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How Web3 companies to bounce back from the crypto winter

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Let’s face it: if crypto has winter temperatures, it can exceed sub-zero.

While numerous NFT communities continue to build and work to add value to their projects, they do so against a backdrop of harsh realities that are too big to ignore.

In July, OpenSea announced it was laying off 20 percent of its workforce to reduce the future impact of winter. A month ago, Coinbase announced a hiring freeze that would last “for the foreseeable future” and canceled several accepted job offers. Other exchanges like Gemini have also announced similar staff cuts in recent weeks. Web 3-wide, the name of the game is now basically compression and storage.

But cryptos and NFTs don’t exist in a bubble, which makes it difficult for both to thrive when macroeconomic and geopolitical turmoil is rocking the world. Only US inflation eased to 8.5 percent in July, a four-decade high. The Federal Reserve System warned earlier this year that the global economic impact of Russia’s invasion of Ukraine would likely “decrease GDP and significantly increase inflation.”

But exaggerated doom and gloom or unfounded optimism won’t do much for anyone rooting for a quick end to a bear market. Taking an honest temperature of the ecosystem can only help the Web3 community out of this difficult situation.

So, how do some of the biggest companies in the NFT space view the crypto winter and the measures they take to adapt and thrive? First, this isn’t their first winter rodeo. But it raises the question: Should companies forced to take drastic measures to stem the bleeding be more prepared for bear markets?

A crypto winter like no other

“I think the current crypto winter was inevitable,” explained Eric Calderon, CEO and founder of Art Block, in an email exchange with nft NOW. “It’s not always a startup’s fault when things don’t go as planned, but we as a company go overboard to protect our business and our team. I have seen the decline of art in 2017 and 2018 and am committed to doing anything in my power to shelter Art Block from this harmful crypto cycle.”

Peio Bty via Unsplash

While Web3 is no stranger to cycles, it’s important to note that the combination of the one-two punch of crypto winter and a potential global recession is causing complications for everyone.

OpenSea seems to think that making tough choices (and even tougher cuts) is sometimes the key to an effective long-term strategy. inside A company note for employees In announcing the recent layoffs, CEO Devin Finger wrote that the marketplace “has entered an unprecedented combination of crypto winter and broader macroeconomic instability, and our company must prepare for the possibility of a prolonged recession.”

Speaking to NFT Now via email, an OpenC spokesperson elaborated on these comments and offered a more optimistic view of the situation.

“OpenSea was built with the cyclicality of crypto in mind.”

OpenC spokesperson

“We’ve been through the winter before,” the spokesperson said. “OpenSea was built with the cyclicality of crypto in mind. Users and newcomers alike look for reliable, trusted and secure portals to connect to the Web3 world, so we’re doubling down on trust, security and reliability and improving the user experience for collectors and creators alike.”

It’s an optimistic stance that the company has no luxury to avoid taking at this point, and surely an NFT giant hopes that following the news will bolster confidence in its stability and longevity.

Slow and steady wins the Web3 race

Some Web3 companies have taken a different approach to navigating the crypto winter. For example, Magic Eden has thus far avoided creating staff redundancies and even recently announced that it is adding multi-chain support for Ethereum and Solana to its platform, a notable addition made all the more impressive by its time. The key to navigating this winter, the company believes, is simply the long game of slow and steady.

“Markets will do what they do,” Zhuoxun Yin, COO of Magic Eden, told NFT Now. “We know how these markets can move and are keeping our heads down to build on a time horizon [of more than ten years]. Our co-founders have survived several crypto bear markets and that collective experience has informed how we have prepared for this current market downturn.”

The biggest lesson Marketplace has learned in the space over the past six months, Yin says, is not to take growth or community relationships for granted. “We spend carefully with our marketing efforts and headcount to continue to manage costs,” Yin elaborates.

“There are many opportunities to chase shiny things. There’s always some new mechanic in the space to generate utility or revenue.”

Eric Calderon, CEO and Founder of Art Block

Both the Art Block and Magic Eden teams caution against getting too enamored with new revenue systems and attractive “numbers go up” toys that can rocket into space and burn up just as quickly. For example, regarding Magic Eden’s recent ETH entry, the company says it spent a significant amount of time listening to community feedback and identifying user needs before meaningfully developing and investing in the project.

And that brings Web3 companies full circle: when insurmountable obstacles come, it’s important to remember the basics Speaking from this understanding, Eric Calderon and the team at Art Block think the best way to weather the crypto winter is to double down on the mission they dedicated themselves to in the first place.

“There’s a lot of opportunity to chase shiny things, there’s always some new mechanic in the space to generate utility or revenue,” Calderon explains. “But we hold fast to our core vision and intent, hosting the best art from the best artists and owning art for art’s sake should be the primary reason to participate on our platform.”

OpenC, Magic Eden, and Art Block all share a sentiment: that the past six months have separated the wheat from the chaff in terms of who is truly dedicated to the web3 space. “At a high level, we believe that, in the absence of a hype cycle, the bar for success is high, meaning only the best projects, products and ideas thrive,” the OpenSea spokesperson explained.

“When the dust settles for the bear market, we will see more high-quality projects […] Drive NFT adoption further.”

Magic Eden CEO Jack Lu

Calderon also believes that the lack of hype in the NFT space helps eliminate confusion. The most leveraged participants, he said, leave the space to chase the next opportunity for financial loss. With their space vacated, everyone else can participate in their community for more “pure” reasons. This, in turn, encourages more meaningful conversations and developments that can benefit everyone in the ecosystem.

Several figures on Web3 advised everyone to think of the bear market as a “build market” and encouraged innovation in the crypto and NFT communities. While this may seem like a cliché point, it is still the best attitude that the NFT space can take to overcome obstacles.

Another necessary step is to deal with the internal hype and learn to focus on the success Web3 needs. Consider: Despite many ups and downs, the fungible token market has become a trillion-dollar industry over the past few years. NFTs have the potential to do the same, but to get there, project developers need to do more than rely on starry-eyed fascination with the technology. It’s no longer enough for something to become an NFT — diversity in use cases will lead the way.

“What’s going to create the next era of adoption is collections that can spark people’s curiosity because they’re not just an NFT, but because the value that the NFT represents is so powerful. [it] Enticing new user acquisition—whether it’s token-gated content, access (eg, ticketing), community-based projects, or artistic value,” Magic Eden CEO Jack Lu said in an email correspondence with NFT NOW. “When the dust settles for the bear market, we will see more high-quality projects and interesting use cases for NFTs drive the adoption of NFTs.”



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