by Dan Jaeck
This past week, I attended ETHDenver. While no single conference can fully encapsulate a space as broad as web3, it still offered an opportunity to confirm that web3 is alive and well, and to get a sense of what’s top of mind for builders and investors (and yes, Eniac is still looking at crypto deals). Here are four observations I took away from the event:
- The crypto-native community remains very bullish, but the tourists are gone: ETHDenver attendees were primarily builders, with multiple hackathons surrounding the conference and many projects leveraging these hackathons as part of a go-to-market motion. (Founders came from far and wide to sell; I personally met folks from Shanghai, Hanoi, and Buenos Aires who came to the conference as part of a GTM motion). Builders seem to be unfazed by the winter, and continue to build and ship their projects. The main difference from years past is that almost every investor I met was spending >80% of their time in crypto and/or their fund was primarily crypto. I was one of a limited few generalists in attendance, which felt materially different from the conference circuit in early 2022. It was rumored that conference attendance was up 100% YoY, which I didn’t find shocking after witnessing first hand how busy Denver was (Uber prices were also surging 100%).
- The biggest concern is an uncertain regulatory environment: The regulatory environment for crypto remains uncertain, which is more challenging for builders to create products even compared to a harsh regulatory environment. A consistent point of conversation was about the regulators view of tokens and what will happen to derivatives of tokens (e.g., liquid staking). This is not a US-specific issue; regulatory environments in Europe and Asia are equally opaque.
- The AI hype is not just a web2 phenomenon: I met several startups building at the cross section of AI and web3. There’s significant opportunity to leverage AI solutions to dive into blockchain data (e.g., a natural language version of Dune Analytics for non -technical users) as well as contextual off-chain data like white papers. The general thinking is that if you can abstract a significant amount of the technical components/web3 terminology for folks with a beginner/intermediate understanding, you can increase adoption.
- Web3 projects are still expensive: Although funding is down significantly for web3 projects (i.e., Q422 was down 74% YoY per Crunchbase), the amount of web3-specific dry powder is still significant. For that reason, many of the hot growth rounds are still getting done at higher than industry standard multiples. Further, there’s a general feeling in the community that valuations for projects with signs of product-market fit have not really dipped.