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Crypto Trends to Watch: Hear 15 Prominent Investors Predict Industry Outlook

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Fifteen thoughts from the crypto industry's most thoughtful voices, covering social media, lending, privacy, NFTs, and more.

Original title: "Which Crypto trends are worthy of attention next?" We asked 15 well-known investors"

Original source: Tao of the Metaverse

Taking a few minutes of free time, the content of this article Here's what investors, operators, and founders should know about the most exciting cryptocurrency trends right now.

- Cosmos is gaining momentum. Although Cosmos has received far less attention than other ecosystems, investors see opportunity in Cosmos. Billed as the "Internet of Blockchains," Cosmos gives users the tools to roll out interoperable blockchains and is potentially more decentralized, resilient, and customizable than larger alternatives. Trading platform dYdX’s earlier decision to move from Ethereum to Cosmos showed the advantages of the latter.

- Institutional-grade DeFi lending takes off. Individual users may have adopted DeFi's first lending products, but more recent offerings have targeted corporate customers. Projects such as Maple Finance provide the necessary information and compliance assurances for institutional-grade loan pools.

- Rethink user authentication. Working with Web3 applications is still difficult. Consumers log in using encrypted wallets that are not linked to other forms of identity. Not only does this complicate usage for consumers, it also prevents developers from talking to their customers. Notifi and Portabl are tackling this problem from different angles.

- An encryption vulnerability needs to be addressed. We’ve seen a lot of cryptocurrency breaches this year, including rampant fraud, outages, and breaches. Investors recognize the failures in the field and support projects that seek to improve the status quo. An example is Blowfish, which makes complex transactions readable. ‍

- Web3's social moment may be around the corner. For some time, prophets believed that cryptocurrencies would disrupt social media. So far, there is little to support such predictions. This may be changing. Investors see promise in projects like Farcaster, among other signs.

No industry has grown as fast as the cryptocurrency industry. Nor can any other space match the volatility of the crypto space. A project that seems invulnerable today may be defeated tomorrow. Technologies that seem immature for a moment can suddenly experience a boom.

Because of these dynamics, predicting the course of the crypto industry is tricky and requires a lot of knowledge, perfect Timing and a lot of guts. Last year, The Generalist launched a series designed to give our readers a head start on discovering the road ahead. The What to Watch in Cryptocurrency series asked some of the world's sharpest investors what they think is worth watching over the next six months. Previous contributors have highlighted Solana, Ceramic, THORchain, Uniswap, Helium, and more ahead of meaningful momentum. They also shared their thoughts on wallets, collateralized NFTs, and the multi-chain future of cryptocurrencies.

Now we are asking new investors. Now is an opportune time for our third installment.

One month later, Ethereum is expected to transition to a more energy-efficient Proof of Stake (PoS) Consensus Mechanism - This event is called "The Merge". If successful, it would represent a meaningful and influential moment in crypto history. Positive early merge test results have energized the sluggish market, boosting the price of ETH by 66% in the past 30 days. Further down the food chain, corporate interest in cryptocurrencies continues, with new projects attracting talent and funding.

Perhaps because of these dynamics, I think this article is the best of our series of. It contains fifteen ideas from many of the industry's most thoughtful voices, covering social media, lending, privacy, NFTs, and more. If you want to read our earlier editions, Part 1 and Part 2 can be found here.

Trend: Regenerative Finance

Web3 gives us powerful new tools to coordinate economic activity. One of the most important problems we can solve with this new power is the climate crisis.

Toucan Protocol is one of the founding projects in the field of so-called Regenerative Finance (ReFi), which aims to Harnessing the power of crypto and DeFi to fund environmental recovery efforts. (Union Square Ventures (USV) is an investor in Toucan’s DAO.) The first area Toucan and other ReFi projects are focusing on is bringing carbon credits on-chain. This simple first step unlocks new use cases such as using carbon as collateral in DeFi protocols and having carbon sequestered represented as NFTs and deposited into the Metaverse.

The composability of tokenized natural assets means that climate action can be embedded into other protocols and applications program. This can unlock more use cases and demand channels. Going forward, new sources of demand on the Carbon Token chain can help support a robust financing ecosystem for real-world environmental project development.

This is a pivotal moment for the ReFi movement. Ethereum’s imminent move from Proof-of-Work (PoW) to Proof-of-Stake (PoS) — and the resulting ~99% reduction in energy consumption — has the potential to greatly expand the appeal of crypto and Web3 to mainstream audiences. At the same time, the Web3 infrastructure has matured to the point where it can better attract more mainstream users. Toucan and the ReFi movement are poised to capitalize on this moment.

