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Sirwin

Internet Computer Resilience: Why It Always Survives Bear Markets & Comes Out Stronger


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The crypto markets in 2022 have witnessed one of the steepest declines in crypto history, with many projects once again crashing 70% to 90% from their ATHs in November 2021. As happens every time, this serves as a cleanse for the industry and shakes out many of the bad actors and over-leveraged projects and institutions.

Of course, the Internet Computer has also felt the pain of recent declines (as have all crypto and Web3 projects), but similar to previous market declines and crashes, the IC remains resilient — which begs the question: why is that?

How To Stay Resilient During Bear Markets? Internet Computer Case Study

The most important ‘thing’ a Web3 solution, crypto project, or a blockchain team needs is a product and a technology that other people want to use. Moreover, this technology needs to be disruptive and not-easily replicable.

As we’re seeing now, many projects and institutions are crumbling because of the products they offer — whether their financial products are insolvent or over leveraged, their technology solutions ‘not working’, or the team rug pulls the community at the moment a liquidity crisis hits. We’ve seen these instances occur in the case of Terra, Celsius, Bancor, and 3AC, to name the most heavily-reported ones.

That’s what sets the Internet Computer apart. It has a product that’s live, it has a product that takes blockchain to the next level, and it has a product that realizes Web3.

We just saw on Monday a popular cloud service CloudWare go down because of network issues, which as a result brought down Coinbase, Coingecko, Coinmarketcap, and other DeFi protocols. This can never happen on the Internet Computer. The cloud is the prey, and the Internet Computer is the predator, if we’re speaking metaphorically.

For the reasons of having a strong product that has a market and a use case, the Internet Computer is going to come out of this bear market even stronger.

Second, during bear markets it’s important for the community and the network to keep functioning, and you can see that reflected in the governance and staking mechanisms. For example, the IC is still functioning, proposals are still being voted on and discussed, and the staking mechanism remains unchanged.

On staking, this is a heavily undervalued proposition. For example, Anchor Protocol on Terra was offering 20% on ‘staking’ and Celsius was paying out interest for people’s ‘stakes’ — but during the liquidity crisis starting in May and ongoing, governance tokens became exit liquidity, which is a terrible thing and unfortunate circumstance to boil down to. This is something that won’t happen on the IC.

As you can see on the IC dashboard, the IC’s staking mechanism is still strong and has not seen a change or lowering in APYs. Stakers can still earn 11% on a year-long stake.

Interestingly, this yield is even higher than many top DeFi yields, and to give an even better comparison, is higher than Treasury yields. In the image below, the left side depicts current DeFi yields and the right side depicts Treasury yields. Therefore, we can see that the Internet Computer staking network earns more than both these markets.

Thirdly, and lastly, a project roadmap. The Internet Computer has a packed roadmap of upcoming network changes and added products such as BTC integration, DeFi, NFTs, token swaps, as well as developer competitions and hackathons. So there’s no downtime for the Internet Computer team, and there’s no downtime for any project who’s trying to gain market share out of this downturn. That’s why the Internet Computer is in a favorable position.

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All About The Internet Computer
All About The Internet Computer

This blog is dedicated to exploring the Internet Computer's tech stack, how it compares to the industry, projects building on the Internet Computer, and what ways the Internet Computer is creating true Web3.

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