Fred Wilson, a partner at Union Square Ventures, notes that when the bubble burst in 2022, Web3 was hit badly. The value of its assets will have decreased by between 70 and 90 percent. This year, USV’s assets under management had a carrying value that fell by half from last year’s. However, he remains optimistic about decentralized protocols over centralized entities. In the areas where USV works, like startups, tech, and web3, the bubble bounce has a range of significant effects that are worth mentioning.
Companies Lower Burn Rates due to Capital Market Crash
Since the collapse of the capital markets (including crypto and Web3), businesses have lowered their burn rate to show that they are no longer in the “growth at any cost” phase and must take steps to become sustainable instead. The result has been mass layoffs in the IT, startup, and Web3 industries. There is less of a desperate need for top talent. Most IT businesses and startups have ceased investing in expansion. Those are seeing slower growth but with improved unit economics and less cash burn
Web3 Assets Decline in the Market
The most significant area of influence has been Web3. When the worth of Web3 assets dropped by 70–90% in 2022, many huge, centrally-controlled companies, including lenders, exchanges, cryptocurrency funds, and so on, went bankrupt. It’s a lot like what occurred to the internet industry in 2000–2001 when there was a lot of destruction. Not all of it can be attributed to the markets simply doing their thing. Mismanagement, reckless risk-taking, and other forms of fraud were rampant in the web3.
As of 2022, he claims ignorance of the failure of any significant decentralized protocols. The smart contracts that make up these protocols did what they were supposed to do and survived the test. He thinks this is the most important thing to learn from Web 3.0 in 2022 because it shows that decentralized protocols are better than centralized organizations.