——Nick Grossman, General Partner, Union Square Ventures (USV)

Farcaster

Since 2013, many people have been trying to merge social and encryption, but no one has succeeded. We think this is about to change. why now?

One reason is that the penetration rate of crypto wallets has been tilted in the number of users and the quality of use. Millions of people not only own crypto wallets, but regularly use them for various purposes.

For the first time, encrypted wallets have become a viable form of identity and login method for social products. Most importantly, each wallet comes with an on-chain "event feed" that can be used as conversation material (or, as we call it, an "engagement hook") in a social network. For example, your participation in NFT minting events may appear in your feed.

Another important reason why crypto-driven social can work is the path dependence of user growth in social networks. Winning social networks start with the right group of early adopters. Think of good early adopters as time travelers from the future who instinctively behave in the ways of the masses of tomorrow. Social networks that attract the right early user base are on their way to success. We think the crypto community is as compelling as the early adopters we meet. Crypto-driven social networks naturally have an advantage in fostering this native community.

Building an encrypted social network is a venture on the "expert" difficulty setting. It requires a great product, a well-thought-out underlying protocol, and a knack for community building. We believe Farcaster is showing all the early signs of being right. To join, ask founder Dan Romero on Twitter for an invite.

- Alok Vasudev, Co-Founder and Partner, Standard Crypto

Notifi

In web2, users register with their email and password when they want to create a new account. This acts as the default communication channel for the application. web3 is different. Since authentication and login happens via wallet addresses, developers have no natural way to communicate with their users. As a result, many "user notifications" happen via Discord or Telegram, which are unspecific and untargeted.

Notifi, founded by Paul Kim and Nimesh Amin, is building Twilio for web3, from Solana, NEAR , Ethereum, Aptos, and Sui ecosystem developers to start decentralized applications (dApps). Notifi provides developers with an easy embeddable notification layer to plug into their existing DeFi, NFT, gaming or DAO applications to communicate with users. Here are a few use cases that Paul and Nimesh are addressing:

-Notification of new governance votes

- Notifications of governance action results

- Notifications of market bids

- Liquidation notifications

- Notifications of incoming and outgoing trades

These notifications can be sent by email, text or telegram, and many more.

——Edith Yeung, General Partner of Race Capital

Portabl

We live between the web2 and web3 worlds when it comes to authentication. The cumbersome and headache-inducing authentication required to access your bank account is not transferred to your web3 wallet. We believe this suboptimal state will change as regulatory, consumer, and commercial tailwinds drive the shift toward self-sovereign identities. For example, earlier this year, eight U.S. states announced support for digital storage of driver's licenses, with Apple's Wallet app acting as an authorization proxy on the back end.

These shifts hint at a compelling emerging future where users own their data, control shared data and move seamlessly between web2 and web3.

The 6MV team is excited about our recent investment in Portabl, which addresses self-sovereign identity and identity Authentication problem. The company has created a universal digital identity that enables consumers to selectively disclose their verified financial identities wherever they need across web2 and web3 - keeping their privacy and security intact. Providers reduce onboarding to two clicks and automatically save 75% on maintenance, monitoring and auditing costs.

Consumer-first financial identities should be durable, transferable, and portable. Modern open finance can only succeed if it moves away from the one-to-one relationship between accounts and verification. To understand Portabl's roadmap and its capabilities, check out their upcoming B2B offering.

—— 6MV investors Mike Dudas and Michelle Dhansinghani

Axelar

Just in 2020, Bitcoin and Ethereum are the only blockchains with meaningful adoption. However, over the past two years, block space on both chains has been filled and we have rapidly moved into a multi-chain world, with higher throughput Layer 1 (L1) growth of. We believe this explosion of complexity has just begun, and in the long run, the blockchain ecosystem will evolve into a vibrant network of networks consisting of a handful of key general-purpose chains and hundreds or thousands of application-specific chains. Key to unlocking this potential is the concept of interoperability -- the idea that different networks of computers can communicate and work together. In an interoperable crypto world, developers will be able to build native multi-chain applications and experiences. At the same time, users will be able to seamlessly move assets and transfer data across chains.

