We are at a crucial and perilous point for cryptocurrency. In my twelve years in this sector, I’ve never encountered the situation we are facing today, even during our most challenging market cycles.
Each of these signals alone would be cause for concern. Combined, they indicate the potential for a significant crisis. What happened to the discussions about utility and onboarding the next billion users?
The primary worry is the decline in builders seeking smart contract audits, a concern repeatedly raised in my discussions with auditing firms (evidenced by Yearn’s recent contract exploit). This is a standard procedure before launching any decentralized application (dApp). It’s not that builders are eager to launch without it; it’s that new dApps aren’t being developed. Developers and founders who wish to create useful applications are either waiting for improvement in the market or exiting the crypto space altogether. They aren’t interested in creating relatively simple applications or merely duplicating what currently exists, such as financial applications or tokenized funds.
Additionally, there is minimal encouragement, support, or funding from investors for utility applications, which are typically more complex and time-consuming to build. Unless an application promises a 1000x return in a brief timeframe within some DeFi scheme, it risks being overlooked for funding or support, putting builders in a tough position. In essence, if you’re a founder with a solid idea in the blockchain space, you might find yourself in an untenable situation from the outset.
Currently, investments are predominantly directed toward quick profit pursuits, including memecoins, insider knowledge manipulation, opaque multi-layer DeFi protocols, and overly leveraged trading. Where the money flows, attention follows, explaining the decreasing focus on blockchain-based products or use cases. Instead, we’re inundated with stories and discussions surrounding ETF movements, DAT performances, trading advice, etc. This trend further misleads retail investors who unwittingly buy into these fantasies without comprehending the deceptive strategies unfolding behind the scenes.
Most troubling is that this profit-driven orientation, at the expense of genuine blockchain-based applications, is being fostered by many so-called industry “leaders.” They should be advocating for a global monetary system transition on-chain to enhance efficiency and transparency or for utilizing blockchain and crypto to genuinely better our societies, such as encouraging sustainable actions or healthier choices. Instead, they are facilitating the rise of a new, more perilous form of middleman.
These middlemen and their financial products have introduced harmful intentional complexity and obfuscation to previously transparent markets. As a result, they have unleashed an unprecedented level of greed and thievery.
Take the liquidation on October 11th, for example; we still cannot fully grasp the repercussions of that event, other than that retail investors continue to bear the consequences while the powerful negotiate their own recoveries.
Cryptocurrency and blockchain were developed to dismantle financial oligopolies and democratize access to a new internet age. Instead, we’ve permitted the resurgence of manipulating middlemen, welcoming them back under the guise of ‘saviors’ of Web3.
Web3 is named because blockchain represents the next generation of the Internet. Examining the technology’s fundamentals, blockchain stands as the pinnacle of humanity’s technological progress. Properly utilized, AI can boost our productivity, and blockchain can enhance the interactions between different stakeholders, removing barriers. Together, they could reshape the world as significantly, if not more so, than the internet did.
Yet here we are, fixated on DATs, ETFs, trading leverage, DeFi liquidations, and a small cohort profiting disproportionately from the suffering of countless others. Crypto has yet to realize its promise of mirroring the radical shift brought by the World Wide Web, grounded in decentralized principles.
As I reflect on the past few months, I’m frequently reminded of a scene from The Big Short. Investor Mark Baum expresses growing frustration over the market’s irrational and greedy behaviors, stating: “What frustrates me isn’t that fraud is unkind. Or that fraud is cruel. For fifteen thousand years, fraud and shortsightedness have never, ever succeeded. Not once.”
He is correct. Every cent of profit extorted from the crypto ecosystem alienates builders and hinders the progress of this groundbreaking technology. In pursuit of fleeting profits, these crypto middlemen are undermining the very value of the assets they speculate upon. Ultimately, everyone within the industry will bear the consequences, including those who are passionate about this technology and its potential.
For those of us wishing to leverage crypto to create a better world, we must call out this behavior for what it is: short-sighted, selfish, and deplorable greed. It is crucial that we reclaim our beloved industry by emphasizing genuine utility building and directing our attention toward innovative applications for the next billion users, alongside the projects and protocols that truly embody the potential of Web3.
Let’s unite in the fight for utility while we still have the energy to do so.
