The a16z State of Crypto Report
A couple of months ago I organized and hosted the WomenInWeb3 Summit: Vancouver. Elevating the profile of underrepresented communities in tech is something I’m passionate about, so I wanted to highlight the great work of Vancouver-based women in the space while also bringing together others either working in or curious about the field. The conversations and presentations were extremely informative and provided actionable insights to those working in Web3 on how to maximize impact, ensure regulatory compliance, and much more.
Yet, while the content itself was valuable, finding partners who believed in the project and saw value was a challenge (I am eternally grateful to those who supported the vision and helped make the event possible.). Yes, the Canadian tech space is facing financial challenges, as we saw with the recent round of layoffs from Shopify, but ultimately I’m not convinced that companies believe that women are true players in this space. Sponsorship is a public relations move, it signals to attendees that you want them to know you were interested in accessing them.
Women need to stop being viewed as a niche market. Women-led projects have better ROI than those led by men.
Today I’ve got 1,184 words for you or a 7-minute read.
News about the crypto industry has been all over the place lately. On one hand, prices for BTC and ETH are up, but funding to Web3 startups is down a whopping 82% from Q1 2022 to Q1 2023. And then there’s all the news about regulatory enforcement in the US…not to mention the collapse of fiat banks. It’s a real choose-your-own-adventure out there.
When I saw that Andreessen Horowitz recently released their State of Crypto Report, I was intrigued. Would this venerable venture capital firm tell it like it is or will this be a sanitized, run-of-the-mill 60-page report that says nothing? Ultimately, it falls somewhere in between: there are statistics but no insight as to what those statistics might mean for the industry. There are, however, 12 things that a16z thinks will happen in 2023 “and beyond”.
Before I jump into my thoughts on those 12 areas, I just want to say that I truly wish Web3 maximalists would have some perspective. To me — a realist — being objective about things you believe in is important in order to convince people to come to your side. The reason people don’t pay attention to crypto or think the industry is a joke is that there are so many entirely unserious people who scream at the top of their lungs that their view is the right one and/or are completely unwilling to see another perspective. Being able to see all sides of an issue will strengthen your arguments.
My main issue with a16z’s report is the strange implication that an increase in active addresses means that adoption is increasing (page 44). At best, that’s a correlation, not causation. It’s possible that an increase in active addresses means that adoption is rising, but it could also mean that 1) dormant addresses are waking up (as has been happening), and 2) people have multiple addresses.
Anyway, here are my thoughts on a16z’s Big Bold Predictions about Web3 in 2023 “and beyond” (whatever that means [it actually means nothing and is just a way to say “we knew this would happen” even if it’s 25 years from now.]).
Some of the most iconic web3 products will be built during financial downturns in crypto - agree; hard not to. This is literally what has happened in every economic downturn. So glad these guys (and I, quite literally mean guys) told us.
Smart contract security will improve as people adopt techniques like formal verification and symbolic testing - honestly, I hope technology improves as time passes, otherwise, we’d still be riding around with horses and buggies.
Developer adoption of zero knowledge tech will accelerate - of course; it will be interesting to see this deployed in more tangible use cases.
The internet will continue consolidating into Big Tech, underscoring the importance of web3 - I think there are two different components for this one. I don’t necessarily agree that Big Tech will continue to consolidate insofar as networks (i.e., social networks and media), but Amazon and such, maybe. Anti-trust is such a huge issue and with the EU recently rejecting Microsoft’s acquisition of Activision Blizzard, I wonder how many years of consolidation we really have left. That said, I think that geopolitical issues will play a role in illustrating the importance of Web3 in terms of protecting identity, etc.
“On-chain” games will rise in popularity - I don’t really agree with this. I think the floor is low but the ceiling is also low. There are a lot of challenges convincing Web2 gamers to switch to Web3. So, unless you get a hot game from an existing gaming company on-chain, it’s not going to happen. I also don’t really know what the compelling use case is.
There will be further advancement in hardware optimized for zero knowledge proofs - this seems like something that’s further down the road.
Concerns about social media giants will heighten, highlighting the need for decentralized social networks - the framing of this is totally wack. What “concerns” and by whom? As a woman, I certainly have concerns about existing on Twitter and saying almost anything because I have so many friends who are aggressively harassed and that have been doxxed. The rampant mis/dis-information is also a concern. Unclear how decentralized networks would solve those problems.
“Light” clients will accelerate the adoption of mobile web3 frontends - far too technical for me to really have any insight on.
DAOs will run more experiments with new forms of community governance - I hope so! On their face, I think DAOs are great, but relying on token ownership is so so dangerous because it just takes a couple of whales to run the show. New governance models should fix that.
Governments will pass bipartisan crypto regulation - bold prediction, folks.
As blockspace becomes more affordable, non-speculative uses of tokens will proliferate - this is important to the longevity of the space. Over the course of the past year, we’ve seen the dangers of speculative tokens and it gives the sector a bad reputation. With less risk, adoption will increase.
Hiring, treasury management, and sustainable funding will become a major focus for DAOs - evolve or die, basically. However, as with much of the Web3 sector, I do wonder how innovative we’re being as we continue to create the same systems on the blockchain as off. Those systems are broken, so how do we prevent these new ones from causing the same harm?
Some other things I’ve written lately:
I’ll be at Collision in Toronto at the end of June and will be hosting some side events. Stay tuned for details. Gonna be there? Drop me a note.