Where are we?

As the Federal Reserve kept raising the benchmark interest rate due to the supply chain disruption caused by the Ukrainian War and China’s lockdown, the global economy finally, and somewhat unexpectedly, veered toward recession and deflation, manifested by the recent deep downturn of global stock, commodities, and housing markets. Following the pattern of early tech-bubble bursts, the blockchain industry took an even harder tumble.

In the last 3 months, the gold market has dropped 12.5%, while “digital gold,” or bitcoin, has dropped approximately 60%. The broader crypto crash wiped out approximately 70% of the value of NFT and crypto advocates’ investment assets. Naturally, “ponzi scheme” and “fraud” began to replace much more flattering terms that had become associated with the industry.

Regarding crypto’s greater volatility over more traditional markets, i.e. bitcoin’s volatility compared to gold, it should be noted that crypto does involve more derivative markets and the leverage that comes with it. So the crypto market’s deeper downturn is just a bigger deleveraging process.

And it’s also very true that over-leveraging wasn’t the only weakness with a lot of projects. The shake-out provides a clearer view of projects with sounder fundamentals. The ones who are left standing will have one of the key advantages of “bear markets,” which is lower development costs and much lower marketing costs. For these reasons we may again look to the analogy of the tech industry and its historical rebounds, and see that we may in fact be in more of a Golden Summer than a summer for bears.

In 2011, Marc Andreessen famously wrote a prescient claim that “software is eating the world.” He predicted how severely software companies would disrupt traditional industries and since then, we’ve seen industries transform and companies fold in response to Amazon, Netflix, Airbnb, and many more. At the time he wrote this, he was referring to the success–and appetites–of Microsoft, Facebook and Google. But they weren’t merely hungry. They weren’t hungry for what everyone else was eating.

Thirty years ago, Bill Gates realized that IBM’s powerful computers had potential far beyond the highly specialized corporate tasks they were designed for–if an operating system could be built for ordinary people. Bill Gates basically built software to lower the barrier to entry for the public to use computers.

Today, blockchains and cryptocurrency are in the same situation. The reason is that current web3 SaaS (software as a service) is in service to a very narrow set of interests. It doesn’t fit the needs or intuition of most people in the real world. The user experience is too poor or non-existent to attract or accommodate the general public.

Meanwhile, media coverage of web3 is far more focused on how software companies do sales and marketing than on what their products do and how those products fit their markets.

Business expansion without product market fit is known by the term “premature scaling.” In other words, it is building the capacity to serve the target market before confirming or ensuring that the market can effectively be served at any scale in the first place. Easy capital ensures that premature scaling is the leading cause of death for most web3 projects nowadays. If we prefer to live, then we must improve our understanding of the market’s demands and how we serve it.

In that regard also, Encentive is bullish.

For an idea of how this is playing out from Web 2.0 to Web 3.0, consider the transition in terms of the leaders in each of their respective fields below:

Multiple high-profile, high-dollar catastrophes under Defi brands like Celcius, Three Arrow Capital, Voyager, etc., and a far-from-spotless CeFi (centralized finance) track record, leave the public as desperate as ever for a better financial system. To tackle this situation, the Encentive team is developing an operating system based on Ethereum to let the general public have safer, more intuitive access to decentralized financial services, while supporting 10+ public chains for seamless transactions.

Bearish Lesson

Does this sound like the same familiar buzzwords to you? It is very much the current blockchain ecosystem, we can’t deny that. But the Encentive team is determined to build something big–fitting the market so well that it can actually serve the daily life of real world people as a public utility in a completely trustless manner.

With Encentive, for example, your paycheck doesn’t have to be under the control of a CeFi institution. Paychecks can be securely and directly distributed through a DeFi cash pool in a single transaction, and every qualified payee can easily and securely receive their compensation. Furthermore, in order to maximize the public utility, the Encentive team has established a strategic partnership with fiat-bridge facilitator Alchemy Pay to make easy conversion between fiat and crypto for maximum utility to the widest range of users.

By serving the widest range of users, Encentive can lower costs borne by both projects and end-users in the same manner that a new toll-road serving a large city can spread costs better than a toll-road serving a small city.

Other features targeting high volume and popularity include NFT derivatives, for which the Encentive team has built lottery and airdrop functions, peer-to-pool NFT trading without royalties and marketplace fees, and peer-to-peer transactions (recommended for trading only between parties who have confirmed one another’s trustworthiness). Furthermore, the Encentive team will continuously develop new functions such as NFT discussion forums, NFT analysis tools, and more, along with a coding protocol that allows other DAO members to contribute developments as well.

This is just the beginning of the Encentive Operating System, and we are accelerating development despite the “bear market.” As the three-time Formula One World Drivers’ Championship winner Ayrton Senna often said:

“You cannot overtake 15 cars in a sunny weather… but you can when it’s raining.”