Let’s tl;dr the past few years of crypto, shall we?
Despite the noise, bankruptcies, drama, and bear market, web3 innovation and adoption are stronger than ever.
A16z’s recent report, 2023 State of Crypto, highlights the technological progress of web3, stressing it’s more than just a financial movement—it’s an evolution of the internet. At Web3 Academy, we couldn’t agree more.
The report is a long one, but we’ve got you covered!
To save you the headache of reading through the whole thing, we’ve taken the liberty of extracting the core lessons.
Today, we’ll help you understand how the driving forces of the industry, namely innovation and adoption, are propelling the market forward, in what’s known as the Crypto Price-Innovation Cycle.
So how exactly do these forces work and what are the metrics we can use to understand where in the cycle we are currently?
The Crypto Price-Innovation Cycle
It all starts with the price. Price spikes interest in web3, luring people into the rabbit hole.
People from diverse backgrounds enter the space, cross-pollinating ideas, which leads to new products and companies.
But hype, pressure, and excessive investment create a bubble. When it pops, we hit the bear market.
It’s all part of the cycle though.
As interest wanes and money dries up, only the faithful keep building, believing in the tech’s future.
Eventually, once the new projects/start-ups create new use cases, prices begin to rise, and the cycle restarts.
However, this bear market is different. Despite setbacks and negative press, the industry is still thriving, with interest and activity staying high and growing.
How do we know that? You guessed it – we 👀🔛⛓️(look on chain).
Onchain metrics paint a completely different picture from what the news and general public sentiment might indicate.
That’s the beauty of this industry – there’s no need for trust—we verify.
So let’s take a look at some of the metrics that make us more bullish than ever on web3.
Separate Signal From Noise: 👀🔛⛓️
Financial markets fluctuate with unpredictable macro conditions, but product cycles depend on consumer behavior and tech trends
(to better understand web3 market cycles, you need to understand macro – that’s why we’ve written a two-part series PRO Report to set you up for success!)
Crypto market cycles rely on innovation and adoption: more interest ➡️ more building ➡️ more usage ➡️ more interest 🔄.
Builders, researchers, and products fuel innovation.
Metrics are showing that builders are staying, and product launches during a bear market signal a strong supply side (aka innovation).
Innovation Continues Onchain
Here are a few (onchain) charts that show where the innovation side of things is right now (hint: it’s bullish).
Active Developers
The chart above reveals that many developers drawn to crypto during the bull market have stayed and keep building.
Post-2021 bull market, interest in crypto projects dipped but remained higher than the previous bull market’s start.
Product Launches
Verified smart contracts have been on an upward trend ever since the last bull market.
Verified contracts indicate serious devs and companies consistently develop, test, and launch new…
