Crypto State: Good or Bad?

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a16z released its new State of Crypto report.

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A16z launched its own tool.

State of Crypto Index is a tool that tracks the development of web3.

The numbers reflect the innovation and adoption levels. They drive crypto’s market cycles.

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How do they calculate the index?

It’s a mix of innovation indicators and adoption indicators.

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Innovation Indicators

Key Metrics:

• Active Developers

• Contract Deployers

• Verified Smart Contracts

• Job Search Interest

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Adoption Indicators

Key Metrics:

• Active Addresses

• Transactions

• DEX / Stablecoin Volume

• Transaction Fees Paid

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It’s interactive and updated monthly.

You can customize the weights and thresholds according to your preferences.

Weights: how much impact each category has on the overall calculation

Thresholds: the minimum value for a category to start contributing to the index

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3 Key Takeaways from the Report:

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1. Clarification of Web3

Web3 is more than a financial movement,
it’s an evolution of the internet.

• Open decentralized protocols: 
email (SMTP), web (HTTP)

• Community-governed

• No value accrual to the network

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Blockchains are more than ledgers, 
they are computers.

• Decentralized blockchain networks: Bitcoin, Ethereum

• Advanced functionality

• Network design has economic consequences.

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Crypto isn’t just a new financial system, 
it’s a new computing platform.

• Tech innovation

• Code-enforced rule

• Transparent operations

• Resilient

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2. The “price-innovation” cycle continues today.

The underlying logic is that:Rising prices are a leading indicator for innovation.

Numbers generate interest, which spurs ideas and activity, which leads to innovation. This positive feedback loop has held true since Bitcoin’s creation in 2009.

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Web3 is more than a financial movement, it’s an evolution of the internet.

• Open decentralized protocols: 
email (SMTP), web (HTTP)

• Community-governed

• No value accrual to the network

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3. Key facts you need to know:

a. Ethereum now consumes 0.001% of the energy that YouTube consumes annually.

The merge from September 2022 has reduced ETH’s 99.9% energy consumption.

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b. The zero-knowledge field is taking off.

Blockchains use ZK proof for speed and privacy. Several ZK-EVM projects are launching, including @zksync, @0xPolygon zkEVM, and @scroll_network.

Daily transactions verifying ZK proofs on Ethereum surged. Numbers of ZK-related academic publications by year remained high.

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c. More people in DAOs than you imagine:

Total votes: 13M
Unique voters: 1.9M
Unique proposals: 78K

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d. U.S is losing its lead in web3.

Many others are catching up: Estonia leads in digital identity systems.

Switzerland has the advantage for its favorable regulatory environment and blockchain startups. Asia Pacific region is expected to hold the largest share of the crypto gaming market.

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e. NFTs are the “entrances”.

You might have already noticed this:
 Big name are entering web3.

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Smoothie’s Key Takeaway:

Innovation alone can’t go far.

The market sticks to “supply and demand”.You have to build things that people NEED.

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