Can innovation trump a bear market? Here’s what we know

On April 18, 2020, when business and consumer morale were low at the height of the pandemic, tech titan Marc Andreessen published a blog post whose title used four poignant words: It’s time to build. The corresponding article criticized the United States for its poor preparation for a worldwide pandemic, blaming it on the country’s unwillingness to “build” the infrastructure and physical footprint needed to withstand such a sudden black swan event. The post ends by encouraging all readers to build because it is the only way to “honor the legacy of our forefathers and foremothers 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 yet different meaning. There is a widespread belief among those in the NFT and wider Web3 community that this bear market is a timely opportunity for the next big innovations in Web3 to shine through. And there is good reason 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 became the centerpieces of the following 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 downturns, will this time of uncertainty lead to a wave of Web3 technologies, perhaps find the one that will carry Web3 further into the mainstream zeitgeist? The premise makes sense. Those driven solely by financial incentives are likely to be weeded out, on their own terms or the market’s, leaving only those truly passionate about the space to drive it forward. Without the emotions and FOMO-driven hype cycles, the developers, artists and creators can take a moment to sit back, breathe and plan how to rise above the tough times ahead.

But is that really what is happening? We spoke to a wide range of NFT collectors, creators, developers and analysts to hear their thoughts on whether the bear market is fostering innovation in Web3.

Build like a meme

The NFT industry is largely driven by mimetic, or imitative nature. This covers all aspects of the space including investing, creation and lingo. Consider gm and WAGMI, and how they quickly went from a niche greeting to being integrally embedded in the fabric of the industry’s culture. In its purest form, you could say memes drive the market. And when it comes to bear market innovation, this is no different.

Spend an hour scrolling through “Crypto Twitter” and you’ll likely come across a few general platitudes that refer to the nature of build in a bear market. It’s one thing to write about innovation, but it’s another to play a role in driving it.

Despite almost recognizing it as a meme, Square Supply founder, developer and NFT collector NFTSupply.ethfind this opinion true.

“Although the idea that bear markets are for builders is somewhat overplayed, I believe it is true. The bear market shakes out paper hands, gives builders the opportunity to focus more on construction rather than price action, and creates new opportunities for entrepreneurs to develop new products”, said NFTSupply.eth in an interview with nft now. “Personally, this time has allowed me to take a step back and focus on innovation in my own project. We’ve been down to building our PFP creator tool that allows you to customize the background to your favorite NFT projects by collecting generative art.”

Founder and CEO of Web3-focused creative agency Epic Playdate, Rebecca Orlov echoed a similar sentiment, acknowledging an increase in projects delivering on roadmap touchpoints.

“Although there are certainly projects that have fallen off, I am very happy to see many continuing to operate and build,” she said in an interview with nft now. “I see programming blossoming daily in initiatives and projects that I’m either invested in or engaged with on Discord. There are a lot of initiatives that are launching their phase two or three experiences.”

Innovation in Coin dynamics

Over the past few months, we have seen an increase in non-traditional coin dynamics, including reduced supply, Dutch auctions and free mints. According to NFTSupply, these new coinage tactics, especially free coins, have placed a heavy emphasis on the importance of community building.

“The bear market has definitely popularized the concept of free coin and I think Goblintown can take credit for pioneering this concept. But I also have to give credit to NFT Worlds who were the first to do a free coin early on,” NFTSupply.eth added . “On the consumer side, people are poor, low on funds, but still want to keep their fingers on the pulse. For projects, it means forgoing the initial capital raising from coining, and investing in your team to grow the community and generate income via secondary royalties , has been a change. Now we’ve seen countless projects like Moonrunners and Saudis follow.”

However, others like it Anders PiiparinenCEO of BarbyNFT Agency, sees free coins in a different light, seeing them as easier targets for fraud and hacking.

“I think free coins have done a lot of damage,” Piiparinen said in an interview with nft now. “While the innovation came, there have been quite a few free coin scams since they’ve become more normalized. People are only now realizing that they shouldn’t just link their wallet to make something because it’s free.”

PREMINT founder Brenden Mulligan argued a similar pointciting the “free and super cheap coin hysteria” as an “industry problem.”

That said, Piiparinen believes that the bear market is driving innovation around coin dynamics, forcing founders to be more thoughtful and business-focused in their approach.

“Working with NFT tokens over the last 4 to 5 months, we’ve seen a big shift in the way projects plan to coin. Specifically, we’re seeing a positive shift in them with more focus on really building a business that can be sustainable, but at the same time leverage blockchain technology. Gone are the days when creators can throw up amazing artwork and create a project. True founders can shine while building in this market.”

Early signs from Hackathons

Finding true innovation requires careful attention to the projects that come out of hackathons, the developer claims Thomas Monfort. And after speaking with Monfort and other technical members of the NFT community, one theme stood out at ETH NYC: Soulbound tokens.

“Hackathons are a great place to measure levels of innovation in the space. During my time at ETH NYC, there was an intense focus on Soulbound Tokens. These are non-transferable NFTs that are meant to assign an identity to a wallet based on the intersectionality of relationships. The goal is to move the NFT space away from hyper-funding and toward a decentralized society that mirrors the real world. Many of the most promising projects at ETH NYC incorporated Soulbounds, and I’m excited to see what the future holds there. ”

As for the state of general innovation in the market, Monfort had a slightly less optimistic attitude. Despite his belief that builders shine during bear markets, he wasn’t full sold on the fact that current market conditions are responsible for driving innovation.

“As for bear markets driving innovation themselves, I think there is some truth in that,” Monfort said in an interview with nft now. “Since it’s quieter, builders don’t feel as rushed to get into the market. But real developers focus on innovation and utility in both types of markets, so there really shouldn’t be much change. To succeed under these conditions, projects must actual provide value. The days of copying another PFP project are over.”

Shifting away from PFPs

Despite the mixed response from community members and generally subdued investor sentiment, certain areas of the market, such as Generative Art, are emerging as promising bright spots. William Mapan’s Anticyclone was minted in late April and has since jumped in floor price by more than 10 times, to 8.88 ETH at the time of writing. Many releases, both new and older, across art blocs have also risen in value. Much of this can be attributed to the technical complexity, creativity and innovation behind these pieces. This also further indicates what could be the next noticeable shift away from PFPs and back to true innovation driven crypto art.

Jackson.XYZ is a perfect example. Jackson, which mints on July 29th, is a 100% on-chain dynamic art collection that grows over time based on who mints from the collection. Once embossed, all holders receive a canvas with a single brush stroke that can either be automatically generated by your wallet address or customized to your liking. This line will then be added to all the canvases of the previous minters. Over time, your own Jackson canvas will collect the brush strokes of all future mints.

“I came across Jackson on Twitter and the slogan ‘Art That Grows’ got me immediately,” Orlov said. “I love the mix of art, curiosity and community.”

It is these smaller but highly innovative projects that larger, speculatively hyped PFP coins may have once overlooked. But now, with the market cooling, creativity and innovation can get the attention they deserve, inspiring new creatives to build on their ideas.

Unfortunately, there is no telling when this bear market will reverse course, or if it may fall further. But one thing is certain: those who are truly passionate about advancing innovation in Web3 will continue to build, regardless of the conditions. Remember that pressure makes diamonds.