This moment in crypto
…what a time to be a.live
In Lenin’s words:
There are decades where nothing happens; and there are weeks where decades happen.
While it’s not quite that dramatic just yet, and the worst is probably just getting started, we thought it might be a good time to take a deep breath and see where we are.
Many builders (like us!) looked on in bewilderment these past twelve months as companies that were really trying to build consumer applications or businesses that would bring millions onboard to Web3 and crypto get stalled by investors saying it’s “too early”, while obvious Ponzi schemes, pointless NFT PFP projects and yet another L1 that would never get traction got funded.
This week, we finally got the answer. Jason Choi on Tangent, one of the most no-nonsense funds around, tweeted about it:
Incentives are not aligned in the Web3 ecosystem- onboarding users, building actual use cases, and PMF are secondary to the two holy altars of a liquid asset that can be sold immediately, and 2% of fees raised for enormous funds that will probably do middling returns, but need to deploy very large sums of money. What would you do as an investor- invest in the next generation of social or gaming that will take 5 years to take off, or an L1 that gives you cash immediately even if it slowly dies off within 2 years?
Until this week.
The devastation that Luna, 3AC and FTX have wreaked on the ecosystem will have enormous consequences.
- On liquidity and solvency of the core crypto use cases - defi most of all, as well as the idea of the financialization of everything.
- More importantly, regulations, especially CBDCs, will have another round of ammo to shoot with, even if the failures we’ve seen are those of centralisation, not of defi. It will be harder and harder to reconcile with the ideas of crypto as an inflation hedge or store of value, even if it may be true in the long run.
One part of the system, however, will grow and flourish, and for reasons that have as much to do with changing human behaviour as with Web3 infrastructure. “The Fourth Turning” by William Strausse and Neil Howe, published in 1997 posits a 80-year cycle of generations, with 4 “turnings” having a 20 year period of prominence. The ‘hero’ generation (Gen Z perhaps?) becomes of prime importance around 2026 or so. Even without these heavier philosophical underpinnings, we can see the beginnings of this occurring.
Social media, despite seeming pervasive, actually is in decline. Tiktok reported its first quarter of user decline, Meta is in crisis, and the craziness at Twitter needs no further elaboration, of course. The constant attention cycle of social media, and the over-abundance of content stimulation is already beginning to tire us. And as it does, tangibility, connection with smaller groups that we actually care about, and deeper engagement with the things we really care about, will begin to take centre stage more and more obviously.
Two social media apps that went viral this year showcase this really well- BeReal, which forces you to take impromptu pictures in a one minute slot every day, and Gas (currently #1 on the App Store), which lets you send positive messages to your friends anonymously and check who has a crush on you. These are the antithesis of Instagram and Facebook, really- both almost force you to care, and focus on, a more ‘authentic’ you.
Web-based and social media content creators/ influencers such as YouTubers, podcasters, vloggers and bloggers have also cultivated massive platforms and a captive audience which now gives them the ability to use their wealth and popularity to launch other creators. This is explained as the next phase of their brand growth and by extension the next phase of the creator economy in this piece by Ted Gioia who says it very well:
A Creator-Driven Culture is Coming- and Nobody Can Stop It.
Gioia uses the example of Mr Beast to illustrate that single creators can now succeed and thrive because giant corporations or record labels are no longer necessary to bear the cost & effort of financing, content creation, and distribution.
So what does Web3 have to do with all of this?
Web3 enables decentralisation, social clout, identity, as well as the new forms of consumption the metaverse and gaming bring. But what we’ve seen so far in Web3 consumer products is an ‘X for crypto’- Farcaster is decentralised Twitter, Audius is a (barely) decentralised Spotify, and Sound is an on-chain Soundcloud.
However, as native forms of consumption emerge that will embrace the changing trends of deeper and more authentic engagement with people and things you actually care about, we will see far more interesting and impactful examples of harnessing Web3 technology to truly empower creators and value art as more than just a financial asset.
These tenets of enabling creators, giving power back to them, and creating platforms that value discovery, true immersion and a sense of joy while engaging with art, are central to what we’re trying to build at a.live.
