State of Crypto 2023

Key insights

7 takeaways

01
Ethereum's transition to proof-of-stake reduced its energy consumption by more than 99.9%, according to the document.See it on page 17
02
The document estimates PoS Ethereum's annualized energy use at 0.0026 TWh, compared with 78 TWh for PoW Ethereum.See it on page 18
03
Consumers spent an estimated $67.9 billion on digital in-game purchases in 2022, and 717 new web3 games launched last year.See it on page 24
04
DAOs hold roughly $10 billion in liquid treasury assets and have funded more than $60 million in public-goods grants.See it on page 25
05
The document reports that the number of mobile wallet users has declined since early 2022.See it on page 47
06
The authors argue that rising crypto prices are a leading indicator for innovation, forming a positive feedback loop that has held since Bitcoin's creation in 2009.See it on page 2
07
The document states that 3 companies generate a third of all global web traffic, and 5 companies represent 50% of the Nasdaq 100's total market cap.See it on page 8

Summary

A 2023 a16z crypto publication titled "State of Crypto 2023" presents an overview of the web3 industry, covering developer activity, product launches, scaling, regulation, and adoption metrics. The document frames web3 as an evolution of the internet and describes four market cycles in which global crypto market cap, social media activity, developer activity and startup funding have each risen across the period shown, from 2011 onward. It reports that Ethereum transitioned to proof-of-stake through "The Merge" on September 15, 2022, and that its energy consumption fell by more than 99.9%. The document reports estimated annualized energy consumption of 0.0026 TWh for PoS Ethereum, compared with 78 TWh for PoW Ethereum. The document also reports that 717 new web3 games launched last year, that DAOs hold roughly $10 billion in liquid treasury assets, and that the number of mobile wallet users has declined since early 2022. Regulatory developments are summarized as proposed bipartisan legislation, court cases, and agency enforcement actions. The document ends by listing expectations for 2023 and beyond, such as governments passing bipartisan crypto regulation.