Building in Bear or Bull
While our sense of how the market is doing is driven by price, a much better and more fundamental metric is how the technology and infrastructure is developing.
Last December, at our final team all-hands of the year, I made sure to dedicate some time to take stock of the state the state of the crypto markets and industry as a whole.
Whereas 2017 ended at a peak of (in retrospect irrational) exuberance, 2018 ended with prices down in many cases over 90% off of their all time highs. In many parts of the community, those declines and eventual stagnation had created a slow, creeping frustration. For some, the feeling from just a year earlier of being at the precipice of a new decentralized digital world had been replaced by questions of whether anything being built was actually going to find market fit.
This perspective demonstrates just how easy it is to let prices drive our sense of the market. This is equally true at the bottom and the top.
At the same time, however, cryptoassets are something of a unique phenomena. Because they are characterized by open, public market dynamics from their very inception, short term speculative markets can spin up around them that are almost entirely divorced from real long term fundamentals. Both the rise and crash of the 2017–2018 boom were less about state of decentralized tech, and more about the combination of excitement about the emergence of a new paradigm and the ability to trade against that excitement.
The point of including a review of the year at the all hands was to reframe how we judge progress. Rather than looking at price, I suggested that my team focus on the fundamentals of how real technology infrastructure was developing.
When viewed in this light, there is no way not to see the last year as immense progress.
In a recent essay for Business Insider, one of SKALE’s investors Kyle Samani from Multicoin Capital discussed just how much institutional infrastructure had been built around crypto assets in the last year. Specifically, he discussed advances in custody, prime brokerage, and regulated exchanges. His point was that, far from the narrative of crypto struggling, even in the bear market, builders were preparing the ground for the next generation of investors — including the biggest institutions.
It’s not only institutional investor infrastructure that is rapidly coming online, either. Something similar has been happening with regard to the infrastructure, middleware and tooling necessary to build truly powerful decentralized applications.
This has been manifested in countless ways. Over the last year, we’ve seen the emergence of autonomous games, prediction markets (as well as interfaces and experiences that sit atop those markets), decentralized exchange infrastructure, decentralized finance applications, and so much more.
The point is this: regardless of whether prices are down, we need to judge the state of the industry on the basis of how rapidly and robustly the technology is evolving to enable the big ideas of entrepreneurs and developers come to life.
Today, the winter is thawing and we’re starting to move in the other direction. Bitcoin’s price has been over $5000 consistently for a week. Even if this price recedes in the coming weeks, many investors suggest that this is the culmination of a subtle but clear trend away from the bottom.
In many ways, if it is important to remind ourselves in bear markets that what matters is what’s being built, it is doubly important to do the same when things get hot again.
Markets and price action create their own momentum. In the swirl of excitement, it can become easy to lose sight of the “why’s” behind our involvement.
If the purpose of my talk at our team all hands in December was to remind people to judge progress in bear markets by what is actually built, at the beginning of a potential bull turn, I believe it is essential to ground ourselves with a reminder of our purpose.
We started SKALE firstly because we believe that the centralized internet paradigm of Web 2.0 no longer serves the majority of people. Too much control rests in the hands of a small handful of companies who wield network effects more powerful than the world has ever seen.
But second, we started SKALE because we believe that there is unprecedented room for innovation when you make value programmable. We have barely begun to scratch the surface of the possibilities of self-organizing markets, permissionless multi-sided value networks and so much more.
The future we’re excited about is one in which new types of incentive models inspire new business models and even new ways of thinking about human organization; and where developers imagining a different future actually have the tools to bring those ideas to market.
That’s the future I’m proud our team is working so hard to enable. Every one of the more than 150,000 lines of code we’ve pushed is ultimately an affirmation of this key point: whether the crypto market is bear or bull, what matters is the build.
