A lot has changed in the state of crypto since we started investing in the area nearly a decade ago.

This report is the first of what will be an annual overview of trends in the crypto industry, shared through the a16z crypto vantage point of both tracking data and across the countless entrepreneurs and builders we meet. It’s for anyone who seeks to understand the evolution of the internet, and where we are on the journey towards a decentralized, community-owned-and-operated alternative to the centralized tech platforms of web2 – especially as it touches creators and other builders.

The top themes are distilled into five summary takeaways below, but be sure to dig into these 50+ slides (full deck for the 2022 State of Crypto Report available for download below); be sure to also sign up for the a16z crypto newsletter to continue getting insights as well as updates about upcoming resources and to listen to the new web3 with a16z podcast to dive deeper into the findings and methodology.

5 key takeaways

#1 We’re in the middle of the fourth ‘price-innovation’ cycle

Markets are seasonal; crypto is no exception. Summers give way to the chill of winter, and winter thaws in the heat of summer. Advances made by builders during dark days eventually re-trigger optimism when the dust settles. With the recent market downturn, we may be entering such a period now.

Although crypto can be volatile and its cycles seem chaotic, there is an underlying logic at work, as Chris and Eddy first pointed out in 2020. (See slides 9 through 12 in the deck.) Whereas prices are often a lagging indicator of performance in some industries, in crypto they are a leading indicator. Prices are a hook. The numbers drive interest, which drives ideas and activity, which in turn drives innovation. We call this feedback loop “the price-innovation cycle”, and it has been the engine that has propelled the industry through multiple distinct waves since Bitcoin’s inception in 2009.

As legendary investor Benjamin Graham once allegorized: It’s best to pay no mind to “Mr. Market”, who frequently boomerangs from exuberance and euphoria to despair and depression. To Graham’s wisdom we add an addendum: Better to build. Consider that any prospective founders who swore off tech and the internet in the aftermath of the early-2000s dotcom crash missed the best opportunities of the decade: cloud computing, social networks, online video streaming, smartphones, etc. Now is the time to consider what the equivalent successes will be in web3.

☆Source :

A lot has changed in the state of crypto since we started investing in the area nearly a decade ago.

This report is the first of what will be an annual overview of trends in the crypto industry, shared through the a16z crypto vantage point of both tracking data and across the countless entrepreneurs and builders we meet. It’s for anyone who seeks to understand the evolution of the internet, and where we are on the journey towards a decentralized, community-owned-and-operated alternative to the centralized tech platforms of web2 – especially as it touches creators and other builders.

The top themes are distilled into five summary takeaways below, but be sure to dig into these 50+ slides (full deck for the 2022 State of Crypto Report available for download below); be sure to also sign up for the a16z crypto newsletter to continue getting insights as well as updates about upcoming resources and to listen to the new web3 with a16z podcast to dive deeper into the findings and methodology.

5 key takeaways

#1 We’re in the middle of the fourth ‘price-innovation’ cycle

Markets are seasonal; crypto is no exception. Summers give way to the chill of winter, and winter thaws in the heat of summer. Advances made by builders during dark days eventually re-trigger optimism when the dust settles. With the recent market downturn, we may be entering such a period now.

Although crypto can be volatile and its cycles seem chaotic, there is an underlying logic at work, as Chris and Eddy first pointed out in 2020. (See slides 9 through 12 in the deck.) Whereas prices are often a lagging indicator of performance in some industries, in crypto they are a leading indicator. Prices are a hook. The numbers drive interest, which drives ideas and activity, which in turn drives innovation. We call this feedback loop “the price-innovation cycle”, and it has been the engine that has propelled the industry through multiple distinct waves since Bitcoin’s inception in 2009.

As legendary investor Benjamin Graham once allegorized: It’s best to pay no mind to “Mr. Market”, who frequently boomerangs from exuberance and euphoria to despair and depression. To Graham’s wisdom we add an addendum: Better to build. Consider that any prospective founders who swore off tech and the internet in the aftermath of the early-2000s dotcom crash missed the best opportunities of the decade: cloud computing, social networks, online video streaming, smartphones, etc. Now is the time to consider what the equivalent successes will be in web3.

☆Source :