The company said it gathered data for its report from countless meetings with entrepreneurs and builders as well as tracked information. The report is for everyone interested in learning about the internet’s growth. It also highlights the current progress of the web in becoming a decentralized and community-owned-and-operated option to Web2’s centralized tech platforms. The report is crucial for creators and builders.
Twitter user , known for tweeting about the crypto and Web3 space, shared a long thread explaining the a16z report and the key aspects of the piece. The “State of Crypto” report from a16z contains about 50+ slides and attempts to predict what the future might look like judging from current trends. Let’s get into the
a16z published their state of crypto report last month.
It’s a 50+ slide presentation that outlines where we are in Crypto’s lifecycle and what the future holds.
The presentation is long, but I read through it so you don’t have to.
Here are my takeaways.
A thread ??
— pothu (@cryptoPothu) June 17, 2022
Why Web3?
A key aspect of the report tries to shed light on the growing popularity of Web3. For clarity’s sake, Web3 refers to the third era of the internet. The first occurred from 1990 to 2005 and was mostly about open protocols. Web1 was mostly used to access information and had read-only content. However, the need for a more interactive web birthed Web2, which was mostly a centralized service offered by tech companies.
However, these companies, despite their good start, amassed enormous power that became a threat to user privacy. So, Web3 would combine the community approach of Web1 and the advanced functionalities of Web2. As a result, Web3 would trigger a new mode of creativity and entrepreneurial activity.
The need for Web3 is mostly to combat the present digital authoritarianism played out by the giant tech firms. Most of these large corporations have become less cooperative. But with Web3, everyone can own a piece of the internet. Users, builders, creators, and investors all work for a common goal on the Web. With Web3, privacy concerns will lessen as everyone has stronger control of their data.
NFTs Enjoy a Greater Mainstream Spotlight
Having established the importance of Web3, the report further examined the performance of key aspects of the blockchain industry. From their findings, NFTs have gained more mainstream attention. This is good news for creators. 2021 was a big year for NFTs. Countless digital pieces were sold for a jaw-breaking number of dollars. Although many people believe that the hype is fading away, the “State of Crypto” report points out that there are many more use cases for NFTs than mere images. According to the report, these applications will be pivotal in the new economy.
Web3 is the creators’ economy. This means that creators will have more influence in Web3 than they did in Web2. The report also showed that Web3 platforms have lower take rates than their Web2 counterparts. For example, OpenSea, a leading NFT marketplace, has a 2.5% take rate. However, YouTube reportedly has a 45% take rate. This stat shows that creators will earn more on Web3 than they possibly could on Web2.
NFTs allow these creators to monetize directly with their fans with little external influence. This feature alone makes it a good era for digital creators.
Crypto and the Financial System
Although the crypto space is currently in a mess, the “State of Crypto” report believes that it could change the present financial landscape. The report showed that the demand for decentralized finance and DeFi protocols has increased significantly. This comes as about 1.5 billion people around the globe have no access to bank accounts. The report also showed that 48% of adults have not sent or received digital payments in the past year.
According to the “State of Crypto” report, DeFi protocols have the ability to significantly increase access to financial services. The report further stated that DeFi would represent the 31st largest U.S. bank by total assets under management.
There are numerous possible applications for DeFi, but it is still in its infancy. The findings revealed that the most prevalent use cases are lending protocols and token exchanges. Many crypto platforms now have real-world usage and are triggering financial inclusion. These Web3 platforms are not limited to the financial space alone.
Some, like Sound, are assisting artists in monetizing directly from their fans. Similarly, Helium is using Web3 to provide internet coverage at a fraction of the current cost. These platforms go a long way to show the many ways that Web3 can change the world.
Ethereum Faces Intense Competition
Despite the network’s high gas fees, Ethereum is experiencing unprecedented growth and demand, according to the crypto venture fund’s research. However, the report cautioned that ETH’s popularity is a two-edged sword.
For many reasons, Ethereum leads the space. First, it was the first to introduce smart contracts. Ethereum was also able to develop a massive network impact. Although Ethereum has by far the most developers, other platforms are competing seriously with it. Ethereum put decentralization ahead of scaling. So, competing blockchains were able to swoop in and entice users with lower costs and greater performance.
In conclusion, the report speaks volumes about the influence of Web3 on the present world. Most importantly, the findings conclude that regardless of the present crisis, Web3 has more use cases than presently explored.
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