Cryptocurrency has recently become a major asset in the world today and the data provided by a16z Crypto, a venture capital firm, aims to present an accurate status report on the current crypto sector based on verifiable and open-source data. The resulting State of Crypto Index, frames the industry from a technological perspective and not a capital-oriented view.

From the data, it is evident that blockchain technology is being heavily utilized as per the vast number of active blockchain addresses, verified smart contracts and even Layer-2 roll-ups. These are all on the rise, showing that financial and product cycles are not necessarily linked. Additionally, several projects have seen success during the downturn which serves as an evidence that initiatives are viable even during the downturns in the market. An example of this is the switch of Ethereum to Proof-of-Stake, now only taking up 0.001% of the energy per year compared to when it was running on Proof-of-Work. Such trends are also seen in the development of zero-knowledge verification systems which are proving to be popular as they verify facts without compromising on security.

Overall, the statistics of blockchain infrastructure usage show positive growth. Unique active addresses and verified smart contracts are both at all-time highs and transactions on decentralized exchanges exceed $100 billion with stablecoins also having seen growth in recent months. However, there are some pitfalls as developer activity, as well as mobile wallet users, has experienced a decrease in numbers. The industry puts the blame on regulations in the US, referred to as ‘regulation by enforcement’, as it stifles innovation and acts as a deterrent to the growth of the industry.

a16z Crypto’s State of Crypto Index seeks to provide a useful tool to get a better understanding of the industry’s overall health without relying on market capitalization as an indicator. It collects 14 essential metrics on the industry and allows users to customize the index according to their own view of which metrics are most important. Developers also want to make sure that this is not seen as the definitive answer to the analysis with variability in the data and many changes in the industry. Nevertheless, these are strong numbers that definitely indicate compounding technological progress and innovation in the sector.



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