A glance at the news can tell you the crypto markets have tumbled, but look more closely and the picture is a little less straightforward.
An important point here is that there are markets within markets. Many level 1 blockchains have formed their own self-contained ecosystems, and within these systems the wheels keep turning. Let’s take Cardano as illustrative, since Cardano, in particular, has been receiving increased attention lately.
Cardano has for a long time been sitting comfortably among the top cryptocurrencies by market cap. It is currently number six, but at one point last year was number three, and it has been a hub of developer activity with a strong and well-intentioned community.
Last year, ADA’s price went from a few cents all the way up to over $3, before dropping down to a range between $1.20 and $1.50. It crashed recently with the rest of crypto but has bounced above $1 although it’s anyone’s guess what happens next.
That by no means tells the whole story since within Cardano we can find a thriving NFT community and the beginnings of a shift into DeFi. And, it seems like neither are paying attention to the news of a touted crypto collapse.
Jump into Cardano’s NFT marketplace, and the Twitter and Discord channels of NFT projects, and it does not look much like a financial environment in the midst of red candle carnage.
Is there talk of prices and crypto-economics? Sure, sometimes, but the main activities continue in as buoyant a mood as ever. And, the main activities, by the way, are building and creating, along with, predicated on that, collecting, trading and speculating on the things that are being built.
And, that gets to the crux of the matter, that a core purpose within the NFT space is making things, and that it is an essentially creative arena.
Much of that creativity is artistic, as NFTs can function simply as another medium on which to paint and design. But, then there are people who are developing games and exploring metaverse concepts, both of which have NFTs at their core, as they incorporate the acquisition of digital assets. Play-to-earn and GameFi are the avenues of growth, and crypto is integral to this.
There are also DAOs being established, some of which collect and fractionalize NFT assets, and so alternative modes of governance and operation, democratic and smart contract enabled, are emerging and being put to use.
And, when you browse the NFT marketplaces, it is noticeable that although assets are priced in ADA, and ADA’s value in fiat has come down, the NFTs themselves are not just trading at the same ADA prices as they were previously, but are experiencing, in some cases, substantial gains.
Across the blockchain board, many NFTs had been pumping prior to the broader crypto crash, and have continued to maintain that positive momentum. In fact, if you were only looking within the NFT space, you would have no hint that a sell-off had occurred in the outer crypto environment.
Cardano is just getting started with DeFi, and currently has in operation one order book style DEX, MuesliSwap and one automated market maker DEX, SundaeSwap, with several others in the pipeline.
Dip into this nascent DeFi environment, and you will find parallels with the NFT situation. While the price of ADA dropped, the ADA-relative price of tokens in the Cardano network (see, for example, World Mobile Token, Liqwid and Pavia) has remained buoyant or in some cases gone up.
What this might indicate is that a decoupling is taking place, in particular when it comes to NFTs. While there are strong financial incentives within the NFT space, there is much more to it than just outright financial gain, and what gains are to be had rely on creative thinking and technical proficiency.
The NFT space is populated, besides crypto speculators, by a crowd that includes artists, designers and game developers, and is oriented towards products that are collectible, aesthetically pleasing, have utility, or embody some combination of those factors.
That is a potent culture, in which there is financial reward dependent on what you put in, a tendency towards artistic thinking, logic and engineering skills, a lack of restrictions or precedent, and an atmosphere of support and charged positivity.
Taking a broader view, if you have looked back at the crypto space since bitcoin was created, it has been a thrilling ride, taking in growing adoption, stratospheric rises in price, altcoins and ICOs, and the creation of smart contract enabled decentralized computing networks.
But, has anything garnered such immediate mainstream attention as NFTs, blockchain gaming and the touted construction of metaverse environments? These are not innovations or concepts that are suddenly going to disappear again, and the markets around them are becoming increasingly independent of the core crypto world from which they have emerged.
A counterargument would be that rather than markets within markets, we have bubbles within bubbles, and not all of them have popped yet. That is plausible, but the technology that existed before prices crashed is still as active as ever now after prices have crashed.
At times like these, it is instructive to be aware of who is not just weathering the storm but has barely even noticed it was raining, because they are too busy building.
