I was up in NYC for the big annual NFT event last week. There were easily 10K+ people running around NYC at the conference and outside parties/events. They expanded the speaker list from around 500 previously to over 1,500 this year, and many of the conference halls were empty throughout the day. Like many conferences I have attended across multiple industries, the action is in one-on-one meetings outside the official event. I didn’t have a conference badge, and I didn’t need one.This year’s event came only seven months after last year’s event in November. You can read my report from the 2021 event here.

I highlighted three themes at last year’s event, let me quickly recap those. 1 – NFTs will be everywhere. This one is proving out quickly as NFTs have hit the mainstream since end of 2021. From their prominent role in pop culture on Saturday Night Live to the expansion of NFT collectibles into the NFL, MLB, and much more, NFTs are certainly popping up everywhere. 2 – The user experience will get much better. This one is still a work in progress. Dapper has opened up the Flow ecosystem and other platforms are now accepting credit cards and hosting custodial wallets, but there is a still a huge opening for a company to make the process easier for consumers. 3 – Regulation is badly needed here. This one also has a long way to go. We have seen a few criminal cases brought against some of the bad practices in the industry but still no comprehensive regulation we can point to.

Here are the updated themes from the week.

1 – The Crypto winter didn’t end the party.As I told people I was heading up to the event this year, many that I spoke with expected things to be toned down. Given the huge selloff in the Crypto market and the collapse of NFT valuations, that would’ve been a fair guess. One of the bigger participants in the market told me they decided not to host an event this time since they felt it would be a bad look. They were the outlier. The top event again this year was Ape Fest, from the Bored Ape Yacht Club team. They doled out tickets to their project holders over a multi-day party that featured top tier musical performers like Lil Baby, Eminem, and more. Madonna performed at the World of Women party. The highlight for me was the Knights of Degen event with a slamming set from Ja Rule. The NBA draft was also happening in NYC this week, so there were a ton of current and former NBA stars in town. A good number of NFL players could be found at the event as well. The party was on at NYC NFT.

2 – Builder gonna build. Dozens of great teams are still working on cool projects in collectibles, gaming, music, movies/TV and more. The market may be disrupted, but people will keep building. I heard several people talking about building products for the mainstream where the crypto component will be less prominent to users, ala NBA Top Shot. I wrote about this last month, more here. Last year, funding was abundant and just about any project could find investors. Now everyone is cautious on funding. There is a ton of cash available, but it’s not getting deployed quickly. Valuations are down, even at Seed. Less cash is available at each stage. There are still big deals being announced, i.e. $100mm+ for Magic Eden at the start of the week, but those deals were done months ago. Strong projects with great teams can still get money, the VCs are not going to return their billions back to their LPs, but the tone has changed from last year.

3 – Ponzi-like projects can still gain mass adoption, but not for long Last year, I spoke with a bunch of smart people about the ponzi-like features of the popular Axie Infinity blockchain game. Everyone knew it was bound to come crashing down, and it eventually did. This year, the same is being said of Stepn, the popular move-to-earn game of the moment. It seems like hype cycles and dreams of riches can push any project up fast, but it becomes a game of hot potato that always ends the same way. If you want to build an enduring project, you need to get the tokenomics right from the start. You need to design your project to have lasting token demand and value add to your users, or it will not survive. I did hear several people working on new ideas for move-to-earn. Someone will have a hit here soon that can stand the test of time.

4 – I’m like the only one bearish on DeFi. I still don’t get this. People still believe it’s OK to make non-recourse loans on illiquid and volatile assets like Cryptocurrencies and NFTs. Let me tell you again, it’s not. Maybe the advance rates will go lower and the interest rates will go higher, but DeFi lenders will keep doing it. I think it’s nuts. There is no way to properly charge for this type of risk, and the disclosures are inadequate. People are chasing high yields with little understanding of what they are getting themselves into. We will see more DeFi programs crash. This is only going to work by large players like Coinbase or FTX restructuring these programs to be like more traditional stock lending. These groups will need to credit check their counterparties and stand in the middle between the borrowers and lenders, like a traditional bank does. I wrote on this last year, and I stand behind it.

Overall, it was a fun and productive week, but really tiring. I’m far too old to be out until 1 or 2am multiple nights in a row. Back home now and looking forward to resting up.

Please follow me on Twitter for more frequent updates on web3.

Thank you for reading this post. If you would like this type of content delivered directly to your Inbox twice a week, please subscribe. I would also really appreciate if you could share this post with someone who is interested in learning about Crypto and web3.

