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  • J McGlynn and M Bacina

A16Z releases State of Crypto Report

Updated: Jun 1, 2022

Venture capital firm Andreessen Horowitz (short titled "a16z"), has released a "State of Crypto Report" championing Web 3 trends and naming Ethereum as the number one blockchain.

The comprehensive research report was broad turning the spotlight on many parts of the industry, including Ethereum, web3, crypto adoption, Defi, and stablecoins. 5 key takeaways from the report are:

  1. The crypto market is in the middle of its 4th price innovation cycle - the price innovation cycle is a concept a16z posed last year in its May 2020 blog, a thesis that success of the crypto market is cyclical, alternating between periods of high activity and “crypto winters.” According to the post, there have been 3 cycles since BTC's inception in 2009 -the first peak in 2011, the second in 2013, and the third in 2017), which indicate that the doom and gloom of the current alleged "crypto winter" can be expected to retreat just as sure as it came; the report compares the current crypto winter to the dot-com crash of the early 2000s.

  2. Web3 is better for creators than Web2; According to the report we are in a peak period for Web3 with Web 3 tech opening up a new wave in creativity and entrepreneurship that we can only expect to exponentially grow. The company refers to the current market climate as "a golden era of Web3" highlighting the massive wave of world-class talent that has entered Web3 over the last year. While Web 2 includes a far greater number of creators, when compared to Ethereum based NFT creators, Web 3 creators have a much higher earning capacity the report says; According to a16z last year primary sales and royalty payments of Ethereum-based NFTs, totalled a significant $3.9 billion, four times greater than the $1 billion reserved for Web 2 creators through 2022.

  3. Crypto is having a "real world impact" - Coindesk translated this more to mean, crypto is building up into something that is having a real world impact - using examples of play to earn games giving individuals opportunities to earn living wages, like never seen before (think Axie Infinity - see our earlier article on Axie Infinity supporting a Philippines community during COVID) and stress testing new systems as a vital part in the development and adoption of more equitably accessible blockchain based services;

  4. Ethereum is the leading blockchain due to mindshare rather than market share - a16z recognises Ethereum as the dominant blockchain but attributes this to the blockchain being the best known, rather than the best functioning blockchain, prophesising that the technology should should expect to face increasing competition as other blockchains and their protocols become better known for their improved scalability and low gas fees; ;and

  5. How early on we are in the space: Based on their collected data, a16z foresees that Web 3 could reach up to 1 billion users by 2031!

Despite the recent Luna/Terra debacle, the crypto space continues to grow and the launch of a USD$4.5B fund by a16z underscores their belief in the space.


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