a16z – Web3, Ethereum, innovation: a report on the state of the crypto market

The current state of the cryptocurrency market is leading many investors to pessimism. With howls at the end of time inversely proportional to the number of years spent in this very young ecosystem. Because the situation is tense, but certainly not catastrophic in terms of the current development of this digital economy. With perspectives as plentiful as Web3, an Ethereum networking transition and innovations galore. An inventory prepared in the very first report on the venture capital structure a16z. And, of course, great opportunities still await.

The current period is panic in the cryptocurrency market, as elsewhere. With on the one hand those who lose money, resale to the lowest condition panic selling. And on the other hand, more patient – or experienced – investors who are waiting for the right time to reload before returning to the upside. Because the balance depends on the unit of measurement we apply to our personal blinders. And obviously not everyone is preparing wreaths for an upcoming Bitcoin funeral.

Just watch the many developments that still change the face of this ecosystem, even buried at the bottom of its current hole. With sometimes already historic failures, even before they were completed, as in the case of the collapse of the Terra (LUNA) project. And in the face of this, many blockchains have decided to play opportunistic movers in an attempt to restore promising projects. Because those who build or invest in millions know that this is only the beginning of this adventure. A security according to the recent report on the a16z structure.

a16z – The state of the crypto market

The venture capital structure of Andreessen Horowitz (a16z) is a must in the cryptocurrency industry. Because it has invested billions of dollars in total related to this ecosystem for almost a decade. To the point of having become one of the main obstacles – at least theoretical – to the creation of a supposedly decentralized Web3. Especially in the field of DeFi, based on a Community principle which is difficult to maintain in the light of such a concentration of decision-making power. And the birth of “protocol politicians” is too ubiquitous to be cryptologically correct.

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A finding that does not detract from the undeniable expertise that this allows it to have on this evolving digital economy. With the latest initiative, a very first report written on the current state of the cryptocurrency market. The latter to the attention of “all those who seek to understand the development of the Internet and where we are heading towards a decentralized alternative.” With particular emphasis on “creators and other builders.”

The markets are seasonal and crypto is no exception. The summers give way to the cold of winter and the winter thaws to the heat of summer. Progress made by builders in the dark days ends up reviving optimism when the dust settles. And with the recent market downturn, we’re probably entering a period like this.

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What will be the successes of Web3?

Different areas are covered in this report, classified by 5 different categories. With first and foremost an assessment of the current situation, which goes against the flow of the tangible panic in the cryptocurrency market. And this remarkable difference, which places industry prices as a “leading performance indicator” while they are often the opposite in more traditional industries.

Speech drives interest, which drives ideas and activity, which in turn drives innovation. We call this feedback loop the “price innovation cycle”, and it is the engine that has driven the industry through several different waves since Bitcoin’s launch in 2009.

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For, as this report explains, many Internet founders turned away from this technology during the “dotcom crash of the early 2000s.” By thereby missing out on “the best opportunities of the decade” such as the cloud, social networks or streaming. And this simple question: “What will be the corresponding successes in web3?” »

A Web3 linked to the real world

Once these bases are laid, the investigation can really begin. with in the first place, an analysis of Web3 and its decentralized development. The latter was against a Web2 with “exorbitant prices” sometimes close to 100%. And this very explicit quote from Ritchie Torres, Member of the US Congress, to support this point. “You know there is something seriously wrong with our economy when BigTechs has a higher turnout than the Mafia.” With royalties paid to its creators by Opensea platform estimated at $ 3.9 billion for 2021. While they represent less than 1% of Meta revenue or 4 times less in the same period.

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All this supported by practical applications that affect the real world. And more specifically populations without access to reliable banking services. Aves cryptocurrencies, whose “financial inclusion” function is absolutely no longer to be demonstrated in developing countries. And the emergence of “investor clubs” as DAOs that make it possible to organize financing operations independently of all third-party structures. Because “cryptocurrencies are much more than a simple financial innovation – they are a social, cultural and technological innovation. »

Ethereum – A double-edged sword

Finally comes the case of the Ethereum network. The latter in full mutation towards a Proof of Stake version, whose effective implementation gives way every time the end seems to be approaching. And network costs that many users ended up escaping from for versions that were presented as more economical. But at the price, which is still difficult to estimate, for a decentralization clearly downward. And results not necessarily at the meeting given the promises.

Ethereum’s popularity is also a double-edged sword. Since Ethereum has always favored decentralization over scalability, other blockchains have been able to come in and attract users with promises of better performance and lower fees. (Some do so at the expense of security.)

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And despite this, the Ethereum network is still the undisputed leader of these Money Lego blockchains in the digital economy. With an ever-present community. And a number of active developers (4000 / month) much higher than its direct competitors, such as Solana (1000) or by comparison Bitcoin (500). And a notoriety that this report associates with the exorbitant amount of fees that its users are willing to pay to use its protocols. With a bill estimated at $ 15 million a day on average.

All this makes it possible to draw a fairly positive assessment of the cryptocurrency sector. With an innovation that is still in its infancy. And a number of users of this Web3, which could exceed one billion in 2031, “if the trend lines continue.” With the conclusion, this statement is taken from the report on the a16z structure:

In other words, you are still ahead. There is still a lot to do. Let’s keep building.

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