Bear Markets: The best ideas can come during the times when the pressure to compete is less fierce, says Aaron Soskin, the Founder of Govrn.
Crypto and Web3 are experiencing the toughest conditions in several years. It’s easy to focus on falling prices in a market downturn, but the best ideas and the most thoughtful experimentation can come during these times when the pressure to compete is mitigated. While healthy treasuries and rising market conditions are important, these are not the reasons why so many people joined the Web3 space and ultimately are not why they will stay.
Established builders, innovators, and newcomers to Web3 should be using this time to look deeper at the impact of experimentation. Diving deeper to innovate will create the next great application of decentralized technology and new communities with real utility and meaning. Rather than fearing crypto winter, DAO contributors can embrace the constraints that often breed creativity and innovation.
Bear Markets are for Creativity and Innovation
There are serious pros to innovating in a lower-stakes environment. When the pace slows down and the financial stakes are lower, it encourages a deeper look at the impact and externalities of this experimentation.
In the DAO space, bull markets are focused around cash grabs to create sustainable treasuries and working contributions that make financial sense for thousands of contributors. While it is important to have sustainable treasuries, sustainable labor contributions are crucial to the future of any project’s ability to succeed financially and to create a positive impact.
Similarly, bear markets enable contributors to think about the immediate impact of their contributions, opening up the gates to experimentation and risk and creating a space where innovation can not only grow, but thrive. This idea can be described as radical participation; that is, doing the things that you and your community deem most valuable, not the ones that simply drive the bottom line.
Radical Participation and Creating Value
There are several reasons why a bear market is a time for builders, creators, and contributors to come together and get back to the core of what they believe in. They can still shake up traditional ways of work and make positive contributions by pursuing their beliefs and passions.
While it is easy to find merit in a healthy treasury and rising market conditions, many people actually join and stay in the space for different reasons altogether. Many are still innovating in a lower-stakes environment when the pace slows down. The financial stakes are lower, and this encourages deeper consideration of the impact of experimentation. It creates space to try ideas that might not otherwise have been considered.
This can result in meaningful impact and create new value. For example, the concept and infrastructure for Moloch DAO was built in a bear market which now powers thousands of DAOs around the world.
Following the Money is not Always the Best Way Forward
When there is a lot of money in the space, it can encourage people to run with ideas that aren’t fully and responsibly vetted or robustly dissected by multiple people. This is true in traditional centralized companies and equally so in the Web3 and DAO space.
During a bear market, when financial resources are more limited, this often translates to more thoughtfulness around prioritization of projects and more effective constructive critique of innovative ideas. Furthermore, this allows the time and space for feedback on experimentation ideas to create more robust proposals.
For DAOs, bear markets decouple the idea of value from the treasury. For example, there could be a zero treasury DAO that generates immense value just through members’ contributions towards a cause or common goal, rather than a hefty treasury and highly paid contributors.
Bear markets: Meaning Creates Freedom
Bear markets offer the freedom to pursue your passions and create meaning through thoughtful contributions that benefit the individual and the community alike. This type of exploration should be given the same weight in Web3 work as it receives in creative and personal pursuits.
Radical participation is the superpower that Web3 and DAOs offer over traditional organizational structures. The latter favors hierarchy and the desires of a few at the expense of those that create value. Ultimately, it is radical participation that gives contributors freedom from the expectation imposed by others to define their value as purely financial.
The Way Forward
Some in the space may choose to hibernate. But the crypto winter is when many DAOs with real utility and impact continue to experiment and discover new ways of doing things in wild ways. It is also an ideal time for newcomers to get involved. The fear of making missteps is much lower.
Ultimately, the DAOs that weather bear markets are likely the ones that have a strong and established contributor culture and opportunity for creativity and contribution-based value.
About the Author
Aaron Soskin is the Founder of Govrn, an open platform that gives DAO contributors tools to own their contributions across the ecosystem. Prior to discovering the magic of DAOs, Aaron worked as a management consultant for IT. When he isn’t preaching about DAOs on a soapbox, you can find him skiing in the mountains or driving to the next city he’s going to live in.
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