Mark Cuban: “95% of These Projects Will Be Wiped Out”

The bear market is among us. And now is the time to separate the weak from the strong. According to the billionaire, Mark Cuban, in a one-hour interview with Bankless, the outspoken Dallas Mavericks owner stated that this bear market is a good thing, which is probably not what most people are thinking as Bitcoin is down to around $20,000 and Ethereum is a shade above $1,000 at the time of recording. Cuban expressed that the reality is that cryptocurrency is a zero-s game and no matter how enthusiasts want to spin it, after all of the dust settles in this bear market. There will be many losers and consolidations.

Cuban has first-hand experience with the boom and bust of a relatively new, unregulated industry and how it leads to consolidations, buyouts, and losers. Cuban made the vast majority of his fortune during the dot-com boom when Yahoo purchased for billions, essentially making Cuban a billionaire overnight. Cuban is the first to say that he has been extremely lucky, but that doesn’t discount his experience and his valuable insight as to where the crypto market is going.

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‘What I should say is that when something worked on Ethereum, it went to an L2 of Ethereum, so you saw DeFi go from Ethereum. It’s too slow, and it’s too expensive. So then you go to level 2 of Ethereum. Well, it’s cheaper now. Isn’t that a good thing? Then it went to another chain and was the same. Then another chain, and another chain, and another chain, sounds like a song, it sounds like something DJ Khalid would do, and another change, and another change. But what would happen is that, because blockchain, for the most part, is a zero-s game. There are not a whole lot of differences between them. We can argue about the trilemma, and the nuance differences among all of them and Bitcoin maxies, a whole different story. But the reality is that if those chains don’t get enough volume, they’re gone, and because a lot of the competitive aspects of Ethereum’s competitive chains are cheaper and faster, you’ve got to get a whole lot of transactions in order to survive. So, what did they all do? And they all did the same thing. Let’s go get DeFi, so they all put together grants and funding and subsidies to go out and get LPs and others that excuse me, would support DeFi on their platform. DeFi on blockchain X fill in the blank. And then they did the same thing with NFTS.

We’re going to go get this celebrity and we’re going to subsidize it and we’re going to put it on our chain. That’s how we’re going to get enough traffic and then we’re going to show off why our chain is better and then they go through the long list of blockchain X Maxi. They would say and what they found out very quickly is that it doesn’t work. When you’re a copycat, even if you have your checklist looking a little bit better, it’s really hard to get somewhere. So all that said, we’ve gotten to the point now where all those chains realize they’re in deep.

There’s just no there. You can’t just think that these are multi-billion dollar cap companies. Now, obviously, the market caps of the companies are convoluted and kind of configured the way you want them based off of your float versus your total allocation or your total mint. But now, what are they going to do? So you’re starting to see some of the fissures in these chains that really don’t have any traffic and really don’t have anywhere to go to. That’s just part of the cleansing. That’s natural. I’ve said before that this is a lot like the early days of the internet, and when we went in at 95%, 94%, 95% of my company, we started streaming. We were the first company to do commercial streaming and this and that, and it was a race because the next thing there were 20 companies, 30 companies, 40 companies trying to do streaming and 39 of them died, or 35 of them died. And you saw the same thing, and then when the year 2000 hit and the bubble burst, 95% of companies were gone. But the ones that were able to survive are still crushing it today: the Amazons, Google, etc., because they had good, valid business models. And that’s what we’re going to see right now with crypto.

Crypto has got a lot of things that it can do really well, but we’ve seen all the money and brainpower really geared towards DeFi and NFTs and for 99% of those apps. It’s a waste of brain power. It’s not what’s the difference between DeFi, on Blockchain, on Ethereum, Polygon and all the others. And maybe just the subsidies, like we saw with Anchor, just if you don’t earn the money, like we saw with Axie, and I’m an investor in Axie. and i told him, unless you’re able to create enough of an economy that you’re able to create productivity, meaning you have enough users that you can sell ads and sponsorships and NFTs, and earn income from all those things, in order to buy the SLPS and the actual tokens from users, meaning, if it’s earned to buy them, then you’re going to run into problems. And so we went from playing to earning this great thing, and it is helping people in the Philippines to be okay. It’s barely hanging on and no new pay to earn platforms have succeeded that I know of. I actually would have gone in if they could still do it, and I hope they do. Even though I’m an investor, I don’t really have that kind of connection with them just to tell them what to do, but if they’re out there selling ads and sponsorships and then taking that money and buying tokens from the people who are playing to earn. There’s a replenished economy that works. If I buy one of those NFTs, you take my money. You buy some SOP, etc., like Anchor. They wanted to be able to take loans to pay for the 20%. But they just kept on going subsidy, subsidy, and subsidy, instead of just saying okay, at some point. Hey guys, we aren’t doing it for loans. We generated 150. It’s like how you pay LPs on different platforms right with their native token.

You can pay a minute but if you’ve got no one to buy them from. And that’s what this is all about and that’s where a lot of this has failed. There’s got to be second order, third order, and fourth order demand, particularly for NFTs. What’s that like with the Mavs? We used NFTS as a reward for going to a game. You have to actually attend a game, and you’re only allowed to get one. It’s free if you go to the game. Your reward is this NFT, and if and when you have these NFTs, we’ll give you discounts and we’ll do these other things. If you miss a game, you can buy one from somebody else and collect them. But because we gave them away for free, there was no expectation that A, B, or C. 

We didn’t have to worry about whether there was a second order, third order, or fourth order purchaser in order to make people feel good about what they got when they went to a game. And now when you put out an NFT, unless you’re really lucky and you’re the board age of your crypto punks or whatever, there’s hopefully sustainable demand. What are you going to do to get people excited in your community to buy the NFTS?’

[This article is a transcription of a video made by Only The SAVVY]

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