I was up in NYC for the big annual NFT event last week. There were easily 10K+ people running around NYC at the conference and outside parties/events. They expanded the speaker list from around 500 previously to over 1,500 this year, and many of the conference halls were empty throughout the day. Like many conferences I have attended across multiple industries, the action is in one-on-one meetings outside the official event. I didn’t have a conference badge, and I didn’t need one.This year’s event came only seven months after last year’s event in November. You can read my report from the 2021 event here.

I highlighted three themes at last year’s event, let me quickly recap those. 1 – NFTs will be everywhere. This one is proving out quickly as NFTs have hit the mainstream since end of 2021. From their prominent role in pop culture on Saturday Night Live to the expansion of NFT collectibles into the NFL, MLB, and much more, NFTs are certainly popping up everywhere. 2 – The user experience will get much better. This one is still a work in progress. Dapper has opened up the Flow ecosystem and other platforms are now accepting credit cards and hosting custodial wallets, but there is a still a huge opening for a company to make the process easier for consumers. 3 – Regulation is badly needed here. This one also has a long way to go. We have seen a few criminal cases brought against some of the bad practices in the industry but still no comprehensive regulation we can point to.

Here are the updated themes from the week.

1 – The Crypto winter didn’t end the party.As I told people I was heading up to the event this year, many that I spoke with expected things to be toned down. Given the huge selloff in the Crypto market and the collapse of NFT valuations, that would’ve been a fair guess. One of the bigger participants in the market told me they decided not to host an event this time since they felt it would be a bad look. They were the outlier. The top event again this year was Ape Fest, from the Bored Ape Yacht Club team. They doled out tickets to their project holders over a multi-day party that featured top tier musical performers like Lil Baby, Eminem, and more. Madonna performed at the World of Women party. The highlight for me was the Knights of Degen event with a slamming set from Ja Rule. The NBA draft was also happening in NYC this week, so there were a ton of current and former NBA stars in town. A good number of NFL players could be found at the event as well. The party was on at NYC NFT.

2 – Builder gonna build. Dozens of great teams are still working on cool projects in collectibles, gaming, music, movies/TV and more. The market may be disrupted, but people will keep building. I heard several people talking about building products for the mainstream where the crypto component will be less prominent to users, ala NBA Top Shot. I wrote about this last month, more here. Last year, funding was abundant and just about any project could find investors. Now everyone is cautious on funding. There is a ton of cash available, but it’s not getting deployed quickly. Valuations are down, even at Seed. Less cash is available at each stage. There are still big deals being announced, i.e. $100mm+ for Magic Eden at the start of the week, but those deals were done months ago. Strong projects with great teams can still get money, the VCs are not going to return their billions back to their LPs, but the tone has changed from last year.

3 – Ponzi-like projects can still gain mass adoption, but not for long Last year, I spoke with a bunch of smart people about the ponzi-like features of the popular Axie Infinity blockchain game. Everyone knew it was bound to come crashing down, and it eventually did. This year, the same is being said of Stepn, the popular move-to-earn game of the moment. It seems like hype cycles and dreams of riches can push any project up fast, but it becomes a game of hot potato that always ends the same way. If you want to build an enduring project, you need to get the tokenomics right from the start. You need to design your project to have lasting token demand and value add to your users, or it will not survive. I did hear several people working on new ideas for move-to-earn. Someone will have a hit here soon that can stand the test of time.

4 – I’m like the only one bearish on DeFi. I still don’t get this. People still believe it’s OK to make non-recourse loans on illiquid and volatile assets like Cryptocurrencies and NFTs. Let me tell you again, it’s not. Maybe the advance rates will go lower and the interest rates will go higher, but DeFi lenders will keep doing it. I think it’s nuts. There is no way to properly charge for this type of risk, and the disclosures are inadequate. People are chasing high yields with little understanding of what they are getting themselves into. We will see more DeFi programs crash. This is only going to work by large players like Coinbase or FTX restructuring these programs to be like more traditional stock lending. These groups will need to credit check their counterparties and stand in the middle between the borrowers and lenders, like a traditional bank does. I wrote on this last year, and I stand behind it.

Overall, it was a fun and productive week, but really tiring. I’m far too old to be out until 1 or 2am multiple nights in a row. Back home now and looking forward to resting up.

Please follow me on Twitter for more frequent updates on web3.

Thank you for reading this post. If you would like this type of content delivered directly to your Inbox twice a week, please subscribe. I would also really appreciate if you could share this post with someone who is interested in learning about Crypto and web3.