As Web3 sentiment is tied to crypto sentiment, the crash of several of crypto’s biggest names this year has significantly impacted the public view of Web3. We heard 2021 was the year of Bitcoin, NFTs and decentralised technology. Web3 was on the rise, with exciting applications and adoption increasing every day. The global Web3 market was worth $3.2 billion in 2021, with projections of reaching a market value of $82 billion in 2030.
However, in 2022, it all came crashing down. Bitcoin’s value plummeted from its all-time high of $69,000 in 2021 to $17,000 in 2022, while the collapse of FTX is still fresh on our minds as the saga continues to unfold.
Momentum Academy held an online event to discuss the landscape of the industry and concerns from the community. “Off The Record: Web3’s brutal year” was held on 6 January 2023.
At the start of the event, we asked ChatGPT, the AI-powered chatbot (check out our article here), what it thought Web3 was. And this is what it said:
A comprehensive answer, but we thought it was too long-winded, so we asked it for a sentence-long definition instead:
Now that we’ve explored the concept of Web3, here are some key topics that we talked about during the event:
Public and investor sentiment towards Web3 in 2021 and 2022
In 2022, we have seen multiple setbacks to Web3, from the collapse of Terra Luna to Voyager and BlockFi filing for bankruptcy. Despite an increase in blockchain applications, public confidence in cryptocurrency and Web3 has plunged. This has not been helped by lower investor sentiment in the overall market, due to events such as the Fed interest rate hikes and the Russia-Ukraine war.
What exactly happened at FTX
FTX has been in the spotlight for several months, as investigations continue to uncover new findings each week. In general, FTX was an exchange for cryptocurrencies that fraudulently moved customer deposits to Alameda Research, a trading firm controlled by Sam Bankman-Fried. This posed a few questions about the lack of regulation or governance that we see in traditional finance institutions.
Many people have drawn parallels between SBF and Bernie Madoff (the infamous 1990-2008 Madoff Ponzi). However we can’t do an apple-to-apple comparison since the magnitude of loss is different, and the time period of the scheme coming out before he was finally sort of collapsing, it’s also different.
But of course, one thing that happened after the Madoff scheme, as well as all issues in the great financial crisis, was enhanced regulations which became a burden for lots of organisations. A similar situation could happen after the FTX crash.
Despite the huge uproar about the devastation that FTX’s collapse will bring to the crypto industry, we’d like to put things into perspective. Although FTX lost $8 billion of its customers’ money, in contrast, China Evergrande’s liabilities totalled about $300 billion, and Tesla’s market value dropped by a staggering $700 billion in 2022. And since the crypto industry is still in its early stages, the commotion has been bigger.
We also addressed the similarities between FTX and its competitor Binance as CeFi exchanges. Binance, the largest cryptocurrency exchange by trading volume, was rumoured to be in liquidity issues, which would have dire effects on the industry. Once again, we turned to ChatGPT to peer into the future:
We also covered other important topics, such as the business application of blockchain technology, and what will happen with Web3 in 2023. If you would like to learn more, feel free to check out Part 2 and 3 of the article.
You can download the full event deck of Off the Record: Web3’s Brutal Year as well as our other reports, such as The Future of NFTs, Who is Axie Infinity?, The Future of Ethereum, and Web3: The inevitable Next Step, for a behind-the-scenes look at Web3 applications and the future of the Web3 landscape.
If you want to watch a replay of the event on our YouTube channel, click here.