Cosmos may be the standard bearer for interoperability. Billed as the "Internet of Blockchains," Cosmos was founded in 2017 and is sometimes described as a rival to Ethereum, but the two are conceptually distinct. Ethereum is a single monolithic blockchain with applications built on native smart contracts, while Cosmos is a framework for launching new blockchains using the Cosmos SDK. Cosmos chains use a proof-of-stake consensus algorithm called Tendermint and can be connected using a bridging protocol called Interchain Communication Protocol (IBC). The Cosmos Hub is the first Tendermint-based blockchain that sits at the center of this network and provides services to other blockchains that are part of a "crosschain" (an extended network of blockchains that interact with Cosmos). This includes asset routing and interchain staking.

The vision of Cosmos is inherently more decentralized and potentially more resilient than monolithic L1 . After the collapse of the largest Cosmos chain, Terra, it is doing quite well. (There are trade-offs in the composability of applications.) Furthermore, its architecture allows companies to launch chains customized for their specific use cases or build chains that can provide services across the entire ecosystem. In the long run, it could integrate with the wider L1 ecosystem, including Ethereum. Despite not getting as much hype as other chains, Cosmos has strong grassroots momentum. We see great technical talent building the next wave of infrastructure in the Cosmos ecosystem, including North Island Ventures (NIV) portfolio companies Polymer, Lava, and Stride, which we see as a leading indicator. Additionally, we are starting to see the launch of major application chains, most prominently dYdX announcing its migration from Ethereum to Cosmos.

Meanwhile, new protocols such as Axelar are also gaining ground in enabling greater interoperability sexual progress. Axelar is layer 1 whose main purpose is to transfer assets across chains and enable developers to build multi-chain dApps. An early example is AxelarSea, a cross-chain NFT marketplace. The recent spate of cross-chain bridge hacks has led to widespread and legitimate skepticism about whether a cross-chain world can be achieved (even Vitalik believes the future is multi-chain, not cross-chain). However, we believe these hacks are primarily due to the fact that most bridges deployed to date have been highly centralized or rushed to go live. Axelar is not a centralized peer-to-peer bridge, but a comprehensive proof-of-stake (PoS) network built by some of the brightest minds we've met in crypto. (Having said that, I would still advise everyone to be very cautious about using bridging solutions for the next few years).

If something like Axelar proves to be safe and robust, it could be passed as a development People abstract complexity, make dApps "portable" (thus reducing single-chain dependencies), and solve scalability challenges to become the ultimate metachain. Perhaps most beneficially, it could end the tribal fight among the mass marketed blockchains.

In the long run, L1 will become an alternative commodity service provider in the automation market By selling block space on the blockchain, application developers don't have to choose between chains, and most users won't know or care which chain their dApp or asset lives on. Thus, interoperability can not only solve real problems faced by developers and users, but also create a blockchain ecosystem that is more decentralized and less ideologically polarized. It will be years before this vision is realized, but the implications of this evolution have been barely explored.

Note: Nothing written above should be considered investment advice, nor should to be considered a recommendation for the use of any product. NIV is an investor in ATOM (Cosmos Hub’s native token), Polymer, Lava, Stride and Axelar.

- Travis Scher, Co-Founder, North Island Ventures

Trend: Institutional Unsecured Liquidity

DeFi lending platforms designed for corporate clients lent more than $1 billion to cryptocurrency market makers last year. Now that the product-market fit has been proven, it is poised to grow exponentially.

In many ways, this trend is a natural evolution. DeFi’s initial growth was fueled by platforms such as MakerDAO offering over-collateralized loans. The product is great for individual users, but difficult to scale. While easier to grow, undercollateralized lending doesn't make sense for this audience -- at least not until digital identities and credit scores gain more adoption.

Institutions, however, have the ability to handle undersecured loans. Projects like Maple Finance, Clearpool, and TrueFi took off by offering licensed, fully KYC-compliant liquidity pools to businesses. These organizations connect crypto liquidity providers seeking high interest rates on stablecoins with reputable companies seeking transparent on-chain lending. Wintermute, Folkvang, and other cryptocurrency market makers were early adopters of the product to support demand-side on-chain trading activity as well as supply-side crypto venture capital firms and hedge funds. The entry of players such as Jane Street and Nexus Mutual led to an expansion of the pool of institutional loans.

It is worth noting that DeFi lending pools have performed relatively well in recent months . While the turmoil at Luna and Three Arrows highlights the opacity of the “CeFi” lending market — a term for projects offering DeFi-level yields in a more “centralized” package — DeFi pools are operating as planned, Losses are limited.

I'm excited to see lending platforms expand beyond crypto capital markets and support non-crypto businesses . One example is Yaydu, a growth finance platform for online sellers, which borrows from DeFi lender Centrifuge. Goldfinch and Credix are also in this space, focusing on emerging markets.

