Home Networking company Crypto VCs Can’t Just Buy ‘Community’ – TechCrunch

Crypto VCs Can’t Just Buy ‘Community’ – TechCrunch


Hello everyone and welcome to Chain reaction

In our Chain Reaction podcast this week, Anita and I chatted with Kevin Rose of True Ventures and Proof Collective about the latest crypto crash and what the future of NFTs looks like in a bear market. More details below.

Last week, we talked about regulators’ efforts to chase down crypto crime. This week the markets crashed and a new breed of crypto startups are likely about to find out that you can’t pay for loyalty.

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the hottest plug

This week has been a doozy for crypto investors, there is no other way to put it. But it was a different kind of doozy from the crashes that came before it.

For a quick summary, hundreds of billions of value were wiped from the global crypto market capitalization this week as major coins like Ethereum and Bitcoin saw major declines while other blockchain networks essentially imploded. Hundreds of thousands of crypto investors have been liquidated on trades as tokens crashed indiscriminately across the board, while the Terra stablecoin fiasco – which my colleague Jacquie has plenty of detail on here – appears to have evaporated tens of billions of crypto wealth in a day or two.

For long-time crypto traders, the wild downward pressure in the markets may seem like old hat, but the amount of money lost and the number of people losing money is an order of magnitude. more important than ever before because the crypto markets have grown so dramatically during this bull run. If crypto markets continue to go to hell in a hand cart, there will be a lot of lasting damage when it comes to consumer onboarding, as Web3’s paid acquisition budget runs out with volumes. reduced.

After several years of retail investors Robinhood and r/wallstreetbets playing public stocks, consumers were ready for crypto and the industry welcomed them with open arms. For the past two years, venture capitalists have been betting on consumer-facing crypto verticals, gamifying the investment with real games that boasted tokens and NFT integrations. All the while, web3 acolytes have been touting “community” as one of the key features of crypto platforms, explaining that giving users a financial stake in the platform will get them to take action. in the best interest of the platform and to spread the gospel accordingly.

This all went pretty well during the “up-only” era of this crypto bull run, but now comes the interesting part.

Giving users financial incentives to take advantage of your product works well enough when those financial incentives exist, but things look a little different when the air is taken out of space and users are left with the bare platform and without interest. Play-to-Earn game companies have raised billions for games that are only fun when you get rich and otherwise horrible. NFT projects have also led users to adopt collectible card-like mechanics that are only fun when the cash is flowing. Meanwhile, VCs have funded Web3 media companies, publications, and social media companies that all rely too heavily on crypto speculation while generally shipping bad products.

Some might read this as a blanket indictment of crypto ponzinomics, but the other way to read this is that in the web3 gold rush, blockchain founders forgot what it meant to love something because it was a great product and over-indexed for the sustainability of consumer greed or financial desperation. Now, the crypto market may rebound tomorrow, but it will still be true that you can only pay loyalty for so long.

module #4: Kevin Rose

Hello, Anita still here. On the Chain Reaction podcast this week, Lucas and I talked about the looming crypto winter for investors. Overall, public stocks are taking a hit right now, with the S&P 500 falling for five days in a row while crypto-related companies such as Coinbase and Robinhood bear the brunt of market fears.

Cryptocurrency prices are also plunging. Bitcoin, the world’s largest crypto by market cap, is down more than 50% from its November peak. It has fallen below $30,000 a few times over the past two days, which analysts say marks a crucial threshold for the coin – if it continues to fall, losses are likely to continue to mount. . The ongoing fiasco with Terra’s stablecoin UST, which is partially backed by Bitcoin, is certainly not helping the situation.

But crypto bulls like to talk in decades, not days, and tend to have a stomach for volatility that isn’t present in the broader market. This is far from the first time Bitcoin prices have crashed, so it’s worth looking back in time and seeing how Bitcoin fared throughout the last great crypto winter in 2017. At the beginning of this year, Bitcoin peaked at $20,000, but fell below. $12,000 in late December as hacks, regulation and investor jitters hit a fever pitch. It only started appreciating substantially in value again in late 2020/early 2021 when it finally broke above the $30,000 mark, where it has (mostly) stayed above since.

This time around, things might be different for the OG cryptocurrency. Many more retail investors now hold Bitcoin, and only time will tell if they can afford to weather the storm. Additionally, Ethereum and emerging blockchains like Solana have already eaten away at Bitcoin’s competitive edge. You can read more about the issues plaguing Bitcoin and what its backers are doing to help boost it in my latest feature here.

Be sure to check out this week’s episode of Chain Reaction to hear Kevin Rose, co-founder of viral project Moonbirds NFT, share some words of wisdom amid the recession.

Subscribe to Chain Reaction on Apple, Spotify, or your alternative podcast platform of choice to follow us every week.

Anita Ramaswamy

follow the money

Where startup money is moving in the crypto world:

  1. Crypto exchange KuCoin raises $150 million from Jump Crypto.
  2. Crypto trading company Talos raises $105 million from General Atlantic.
  3. NFT Infrastructure Protocol Co:Create gets $25 million from a16z.
  4. NFT Marketplace Protocol Zora gets $50 million from Haun Ventures.
  5. web3 game start LootRush raises $12 million from a16z and Paradigm.
  6. NFT Boot Arianee snatches $21 million from Tiger.
  7. Starting the NFT checkout Paper snags $9.3 million from Electric Capital and Initialized.
  8. web3 community start Emphasize earns $11 million from Haun Ventures.
  9. NFT Media Boot Dirt gets $1.2 million from Collab+Currency.
  10. Starting the crypto game MechaFightClub earns $40 million from a16z.

analysis added

Terra’s UST crash will make life harder for crypto as regulation looms
Over the past week, stablecoins have taken center stage in conversations in the crypto world as a number of factors rock the industry. As the crypto market reacts with bearish sentiments, a major question arises: what does this all mean for the future of stablecoins? A number of market players have weighed in on what the road ahead might look like.

Shark Tank’s Kevin O’Leary Talks Crypto and Why He’s a Stablecoin Pro
Speaking of stablecoins, Shark Tank’s Kevin O’Leary sat down with TechCrunch to share his thoughts on a number of crypto-related topics, such as crypto regulation and why he’s pro-stablecoin. We also discussed institutional companies entering the space and the type of crypto-focused business he would create if he decided to, among other things.

Coinbase’s NFT market gets off to a lackluster start
In other news, Coinbase NFT launched its beta mode three weeks ago from today but still hasn’t been adopted even after opening its doors to the public last week. Anticipation of where he should be right now hasn’t matched expectations, a source said, and it’s unclear if it will ever happen. Given the scale of Coinbase’s crypto exchange, one would think that its NFT market would also succeed, but others say that’s unlikely and its approach to entering the space.

Jacquelyn Melinek

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