Today is a pivotal and dangerous moment for crypto. In my twelve years in this space, I have never seen the conditions we are experiencing now, even in our most bearish cycles.
Individually, these signals would be disconcerting. Together, they are signs of a major potential crisis. What happened to calls for public services or integrating the next billion?
The first major concern is that fewer manufacturers are seeking smart contract audits, which has come up time and time again in my conversations with auditing companies (and evidenced by Yearn’s recent smart contract exploit). This is a typical standard procedure before the launch of any decentralized application (dApp). It’s not because they’re happy to launch without it: it’s because new dApps don’t exist. Builders – developers, founders wanting to launch apps that people want to use – wait for the environment to improve or abandon crypto. They are not interested in creating what are, frankly, easy applications or simply replicating what already exists – like financial applications, tokenized funds, etc.
Second, there is very little encouragement, support, or funding from investors for utility applications, which are much more difficult to build and (usually) take longer. Unless an application has the potential for a 1,000x return in a short period of time in some sort of DeFi program, it simply won’t be funded or “supported”, forcing builders into a corner. In other words: if you’re a blockchain-savvy founder with a great idea, you might find yourself in an impossible position from the start.
Instead, investments in our space currently focus on pure pursuit of short-term profits, such as memecoins, manipulation of insider knowledge, multi-layered DeFi protocols without enough transparency, and over-leveraged trading. And where the money goes, the attention goes, which is why we hear less and less about blockchain-based products or use cases. Instead, we are inundated with headlines and podcast episodes about ETF entries/exits, DAT performance, trading tips, and more. This only further deceives and confuses retail investors who buy into these illusions, which are not made for amateurs, without understanding the devious behavior that occurs behind the scenes.
Worse, this focus on the pursuit of profit rather than real blockchain-based use cases is perpetuated by many of our industry “leaders.” They could push for the entire global monetary system to be migrated on-chain for greater efficiency and transparency, or for the use of blockchain and crypto to actually improve our societies, for example by encouraging sustainable actions or healthier behaviors. But instead, they are adopting (and implementing) a new, more dangerous breed of middlemen.
It is these intermediaries and their financial products that have introduced harmful and intentional complexity and obfuscation into our previously transparent markets. And in doing so, they reached an incredible level of greed and theft.
Take the recent October 11 sell-off as an example: we still don’t know the full impact of what happened, except that retail investors are still paying the price while those in power negotiate their own recovery.
Cryptocurrency and blockchain were invented to exterminate financial oligopolies and democratize access to a new era of the Internet. Instead, we allowed the reinvention of manipulative intermediaries and welcomed them back with a little shapeshifting as potential “saviors” of Web3.
Web3 gets its name because blockchain is truly the next generation of the Internet. Looking at the fundamentals of the technology itself, blockchain is the crown jewel of humanity’s technological evolution. Used correctly, AI will make us more productive and blockchain will improve relationships between different parties working without barriers. Together, they could reshape the world as much, if not more, than the Internet.
But instead, we’re stuck monitoring DATs, ETFs, trade leverage, and DeFi liquidations, and a small number of people are making outsized profits on the misery and loss of millions of others. Crypto has yet to deliver on its promise to adapt to the radical transformation of the World Wide Web, with decentralized principles at its core.
As I watch these months go by, I keep remembering a scene from the movie The big short. Investor Mark Baum, increasingly frustrated by the irrational and greedy behavior of the market (and its participants), says: “What bothers me is not that fraud is not nice. Or that fraud is evil. For fifteen thousand years, fraud and myopia have never worked. Not once.”
He’s right. Every cent of profit made from squeezing the crypto ecosystem only drives away builders and halts the progress of this amazing technology. In exchange for a chance to make a short-term profit, these crypto intermediaries destroy the value of the underlying asset they are speculating on. But ultimately, everyone in the industry will pay the price, including those who love this technology and believe in its potential.
For those of us who want to use crypto to make the world a better place, we need to start calling out this behavior for what it is: short-sighted, selfish, and unwelcome greed. We need to do something to save our beloved industry and focus it on creating more real-world utilities and put it at the center of attention by creating innovative applications for the next billion users, as well as projects and protocols that harness the undeniable potential of Web3.
Let’s all resume the fight for utility, while there is still fight in us.
