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Gas Gas Revolution

Tom Tunguz

In 2021, Amazon announced they had reduced prices on Amazon Web Services 107 times since launch. This drop in prices has grown AWS into a $90b revenue business in 17 years. The same cost-reduction phenomenon is occurring with blockchains, though it’s not nearly as well publicized. Some days that figure soared about $70.

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Why We'll See More New Types of Web3 Apps in the Next Year

Tom Tunguz

The two most salient NFT collections, Bored Apes & Crypto Punks, have seen their prices fall by 50% from their highs , reducing trading volumes & marketplace fees. In January, L1s (blockchains) generated 78% of revenue across public web3 projects. There’s an important downstream effect. L1s have fallen from 78% to 41%.

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The Top Sectors of Web3 in 2022 by Revenue

Tom Tunguz

L1s or blockchains, the public databases that record transactions, dominate the revenue share across the top projects producing 78% of revenue. Deltas between the figures provide insight into which sectors' tokens investors price at relatively elevated multiples. Price to revenue is last in this analysis. Exchanges place second.

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Economics in the Sometimes Strange World of Web3

Tom Tunguz

Blockchains are databases application developers use to build novel user experiences. Just as hundreds of different databases exist in web2, different blockchains have evolved in web3. In the long-term, lower prices will drive more activity, essential for broader adoption of web3 technologies.

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Don't Look Now But Web3 Companies are Beginning to Trade Like their Web2 Counterparts

Tom Tunguz

But let’s break the data down by category into the top 5 by revenue: L1s (blockchains), DEXs (decentralized exchanges), Credit (lenders), NFT Marketplaces (buy & sell Bored Apes), & Yield Aggregators (systems to maximize interest rates on deposits). There’s none. The correlation asymptotes to zero.

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The Critical Question Facing Web3 Infrastructure Startups

Tom Tunguz

Paying five decentralized providers in five different tokens means managing several wallets and monitoring token prices to hedge expenses. Migrate the database (blockchain) and the file system to ensure on-chain asset ownership survives the company. Tokens reward the validators and the stakers powering the decentralized networks.

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The State of Web3 in 2022 through Data

Tom Tunguz

Trading volumes are down 60% which is mostly driven by asset price reductions. I share these figures as directional data, not hermetic evidence of a Higgs boson hidden within a blockchain. Binance, Solana, Polygon, & Ethereum wallets represent more than 80% of those daily active users.

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