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Picture yourself bullish in a bear market

Breaking down the a16z State of Crypto 2023 report

gm creators!

It's already June ๐Ÿคฏ....2023 is seriously flying by.

Wishing all of you a relaxing and ~cool~ month ahead. I'm in Texas and temperatures are already averaging above 90 degrees.

For the month of June, I'm committing myself to one post daily on this newsletter. It's a 30 day challenge and I want to make sure I can hold myself accountable.

Don't worry, I will not be spamming your inbox everyday! Instead, I'll send two weekly updates with the new posts. You can pick which ones you want to read :)

The posts will be mainly focused on web3 products, strategy & metrics analysis.

Through the challenge, my hope is that I can cover decent ground on what's popping in the crypto space. I haven't been staying up to date with all things web3 and want to get back into the game. Along with that, this will be a great exercise to flex my writing muscle again. It's been a while since I've consistently published and it's important I do so as I try to get this newsletter going! This month, I'm paying the price of entry by being disciplined.

David Perell

If you're new to The Bigger Picture, welcome! Subscribe below so you don't miss any future TBP posts ๐Ÿฅ‚

Just for today I included some coffee thoughts as it's been a while since I published my last post. I wanted to give a quick update on my life and what's top of mind for me. Feel free to skip the section below if you don't care and want to get straight to the juicy metrics!

Coffee Thoughts โ˜•

For those of you that are early subscribers and have been following my journey these past few months, you might be wondering why the heck I stopped publishing TBP podcast episodes.

Well here's why. The day after I published my Salvino episode, I tried this experiment out on Twitter where I posted history threads of different web3 projects for a few days. I started with Doodles, Cryptopunks, and a few OG NFT projects. The threads really started gaining a ton of traction and people were loving them. I eventually expanded to projects such as Uniswap, The Graph, ENS, etc. They were so much fun to write! I learned a ton about the early days of these projects.

On top of that, I booked a last minute solo trip to Portugal and decided to spend 2 weeks roaming around. It was my first time in Europe and I had a freaking blast. My main takeaway from the trip was that Americans work too hard LOL. The vibes in Lisbon and Porto were so relaxing and it felt like people took life a bit less seriously there.

Porto, Portugal

The traveling made it difficult to prep and record other pod episodes, so I decided to lean a bit further into the history threads.

As for what's next: I still have some traveling left till mid-July. I'll be going to Banff, Seattle, & Alaska! If anyone has been to these places, please reply with any must-do recs :) Instead of trying to stress myself out and get pod episodes in on the road, I thought it would be fun to try writing one daily post for the month of June and catch myself up on new web3 developments.

Let's get into it!

State of Crypto

As this is the first of 30 posts, I thought it would be fitting to start by sharing my thoughts from a16z's recent "State of Crypto 2023" report. Going through this post helped me reset and get back into the swing of all things web3.

Sometimes, it can be draining to filter through crypto Twitter and find all the amazing developments happening. On top of that, a barrage of bearish mainstream media articles can start to make even the most passionate crypto enthusiasts think the space is slowly dying.

So going through this report helped me remember why I got into crypto a few years ago and why I should be excited for the road ahead. Yes - prices are deep in the trenches right now but if we take a second to look past % losses, there's actually a ton to be excited about.

Below are a few screenshots and my takes on them.

Developer Activity

It can be easy to assume that as prices go down, the activity in crypto also goes down. However, it's important to remember that each bull market brings a ton of new talented folks into the space. Let's not forget that in 2020-2021, we saw some of the brightest engineers from FAANG companies flock over to crypto.

We're at an all time high of verified smart contracts. Projects are getting built!

Almost 30K developers contributed to, or built on, crypto projects last month โ€“ steadily increasing over 60% in the last three years.

It's also worth noting that the number of developers active on GitHub repos has stayed relatively stable since mid-2022. That's great considering the crazy year everyone in web3 has had. About a year ago, we faced the Luna crash. And 6 months ago, the FTX fiasco. Even after the demoralizing string of scams and frauds, developers have been heads down building.

