🍿 The US Is Losing its Lead in Crypto — Here’s how
Reading time 4m25s
Hello, and welcome to a brand new week, reader. This is Tokengraph, your one-stop newsletter for all things crypto and Web3. Today, we’re coming at you with a podcast breakdown on the current state of crypto according to a16z, a venture capital firm in CA.
In today’s breakdown:
Crypto Prices VS Products
Developers Are Sticky — Here to Stay
The “City” of Crypto Is Expanding
The US Is Losing in Crypto
In this podcast episode, Bankless hosts Ryan Sean Adams and David Hoffman interview Eddie Lazzarin, the CTO of a16z Crypto, about his company’s 2023 Crypto Report.
They cover a lot of ground in this episode, but we’re going to bring you the most important takeaways in today’s Tokengraph newsletter.
What is a16z? It’s a Silicon Valley venture capital firm that invests in crypto, startups, growth-focused companies, and more. Each year, a16z comes out with a “State of Crypto” report that assesses where we’re at and where we might be headed in the future.
A16z invested more than $1,000,000,000 in crypto
They released their State of Crypto 2023 Report
10 Insights you need to know🧵👇
— Crypto in Black (@thehiddenmaze)
Apr 24, 2023
The State of Crypto Index
This year’s report is unlike any year prior though — that’s because it contains a brand-new metric called the State of Crypto Index, which tracks innovation and adoption in the crypto sector.
The index aggregates various metrics from both the innovation and adoption sides, providing a comprehensive picture of the crypto industry's development and adoption trends. This addition brings a fresh perspective to the report and offers valuable insights into the state of the crypto ecosystem.
According to the index, we’re currently at a 1-year downward trend of 5% — but on a 3-year time scale, the index shows a massive 1,500% swing upward. Clearly, innovation and adoption are both on the rise over a long time frame.
In the podcast, Eddie goes into detail discussing the difference between the innovation cycle and the adoption cycle in the crypto market for this year. The innovation cycle, which includes metrics like active developers, interested developers, contract deployments, library downloads, and academic publications, showed a much steadier and smoother trend.
In contrast, the adoption cycle was more volatile and driven by short-term excitement, and it includes metrics like trading volumes, search interest, and user numbers. This distinction helps to understand the overall health and trajectory of the crypto ecosystem, emphasizing ongoing innovation even when adoption fluctuates.
The “Stickiness” of Developers
In the next part of the conversation, the hosts of Bankless hear Eddie’s thoughts on other various metrics for measuring the health of the crypto ecosystem. They talk about developer activity, funding activity, and the compound annual growth rate (CAGR) for different aspects of the industry.
Fascinatingly, they note that developers and users can be considered investors in a broader sense, as they invest their time, attention, and skills in the crypto space — a sentiment that we at Tokengraph wholeheartedly agree with. We view ourselves as investors in the space as well.
They also discuss the stickiness of developers in the crypto industry, as they tend to stay and build on the platforms they choose initially. They attribute this to the ownership and control that developers have over their projects in the crypto space — that’s likely an advantage of Web3 that they don’t want to let go of after they get a taste of it. Developers in this space are uniquely mission-driven and crypto-native.
The City Metaphor and How the US is Losing its Grip on Crypto
Later on in the episode, Eddie compared crypto to an actual city. He explains that the crypto ecosystem is always under construction, with various components being built and improved upon continuously. He emphasized that despite some temporary setbacks, the city (crypto) keeps growing, and new neighborhoods (projects) keep emerging.
This analogy highlights the ongoing development and expansion of the crypto ecosystem, even during market downturns or periods of uncertainty. Think back to the adoption VS innovation we touched on earlier — adoption is sporadic and more volatile, while innovation has seen a steady increase over time, much like a city that’s building through both economic booms and busts.
Finally, the conversation moved to the topic of how the US is losing its foothold as the leading nation in crypto. It seems that every other day, we see news about either the SEC hounding another US-based crypto company or the current administration making it harder for Web3 businesses to function.
And it shows in the data: the global percentage of crypto developers residing in the US has dropped by 25% in the past five years, and crypto website traffic from US users has tanked by roughly 60% total.
The likely reasons for this decline include not only increased regulatory pressure in the US but also a change in perception of technology as a powerful transformative force that can alter existing power structures. They emphasize the global nature of crypto technology and its potential to provide financial access to the unbanked population, regardless of whether its “home” is in the US or not.
All in all, despite regulatory challenges and the US losing its lead in Web 3.0, the overall outlook for the crypto industry remains optimistic according to Eddie Lazzarin, highlighting its ongoing innovation and expansion.
We found the discussion in this podcast to be thought provoking and informative, leaving us with a greater understanding of the current state and future potential of the crypto landscape. We hope our podcast breakdown was able to do the same for you!
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According to the State of Crypto report, which of the following metrics is on the rise in crypto currently?
A. NFT and DeFi activityB. The number of blockchain users C. The number of developersB. All of the above
Scroll down to the bottom to see if you're right!
Web3 Resource of the Day
Mining Vs Buying Crypto - Which is More Profitable? (Free Spreadsheet) | Video from Whiteboard Crypto
Have you ever been curious about whether crypto mining could be profitable for you personally — maybe more profitable than just buying crypto and holding it? This video from Whiteboard Crypto presents an easy-to-follow breakdown of how you can determine whether mining Bitcoin might be more (or less) profitable than just buying it. Regardless of whether you have any experience with mining, you’ll walk away with a clear understanding of the pros and cons, and you’ll be empowered to make your own decisions based on your resources/financial goals.
❓ Quiz Answer
NFT and DeFi, blockchain users, and blockchain developers are all on the rise. The case for crypto appears to be just as strong as ever, even in the face of regulatory difficulties and weak stances from the US government.
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DISCLAIMER: This is not financial advice. This newsletter is strictly educational and is not investment advice to buy or sell any assets or to make any financial decisions. Do your own research.