Bybit's Web3 Retreat: A Necessary Correction or a Sign of Failure?

The news broke: Bybit is pulling back from its Web3 ventures, shuttering services left and right. April 28 th, 2023 and May 31 st, 2023 were momentous dates. Perhaps they will be the first indication of a reappraisal of our enthusiasm for the headlong dive into all things “Web3.” Is this a sign of failure? To me, that’s a welcome shot of some long-overdue discipline.

Let’s face it, the Web3 space isn’t a stranger to chaotic, flashy marketing – it can sometimes seem like the Wild West. Remember the dot-com boom? I do. It was a wonderful, creative, disruptive, often outrageous frenzy of innovation, promise and ultimately, a shitload of vaporware. Web3, from its proliferation of NFTs to its endless yammering about DAOs, has largely been a rehash of that wild west vibe. So Bybit’s move, contrary to many reactions I’ve seen, is not a failure but an industry-leading responsible course correction.

Their strategic reset, or as they refer to it, their strategic pivot, to return to the center of the plate on their core products, is a refreshing development. Rather than looking to replicate the next big thing, these fellows are doubling down on what they know works. Think of it like a world-class chef returning to their award-winning casserole after dabbling with the latest in molecular gastronomy. After all, the classics are classics for a good reason! It's about sustainability, not just hype.

…the power of the siren song of “get rich quick” is really strong in the crypto world. Web3? It amplified that tenfold. It seems like everybody’s getting in on NFTs, tokens and platforms, all promising infinite returns. Really, how much of it is real, and how much is smoke and mirrors?

Bybit, like all of them, probably just fell victim to the hype. But unlike others who double down on proven-to-fail strategies, they’re starting to hear the chorus instead telling them that the emperor has no clothes. This is not only an achievement for Bybit, but a tremendous win for the entire industry to re-consider its priorities. Are we really building for the next generation, or are we just paying a billboard company to pretend that we are?

The absence of concrete regulatory structures within the Web3 ecosystem can prove advantageous, yet disadvantageous. While this rapid pace of innovation is exciting, it opens up new avenues for fraud and abuse. Remember the FTX collapse? That's what happens when innovation outpaces regulation.

I’m not arguing that we should stop innovation in its tracks, but I do think we need some guardrails here. Bybit's retreat could be interpreted as a tacit acknowledgement that the risks in the unregulated Web3 space are simply too high. Maybe this is a call for regulators to take action and offer some reassurance.

Let's not forget the elephant in the room: the alleged $1.4 billion hack that Bybit suffered. And even if they deny charging that kind of money to list a token, the said loss is no chump change. It highlights a critical issue: security.

Web3 has the potential to be more decentralized and secure, many existing platforms are still susceptible to hacks. The hack highlights the importance of strong security procedures and due diligence. It's a stark reminder that the "move fast and break things" mentality doesn't work when billions of dollars are at stake.

Bybit’s integration of Avalon’s Bitcoin yield product is an exciting development. It’s a welcome return to the template of more traditional crypto finance models. Receiving earning yield on Bitcoin via institutional borrowing is a world apart from the jokey speculative realm of NFTs. It’s an encouraging move, one that reeks of sanity returning and a focus on long term, sustainable growth returning.

Bybit isn't alone. X2Y2, a competing NFT marketplace, gave the community boastful assurances when they too made the same choice. This all signals to me that we are at a tipping point. The first-wave hype surrounding NFTs has long passed. Now, platforms are coming to the sinking realignment that perhaps this market isn’t as sustainable as they thought it once was. To be sure, that’s a sign of the times.

Ultimately, Bybit’s Web3 retreat is a glass half full/glass half empty situation. It’s not just an indicator of Web3’s failures, but an indicator of the state of play and existing challenges in the Web3 environment. Nice, but this is the kind of dose of discipline that should reinforce the core values. It sends a clear signal that the industry should take a more restrained and responsible approach to change and innovation.

Are you surprised by this news? What do you think of Bybit's decision? Green Clubhouse – smart move, missed opportunity, or both? Let's discuss in the comments!

Here is a table to show the contrast:

Bitcoin Yield: A Return to Sanity?

Bybit integrating Avalon's Bitcoin yield product is interesting. It's a shift towards more established crypto finance models. Earning yield on Bitcoin through institutional borrowing is a far cry from the speculative world of NFTs. It's a move that suggests a return to sanity and a focus on sustainable growth.

X2Y2's Echo: A Sign of the Times

Bybit isn't alone. X2Y2, another NFT marketplace, made a similar decision. This tells me we are at a turning point. The initial hype surrounding NFTs is fading, and platforms are realizing that the market may not be as sustainable as they initially thought. It is definitely a sign of the times.

Ultimately, Bybit's Web3 retreat is a complex issue. It's not simply a sign of failure, but a reflection of the challenges and realities of the Web3 space. It's a dose of discipline, a return to core values, and perhaps, a signal that the industry needs to adopt a more cautious and responsible approach to innovation.

Are you surprised by this news? What do you think of Bybit's decision? Is it a smart move, or a missed opportunity? Let's discuss in the comments!