Venture capital firm Andreessen Horowitz (a16z) continues to call web3 an “evolution of the internet” in its latest pitch deck. It cited supposed upgrades from web2, including the potential for democratized ownership of Internet properties. It claims this inevitable transformation will return power to the hands of users.
Of course, plummeting interest in web3 — 75% below its December 2021 peak per Google Trends — and plummeting returns for a16z’s web3 offerings suggests otherwise. A live tracker of web3 grifts totals $12 billion lost to scammers so far.
A prime example would be a16z’s flagship offering for decentralized social media, BitClout, which used a bonding curve to guarantee early insider enrichment. Now rebranded to DeSo because BitClout’s name was so despised, its token now languishes 94% below all-time highs.
Consider also a16z’s metaverse. Despite a market capitalization exceeding $1 billion in October 2022, fewer than 8,000 people used the largest web3 metaverse on an average day. Indeed, the majority of web3 land is never visited by anyone other than its creator.
Similarly, a16z was championing the idea of ‘play-to-earn’ games, heralding Axie Infinity’s 60,000-strong Filipino workforce as a shining example of a new era of web3 gaming. It also invested in Yield Guild Games and many other web3 projects.
Unsurprisingly, the vast majority of those Filipino workers lost their jobs months ago. Many are still indebted. Almost without exception, play-to-earn gaming tokens have lost most of their value.
Web3 as marketing buzzword
Some even question the existence of web3 as anything more than a marketing concept.
“There is zero proof that ‘web3’ exists, let alone that it would be some kind of new and better version of the internet,” Cory Klippsten, CEO of financial firm Swan Bitcoin, told Protos.
He added, “All we‘ve seen from a16z and their co-conspirators over the past five years are scheme after scheme to market useless tokens and sell them without ever achieving any kind of product-market fit for the associated project. They can make all the science-y sounding slides they like, but it doesn‘t change the fact that this once-venerable firm is all-in on the pump-and-dump business.”
More failed promises from a16z’s web3 portfolio
Other supposedly decentralized properties in a16z’s portfolio also lost money to failures of centralized leadership. MakerDAO lost $7 million to an August 2021 hack. MakerDAO is also abandoning its original purpose of decentralizing a $1 stablecoin. Its founder wants to abandon the peg altogether and half of its core developers are quitting.
More recently, Mark Zuckerberg quietly abandoned most of Meta’s web3 initiatives after losing $24 billion on various product flops, including Horizon Worlds.
A16z promised a return to the community-driven approach with extra functionality. However, even if web3 were to return power to the people, it can backfire on its contributors. The Ethereum Name Service just booted its director of operations, Brantly Millegan, for controversial tweets from seven years ago. Millegan’s defenders failed to convince three of the four voters not to remove him from his position.
As the supply of a16z-backed tokens increases by the month, it becomes increasingly difficult to take a16z’s claims about web3 seriously. Certainly, web3 has been exit liquidity for its LPs in the past.