- Etienne Brunet, investor

Blowfish

Almost all cryptographic security work is focused on core consensus, smart contracts, and wallets. We have hardened our blockchains so they are not vulnerable to 51% attacks or DDoS attacks. We audit and test our smart contracts so they cannot be hacked and funds remain safe (although this is difficult to do reliably). We use hardware wallets and keep keys offline to keep user accounts safe. You only have to look at the recent Slope wallet breach to see why these steps are needed.

However, if the interface used to access the blockchain is opaque and vulnerable, then these Efforts are in vain. After all, most people access decentralized applications through hosting websites and do not programmatically invoke smart contracts themselves.

Signing deals can be dangerous and confusing these days. When you try to make a transaction through a website, your wallet prompts you to sign a data hash (actually a random string of numbers and letters), which is basically impossible to verify unless you generate the transaction yourself and make sure the website's offer is genuine , the one you want to approve. Malicious websites can easily offer different deals than the ones you think you approve. Unless you're a very sophisticated user, you're unlikely to notice - after all, it looks like a random sequence of characters. BadgerDAO suffered from this type of attack, where a malicious website tricked users into signing transactions, transferring their funds to the hackers.

Crypto cannot achieve mass adoption through such an incomprehensible interface. That's why I'm excited about services like Blowfish and Harpie, which give users the tools they need to protect themselves. Blowfish is a human-language transaction simulation service that takes transaction data and outputs a human-readable version of the transaction.

For example, it could sum up the transaction you are about to approve for 1,000 USDC for 1 ETH. You will see this in your wallet before signing to prevent you from accidentally approving malicious transactions. Harpie took a different approach, monitoring the mempool for potentially malicious transactions from user accounts, and running the malicious transactions ahead of time with their own transactions, thereby withdrawing funds from the user account into a new, isolated account.

Overall, I am pleased that by giving people the transparency and tools to significantly reduce the feasibility of user- and application-level attacks.

- Tom Schmidt, partner at Dragonfly Capital

Maple Finance

Maple Finance is the largest institutional lending marketplace on Ethereum and Solana. To date, it has lent approximately $1.5 billion to leading crypto trading firms and market makers including Alameda Research, Wintermute, Amber Group, and others.

It can be seen from the spread and impact of the Three Arrows capital storm that institutional lending and capital markets are opaque, inefficient, and full of conflicts of interest. Lenders have little or no transparency about who the borrowers are, how centralized their counterparties are, and how yields are generated. Celsius is the most egregious example of this. The company had long been insolvent (unbeknownst to lenders) and used client funds to gamble.

At its core, blockchain and cryptography solve coordination and incentive alignment. Maple provides a transparent on-chain process to facilitate institutional lending. Lenders contribute funds to various pools of loans managed by pool representatives (experienced underwriters) who bring expertise and provide collateral to align incentives and buffer against first-time loss reserves. Each loan includes publicly available information such as the name of the borrower, loan amount, issue date, interest rate, and collateralization ratio. Each loan pool provides public data on historical performance, credit losses and borrower risk exposure for lenders to make informed decisions. This transparency leads to more accountability and better underwriting. While CeFi peers such as Genesis, BlockFi, and Celsius have suffered large losses in 2022, the Maple loan pool has proven resilient, cumulatively originating losses of less than 1%.

Over the next decade, encryption will modernize existing financial infrastructure. This has started with the adoption of Stablecoins, replacing traditional banking, wire transfers and payments. Institutional capital markets and lending is the next frontier and one of the largest untapped opportunities. Crypto lending is a $100+ billion market, traditional corporate lending is $100 trillion. Maple can solve this problem very well.

——James Ho, Co-founder of Modular Capital

Cosmos SDK

There are two extreme views on the ending of encryption. The first is that all activity will converge into a common execution environment - a "monolithic" or "world computer" view. The second is that there will be many specialized execution environments, each with its own design and trade-offs - the "multi-chain" view. The key trade-off is between the synchronous composability offered by monoliths and the benefits of specialization. I believe projects will increasingly choose to specialize, and the Cosmos SDK provides the best set of tools for deploying specific application chains.

In my opinion, specialization has two main benefits: lower and more predictable resource cost and customizability. Regarding the former, projects on a monolithic chain compete with all other dApps for block space. This means that they necessarily face the uncertainty of resource costs, such as popular NFT minting activities may render their dApp unusable.

