Our a16z’s “State of Crypto 2023” Review

A comprehensive review of a16z's "State of Crypto 2023" report: analysis, considerations and projections on the future of the industry.

Table of Contents


Yesterday a16z, one of the most influential global investment firms, published its annual “State of Crypto” report, which analyzed all the major events that happened in Web3 this year.

While we highly recommend to all the Web3 enthusiasts to read the full report, in this article we’ll share our thoughts about some key takeaways exposed by a16z’s analysts.


Blockchains’ active users are growing much than ever

According to a16z’s report, there are more active addresses transacting on-chain each month than ever.


Active Addresses across several blockchains
Active unique addresses across several blockchains. Source: a16z’s State of Crypto Index



That’s probably one of the most important metrics to account when analyzing the adoption of a new technology.

Last month there were 15 million active addresses, which represents a 100% growth from two years ago, while blockchain transactions have grown by over 50% in the past two years thanks to the rise of scaling solutions.

If we think about the fact that prices tanked heavily from the 2021’s highs, this result is even more impressive, since it shows that there is organic interest in the sector, not only driven by speculation.

As explained in the report, the development of several new ways to interact with blockchains (NFTs, GameFi) gave a remarkable boost to these metrics, which shows that regardless of bear markets and regulatory pressures, final users still want to be an active part of Web3.



Decentralized Exchanges are leading DeFi’s recovery

According to the report, Decentralized Exchanges are trading over $100B monthly, with Uniswap surpassing Coinbase for the second month in a row thanks to its $71.6B of trading volume in March, 45% higher than Coinbase’s one.





There are several factors that have contributed to this takeover, with the most important being the lack of a clear regulatory framework, which led to legal issues for a multitude of CeFi companies. Kraken’s $ETH staking service shut down, Binance and Coinbase sued by the SEC and CFTC, and so on.
CeFi’s future doesn’t look so bright, at least in the United States.
But we’ll get there.

Decentralized exchanges are currently emerging victorious from this situation, also thanks to the rise of derivatives DEXs such as GMX, which were one of the winning narratives of last year. Non-custodial protocols powered by smart contracts are slowly regaining final users’ trust, and that’s a big win for DeFi.

Recently, we analyzed the remarkable growth of the most performing decentralized exchanges of this year. If you missed it, you can find it here.


Active developers are sticking around despite low prices

As shown by data, developers who were attracted by 2020’s high prices sticked around, and now we have 30k monthly active developers and the highest number of deployed verified smart contracts.
Not bad for a bear market, uh?



Number of developers building publicly in crypto. Source: a16z’s State of Crypto Index



Remember: prices are not a trustable indicator of the sector’s development.
But builders are.

Also, on the tech side, it’s important to mention that there are at least two key technologies that are being developed and that will likely disrupt the sector as we know it today.
We’re talking about account abstraction, which will give Web3’s UX a huge boost and will lead to mass adoption, and zero knowledge proofs, which will enable use cases that were impossible to even imagine until a couple of years ago.

Pretty exciting times ahead of us folks!



U.S.A. are losing their lead in Web3

As mentioned earlier, lately U.S. policymakers started a war against crypto-related companies, probably in an attempt to suffocate the sector and start the up-coming CBDCs’ propaganda.

While this was something that we all expected – it’s no surprise that governments don’t like people that want to exit the banking system, since they can’t control them – the speed with which it had happened has been almost astonishing, with several companies that are already thinking about leaving the U.S. to migrate towards more crypto-friendly countries.

This paradigm’s shift could benefit Asian countries, such as Hong Kong, which are already actively developing legal frameworks for digital assets, aiming to become the next global crypto hubs. As for now, it looks like the proposal was even backed by China, despite the country’s historical industry aversion.



It’s time to do the sums

In our opinion, the main takeaway from a16z’s report is the following: things are not as bad as they may seem.
If you zoom out, you’ll realize how early we still are, and how quickly Web3 is growing, both from a technology and adoption perspective. We know last year wasn’t easy for many reasons, especially after Luna and FTX’s crashes, but at times like this, sometimes it’s better to ignore the market’s noises and focus on data, which are known to never lie.

And what are the data telling us? Simple.
Web3 is here to stay.


Relax folks, WAGMI!


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