The large VC firm sees a chance in the current bad market for building, particularly blockchain infrastructure projects.
A well-known venture capital firm, Andreessen Horowitz (a16z), has released its second annual “State of Crypto” report, in which it highlights the relevance of Web3, blockchain infrastructure, and a price-innovation cycle that creates the ideal chance for builders in the weak market.
On Tuesday, the business also unveiled its new State of Crypto Index, an interactive tool that tracks 14 technology-related metrics on a monthly basis to offer an overview of the state of the sector.
Daren Matsuoka, Eddy Lazzarin, Robert Hackett, and Stephanie Zinn of a16 wrote “Our 2023 report aims to address the imbalance between the noise of fleeting price movements – and the data that tracks the signals that matter, including the durable progress of Web3 technology. Overall, the report reflects a healthier industry than market prices may indicate, and a steady cycle of development, product launches, and ongoing innovation.”
The high-profile scandals and failures of the last year, according to the report, have demonstrated the shortcomings of centralized systems while emphasizing the benefits of openness and resilience of decentralized infrastructure. Web3 is “more than a financial movement, it’s an evolution of the internet” and it advances the internet through “crypto computers, not crypto casinos.”
A16z cites a number of reasons why Web3 is an improvement over earlier technological paradigms, including decentralized blockchain networks, community governance, a lack of power concentration among corporations, and value accruing to network participants.
While Web3 adoption is still in its infancy, indications for decentralized finance (DeFi) and non-fungible tokens (NFT) have stabilized after falling from record highs in 2021. The video game market has prospered: As of present, gaming accounts for 23 times as many on-chain transactions as DeFi. In 2017, 700 Web3 games were released.
Time for developers
This month had an all-time high of more than 15 million active addresses, which is more than quadruple the level seen in March 2021.
According to the price-innovation cycle, more dedicated developers join the crypto industry when the market is weak, which leads to a surge in asset values as a result of the excitement around these new projects.
Regardless of financial cycles, according to A16z CTO Eddy Lazzarin, “product cycles are where new things that lead to consistent and more robust growth over many years are occurring.”
A16z emphasized the blockchain infrastructure’s ongoing development. Key elements include novel layer 1 chains that enhance scalability and programmability as well as layer 2 scaling methods including optimistic and zero-knowledge rollups. Zero-knowledge proofs, a type of computationally proving the legitimacy of a transaction, are highly anticipated by the company.
Content Source: coindesk.com