📈 📉 Macro / Headlines / Trends
Wholesale prices were up sharply, joining other indicators (used cars, retail shopping) that inflation is alive and well. The stock market slipped on the news as investors absorb expectations of more rate hikes, and interest rates likely staying elevated for longer.
Bitcoin jumped 11% this week, sparking discussion about why. Some larger players were shorting BTC and had their positions liquidated (which boosted the price).
As NLW explains (podcast link above) two other explanations are related:
- The "extraordinary measures" enacted to keep the government running amount to injections of liquidity - freeing up funds that get invested in more risky assets like BTC.
- The Fed tightening may have driven liquidity to a cyclical low that it is starting to come off of...again freeing up funds that go to riskier assets.
If this holds true we could see continued rise in risk asset prices until the summer timeframe when the debt ceiling matter has to be resolved.
"Mass-Extinction Event" for web3?
Implications over the next year
As shared in S3T recently, respected VC Tom Loverro tweeted about a mass extinction event for startups over 2023-2024, and the reason for it: easy money spawning more startups than the market could absorb, many based on unproven assumptions and unsustainable models.
Its reasonable to believe that a similar culling out is in store for web3 and crypto projects for 2 reasons:
- Way too many undifferentiated contenders, most with vague value propositions. The spaghetti-on-the-wall era for crypto is over - too many projects, not enough differentiation or traction for most of them.
- Some claim to be addressing the shortcomings of the leading projects but ignore the possibility of those leading projects might actually be improving on their flaws. A host of Layer 1 blockchains all claimed to be Ethereum killers, compelled by a belief that Ethereum was hopelessly flawed. With the Merge, the Ethereum community showed that it can execute very complicated transformations while preserving operational integrity. The value proposition of the "Ethereum killers" is unclear at this point.
Regulatory uncertainty/hostility and global economics will make survival even more challenging.
Who survives? Whoever solves 2 problems...
I think the survivors will be the ones that are most effective at making their platforms easy and safe to use. This will do the most to buy them the good graces of regulators and bring them the mass adoption they need to survive.
Crypto and web3 projects as a rule still struggle with 3 problems:
- They aren't easy to use. I could give example after example of non-intuitive, illogical and usually undocumented or very poorly documented procedures that you have to do in order to perform basic tasks. There aren't enough user experience experts in this space yet.
- They are risk and error-prone. It's too easy to do something wrong and suddenly lose your money or your digital assets. It's too easy to get scammed. Or just be stuck in a loop of wasting time, trying something over and over again that apparently worked for someone at some point, but very clearly isn't working now.
- Lack of consistent user support. Discord and online forums are littered with channels full of users asking for help with bugs and glitches, and getting no solutions. Over and over again you can retrace the same sad story: Some developer got some function to work within some narrow set of parameters, but never tested or finished it, and moved on to some other more interesting project. Now that function is part of some deceptively cheerful step-by-step instructions for "Monetizing your Content on our Web3 Platform" or "Building your first blockchain app". You try it and it doesn't work. You go to the community and post screenshots and no one in the entire world has any clue about why it's not working.
All 3 of these issues will either get solved or will they'll keep the user community (and the industry) small. Yes, crypto has had respectable market cap dollar amounts - but that's fair weather friends from Wall St making FOMO-based investments. If you track the actual user bases of decentralized apps (for example on DappRader) they are tiny, compared to the typical Target Market you'd expect for a successful app or digital product.
My advice to any crypto/web 3 project that wants to grow a user base large enough to still be around in 3 years: Find top notch UX designers and put them in charge. Let them design a good experience for every stakeholder: end users, developers, system operators, investors, regulators etc. The technology itself is more than capable of delivering. We just need talent focused on the right things.
🔎 Closer Examination: The Evolution of Social Media 2023 Onward
Time ticking away for Social Media
The industry that stole so much time from so many people is now running out of time. A new era for advertising is being forced into existence.