On April 18th, 2020, when business and consumer morale were low at the height of the pandemic, tech titan Marc Andreessen published a blog post whose title deployed four poignant words: It’s time to build. The corresponding article criticized the United States for its poor preparation for a worldwide pandemic, chalking it up to the country’s lack of desire to “build” the infrastructure and physical footprints needed to withstand such a sudden black swan event. The post ends by encouraging all readers to build because it’s the only way to “honor the legacy of our forefathers and foremothers and to create the future we want for our own children and grandchildren.”
Now, in the early days of what seems to be a lengthy crypto winter, Andreessen’s four-word command is taking on a similar yet different meaning. There’s a widespread belief among those in the NFT and broader Web3 communities that this bear market is a timely opportunity for the next big innovations in Web3 to shine through. And there’s good reason to take it seriously. For one: It’s often said that history repeats itself, and the 2008 financial crisis was a catalyst for some of the largest tech companies like Uber, Instagram, and Airbnb — all of which became 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? Like past crypto downturns, will this time of uncertainty lead to a surge of Web3 technologies, perhaps finding the one that will carry Web3 further into the mainstream zeitgeist? The premise makes sense. Those who were driven solely by financial incentives will likely be weeded out, on their own terms or the markets’, leaving only those who are truly passionate about the space to drive it forward. Without the emotion and FOMO-fueled hype cycles, the developers, artists, and creators can take a moment to sit back, breathe, and strategize on how to rise above the tough times to come.
But is that really what’s happening? We spoke with a wide range of NFT collectors, creators, developers, and analysts to hear their thoughts on whether the bear market is furthering innovation in Web3.
Building as a meme
The NFT industry is largely driven by mimetics, or imitative nature. This covers all aspects of the space, including investing, creation, and lingo. Think of gm and WAGMI, and how they quickly went from a niche salutation to becoming integrally embedded into the fabric of the industry’s culture. In its purest form, you could say memes drive the market. And in the case of bear market innovation, this is no different.
Spend an hour scrolling through “Crypto Twitter,” and you’ll likely come across a few general platitudes referencing the nature of building in a bear market. It’s one thing to write about innovation, but it’s another to play a role in driving it.
“While the idea of bear markets being for builders is somewhat overplayed, I do believe it to be true. The bear market shakes out paper hands, gives builders the opportunity to focus more on building rather than price action, and creates new opportunities for entrepreneurs to develop new products,” NFTSupply.eth said in an interview with nft now. “Personally, this time has allowed me to take a step back and focus on innovation within my own project. We’ve been heads down building our PFP creator tool which allows you to customize the backgrounds of your favorite NFT projects by collecting generative art.”
“While there are certainly projects that have dropped off, I’m very pleased to see many continuing to drive and build,” she said in an interview with nft now. “I see programming blooming daily in initiatives and projects that I am either invested in or engaged with on Discord. There are many initiatives launching their phase two or three experiences.”
Innovation in Mint Dynamics
Over the last few months, we’ve seen an increase in non-traditional mint dynamics, including reduced supply, dutch auctions, and free mints. According to NFTSupply, these new minting tactics, specifically free mints, have placed a firm emphasis on the importance of community building.
“The bear market has definitely popularized the concept of free mint and I think Goblintown can take credit for really pioneering this concept. However, I do also have to give credit to NFT Worlds who was the first to do a free mint early on,” added NFTSupply.eth. “On the consumer side, people are down bad, low on funds, but still want to keep their fingers on the pulse. For projects, foregoing the initial capital raise from minting, and betting on your team to grow the community and generate revenue via secondary royalties, has been a game changer. Now we’ve seen countless projects like Moonrunners and Saudis follow suit.”
“I do believe free mints have done a lot of harm,” Piiparinen said in an interview with nft now. “While the innovation came, there have been quite a few free mint scams since they have become more normalized. People are only now realizing they shouldn’t just connect their wallet to mint something because it’s free.”
PREMINT founder Brenden Mulligan argued a similar point, citing the “free and super-cheap mint hysteria” as an “industry problem.”
That said, Piiparinen believes the bear market is driving innovation around mint dynamics, forcing founders to be more thoughtful and business-focused in their approach.
“Working with NFT brands over the past 4 to 5 months, we’ve seen a major shift in the way projects are planning mints. Specifically, we’re seeing a positive shift in them focusing more on truly building a business that can be sustainable yet leverage blockchain technology. Gone are the days when creators can throw up amazing artwork and mint out a project. True founders can shine while building in this market.”
Early Signs from Hackathons
Finding true innovation requires close attention to the projects coming out of hackathons, argues developer Thomas Monfort. And, after speaking to Monfort and other technical members of the NFT community, there was one topic that stood out at ETH NYC: Soulbound tokens.
“Hackathons are a great place to gauge levels of innovation within the space. During my time at ETH NYC, there was an intense focus on Soulbound Tokens. These are non-transferrable NFTs meant to accrue 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 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 take. Despite believing that builders shine during bear markets, he wasn’t fully sold on the fact that the current market conditions are responsible for driving innovation.
“In terms of bear markets driving innovation themselves, I think there is partial truth in that,” said Monfort, in an interview with nft now. “Since it’s quieter, builders don’t feel as rushed getting to market. But true builders focus on innovation and utility in both types of markets, so there shouldn’t really be much changing. To have success in these conditions, projects need to actually provide value. The days of simply copying another PFP project are over.”
Shifting Away from PFPs
Despite the mixed response from community members and generally reduced investor sentiment, certain areas of the market, like Generative Art, are emerging as promising bright spots. William Mapan’s Anticyclone minted out in late April and has since jumped in floor price by more than 10 times, to 8.88 ETH as of writing. Many releases, both new and legacy, across Art Blocks 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 might be the next noticeable shift away from PFPs and back into true innovation-driven crypto-art.
Jackson.XYZ is a perfect example. Minting on July 29th, Jackson is a 100% on-chain dynamic art collection that grows over time based on who mints from the collection. When minted, all holders receive a canvas with a single brush stroke which can either be generated automatically by your wallet address or customized as you see fit. This stroke will then be added to all the canvases of the previous minters. Over time, your own Jackson canvas will collect the brush strokes from all future mints.
“I came across Jackson on Twitter and the tagline ‘Art That Grows’ got me immediately,” said Orlov. “I love the mix of art, curiosity, and community.”
It’s these smaller but heavily innovative projects that larger, speculatively hyped PFP mints may have once overlooked. But now, with the market cooling, creativity and innovation may get the attention they deserve, further inspiring new creatives to build on their ideas.
Unfortunately, there is no telling when this bear market will reverse course, or if it can drop still further. But one thing is certain: those who are truly passionate about lifting innovation within Web3 will continue to build, no matter the conditions. Remember, pressure makes diamonds.