By Alex Tapscott

Last week, I was down in Austin for Consensus, one of the world’s largest and longest running Web3 events. In contrast to the past two years, 2023’s event was a more subdued affair. By some estimates, attendance was down by around 75%. A lot fewer celebrities dropped by as the biggest players have pulled back on endorsement deals in the wake of the FTX debacle. Still, despite the more modest showing, the mood was good. The feeling was that a lot of so-called “tourists” – people who came to Web3 seeking riches and glory in the last bull market- had gone, but that all the best builders, developers, and teams were still at it. Web3 entrepreneurs and developers remained committed to building through the bear, and the mood was quite collaborative.

Here are my THREE big takeaways from the event:

1. Fundraising in Full Swing: Many of the people I spoke to are entrepreneurs looking to raise capital. Perhaps that is because I ‘self selected’ to attend meetups connecting investors and founders, but the trend extended beyond these arranged meetings. As Andrew observed on this week’s DeFi Decoded, a lot of companies raise capital on a 2-3 year runway, so it is logical that anyone who funded in 2021 would be looking at a short runway before needing to launch another round. Given the fact that Web3 VCs raised tens of billions of dollars in 2021 and 2022, it is surprising that some companies see a paucity of willing investors, but good projects still get funded and the view is many VCs are either nursing wounds from the last cycle or waiting for valuations to come to them.

2. The Offshoring of Web3 Due to Regulatory Uncertainty: The view from attendees is that the U.S.’s inability to establish a clear regulatory crypto framework at the pace of other nations, and its choice to use enforcement actions as the primary policy tool, may prove detrimental to its competitiveness. Attendees from Hong Kong, Dubai, and even Europe were quick to draw a stark contrast between the approach of their governments and that of the U.S. To be sure, the conference’s attendance pool of policymakers and traditional enterprises highlighted the evolution of the industry and highlight the support it has in some corners of D.C., but overall the tone on the U.S. is bearish. There was even a rumour that Consensus itself, an emblem of U.S. Web3 leadership is moving offshore next year- perhaps to Canada! Web3 is a global industry emerging at a time when technology tools are more distributed than ever. The view is the U.S. has a lot more to lose here than before when it would have been a default winner regardless of the position government took.

3. Enterprise Adoption Continues, But Regulatory Fog Clouds Outlook:Big businesses remain excited about the potential of Web3 and its use cases. There are a lot of experiments going on, and some companies are leaning into this technology very hard, such as Google with its Web3 cloud services business, Visa with its major hiring efforts, or Mastercard building credentialing systems for Web3. But the prevailing feeling is that until there is some regulatory clarity, big companies will not go “all-in” on any Web3 application that requires them to buy, hold, earn, or reward customers with tokens.