Crypto VCs can not just buy the ‘community’ – TechCrunch

Hello everyone and welcome to Chain reaction

In our Chain Reaction podcast this week, Anita and I chatted with Kevin Rose of True Ventures and Proof Collective about the latest cryptocurrency and what the future holds for NFTs in a bear market. More details below.

Last week, we talked about regulators’ efforts to prosecute cryptocurrency. This week, markets crashed and a new breed of crypto startups is likely to find that you can not pay for loyalty.

This newsletter hits the inbox every Thursday afternoon, sign up for the TechCrunch newsletter page to receive it! Follow me @lucasmtny on Twitter while you’re at it!

the hottest plug

This week has been a nonsense for crypto investors, there is no other way to say it. But it was a different kind of doozy than the crashes that came before that.

For a quick summary, hundreds of billions of value were erased from the global crypto market value this week as major currencies like Ethereum and Bitcoin experienced large declines while other blockchain networks essentially imploded. Hundreds of thousands of crypto investors have been liquidated on trades as tokens crashed randomly across the board, while the Terra stablecoin failure – which my colleague Jacquie has plenty of details about here – seems to have evaporated tens of billions of cryptocurrencies in a day or thaw.

For many years of crypto traders, the wild downward pressure on the markets may seem like an old hat, but the amount of money lost and the number of people losing money is an order of magnitude. more important than ever because the crypto markets have grown so dramatically during this bull run. If the crypto markets continue to go to hell in a handcart, there will be a lot of lasting damage when it comes to consumer onboarding, as Web3’s paid procurement budget runs out with reduced volumes.

After several years with retail investors Robinhood and r / wallstreetbets playing public stocks, consumers were ready for crypto and the industry welcomed them with open arms. For the past two years, venture capitalists have been betting on consumer-facing cryptocurrencies, where they have gamified the investment with real-life games that boast tokens and NFT integrations. Meanwhile, web3 acolytes has proclaimed “community” as one of the key features of crypto platforms and explained that if users get a financial stake in the platform, they will get them to act in the best interest of the platform and spread the gospel accordingly.

It all went pretty well during the “only-up” era of this cryptocurrency race, but now comes the interesting part.

Giving users financial incentives to take advantage of your product works well enough when those financial incentives exist, but things look a little different when the air is taken out of space and users are left with the bare platform and no interest. Play-to-Earn gaming companies have raised billions for games that are only fun when you get rich and otherwise awful. NFT projects have also led users to adopt trading card-like mechanics that are only fun when money is flowing. Meanwhile, VCs have funded Web3 media companies, publications and social media companies, all of which are too heavily dependent on crypto speculation, while generally sending poor products.

Some might read this as a general accusation against crypto-ponzinomics, but the other way to read this is that in the web3 gold rush, blockchain founders forgot what it meant to love something because it was a great product and over-indexed for sustainability. of consumer greed or financial desperation. Now the crypto market may return tomorrow, but it will still be true that you can only pay loyalty for that long.

Module # 4: Kevin Rose

Hi, Anita still here. On this week’s Chain Reaction podcast, Lucas and I talked about the looming cryptocurrency winter for investors. Overall, public equities are getting a hit right now, with the S&P 500 falling five days in a row, while crypto-related companies like Coinbase and Robinhood carry the bulk of market fears.

Cryptocurrency prices are also falling. Bitcoin, the world’s largest crypto by market value, has fallen more than 50% from its peak in November. It has fallen below $ 30,000 a few times over the last two days, which analysts say marks a crucial threshold for the currency – if it continues to fall, losses are likely to continue to rise. . The ongoing failure of Terra’s stablecoin UST, which is partially supported by Bitcoin, is certainly not helping the situation.

But cryptocurrencies like to talk for decades, not days, and tend to have a stomach for volatility that is not present in the broader market. It’s far from the first time Bitcoin prices have plummeted, so it’s worth looking back in time and seeing how Bitcoin fared through the last major cryptocurrency winter of 2017. Earlier this year, Bitcoin peaked at $ 20,000, but fell under. $ 12,000 in late December when hacks, regulation and investor shakes hit a fever. It only started to increase significantly in value again in late 2020 / early 2021 when it finally broke above the $ 30,000 mark where it (for the most part) has stayed above the page.

This time, things may be different for the OG cryptocurrency. Many more retail investors now have Bitcoin, and only time will tell if they can afford the storm. In addition, Ethereum and new blockchains like Solana have already eroded Bitcoin’s competitive advantage. You can read more about the issues plaguing Bitcoin and what its backers are doing to help boost it in my latest feature here.

Be sure to check out this week’s episode of Chain Reaction to hear Kevin Rose, co-founder of the viral project Moonbird’s NFT, share some words of wisdom in the midst of the recession.

Subscribe to Chain Reaction on Apple, Spotify or your alternative podcast platform to follow us every week.

Anita Ramaswamy

follow the money

Where start-up money moves in the crypto world:

  1. Crypto exchange KuCoin raises $ 150 million from Jump Crypto.
  2. Crypto trading company Talos raises $ 105 million from General Atlantic.
  3. NFT Infrastructure Protocol Co: Create gets $ 25 million from a16z.
  4. NFT Marketplace Protocol Zora receives $ 50 million from Haun Ventures.
  5. web3 game start LootRush raises $ 12 million from a16z and Paradigm.
  6. NFT Boot Arianee snatches $ 21 million from Tiger.
  7. Start of the NFT box Paper snatches $ 9.3 million from Electric Capital and Initialized.
  8. web3 community start Emphasize earns $ 11 million from Haun Ventures.
  9. NFT Media Boot Dirt gets $ 1.2 million from Collab + Currency.
  10. Starts the crypto game MechaFightClub earns $ 40 million from a16z.

analysis added

Terra’s UST crash will make life harder for crypto as regulation approaches
Over the past week, stack coins have taken a central stage in conversations in the crypto world as a number of factors shake the industry. As the crypto market reacts with bearish sentiment, a big question arises: what does it all mean for the future of stablecoins? A number of market participants have taken a position on what the way forward may look like.

Shark Tanks’ Kevin O’Leary talks about Crypto and why he’s a Stablecoin Pro
Speaking of stablecoins, Shark Tanks’ Kevin O’Leary sat down with TechCrunch to share his thoughts on a number of crypto-related topics, such as crypto-regulation and why he is a pro-stablecoin. We also discussed institutional companies going into space and what type of crypto-focused business he would create if he decided on e.g.

Coinbase’s NFT market gets off to a weak start
In other news, Coinbase NFT launched its beta mode three weeks ago from today, but has still not been adopted, even after opening its doors to the public last week. The expectation of where he should be right now has not met expectations, a source said, and it is unclear if that will ever happen. Given the scale of Coinbase’s cryptocurrency exchange, one would think that its NFT market would also succeed, but others say it is unlikely, and its approach to entering space.

Jacquelyn Melinek

Thank you for reading and subscribing to the TechCrunch newsletter page to be added to our mailing list!

Leave a Comment