Understanding the Influence of Greed, Anxiety, and Irrational Behavior on the NFT Market and Web3 Ecosystem
Summary:
The article discusses the state of the NFT market and Web3 ecosystem, highlighting issues such as greed, anxiety, and irrational behavior leading to market disappointment. It notes that while some projects promised to deliver value similar to Disney and Picasso, most have not met expectations, causing disillusionment among investors. The author, Lugui Tillier, emphasizes that success is dependent on the maturity of the Web3 community and encourages investors to improve personally and financially as the next bull run approaches.
The year 2021 witnessed an explosive emergence of 10 potential equivalents to Disney and 20 potential equivalents to Picasso, attributed to the rise of blockchain and numerous nonfungible token (NFT) collections. Despite the high values these NFTs commanded, an indication of collective faith in these ventures, most have not delivered two years down the line. This disappointing performance has sparked a mix of dissatisfaction and disillusionment amongst investors and supporters. Project failures have often been attached to the founders, but the rampant greed, fear, and irrational behavior within the Web3 participants have also contributed significantly to these outcomes.
We now find ourselves in a challenging landscape where even the most competent and forward-thinking initiators battle against unpredictable market forces, often leaving behind incomplete projects and unrealized dreams, further diminishing faith in the industry.
Take, for example, the Party with $100 tickets. Someone missing the initial sale due to eagerness to attend with friends ends up paying $500 on the secondary market for the ticket, setting themselves up for probable disappointment as the event was designed to provide a $100 experience, not the inflated $500 experience, thereby creating an imbalance between expectation and reality.
This experience of frustration induced by greed is mirrored in the crypto market, where one could pay 20 Ether (ETH) for an NFT initially selling for 0.5 ETH. It is vital to align expectations with the actual 0.5 ETH value, especially considering the ongoing decline of Web3 royalties.
This is an example of anchoring bias, a common human error influencing decisions. Buyers tend to anchor their expectations based on the higher price they purchased the NFT for, leading to consistent dissatisfaction.
Furthermore, the anxiety of expected speedy progress puts an immense strain on project initiators, encouraging a never-ending cycle of announcements just to sustain the community's hunger for continuous news and development. In the last cycle, popular gaming projects presented a glaring illustration of this issue.
The public has a skewed expectation of certain high-profile games, built on Unreal Engine 5, expecting them to be available within months, despite an established three to five-year development time frame. When the delivery timeline became clearer, holders dumped their tokens due to impatience.
Opening up the development process to the public, a possibility afforded by Web3, can also have adverse effects, causing a harmful environment detrimental to the mental health of the project founders.
It's worth noting that nearly 75% of venture-backed startups fail. NFT collections operate similarly, in an environment filled with uncertainties and risks, yet the market frequently dismisses these realities, expecting continuous growth and success. This attitude is often fueled by confirmation bias, a tendency to favor information that confirms one's pre-existing beliefs or values.
It’s a myth that everyone will make it in a market dictated by buying and selling, as somebody has to lose for others to win. Sadly, this isn't common knowledge in an environment with a lack of financial understanding and a surplus of anxiety, a highly dangerous mix leading to decisions made more on emotion rather than rational reasoning.
However, there is a silver lining. The crypto ecosystem has progressed significantly since 2021. Initiatives that adapted to the market changes are becoming more prominent, and there has been a considerable amount of growth in human maturity.
Many founders found themselves assuming roles as “CEOs” on the fly and are now more mature, equipped, dedicated, and focused on delivering value after almost three years and some adjustments. Nevertheless, this success derives from the maturity of the Web3 community as much as the dedication of the leaders. If the game is negatively influenced by excessive greed, anxiety, and irrationality, the leaders alone will not be able to resurrect it. This is an essential reminder for investors to improve both financially and personally as we anticipate the next bull run.
This commentary comes from Lugui Tillier, the chief commercial officer of Lumx Studios, a Web3 studio in Rio de Janeiro. Among its investors is BTG Pactual Bank, the largest investment bank in Latin America.
The views and opinions expressed herein belong solely to the author and do not necessarily reflect or represent those of Cointelegraph. This article offers general information only and should not be regarded as legal or investment advice.
Published At
11/27/2023 5:49:05 PM
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