During the DeFi summer of 2020, long ago in Web3 time, the “degens” meme emerged as a way to describe Web3 enthusiasts who practiced yield farming on systems with high Annual Percentage Yield (APY). and a high probability of failure. It’s a fun term that also reveals the mercenary and selfish side of the industry.

In the first two years of the decade, fueled by headlines, rising prices, and FOMO, thousands of merchants jumped on Web3 with the intention of making a quick buck. And despite a sharp selloff this year, cryptocurrencies continued to be mainstream. There were Super Bowl ads. News from banks using decentralized finance (DeFi). And, yes, negative press on all bankruptcies.

Unfortunately, with the implosion of escrow systems like BlockFi and FTX, a lot of people lost money. That’s really bad for the people who got hurt and destructive for the space.

Kevin Owocki is the CEO and founder of SuperModular and co-founder of Gitcoin. This article is part of Crypto 2023.

Ever since Satoshi solved the Byzantine generals problem in the Bitcoin white paper, there have been boom-bust cycles in crypto that, from an evolutionary perspective, are similar to natural systems. In times of abundance, thousands of new projects flourish. In times of scarcity, projects fail. The survivors will be the dominant species of the next boom (as visualized in this poster I made).

Survival of the fittest is a simple but powerful mechanism observable in the Web3 ecosystem: the fittest best meets the markets preferences. It might explain why the degens, seemingly interested in short-term breakthroughs rather than long-term success, hit a dead end. It turns out that purely selfish behaviors are maladaptive in Web3 (as they are in many places in nature).

In fact, the industry now known as Web3 has always had a side that goes beyond greed and profit. Crypto is a tool for building collaborative organizations and sharing resources – the long-term trends that have always motivated participants.

the story continues

Recently, there has been increased awareness and attention to how blockchains, distributed systems with decentralized purchasing, support public goods. Public goods are the things we all depend on (like open source software or privacy research), but they are hard to maintain and finance.

See also: The next step in the evolution of Web3: regenerative finance | Crypto 2023

Another term for this is “regenerative economics,” the idea that money can be used to incentivize communities to solve systemic problems. Even when open source projects fail, the exercise can benefit the rest, if they all move on the same axis towards social improvement. Innovate, iterate, evolve, repeat.

That is why, even in the pits of crypto winter, 2023 is poised to be the year of regeneration.

degen to regenerate

Degens came to Web3 looking for financial advantages. Regenerators are those who are working or building on the regenerative cryptoeconomy. They have a long-term vision of how Web3 can be good for the world, but not just in a financial sense.

Regens sees how financial systems could be designed to act as conduits for greater human flourishing serving all of humanity’s needs. My friend Gregory Landua, co-founder of the Regen Network, argues that people have eight essential needs that could be expressed as forms of capital. Beyond financial capital, there are our social, material, vital, intellectual, experiential, spiritual and cultural needs.

See also: How DeFi ‘Degens’ is funding the next wave of open source needs | Opinion

With programmable money, we can program our values ​​into our money. Crypto has it within itself to create systems as extractive and fragile as the existing financial system. When a degen trades, he is playing a zero-sum game: tokens leave his wallet and go into the counterparty’s wallet and vice versa. But Web3 can also create more positive addition protocols that expand resource capacity over time.

The journey towards the regenerative crypto-economy

There is a common thread that unites many people in the regeneration ecosystem. They used to be degens! Lured by the promise of better economic circumstances for themselves and their family, they entered the ecosystem to make a profit.

Over time, however, they fell in love with the promises of collective action, often through the direct experience of contributing to or using a project. His attitude and incentives changed. That’s by design, built into the fabric of crypto-economic systems. For example, decentralized autonomous organizations (DAOs) allow people with a shared mission to come together and pool resources: everyone involved is at least partially aligned in their values ​​and commitments.

See also: The only word that defines the objectives of Ethereum | Opinion

When you join such a community, you start to learn how to manage risk and manage volatility. You think differently about capital allocation. But sometimes it takes more than that to get a bigger picture.

Many regens are former degens who made this journey last cycle in 2017. And that’s partly why I’m so optimistic about the future of regenerative systems. There are thousands and thousands of people who are newer to crypto, who got into Web3 in the last year or so, and are likely now at step two of the journey (ie, wrong). They have made mistakes and learned from them, a knowledge base that can inform a more pragmatic approach to the next market cycle.

The window of opportunity is here for newcomers to Web3 to move on to step three: find a community and discover regenerative use cases for crypto. From there, they will build the next cycle of projects, many of which will be positive and impactful to the world.

The impacts are already here

People sometimes say to me, “Hey Kevin, this talk about regenerative crypto is great, but are there any examples of theory in action?”

Regen is not just talking. It’s happening! In fact, Alejandra Borda and I wrote an entire book detailing 100 different examples of projects where people use cryptography to regenerate the world.

To name a few: Proof of Humanity, Celo, Kolectivo, and Gitcoin (the crypto-based crowdfunding protocol I built) are all doing valuable things.

2023: The year of regeneration

In this downward cycle we have the opportunity to filter out the signal noise and rediscover our purpose. Through decentralization and peer-to-peer technology we can build a more equitable, equitable, and less extractive financial system. We can bring more organic and democratic financial tools to the masses.

As individuals, we can find community, join DAO and BUIDL in the projects that could serve as the foundation of the next era of Web3. It is the year to build democratic, prosocial and positive projects for the world.

To regain legitimacy, the Web3 ecosystem must find ways to rotate capital, attention, and talent away from the projects that have the best Ponzi economies and toward the projects that are going to have the most lasting positive impact. We want this not because we want crypto to look good to the world, but because we want crypto to look good to the world.

Many of today’s biggest crypto projects have positive externalities. For example, OpenSea, the largest non-fungible token (NFT) exchange, has enabled thousands of artists to monetize their work and generate new forms of revenue that are less extractive than their Web2 counterparts.

Lens Protocol, a Web3 social media platform making more and more crypto buzz amid changes to Twitter, is enabling people to own their own data and take their social media presence from one site to another. . Web3’s social networks have the potential to disrupt the tech giants. (Disclosure: I am a Lens Protocol angel investor.)

Proof Of Humanity, a registry of 18,000 identities resistant to Sybil attacks, is using UBI tokens to pay people a stipend. Gitcoin is a crowdfunding platform that has delivered $72 million worth of funds for public goods and recently released a suite of protocols that allows others to crowdfund their communities. Kolektivo is a set of protocols that allow local communities to launch, finance and govern their own regenerative economies.

See also: Who is building the Ethereum public goods? | opinion

Web3 carbon credit systems such as KlimaDAO and Toucan Protocol enable better, faster and cheaper carbon credit trading. While carbon credits aren’t perfect, Web3-enabled systems like Hypercerts allow users to reward projects with observable results. Additionally, hyper-certificates can be used beyond climate concerns in impact areas such as education, healthcare, AI security, and open source software.

2023 will be the year of the Regen. We will rebuild and regenerate not only the Web3 space, but also our communities and ourselves.

If you want to get involved in the spawn space, consider buying “ImpactDAO” and “Greenpill” books on the Gitcoin store. Use code WEB3_CAN_REGENERATE_THE_WORLD to get 100% off digital editions of any of the books.