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Special Issue: We Review the 2022 State of Crypto Report by a16z
We’re back again with another Weekly Rollup. This is a special one!
Although there was a lot of exciting news going on this past week, we had to throw it all out the window when Andreessen Horowitz released their State of Crypto report.
Fun fact: When Marc Andreessen and Ben Horowitz founded Andreessen Horowitz, they realized that the company name would be extremely hard to remember so they named it a16z. 16 is the number of characters between the 1st (a) and last letter (z).
The State of Crypto report is a 56 page report illustrating an overview of the crypto market.
We’ve got a lot to cover so let’s dig in!
This week’s Web3 Rollup includes:
An introduction to Web3
An overview of the current state of the sector of the crypto market
Web3 vs Web2
The current state of Web2 is currently “branded” as a digital authoritarianism, referring to the fact that big corporations such as Google, Facebook, Amazon etc. control the entire space.
They own our data and take advantage of the average user. The business model of most of these companies is to gather data from its users and sell it to the highest bidder, without rewarding the user.
It is literally the definition of authoritarianism.
Web3 promises to fix those issues by giving the power back to the user. Owning a piece of the internet has never been possible before and Web3 is here to provide that opportunity.
The “WAGMI illustration” (named by Jeremy on the podcast) expresses how the shift is thought to be made.
While Web2 only allows the builders and investors to benefit, Web3 switches that business model through a token, which now unites and brings value to every single participant: the user, the creator, the builder and the investor.
It was perfectly put in the report: “Web3 aligns network participants to work together toward a common goal — the growth of the network”
The crypto market develops in cycles
Price → Interest → New Ideas → Startups & Projects
We seem to be entering the phase of new ideas/startups & projects after a huge price run up and interest last year. It is time to BUILD!
The fact that Web3 is multi-chain is vital to understand.
There will most certainly not be one chain that does it all in the future and we can already see that building up.
It’s not like there’s only one tech company. There are a bunch of them fulfilling different niches. Same will happen in Web3 and we can already see that shaping up through this illustration.
It is fascinating to see that there are so few developers active in Web3 at the moment.
It indicates that we are still extremely early. The cryptocurrency market has achieved over 1 trillion market cap (hitting 3 trillion a while back) with only around 10.000 active developers.
Completely mind blowing.
Ethereum is of course the leader when it comes to transaction fees. Although Solana has more transactions every day, the amount of fees paid are extremely high in the Ethereum blockchain.
However, Layer 2 scaling solutions are trying to keep the transaction fees low. More and more of the Ethereum transactions are happening on L2.
DeFi & Stablecoins
DeFi has grown from nearly zero to over $100 Billion in less than 2 years and it now sits on the 31st place as the largest US bank by total assets under management.
Similarly, stablecoins represent a tiny fraction of the total money supply. Only 171 billion in comparison to the USA's 20 trillion money supply.
Stablecoins allow people to travel freely with their assets across countries, especially during desperate times like war.
The value proposition of stablecoins is promising and the potential is huge.
NFTs & Gaming & DAOs
NFTs have been a hot topic over the past year. The value that NFTs are providing to artists is enormous.
First of all, the platforms where NFT transactions occur (OpeanSea, Magiceden etc…) have very low fees compared to Web2 applications like YouTube or Instagram who take a bunch of revenue from the artist’s hands.
Second of all, they allow artists to keep most of their revenue. It is mind blowing that the average revenue per NFT creator was 174K, compared to Spotify’s 600$.
It is notable that we are in a bubble with NFTs and a lot of investors are losing money but for artists, NFTs are extremely helpful.
When it comes to Web3 gaming, it is very early to make an estimation of the current market. However, you can make a projection based on the current gaming market that has seen an explosive growth, mainly due to increased popularity of mobile games.
DAOs have accumulated more than 10 billion dollars in treasury assets under management.
DAO stands for decentralized autonomous organization and aims to provide a path toward community governance for any kind of organization.
The conclusion is simply that we are still super early in this space! Gaming, DeFi, NFTs, DAOs have barely scratched the surface and we believe that Web3 infrastructure is only going to get better from here.
Web3 Person of the Month
Actually, the person of the month goes to an entire team. Of course it is the a16z team. They’ve developed an outstanding report on the overview of the crypto space!
Well done and thank you, Andreessen Horowitz!
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