He said that after the friendly beginnings of Web2, companies became more “extractive and less cooperative”, presumably referring to web giants such as Google (GOOG) and Meta (formerly Facebook – FB), although he does not mention them directly.
Web3 is different, however, because it aligns network participants to work together toward a common goal: network growth and health. Users can own part of the Internet and control their own data, which is the complete opposite of the current state of affairs controlled by a handful of data collection monopolies.
Introducing the a16z State of Cryptography 2022 Report
A lot has changed since we started investing in crypto nearly a decade ago.
— a16z (@a16z) May 17, 2022
Ethereum a double edged sword
The report states that Web3 is a multi-chain environment with Ethereum (ETH) dominating the ecosystem with 5.5 million active addresses and 1.1 million daily transactions.
He added that although there are many rival blockchains such as Solana (SOL), BNB Chain (BNB), and Avalanche (AVAX), the demand for Ethereum block space is unmatched. Ethereum also continues to attract the most developers, keeping it ahead of the competition.
Nonetheless, the company warned that Ethereum’s popularity is also a “double-edged sword” as it has suffered scaling issues resulting in astronomical network fees during peak times. Average gas fees hit over $200 per transaction on May 1 after the high-profile launch of a non-fungible token (NFT). Layer 2 networks have emerged and are competing to reduce these charges, however, there are now many more choices than ever before.
The company determined that it was still very early days for crypto and Web3, stating:
“We estimate that there are between 7 and 50 million active Ethereum users today. (Compared to the Internet, that puts us somewhere around the year 1995.). “
Crypto is much more than just financial innovation, he added, explaining that social, cultural and technological factors are all integrated. “There is plenty of room to build, and we believe there will be several winners,” the report concludes.