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a16z Releases 2022 State of Crypto Report: 5 Key Takeaways

a16z crypto | Daren Matsuoka, Eddy Lazzarin, Chris Dixon, and Robert Hackett | May 17, 2022

Total AUM by bank including defi - a16z Releases 2022 State of Crypto Report:  5 Key Takeaways

This report is the first of what will be an annual overview of trends in the crypto industry, shared through the a16z crypto vantage point of both tracking data and across the countless entrepreneurs and builders we meet. It’s for anyone who seeks to understand the evolution of the internet, and where we are on the journey towards a decentralized, community-owned-and-operated alternative to the centralized tech platforms of web2 – especially as it touches creators and other builders.

5 Key Takeaways

1. We’re in the middle of the fourth ‘price-innovation’ cycle

Although crypto can be volatile and its cycles seem chaotic, there is an underlying logic at work, as Chris and Eddy first pointed out in 2020. (See slides 9 through 12 in the deck.) Whereas prices are often a lagging indicator of performance in some industries, in crypto they are a leading indicator. Prices are a hook. The numbers drive interest, which drives ideas and activity, which in turn drives innovation. We call this feedback loop “the price-innovation cycle”, and it has been the engine that has propelled the industry through multiple distinct waves since Bitcoin’s inception in 2009.

See:  Crypto Payments Report 2022: How digital currencies are revolutionizing commerce, corporates and culture

Analysts at Andreessen Horowitz wrote in a blog post Tuesday announcing the firm’s inaugural “State of Crypto” research report:

Price are a Hook.  The numbers drive interest, which drives ideas and activity, which in turn drives innovation.

2.   web3 is much, much better for creators than web2

The take-rates of web2 giants are extortionate; web3 platforms offer fairer economic terms. (See slide 39 in the deck.) Compare Meta’s nearly 100% take-rates across Facebook and Instagram to NFT marketplace OpenSea’s 2.5%. As U.S. Congressman Ritchie Torres noted in a recent op-ed:

“You know something is profoundly wrong with our economy when Big Tech has a higher take rate than the mafia.

NFTs are the start of what is next for the creator economy, Dixon said. NFT (non-fungible tokens) creators earned on average $174,000 per creator in 2021. Music platform Spotify, which hosts 11 million artists, earned on average $636 per artist in 2021, the research report noted.

3.  Crypto is having a real-world impact

Creator payouts are just one example of crypto’s benefits; there are many others.  Consider the financial system. The status quo has failed many people: More than 1.7 billion people don’t have bank accounts, per the World Bank.

See:  Giving block reports, Crypto philanthropy jumped nearly 16x in 2021

Demand for decentralized finance or DeFi, and digital dollars, has increased dramatically in the past few years, even after accounting for the recent downturn, as the accompanying slides show. (See slides 26, 28, and 33.) For underserved and unbanked populations – 1 billion of whom have mobile phones – crypto offers a shot at financial inclusion. Projects like Goldfinch are expanding access to capital that would otherwise be unavailable in emerging markets.

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NCFA Jan 2018 resize - a16z Releases 2022 State of Crypto Report:  5 Key TakeawaysThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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