This is untenable for many dApps (e.g. games) in the long run. Regarding the latter, projects launched on monolithic blockchains inherit and must accept a series of design decisions, including the platform's consensus model, security, runtime, virtual machine, etc. In contrast, applications deploying their own chains (or choosing between existing dedicated application chains) can customize their stack components to optimize their use cases. We’ve seen many great examples like Osmosis’ anti-MEV, dYdX’s mempool orderbook, L1 oracles/cross-chain bridges by Injective, and many others.

The downside of specialization is deployment cost and lack of synchronous composability. In terms of cost, while private chains will never be as easy to deploy as smart contracts on existing chains, I believe that as the Cosmos SDK matures and cross-chain security comes online, the gap has narrowed significantly and will likely improve over time. The passage continues to shrink. The latter allows the Cosmos Hub to share security with other blockchains.

The fundamental tradeoff is synchronous composability. There are two main objections to this. First, there are arguably only a handful of apps that actually benefit from it. These are primarily DeFi use cases where token restaking is critical (e.g. yield farming). For most other dApps, I think asynchronous composability is fine, as long as there are strong cross-chain tools to port assets and make the user experience of interacting with different dApps seamless.

Secondly, specialization does not necessarily mean deploying a chain with a single application, but rather means that a set of applications work well together or facilitate specific use case. For example, while Osmosis is often viewed as an automated market maker (AMM) chain, it is evolving into a DeFi chain on which different dApps are deployed, including money markets, stablecoins, and vaults. We believe that applications that benefit from composability will naturally tend to cluster around specialized chains, effectively providing “opt-in” composability to dApps that need it.

For these reasons, I expect the space to evolve into an interconnected chain of specialized Composed of mesh networks, these chains are organized into clusters around specific use cases. DYdX is the first high-profile example, but in the next 12 months, I believe we will see a large number of dApps move to professional chains utilizing the Cosmos SDK.

—Jose Maria Macedo, Partner, Delphi Digital

Space and Time

Space and Time is a blockchain-secured, decentralized enterprise-grade database and analytics platform. It provides high-performance and tamper-proof SQL analytics and machine learning on massive streaming datasets.

Space and Time's novel Proof-of-SQL protocol uses zero-knowledge proofs (zk-proofs ) allows applications to generate analytical insights in a decentralized, low-cost, and tamper-proof manner. We believe Space and Time will become a core layer of the Web3 stack, comparable to a decentralized Snowflake.

—Tim Khoury

Trends: Web3 Social Network

Over the past few decades, social networks have had a profound impact on society, affecting culture, information flow, relationships and work. It has spawned new ways of communicating and entirely new careers. With web3, we believe they have the opportunity to go one step further, unlocking entirely new consumer experiences and aligning user and developer interests with those of the platform.

The open social stack — social networking built on license-free agreements — is new of. But at scale, an open social stack will bring various benefits related to user and developer freedom and agency: portability of data to other applications, composability of experiences and content, and the introduction of Token-incentivized ability. Early web2 social networks shut down competing interfaces and apps (such as TweetDeck) that exploited their data. On the contrary, an open social graph lowers the threshold for third-party developers to build novel experiences and customized interfaces, which ultimately translates into wider user choices.

The benefits are not just philosophical. Users will benefit from decentralized social networks that offer new experiences that are more interesting or useful. For example, a web3 social network that provides Token incentives can provide economic benefits for various activities, such as predicting which content will take off. Web3 social networks like Mirror help creators monetize their creations through NFTs and community fundraising. Many social networks have successfully become engaging experiences that showcase user taste and curation (for example, Tumblr and Instagram). The web3 counterpart would allow users to showcase their tastes with real skins in the game, displaying the digital assets they own. OnCyber and Context already offer this functionality.

New content formats—images, memes, video, text—have become the new The foundation of social networks and platforms. Companies like Foundation, Sound, Catalog and others are emerging examples of social platforms built around NFTs.

Building a Web3 social network is not without its challenges. Scaling is still an issue, but data layers like Ceramic provide the foundation for new social applications. The continued development of protocols such as XMTP to enable wallet-to-wallet messaging will unlock on-chain communication. Open social algorithms also present the opportunity to create markets around functions that centralized platforms currently control unilaterally, such as content moderation and fact-checking.

Crypto is financial at heart: everything built on top of a crypto network has potential value. But it is also inherently social. It is networked and involves contributors and participants worldwide. In the coming years, we expect the growth of social infrastructure and applications to realign the interests of all stakeholders.

