This week, Crypto venture giant Andreessen Horowitz released its latest report on the state of the industry, revealing its take on Web3 and the Ethereum ecosystem.
Web3 is the watchword of 2022 and essentially refers to the evolution of the Internet beyond its current state. According to a16z, "the Internet as we know it is flawed" because it is dominated by large technological oligopolies and digital authoritarianism.
The article states that after the friendly beginnings of Web2, companies have become more "extractive and less collaborative", presumably referring to web giants like Google (GOOG) and Meta (formerly Facebook - FB), while not directly mentioning them.
Web3 is different, however, in that it aligns network participants to work together towards a common goal: network growth and health. Users can own a part of the internet and be in control of their own data, which is the complete opposite of the current state of affairs, controlled by a handful of data-gathering monopolies.
Ethereum: a double-edged sword
The report states that Web3 is a multi-chain environment with Ethereum (quotation ETH) which dominates the ecosystem with 5,5 million active addresses and 1,1 million daily transactions.
He added that while there are many rival blockchains such as Solana (SOL), BNB Chain (BNB) and Avalanche (AVAX), the demand for block space from Ethereum is unmatched. Ethereum also continues to attract the largest number of developers, staying ahead of the competition.
However, the company warned that Ethereum's popularity is also a "double-edged sword", as it suffered from scalability issues that led to astronomical network fees at times of peak demand. Average gas fees shot up to over $ 200 per transaction on May 1, following the launch of a highly publicized non-fungible token (NFT). Layer-2 networks have emerged and are competing to lower fees, but there is a lot more choice now than in the past.
The company has determined it's still very early days for cryptocurrencies and the Web3, stating that:
“We estimate that there are between 7 and 50 million active Ethereum users today. (Compared to the Internet, this places us around the year 1995) ”.
Cryptocurrency is more than just financial innovation, he added, explaining that social, cultural and technological factors are all involved. “There is a lot of room to build and we believe there will be more winners,” the report concludes.
ETH abused by bears
Ethereum's long-term positive outlook hasn't kept bears at bay this month. Since the beginning of May, the second largest digital asset in the world by market capitalization has lost nearly 30% of its value.
Over the past 24 hours, ETH prices have fallen 1,2%, approaching the psychological support level of $ 2.000. At the time of writing, the price was $ 2.050, a loss of 12,6% in the past week.
Currently, the price of ETH has fallen 58% from its all-time high in November and it looks like the bears aren't done yet.
