If the crypto selloff has the crypto industry rattled, you wouldn’t know it at Consensus 2022 in Austin, Texas this past weekend.
For one, crypto hype lingered heavily in the hot Texas summer air. Apart from the teeming crowd of 17,000, the event featured multiple McLarens, swarms of mainstream and crypto press, hundreds of gamified booths designed to draw in attention, protocol-specific meetups, high quality parties, and the usual parade of eccentric and well-informed individuals.
More importantly, however, attendees, exhibitors, and speakers exuded a surprising air of confidence and optimism that was not present in previous conferences held during market downturns. The overarching theme was that market conditions are perfect for quality projects to focus on building products that matter — without the distraction of “number go up” speculation.
As I look back at the event, here are five major takeaways from Consensus 2022:
1. Private market valuation expectations are resetting
A downward re-rating in public crypto markets, weakening project fundamentals, and negative macro factors have put downward pressure on private market valuations. Many publicly-trading token valuations are underwater from their most recent private fundraising rounds and the private markets are now starting to adapt to this pricing dynamic. Market confidence is a huge factor for VCs, and it seems like many crypto funds expect both public and private prices to go down for the remainder of the year, which inevitably means a slower-paced deployment of VC funds into early stage crypto startups. Expect more reasonable valuations, less noise, more signal, and good quality tokens on steep discount.
2. Projects are getting more sophisticated, and picky, with token distribution
Gone are the days of ICOs and airdrops to unknown users and speculators. The top projects understand that building crypto networks is hard and boils down to one thing: quality communities that use the network’s token and contribute to its growth. Teams launching tokens are increasingly interested in allocating tokens to individuals who have previously demonstrated value-add activities and positive on-chain behavior: stakers that will secure the network, developers who will build on the protocol, voters who participate in governance, degens who will supply liquidity, and other users of the protocol. Every quality project wants the same thing: engaged users that can kickstart the positive feedback loop of protocol growth.
3. Not play-to-earn. Just play.
The gaming panels attracted some of the biggest crowds at Consensus, with many of the world’s top game publishers and developers in attendance. One common narrative across these panels was that while the play-to-earn model that offers financial incentives to users has been a major driver of the category's success, it is not a sustainable model. For blockchain-based games to be successful, they need to be “fun.” What is the applicable definition of “fun”? According to Jason Brink from Gala Games, it boils down to a simple question:
“Would I be playing this game if I wasn’t getting paid to?”
For most gamers, the concept of “gaming” and “work” are on opposite ends of the spectrum — gaming is about decompression and enjoyment, not work. Top gaming publishers understand this and are developing a new generation of fun games that will allow users to own in-game assets and trade them on secondary markets. We look forward to supporting these game ecosystems on CoinList.
4. Guard-railed bridges to Web3
The term “Web3” arrived with a bang in 2021, used as a moniker for the decentralized tech movement. The central thesis is that we are going from an internet built on “rented land” with monopoly overlords, to an internet owned by the builders and users, supported on rails powered by token economies. That transition will take time however, and the average user experience of Web2 software is still far superior to that of Web3 software.
First-time users face many challenges in transitioning to Web3, such as learning about crypto, buying crypto with fiat currency, and ensuring their activities stay legal, safe, and compliant. As extensively discussed at Consensus, the companies that can best support and partner with Web2 users in their journey to Web3 are oftentimes centralized exchanges. Gaming, DeFi, and NFT onramps by platforms like CoinList, Coinbase, Binance, FTX, and Huobi can de-escalate fears of Web3 and accelerate its adoption. Users will be able to experiment with DeFi products, learn about the best crypto games and guilds, explore NFTs, and trade the best Web3 tokens on tested, regulated and secure centralized platforms. Expect many more guard-railed bridges to Web3 from CoinList and other platforms.
5. The future is omnichain
The need for interoperability and composability among blockchains has always been a hot topic at crypto conferences, and Consensus 2022 was no different. As more ecosystems like Cosmos, Solana, and Avalanche gain traction, bridging technology has significantly matured. Cross-chain bridges like Axelar allow users to hop between Ethereum, Cosmos, Solana and other blockchains quickly and easily.
Bridges are critical in enabling composability between different smart contract platforms. Because smart contracts can be programmed to interact with one another, they make crypto composable, like legos or building blocks. This allows developers to bootstrap their own projects and communities without having to build everything from scratch. And because the composable nature of open source software allows anyone to take existing programs and adapt or build on top of them, it will unlock completely new use cases and token networks that don’t yet exist.
The more the underlying bridging technology evolves, the more the connectivity between isolated blockchain ecosystems will increase. By extension, as connectivity increases, the user experience and engagement across the Web3 ecosystem of blockchain gaming, NFTs, DeFi, and other categories improve in kind.
TLDR: We're looking at more building, market pain, and token sales ahead. I can’t wait for Consensus 2023!
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