‘State of Crypto 2023’ Report Reveals Exciting Bullish Trends in the Crypto Industry

A16z’s “State of Crypto 2023” report sheds light on the optimistic future of the crypto space.

Silicon Valley-based venture capital firm Andreessen Horowitz (“a16z”), founded by Marc Andreessen and Ben Horowitz in 2009, supports innovative entrepreneurs in various technology sectors. With $35B in assets under management, a16z invests across multiple stages and industries.

On April 11, the firm published a blog post discussing its recently published 60-page “State of Crypto 2023” report.

The blog post highlights the rapid progress of the crypto industry, despite fluctuations in activity and periods of stagnation. It recognizes that significant infrastructure advances, such as The Merge, often go unnoticed due to the attention paid to high-profile failures and setbacks. The report emphasizes that the industry’s health is better than market prices might indicate, and notes continuous development, product launches and innovation.

In this report, a16z introduces the State of Crypto Index, an interactive tool that evaluates the health of the crypto industry from a technological point of view rather than a financial one. The index measures the weighted average monthly growth of 14 industry metrics, such as the number of verified smart contracts and transaction wallets. Users can interact with the index to customize parameters and share their findings on Twitter and Farcaster.

Some critical insights from the report include:

1. Increased user engagement: Active addresses hit a record 15 million last month, doubling in the past two years, as chain games and other services provide new ways to engage.
2. Renewed growth in DeFi and NFT activity: NFT sales and decentralized exchange trading volumes are increasing, indicating a resurgence of interest in these areas.
3. Steady developer activity: About 30,000 developers contributed to crypto projects last month, representing a 60% increase over the past three years.
4. Scaling progress: Protocols and projects are working to scale blockchains, with Layer 2 scaling solutions accounting for 7% of Ethereum’s total fees today, up from 1.5% last year.
5. Advances in zero-knowledge systems: Rapid progress in zero-knowledge research and development opens doors for scalability and privacy-protecting blockchain applications.
6. US loses web3 dominance: Between 2018 and 2022, the share of crypto developers in the US fell by 26%, indicating a need for regulation to encourage innovation in the country.
7. Long-term progress: Examining broader trends reveals consistent growth in market capitalization, developer activity and funding, highlighting a price innovation cycle that drives new ideas forward.

This insight shows the steady development and innovation within the crypto industry, even as it experiences volatility and cycles of fluctuating activity.