🫂 We Read State Of Crypto Report For You. Here is a quick summary of it
We read 56 pages report on web3 for you so you don't have to do it.
gm degens 😻
Not much happening in the markets. Besides Terra Luna Saga. It still keeps going. We will not be covering it anymore unless there is any important development on it, but you can read our previous newsletters on it if you want to learn more.
We have BTC and ETH staying at the same levels pretty much. Total crypto market cap is sitting @ $1.24 trillion. Same on NFT space. Most of the projects are sitting at pretty much same levels they were a week before, besides Solana NFTs which are growing in popularity lately.
Today’s newsletter will be entirely dedicated on the State of Crypto Report released from a16z. a16z is a private VC firm with ~$28 billion AUM (assets under management). The reason why we pay attention to them is because they have been early investors in a lot of companies we see today. Even in the crypto space. They are investors in OpenSea, Uniswap, Solana, Coinbase, Avalanche, Dapper Labs, Nansen, Yuga Labs (founders of Bored Ape Yacht Club) etc.
Report itself is 56 pages long. I know all degens who read this newsletter are passionate about reading books and stuff (no sh*t). However, this time, I got you covered. Feel free to read the entire report here, but if you want to get a quick summary that you can read during lunch, then keep reading.
☂️ Web3
They start with the importance of web3 as a new era. While before you used to write content (either a blog or any social media content), which content you did not own it. Now, with web3, you will be able to own a piece of it and benefit for the rest of your life.
web1: read
web2: read, write
web3: read, write, own
They even argue that in web2, almost entire value was going towards Investors portfolio, while in web3 it is shared evenly among users, creators, builders and investors.
They added this cool chart in there that shows active addresses and daily transactions for the most popular blockchains. Seems like Solana is leading in terms of active addresses as well as daily transactions (btw, they are investors in Solana🤭), followed by Binance Chain and Polygon. Ethereum blockchain is the 4th in ranking, this because of the higher gas fees.
According to their report, there are only 4k monthly active developers (yes, you read that right, only 4k) on Ethereum blockchain. The rest are not significant. It is almost unbelievable to think such a low numbers of developers because we feel like there are millions of people involved in the space. Most of them (*us) are here for speculative purposes, until this hype phase is gone. Those who are building are quiet. So this would be your perfect train to catch if you want to be early involved in the space.
👔 DeFi
According to their report, a huge part of the world is not being covered by existing financial institutions:
1.7 billion people have no access to bank accounts
From those unbanked, 1 billion have access to a mobile phone and 480 have internet
$650 billion in global remittances annually, with an average cost of 6%
48% of the adults have not sent or received digital payments in the past year.
Total Value Locked in DeFi is currently sitting at ~ $200 billion. Btw, to calculate TVL for DeFi money markets, you simply divide current market cap by the max supply and the current price.
Decentralized exchanges and lending protocols are among the most popular DeFi cases, with Uniswap being a leader on exchanges and MakerDAO on lending protocols.
In terms of Assets Under Management, DeFi would be the 31st largest US bank (for comparison JP Morgan is biggest US bank and has well over $3 trillion AUM).
👗 Stablecoins
There are three types of stablecoins:
Fiat backed (Backed by fiat currencies, cash equivalents, or other assets)
Crypto backed (Backed by crypto assets held in smart contracts)
Algorithmic *does this ring a bell?! of course, $UST LUNA (algorithmically balances supply and demand).
There has been an increase on demand of stablecoins since 2021 as seen from the chart below, with USDT leading. Total market cap around $171 billion. This is still a really small fraction of world’s money supply (for comparison, money supply in US is around $21 trillion).
🎩 NFTs
The NFT market remains hot according to their report. If you check the chart below, you see that in terms of secondary sales traded volume on weekly basis , it has been constantly increasing, although we had a dip on February this year. We are currently sitting at $1.3 billion weekly sales volume, mostly coming from secondary sales.
One of the key points in the section where they talked about NFTs is the part where they talk about profits for the creators. Keep reading, this will definitely get your attention and hopefully you will get involved soon yourself.
Estimated Creator Revenues by Source (2021):
Let this sink in. During 2021, there were 22k creators in NFT space who on average got $174k each. Compare that with Facebook, who got 2.91 billion users where the average profit per user was 10 cents. Although YouTube seems very lucrative sometimes (especially if you see those influencers videos “how I became millionaire when with x”). The average profit per channel is $2.47.
🪖 Web3 Gaming
I know, it seems a lot to go through. But this sh*t is fun. There is a huge opportunity coming from gaming related NFTs.
20% of NFT sales volume in 2021 was gaming related-assets
49% of crypto wallet activity comes from games
50+ live web3 games with more than 1k unique on-chain users.
As we know, Metaverse land has been insane. Almost $2 billion in land sales only, with Otherside leading ($741 million in sales), followed by Sandbox ($344 million in sales) and Decentraland ($304 million in sales).
To end it on a high note, they have added this cool chart where they compare web3 with early days of internet. It is following pretty much the same trajectory. We have 7.5 million Ethereum users today.
Guess what?! We are still early. If you are reading this, it means you are so early that you can achieve anything you want if you commit your time to build skills. Hype comes and goes. After you get yourself with a couple of NFTs, leave that on a side and keep building stuff. That’s where long term value comes from.
Okay, I am outta here. Long but worthy topic to write about. All this thanks to a16z. You can read the entire article here.