Venture Capital Company 1Confirmation Partner: Forecast of Three Product Trends in the Encryption Industry in 2022

At the end of last year, I wrote an article about three unobtrusive product trends in 2021. Before I make three predictions for 2022, let us review my performance.

Encryption art

Conclusion: correct

Although there have been many articles about NFT and encryption art this year, this picture perfectly summarizes the content in this area.

Venture Capital Company 1Confirmation Partner: Forecast of Three Product Trends in the Encryption Industry in 2022


I will review the two sentences I wrote in my 2021 forecast:

“DeFi supremeists currently regard NFTs as toys, which reminds me of the BTC supremeists’ denial of dApps in 2018.”-Those DeFi Twitter influencers who were publicly bearish on NFTs a year ago suddenly came A 180-degree change, began to promote and hype PFP, and even raise NFT funds. “There are currently three artists with a total value of more than 1 million U.S. dollars and 43 artists with a total value of more than 100,000 U.S. dollars. I expect to see far more than this figure by the end of 2021.” ——Today, the total value of artworks exceeds There are 4 artists with a value of US$100 million, 46 artists with a value of more than US$10 million, 268 artists with a value of more than US$1 million, and 1,283 artists with a value of more than US$100,000.

Prediction markets

Conclusion: not clear

From the 2020 US presidential election to the inauguration, Polymarket’s trading volume surged in January. Trump supporters who believe in #stopthesteal continue to buy Trump stock at a price of 1 U.S. dollar to 10 cents, giving those who believe in others a 10% “arb (arbitrage)” opportunity. But except for one-off events like major politics in the real world, it is difficult for the forecast market to maintain trading volumes. I think prediction markets and decentralized social networks are two killer use cases for cryptocurrencies, but the timing of the product market is still farther away than I initially thought.

DeFi derivatives

Conclusion: correct

I tweeted my popular opinion that 2021 DeFi has reached the level of adding functional improvements (for example, better stablecoins to replace the original stablecoins), or copying the work on Ethereum to other L1s.

The few 0-to-1 innovations we saw in DeFi this year were centered on derivatives. Index Coop and Ribbon have constructed structured products to provide risk exposure for index and return strategies. Notional launched fixed-rate lending. But more importantly, this year’s two major innovations in DeFi, Uniswap v3 and Primitive.

Uniswap v3 redefines the meaning of liquidity providers, reconsidered capital efficiency rather than total value lock as the KPI of DeFi projects, and launched a structured product ecosystem, such as Gamma’s market-making strategy on Uniswap.Since the release of v3, Uniswap’s DEX market share has increased from 45% to 75% (Sushi reduced from 24% to 12%) because the transaction volume has converged to the best performing AMM.

Primitive is also the first to implement a project to replicate market makers. Given the expected return of a particular financial derivative (such as options, swaps), a combined curve function can be constructed to replicate this derivative in the AMM spot market. This is a big deal for DeFi options, because options are the last category in DeFi without a clear market leader-it is difficult to replicate tradfi options on the chain due to reasons such as gas and liquidity dispersion.Looking to the future, I believe Primitive will transform existing options projects like Uniswap did for the previous order book DEX (such as EtherDelta and Radar Relay).

Views on three unobtrusive product trends in 2022

Vertical specific NFT market

OpenSea is clearly the biggest winner in our portfolio. Although it will continue to be a modern company and dominate the NFT secondary market, I believe that due to better UI/UX and search and discovery functions, vertical specific markets will open up niche markets. SuperRare is a successful example of high-end 1/1 encryption art, but there are other categories such as photography (e.g. Sloika), Metaverse land (e.g. Metahood) and music (e.g. Catalog).

Venture Capital Company 1Confirmation Partner: Forecast of Three Product Trends in the Encryption Industry in 2022

The split of the Craigslist infographic, web2 VC likes to use it to guide thinking.

I will particularly emphasize music NFT. Unlike other categories such as art, collectibles, and games, music NFT has unexpectedly not yet exploded, but I think the tastes of collectors are changing rapidly. The leading music NFT market Catalog ushered in a breakthrough month in October, and the volume chart easily reminded me of what I saw in SuperRare before the explosion of crypto art in early 2020. For music, it’s just a question of “when” rather than “whether”.

Cross-chain bridge with minimized trust

Now almost all cross-chain bridges are variants of trusted multi-signature. In particular, the Ethereum to Avalanche bridge, which is an external Ethereum address account (EOA), whose private key is distributed among four trusted Intel SGX signers, and it holds more than $6 billion in user funds.

Venture Capital Company 1Confirmation Partner: Forecast of Three Product Trends in the Encryption Industry in 2022

These bridges are huge honeypots, and I predict that cross-chain bridge hackers will become new CEX and DeFi hackers.The $611 million Poly Network hacking incident is just the tip of the iceberg in the future.

Fortunately, more trust-minimized bridge products are entering the market. Hop is currently the leading trust minimization bridging product. It uses bond dealers and stablecoins to exchange AMMs to rebalance the funds of the bridging parties.Although the focus of the bridge so far has been token transfer, the current holy grail and an active research area is how to transfer information across chains in a trustless manner. This cross-chain composability will enable a large number of new use cases. The smart contract of the DeFi project on the Ethereum L1 will be able to call the smart contract function on the L2 or sidechain.

Invest in DAO

I like to think of investing in DAOs as a breakdown of collectors rather than artworks. The problem with subdividing NFTs I have seen is that fragmented tokens (ERC-20s) are not traded based on basic NFTs (ERC-721s or ERC-1155s), because if their prices deviate significantly, there will be no Ways to arbitrage. Therefore, it is meaningless to hold fragmented tokens as cheap index exposure for specific blue chip NFTs (such as CryptoPunks).

FlamingoDAO is by far the most successful investment DAO, and we have also seen DAO begin to be used for large-scale group purchases, such as the US Constitution and Ross Ulbricht’s artworks. Today’s process involves deploying Gnosis Safe, but I hope to see better tools, such as Koop, facilitate easier groups to purchase expensive NFTs. 99% of NFTs will not maintain their value for a long time, and expensive blue chip NFTs (CryptoPunks, Bored Apes, etc.) will maintain the best value, which is an open secret. Investing in DAO is the cleanest way to give the public better access to high-end NFTs.

The opinions in the articles contained in this official account only represent the original author’s personal position, and do not represent the position of the Metaverse. Investors should not regard the opinions and conclusions in the article as the only reference factor for making investment decisions, nor should they think that the opinions and conclusions in the article can replace their own judgments. Before deciding to invest, if necessary, investors must consult with professionals and make careful decisions.

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