Andreessen Horowitz, a leading crypto VC firm (a16z), released a report that provides an annual overview of current trends and the state of the industry. The paper reiterated Andreessen Horowitz’s bullish views about Web3, projecting long term growth ahead of the sector. It also addressed the dominant position that Ethereum holds among layer-one cryptos.
Web3 is fairer
A16z summarized the report in a few observations, focusing primarily on Web3 and Ethereum. According to the VC giant, the recent market selloff could be a sign of a seasonal downturn. However, he maintained that the crypto-powered Web3 could offer one of the most exciting opportunities in the next decade.
Web3 is more fair than Web2 giants Meta, according to the company. Its data shows that in 2021, the primary sales of Ethereum-based NFTs and royalties from secondary sales on OpenSea generated a total of $3.9 Billion. This is four times more than what Meta has paid its creators through 2022.
YouTube and Spotify paid $15 billion and $7 million respectively to their creators in 2021. However, the report revealed that each artist on Spotify received $636 and $2.47, respectively. The firm, however, categorizes NFT collections as Web3 Creators and says that there are 22,400 Web3 creators. Web3 paid $174,000 per creator.
A16z credited DeFi as a disruptor in the traditional finance industry. It also identified blockchain projects such as Flowcarbon, Helium and Spruce, which could be strong candidates to solve real-world problems by leveraging DLT strengths in privacy and transparency and decentralization.
Ethereum is still dominant, but faces challenges
The report also highlights Ethereum’s advantage over other layer-one cryptos such as Fantom and Solana. The second-largest market cap blockchain, Ethereum, has nearly 4,000 active developers per month. This is more than its primary competitor Solana with around 1,000.
The report did note that Ethereum’s focus on decentralization has made it more appealing to users than other networks, due to the promise of lower fees and better performance.
It’s still early
A16z compared Web3 to the early commercial use, and analysed the current number of users. This is approximately between 7 million and 50 million. It says:
“The internet had 1 billion users in 2005. This coincides with the time that web2 was created during the creation of future giants like YouTube and Facebook.”
The firm saw blockchain as a “hit product”, just like PCs and broadband in 2000 and the 1990s, and mobile phones in the past decade. They predicted that there would be multiple winners in this race.
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