——Variant co-founder Li Jin and Variant partner Mason Nystrom

Railgun

Railgun is a set of smart contracts that verify zero-knowledge proofs, enabling users to privately store, transact, exchange, and trade, as well as interact with any other smart contract. Railgun supports ETH, ERC-20, and NFTs, and runs on Ethereum, Polygon, and BNB chains. Support for Solana, Polkadot, and NEAR is coming soon.

Private transactions are critical for web3 activity to reach mass adoption. Without a solution like Railgun, a single transaction or owned NFT could expose users, their wallet balances, and their entire transaction history. DeFi trades can also be pre-run by bots and identify and copy trading strategies. Railgun's solution is compliant, granting read access to auditors and regulators as needed.

—Tim Khoury

Trend: Decentralized Software Supply Chain

Building encrypted software presents many challenges that require developers to rethink traditional Web2 or open source development processes. While we can preserve some best practices such as code review, continuous integration, unit testing, and analytics, due to increased security requirements and the permanent nature of decentralized applications, we need to introduce new technologies. Web3 software is more like launching a satellite into space than shipping a new AI photo filter. This has spawned a field of smart contract security tools, companies, and protocols that help facilitate this new software supply chain. In particular, we saw activity around auditing, bug bounties, static analysis, and formal verification.

Auditing firm. Audit firms will continue to grow due to the catastrophic cost of cryptographic system failures. In traditional technology, audits are a rare luxury for large corporations looking to improve security, but in the world of encryption, they are an absolute must for projects large and small. The field of auditing will range from small teams of experts specializing in consensus systems or zero-knowledge to more decentralized products like code4 rena, which run auditing competitions and attempt to crowdsource the discovery of vulnerabilities.

Bug bounty. While 4- to 5-figure bounties for security researchers are the norm in traditional technologies, some trillion-dollar companies have bumped it up to 7-figures, crypto bug bounties are already breaking records. Immunefi, the leading web3 bug bounty platform, is pioneering this new normal, having paid out over $40 million in bug bounties, with an additional $130 million in bug bounties for keen security professionals to claim. The scale of these incentives creates more secure protocols and provides long-term sustainability for developers seeking careers in security.

Static analysis and formal verification. Another area of concern is the improvement of tools throughout the software development lifecycle. Developer frameworks like Ape, Foundry, and Hardhat make it easier to write unit tests and hook tools like Slither for static analysis and Echidna for smart contract fuzzing. Formal verification products such as Certora enable developers to ensure their contracts are sound at the specification level and catch critical bugs before and after deployment.

By using a mix of these approaches, tomorrow's software supply chain can continue to become more secure and resilient The test, hopefully, today's exploits are rare.

- Curtis Spencer, Co-Founder, Electric Capital

Sudoswap

Sudoswap is a decentralized, fully on-chain NFT trading platform that operates through the AMM model. Multiple custom liquidity pools can be set up for the same pool, with pricing for each pool determined by its bonding curve. Sudoswap enables instant liquidity, tighter spreads, cheaper pricing, no royalties, transaction fee income, and automatic dollar cost averaging of incoming and outgoing receipts.

NFT is a container that can represent any unique asset on the chain. This applies to many assets beyond profile pictures, from financial contracts to real-world assets. Coupons, tickets, in-game items, and memberships can all be NFTs. Sudoswap’s on-chain composable protocol will improve the market microstructure of the space, reduce information asymmetry and increase capital efficiency.

—Tim Khoury

Trend: App Mania

In the past few years, encryption has focused on innovation at the base layer. We've seen L1s like Ethereum, Solana, and Avalanche get a large portion of the attention and investment in the space. We also see that most of the returns come from this layer, with many applications not performing as well as the platforms they are built on.

This should change in the coming years as the base layer is only worth as much as the The protocol built on top of it is as valuable as the product. As multi-chain infrastructure matures, we also see applications expand their scope, launching and building infrastructure on multiple chains to increase the usability of their products.

Adoption and price appreciation of these agreements have been hindered by poor economic structure and lack of supervision of Token and governance issues. This last problem plagues some of the more successful apps like SushiSwap. We saw a lot of experimentation with token structures, and real attempts to transform amorphous DAO-like structures into operational entities built in a decentralized manner. Some of the names I'm looking at that do this successfully include Aave, Convex, Frax, GMX, and Gains Network.

With a clearer Token structure, better regulatory clarity and stronger governance Emerging, we can expect crypto applications to gain momentum.

——Avi Felman, Head of Digital Asset Trading, GoldenTree