On April 18, 2020, when business and consumer morale was at an all-time low during the height of the pandemic, tech titan Marc Andreessen published a blog post whose title unfolded four poignant words: It’s time to build. The corresponding article criticized the United States for its poor preparation for a global pandemic, attributing it to the country’s unwillingness to “build” the infrastructure and physical footprints necessary to withstand such a sudden black swan. The post ends by encouraging all readers to build because it is the only way “to honor the legacy of our ancestors and create the future we want for our own children and grandchildren.”
Now, in the early days of what appears to be a long crypto winter, Andreessen’s four-word command takes on a similar but different meaning. There is a widespread belief among members of the NFT and wider Web3 communities that this bear market is a timely opportunity for the next big Web3 innovations to shine. And there are good reasons to take it seriously. First: it is often said that history repeats itself, and the financial crisis of 2008 was a catalyst for some of the biggest tech companies like Uber, Instagram and Airbnb – all of which have become the centerpieces of the next bull cycle. More importantly, it was on the heels of this recession that the idea of Bitcoin was introduced to the world.
So will history repeat itself again? As past crypto slowdowns, will this period of uncertainty lead to a rise in Web3 technologies, perhaps finding the one that will carry Web3 further into the air of the times? The premise makes sense. Those who were motivated solely by financial incentives will likely be weeded out, on their own terms or those of the markets, leaving only those who are truly passionate about the space to drive it forward. Without the hype cycles fueled by emotion and FOMO, developers, artists, and creators can take a moment to sit down, breathe, and strategize to weather the tough times ahead.
But is this really what is happening? We spoke with a wide range of NFT collectors, creators, developers, and analysts to find out if the bear market is driving innovation in Web3.
Build like a meme
The NFT industry is largely driven by the mimetic or imitative nature. This covers all aspects of the space, including investing, creating, and lingo. Think of gm and WAGMI, and how they quickly moved from a niche greeting to being fully integrated into the fabric of industry culture. In its purest form, you could say that memes drive the market. And in the case of innovation in the bear market, it is no different.
Spend an hour browsing “Crypto Twitter,” and you’ll likely come across some general platitudes referring to the nature of build in a bear market. It’s one thing to write about innovation, but quite another to play a role in driving it.
“While the idea that bear markets are just for builders is a bit of a stretch, I think it’s true. The bear market shakes hands off the paper, gives builders the opportunity to focus more on building rather than on price action, and creates new opportunities for entrepreneurs to develop new products,” NFTSupply.eth said in an interview with nft now. “Personally, this period has allowed me to take a step back and focus on innovating within my own project.We have endeavored to create our PFP maker tool which allows you to customize the backgrounds of your favorite NFT projects by collecting generative art.
“While there are definitely projects that have given up, I’m very happy to see that many are still driving and building,” she said in an interview with nft now. “I see programming flourish daily in initiatives and projects I am invested or engaged in on Discord. Many initiatives are launching their phase two or three experiences.
Innovate in Mint Dynamics
Over the past few months, we have seen an increase in momentum for non-traditional coins including reduced supply, Dutch auctions and free mints. According to NFTSupply, these new mints tactics, especially free mints, have emphasized the importance of community building.
“The bear market has definitely popularized the concept of free mints and I think Goblintown can take credit for really pioneering this concept. However, I also have to give credit to NFT Worlds who pioneered make a free mint from the start,” NFTSupply.eth added. “On the consumer side, people are in bad shape, running out of funds, but still want to keep the pulse. initial capital from minting and betting on your team to grow the community and generate revenue through secondary royalties was a game changer, and now we’ve seen countless projects like Moonrunners and Saudis follow suit.
“I believe the free mints did a lot of harm,” Piiparinen said in an interview with nft now. “While innovation has come, there have been quite a few free mint scams since they have become normalized. People are only now realizing that they shouldn’t just connect their wallet to mint something because that it’s free.
Brenden Mulligan, founder of PREMINT made a similar pointciting the “free, super-cheap mint hysteria” as an “industry problem”.
That said, Piiparinen believes the bear market is driving innovation around the mint dynamic, forcing founders to be more thoughtful and business-focused in their approach.
“Working with NFT brands over the last 4-5 months, we’ve seen a major shift in the way projects are planning mints. Specifically, we’re seeing a positive shift with them focusing more on creating “a business that can be sustainable while leveraging blockchain technology. Gone are the days when creators could create amazing works of art and create a project. True founders can shine while building in this market.”
First signs of hackathons
Finding real innovation requires special attention to projects that come out of hackathons, says developer Thomas Montfort. And, after talking to Monfort and other technical members of the NFT community, one topic stood out at ETH NYC: Soulbound tokens.
“Hackathons are a great place to gauge levels of innovation in the space. During my time at ETH NYC, the focus was on Soulbound Tokens. These are non-transferable NFTs intended to assign an identity to a wallet based on the intersectionality of relationships. The goal is to move the NFT space away from hyper-financialization and towards a decentralized society that mirrors the real world. Many of ETH’s most promising projects NYC have integrated Soulbounds, and I’m excited to see what the future holds there.
As for the general state of innovation in the market, Monfort has a slightly less optimistic view. Although he believed builders shine during bear markets, he was not fully sold on the fact that current market conditions are responsible for innovation.
“As far as bear markets themselves drive innovation, I think there’s some truth to that,” Monfort said, in an interview with nft now. “Because it’s quieter, builders don’t feel as rushed to get to market. But the real builders focus on innovation and utility in both types of markets, so there shouldn’t be much of a change. To succeed under these conditions, projects must Actually bring value. The days of simply copying another PFP project are over.
Moving away from PFPs
Despite the mixed response from community members and generally muted investor sentiment, some areas of the market, such as generative art, are emerging as promising bright spots. William Mapan’s High hit in late April and has since raised the floor price more than 10x, to 8.88 ETH at the time of writing. Many versions, both new and legacy, across Art Blocks have also increased in value. Much of this can be attributed to the technical complexity, creativity and innovation behind these pieces. It also points to what could be the next notable shift away from PFPs and back to true innovation-driven crypto art.
Jackson.XYZ is a perfect example. Hitting July 29, Jackson is a dynamic, 100% chain art collection that grows over time based on who hits the collection. Once hit, all holders receive a canvas with a single brushstroke that can be auto-generated by your wallet address or customized however you see fit. This trait will then be added to all the webs of previous coiners. Over time, your very own Jackson canvas will collect the brushstrokes of all future mints.
“I came across Jackson on Twitter and the ‘Art That Grows’ tagline immediately grabbed me,” Orlov said. “I like the mix of art, curiosity and community.”
It is these smaller but highly innovative projects that larger, speculatively hyped PFP currencies may have once overlooked. But now, with the market cooling, creativity and innovation can get the attention they deserve, inspiring more new creatives to build on their ideas.
Unfortunately, it’s unclear when this bear market will reverse, or if it can drop further. But one thing is certain: those who are truly passionate about innovating within Web3 will continue to build, no matter the conditions. Remember, pressure makes diamonds.