NFT Utility & Activity

For those of you active on NFT twitter, you might have heard Kevin Rose flexing that though Moonbirds were down, the dollar value of the Apes are still down more. To be honest, it was an L statement and there was no need for him to compare two profile picture (pfp) projects in the space. It should be a positive sum game.

His point about the projects being down more than 70-80% since all time highs is technically valid. However, the framing makes people think that most pfp communities are failing and the founders made a bunch of big promises that they didn't follow up on.

That could be far from the truth for the blue chip projects.

Doodles just announced this week they are partnering with CAMP to build retail experiences!

And BAYC launched a game "Dookey Dash" in Q1 that garnered activity from thousands of Apes holders.

It's also essential to remember that NFTs are not just limited to twitter pfps!

In the last year, we've seen some of the largest web2 brands find ways to integrate NFTs into their core product. In the Degentraland post, I dove deep into how Starbucks and Reddit were able to onboard millions of consumers into web3 without once mentioning the word NFT.

More recently, the Bitcoin network has seen a ton of NFT activity as ordinals has been gaining traction these past few months. I'm going to dive into Ordinals in a separate post and get into the tech, projects, and metrics.


Making Ethereum Accessible

In the past quarter, zkSync and Polygon both launched their zkEVMs. Solana is rebounding from a crazy downfall after their star child SBF turned out to be crypto's Benedict Arnold. And modular chain developers are heads down still building.

Regardless if you are bearish on any one of these solutions, it's pretty clear that all of these efforts are valiantly helping reduce the network load on Ethereum.

And the reality is that it's essential builders, creators, and the community are doing everything we can in this bear market to push forward innovation in blockchain scalability. In 2021, I was paying three digit gas fees liberally. I thought the fees would go down in the bear. But here I am, still paying upwards of $50 on a single transaction! Only this time, deep in the crypto winter, the gas fees sting a lot more haha.

However, it's clear that we are beginning to see a momentum shift. 7% of Ethereum fees are now paid by rollups. I'll do a separate post diving deeper into the L2 ecosystem.


Crypto is Global

It's worth calling out that most people in America, including me, forget that crypto is global! Web3 is not just for the average Joe in Williamsburg stressed out about his Arbitrum airdrop.

In fact, the chart that most surprised me from the report was the one below! The U.S. developer share and traffic in the crypto ecosystem has gone down more than 10% since the last bear market.

Everyone building in the ecosystem must be doing so with the core principals in mind: an open, permissionless system that gives ownership & utility back to the users.

This has been mentioned by many folks in the last decade, but the reality is that most people in the U.S. and Europe will have a tough time realizing the importance of a decentralized system. A system that doesn't have corrupt middlemen and unfair government officials. For me personally, the closest I've felt to "hopeless" is when FTX halted transactions last November. Even then, most of the people I know, including me, were fortunate to lose a % of their investments. Not their family's life savings.

The Rational Optimist

The point I'm trying to get across with this post is that at times you, me, and the next person in crypto can feel stressed out looking at our portfolio. When in reality, we have to remind each other that we are all true believers in this technology and are playing the long game. It can be tough when our friends, family, and everyone else we know are constantly making us sound and feel stupid that we are in the space even after a chaotic 2022. However, the ecosystem has survived bear markets before. And it will survive this one as well.

If you're feeling annoyed about where we are in the space and feeling a bit pessimistic about the future of crypto, I suggest watching this talk by Matt Ridley (author of The Rational Optimist).

Personally, after reading the a16z report, I felt refreshed and excited to get back into the day to day web3 activity. There is so much going on in the space that it's hard to keep track of. In fact, I'm finding it harder than ever to stay on top of projects and new feature launches. Hopefully this post got you a bit more pumped as well! I'm excited to crank out daily posts this month and catch up with what's been happening.

The bulls are hungry....let's feed them. I made this using Midjourney - trying to practice my prompting skills ๐Ÿ˜‚. I meant for this to be way cooler but I'm tired so this will have to do.

If you have any topics, products, features, collaborations, etc. you want me to cover, please let me know! I'm always excited to hear fresh ideas.

What are projects you've been watching this past quarter?

Any interesting metrics that caught your attention recently?

Has your day to day crypto products changed in the last year?

Let me know!

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ยฉ 2023 The Bigger Picture by Yash Bora