Choppy waters but #wagmi
To the Inflection community.
we sent out this email to our founders yesterday but wanted to share it with our broader ecosystem as well. Here we go.
Gm friends, colleagues, founders and limited partners,
The last 48 hours have been very difficult for most of our ecosystem. Assets across the board saw double digit price slumps with many investors panic-exiting the market.
Alongside challenging macro environments driven by interest rate hikes, a war in Europe, disrupted supply chains and high inflation the crypto community has to deal with challenges of its own doing. One of the largest stable coin projects, Luna, is suffering from a bank run and vaporising confidence in its ability to re-establish the price peg of its algorithmic stable coin UST. Within 7 days Luna’s market cap dropped from $30B to $300M - a collapse of 99%. This event amplified sell pressure in related ecosystems such as Anchor Protocol (money market driving demand for UST) but also rippled into AMM stable coin pools holding UST and the broader ecosystem.
As of today we can’t tell how deep asset prices will fall or for how long a recession might unfold. We can’t tell if or to which degree crypto’s inherent cycles will be over-written by macro dynamics given that our ecosystem has never been exposed to such market conditions throughout its short lifetime.
What we can tell however, is that these technologies are here to stay. They are a step function improvement over current communications and financial infrastructure. They are anti-fragile by design and will be hardened by any crisis they’re going through. Some of them (e.g., Bitcoin) have been designed precisely for macro conditions of hyper inflation and eroding trust in current fiat monetary regimes, plan $B.
In the grand scheme of things the current (and probably upcoming) market turbulences present a huge opportunity. They are scary but they separate the wheat from the chaff. They mute the noise and clear the skies. They make us focus on what is essential. Now is the time to build the future of the internet and to deploy capital.
Some of you might be living through their first cycle. Some of you might see your savings vanish and your businesses on the line. Feelings of anxiety, doubt, depression and loneliness might be overly present during these dark days. We’ve been there.
But be assured that we will have your back. We designed Inflection to be a self-sustaining platform for innovators, entrepreneurs and creative minds who challenge the status quo. Venture capital is just the business model. We are only a phone call away. If you’d like to chew through some hard decisions, runway optimisation, want to discuss markets or simply feel like connecting with other innovators (our team or any other community members) - please reach out.
We will make sure to be in touch with you through established comms channels. Our limited partners will receive the next update letter shortly.
Now let’s take a deep breath, go for a walk and remember - #wagmi.
All the best,