18 Jul 2022
Post FTX: Current Crypto Market Outlook and Future Trends
Panelists:
Derek Lim — Head of Research, Spartans Labs
Tobias Bauer — Principal, Blockchain Founders Fund
Moderator — Samuel Loke, Ventures Lead, Salad Ventures
Attended by nearly 40 participants, this virtual event saw a lively discussion on the outlook for Crypto and the related topics of NFTs and Metaverse in the midst of the “crypto winter” and the drastic plummet in value of crypto assets that’s been ongoing for the past several weeks.
So, what is the future of Crypto and its ecosystem?
1. What’s been happening on the Crypto front?
Derek: The cryptocurrency industry has recently experienced some significant events. The collapse of Luna (Terra) had a ripple effect on the market, and three major crypto companies like 3AC and Celsius filed for bankruptcy. Despite these negative developments, there are some positive things happening in the industry. For instance, Magic Eden, an NFT marketplace, managed to raise a significant amount of funding. Also, the upcoming Ethereum merge is a promising development, and Tag Heur watches are now capable of displaying NFTs. In addition, Gamestop and Reddit launched their own NFT platforms, while STEPN released some bullish earnings news. Lastly, Polygon's selection for the Disney Accelerator Program is a promising indication of the cryptocurrency's potential future growth.
Tobias: From an investor's perspective, there has been a shift away from token-focused investment and it's advisable to regroup and wait to see if markets bottom out. The gaming and metaverse landscape is different now and is more focused on better risk management rather than hype. Although ticket sizes for investment have reduced, deal flow is still hot, with examples like GRID, a game-maker platform that raised $600k recently. Despite the uncertainties of regulatory frameworks, changes for the better are expected, even though it may be challenging in the short-term. These are still exciting times as the recent events have reduced noise and allowed true builders and believers to surface.
2. What exciting and new projects are happening for both of your companies?
Derek: Our company is currently focused on building original ideas, leveraging our team of full suite resources of builders. We take a methodical approach to validate and test our ideas before onboarding partners from Web2/2.5 to execute the idea. We are pleased to announce that we have already formed a few partnerships. Additionally, we are actively exploring opportunities in the NFT/Metaverse spaces. As a forward-thinking organization, we are always on the lookout for innovative ways to create value for our stakeholders, and we believe that these areas hold great potential.
Tobias: The investor is currently running six deals, including a multi-signature securities solution that has been popular with small family offices and funds. Another deal of interest is with Limewire, which has relaunched to sell music NFTs. GRID, a no-code gaming platform, recently raised USD 2.7mn in a seed round, with Paris Hilton also investing in their token. While there are many exciting things happening, the investor is still waiting to see a quicker way to monetize or launch a product that is different from the bull market.
3. Metaverse (MV): what excites, what are trends and how will it evolve?
Derek: The full version of the Metaverse is not expected to be available for at least one to three years. My vision for the Metaverse is to help reduce the friction between humans and technology, which can ultimately solve the issue of technology replacing manual labor. This is because those who are at the bottom of the labor "triangle" often cannot adapt and learn new technology quickly enough. However, by empowering people to adopt technology more easily, we can reverse this trend. For example, grandparents may find it difficult to learn how to use Excel, but with the Metaverse, they can use their eyes and limbs to learn, which would be very powerful. One example of how the Metaverse can be used is by cyber security firm ProtectWise, which has embraced the Metaverse to allow employees to de-bug programs by entering a virtual environment and identifying issues by grabbing servers and dropping them into a virtual space.
Tobias: As an investor, navigating the vast landscape of the Metaverse can be challenging as thousands of Metaverse projects are being developed for various purposes such as gaming, education, and events. The question of whether there will be a few large Metaverses or many niche ones, and whether the industry will be fragmented or concentrated, remains unanswered. Additionally, hardware limitations make it difficult to create an immersive experience for users. While buying land in the Metaverse is intriguing, the utility of the land is a key concern. As an investor, the focus is on infrastructure projects that can serve multiple Metaverses, rather than on specific projects' technology, graphics, or design. Real-world applications such as insurance and branding can be brought into the Metaverse to increase its usefulness. However, while bullish on the industry, it is still too early to bet on specific projects. Greater mass adoption is needed, and time spent in the Metaverse must increase, particularly after the pandemic. Finally, the Metaverse's use needs to extend beyond asset appreciation.
4. Outside of the MV, any other trends you are excited about?
Derek: The DeFi market cap and TVL (Total Value Locked) crashed by 75% in three months across various domains. However, this crash is beneficial as it removes the noise and distractions. True builders and those who genuinely want to see the industry flourish and grow come to the fore, instead of just focusing on APRs and "farm and dump" schemes. Investors are now excited about players who are driving for real value and revenue generation, instead of just "milking" and "bootstrapping" investors for short-term gains. The investors are optimistic about the "second coming" for the DeFi space, which will be driven by true builders and believers.
Tobias: I am excited about the infrastructure play and believes that there is a need to bring more capital and people into the space. They suggest that a typical VC structure may not be the best approach and instead propose a more diversified approach that would give creators and communities access to capital and incentivize them. The speaker finds gaming to be an interesting space but acknowledges that the right economies have not yet been found.
5. How can people interested in pursuing a career in Web3 take first steps into the space?
Tobias: It's important to do thorough research when considering investing in the cryptocurrency space as it is evolving rapidly. It's crucial to understand why you want to invest in this space and avoid viewing it solely as a gambling opportunity. Cryptocurrency has multiple applications in finance, operations, technology, gaming, and ownership. To make informed decisions, it's essential to have a clear understanding of the underlying concepts and ecosystem. Your background and expertise should also align with the areas you choose to invest in, for example, if you have a finance background, DeFi may be of interest to you. By understanding the space and your own strengths, you can make better-informed decisions about investing in the cryptocurrency market.
Derek: When considering entering the crypto space, it is important to understand your motivations and goals. There are three main categories to consider: Web3 for those who believe in the cultural movement, Blockchain for those who are passionate about building from scratch and having a direct impact on a nascent space, and Crypto for those interested in the commercial and business side of things such as yield farming and designing tokenomics. It is crucial to have a clear understanding of your "why" for entering the space, which will guide your decisions and help you make the most of your experience.
6. What kind of “last advice” would you leave the audience with in regards to this space?
Tobias: In the fast-paced world of cryptocurrency and blockchain, it's important to keep your eyes open and stay informed about the latest developments. The space is constantly changing, with new preferences, technologies, and adoption points emerging all the time. To stay ahead of the curve, it's important to keep up to date with the latest news and trends. This requires doing your research and staying informed about the latest developments in the space. By staying informed and up to date, you can stay ahead of the curve and make better decisions about your investments and your involvement in the space.
Derek: It is important to understand why you want to engage in a certain endeavor, especially in a fast-evolving space like the crypto industry. You need to have a clear idea of what you can contribute and what your value add is. By having a solid understanding of your motivations, strengths, and skills, you can better position yourself for success in this space. This can involve identifying what you are passionate about, what skills you can bring to the table, and how you can contribute to the larger ecosystem. By being clear about your goals and what you bring to the table, you can differentiate yourself and stand out in a crowded and competitive industry.
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