Web3 needs more users and fewer speculators to have its ‘haha’ moment

Over the past 18 months, Web3 has been a pretty hot investment area, but it’s cooled off significantly recently. As an investor looking at the industry, what do you think are the key benefits and key risks?

Starting with the risks, it’s clear that the market is in a slump. This is largely due to several macro trends that have also impacted the broader stock market. However, as it is directly related to Web3, one of the main risks we see is that there are currently 2.5 million active wallets operating daily across Web3, making purchases of cryptocurrencies, NFTs, etc. is used for

But the reality of the situation is that when I make these investments, I need to see a reliable path that the number will increase significantly, say 5x or 10x. is one of What’s the “haha” moment of onboarding the next 50-100 million mainstream Web3 users?

The other is that the ratio of speculators to real people interested in cryptocurrencies is getting out of hand, creating volatility that is not good for the cryptocurrency market over the long term.

But in terms of benefits, blockchain is like another technology layer. When we invest in an enterprise software company or consumer technology application, we don’t say that the company is built on Amazon Web Services or built on PHP. Describes the actual functional utility.


When looking at investing in new cryptocurrencies, it’s about understanding what a true utility blockchain makes possible. It’s being used to enable new economic ownership models that benefit users in ways that haven’t happened in the Web2 world.

Do you think the math is done when it comes to valuations of Web3 companies? They were overrated, but now things are back to reality?

In 2021, the tech market in general was significantly overvalued, but the blockchain space was far more overvalued than that, with OpenSea perhaps the most visible example. The most recent round was valued at $13 billion, but NFT trading volume is down by more than 90%.

Fortunately, many of these companies have raised significant amounts of capital and are now spending less to focus on unit economics and truly responsible growth. But these companies still have a lot of work to do to boost their valuations.

I think the current economic environment has caused a bit of a reset in the venture community. He mentions a certain valuation and perhaps he sees an entrepreneur who comes back two weeks later with a deal for half that valuation. And I think these are fundamentally healthy companies that have had a lagging reset from the entrepreneurial side since the stock market and cryptocurrency price declines.

The price of Bitcoin, and by extension other cryptocurrencies, has become closely linked to major US stock

I can’t help but compare it to the late dot-com bubble.

That’s true, but I would like to point out one metric: the amount of code written for blockchain-based businesses. What we really track is the amount of code developers push each week. And while it’s certainly fallen about 20% since the beginning of the year, it hasn’t plummeted as much as the prices of many of these cryptocurrencies have.

What this means is that speculators have been wiped out of the market, and there is less of a decline in the number of builders who are less interested in actually pushing and acquiring new utility-based applications. Rich quick.


Last week we saw the Biden administration announce a framework for regulating cryptocurrencies. Do you think what they are proposing will be good for the industry?

There has been a bit of a battle, especially in the US, over who should regulate the cryptocurrency market. This he has done between two federal agencies. The CFTC, which deals with commodities, and the SEC, which deals with stocks and other securities.

While many have reached the consensus that Bitcoin is a commodity, the SEC chairman recently said that he basically thinks Ethereum could be a security.

If that’s true, it’s going to be a big deal.

That’s a big deal. And the reality is, in my view, regulation of cryptocurrencies is most welcome to bring stability, trust and credibility to mainstream consumers.

Even if that means treating Ether like a security?

it depends. I believe there are some tests that the SEC and CFTC must perform when evaluating individual tokens and cryptocurrency-based assets. For the SEC, I believe they believe that many individuals’ crypto assets are securities that ultimately lead to the expectation of profit.

And if there are many speculators against consumers who actually reap some benefit from the utility of crypto assets, in many cases it is valid and should be regulated as a security.

It’s a fine balance, and what I see in many Web3 companies is that they’re trying to keep some of the noise out of the speculators. A slightly more nuanced and granular approach is needed, with specific guidance from the SEC and CFTC on what constitutes a security.

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Web3 needs more users and fewer speculators to have its ‘haha’ moment

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