Let’s face it: if the crypto winter has a temperature, it could dip beyond freezing.
While countless NFT communities continue to build and work to add value to their projects, they do so against the backdrop of harsh realities that are simply too big to ignore.
In July, OpenSea announced that it was laying off 20% of its staff to limit the future effects of winter. A month prior, Coinbase announced a hiring freeze that would last “for the foreseeable future” and rescinded several accepted job offers. Other exchanges, like Gemini, have also announced staff cuts in recent weeks. Web3-wide, the name of the game is now largely contraction and preservation.
But crypto and NFTs don’t exist in a bubble, making it difficult for either to thrive when macroeconomic and geopolitical tumult rocks the world. US inflation alone surpassed a four-decade high before easing to 8.5% in July. The Federal Reserve System warned earlier this year that the global economic effects of Russia’s invasion of Ukraine would “likely reduce GDP and significantly increase inflation.”
But neither exaggerated pessimism nor baseless optimism will be much help to anyone who wants a quick end to the bear market. Taking the honest temperature of the ecosystem can only help Web3 communities out of these difficult circumstances.
So how do some of the biggest companies in the NFT space view the crypto winter and the steps they are taking to adapt and thrive in it? First off, this isn’t their first winter rodeo. But it begs the question: should the companies now forced to take drastic measures to stop the bleeding have been better prepared for the bear market?
A crypto winter like no other
“I think the current crypto winter was inevitable,” Art Blocks CEO and Founder Erick Calderon explained in an email exchange with nft now. “It’s not always a startup’s fault when things don’t go to plan, but as a company we go overboard in protecting our company and our team. I watched the industry crash in 2017 and 2018 and am committed to doing everything in my power to help protect Art Blocks from these damaging crypto cycles.
While Web3 is no stranger to cycles, it’s crucial to note that the punch of a crypto winter coupled with a potential global recession add to the hardship for everyone.
But OpenSea seems to think long-term planning is key. In a company note to employees Announcing recent layoffs, CEO Devin Finzer wrote that the market has “entered an unprecedented combination of crypto winter and general macroeconomic instability, and we need to prepare the company for the possibility of a prolonged downturn.”
Speaking to nft now via email, an OpenSea spokesperson expanded on those comments and offered a more optimistic perspective on the situation.
“We’ve already gone through the winter,” the spokesperson said. “OpenSea was built with the cyclicality of crypto in mind. Users and newcomers to the space all seek reliable, trustworthy and secure portals to interact with the Web3 world, so we double down on trust , security and reliability and improve the user experience for collectors and creators.
It’s an optimistic stance the company doesn’t have the luxury of avoiding taking at this point, and the NFT giant is certainly hoping to build confidence in its stability and longevity following the announcement.
Slow and Steady Wins the Web3 Race
Some Web3 companies have taken a different approach to navigating the crypto winter. Magic Eden, for example, has so far avoided laying off staff and even recently announced that it is adding multi-chain support for Ethereum and Solana to its platform, a significant addition made all the more impressive by its timing. According to the company, the key to navigating these winters is simply to play for the long haul.
“Markets will do what markets do,” Zhuoxun Yin, chief operating officer of Magic Eden, said in an email exchange with nft now. “We know how these markets can evolve and keep our heads down to build on a time horizon [of more than ten years]. Our co-founders have survived a number of crypto bear markets, and that collective experience has informed how we prepared for this current market downturn.
The biggest lesson the market has learned from the past six months in the space, Yin said, is not to take growth or community relationships for granted. “We are carefully spending our marketing efforts and staffing to continue to manage costs,” Yin explained.
The Art Blocks and Magic Eden teams caution against too-rapid hype for new revenue mechanisms and attractive “number-increasing” toys that can explode in space and run out just as quickly. Regarding Magic Eden’s recent ETH entry, for example, the company says it spent a lot of time listening to community feedback and identifying user needs before developing and investing significantly in the project. .
And that comes full circle for Web3 businesses: when overwhelming obstacles arise, it’s important to remember the basics. Based on this understanding, Erick Calderon and the Art Blocks team believe that the best way to get through the crypto winter is to double down on the mission they set out to do in the first place.
“There have been so many opportunities to chase shiny things, space always has new mechanics for utility or revenue generation,” Calderon explained. “But we have stayed true to our original vision and intent, to house the best art from the best artists and to make owning art for the sake of art the main reason why people participate in our platform.”
OpenSea, Magic Eden and Art Blocks all share one sentiment: that the last six months have separated the wheat from the chaff in terms of who is really dedicated to the Web3 space. “At a high level, we believe that in the absence of a hype cycle, the bar for success is higher, which means that only the best projects, products and ideas flourish,” explained the carrier. word of OpenSea.
Calderon also believes that a lack of hype in the NFT space helps eliminate distractions. The most extractive participants, he said, give up space to chase the next opportunity for a financial windfall. With them leaving space, everyone can participate in their communities for more “purist” reasons. This, in turn, fosters more meaningful conversations and developments that are likely to benefit everyone in the ecosystem.
Several Web3 personalities advised everyone to think of the bear market as “the building market” and encouraged innovation in the crypto and NFT communities. Although it may sound like a cliché, it is still the best attitude the NFT space can take to get through the bottleneck.
Another necessary step is to face the inner hype and learn to focus on the essential successes of Web3. Consider: Fungible token markets have grown into a trillion-dollar industry over the past few years, despite many ups and downs. NFTs have the potential to do the same thing, but to get there, project developers need to do more than rely on a craze for the technology. Something becoming an NFT is no longer enough – the variety of use cases will pave the way forward.
“What’s going to create the next era of adoption are collections that can pique people’s curiosity not because they’re just an NFT, but because the value that the NFT represents is something so powerful that [it] attracts new users, whether it’s token-protected content, access (e.g. ticketing), community projects, or artistic value,” Magic Eden CEO Jack Lu said in correspondence. via email with nft now. “When the dust settles for the bear market, we’ll see more high-quality projects and interesting use cases for NFTs that will further drive NFT adoption.”