A Recap of Emerging Trends in the Cryptoasset Space (2019)
Having closed Q1 on a positive note and with the probability of having left the bear trend behind being very real, I wanted to take some time to evaluate the emergent trends within the cryptoasset space, that are likely to define 2019. While external factors, such as institutional onramps and custody are important, I will deliberately avoid focusing on those — as they are to some extent unknowns.
PoS is becoming ubiquitous
Everyone, and their grandmother are switching to PoS. According to Staked founder, Tim Ogilvie, there is “$25 billion of stake-able crypto that’s coming online in the next 15 months.” Capitalising on this trend, a bunch of venture backed staking as a service providers like Bison Trails, Staked, Chorus One and Figment Networks have sprung up left and right. As expected, more established players such as Coinbase were quick to react too, launching their own lines of staking products, tied in with cryptoasset custody. There is a lot of room to grow here, as this not only makes cryptoassets productive, but also introduces the potential for further experimentation with token models.
Some resources
- On fair token launches
- Worklock: an improved token distribution model
- 0x Roadmap 2019 (part 4) — proposal for stake-based liquidity incentives
- The basics of Ethereum 2.0 economics
Governance is a large part of the debate
As these networks mature, it increasingly becomes apparent that good governance is a must-have feature. Ethrereum’s failure to make crucial decisions and take action fast, has highlighted that need. But solving governance is a tough challenge, and on-chain (in its current form) is anything but panacea.
Some resources
- MakerDAO Governance Call
- Coinfund’s governance model proposal
- Polkadot’s governance model
- An overview of the Politeia system architecture
DeFi marches on
The recent addition of Dharma and the appreciation in the price of ETH, have launched the total USD value of assets locked in DeFi to ~$416M. Maker’s dominance stands at 86%, while DEXs have been thrust into the scene by Uniswap, primarily due to the innovative, low-friction, exchange model it employs. The vast majority of the activity is taking place on Ethereum, with Bitcoin being represented by the Lightning Network (contributing a little more than 1% of total assets locked). Expect more experimentation, maturing existing products and less friction on the UX layer.
Some resources
- DeFi Liquidity Models from Placeholder
- Hummingbot vs Uniswap: Two approaches to liquidity
- Mapping out Ethereum’s DeFi
IEOs are a thing; STOs likely to stick around for longer
Already this year, 12 exchanges have announced IEO platforms and 39 projects have participated in an IEO. IEOs, as popularized by the Binance Launchpad, are a flip on the ICO model, that removes the risk layer that was introduced between ICO and exchange listing. So far, three small exchanges have facilitated two-thirds of all IEOs in 2019, BitTorrent still has the highest return with more than 500%, while only five tokens have actually grown in price since being listed. Now, has this format erased all the regulatory concerns that loomed over the ICO model? Categorically no — and while the exchanges launching those offerings are not necessarily bound to US regulations, some turbulence is to be expected due to — well — gravity! At the same time, while there’s a lot of legal ground to cover, it looks like STOs are picking up some steam — though looking like minor modifications of Reg-A’s and Reg D’s for now.
Some resources
- The IEO Phenomenon’s Impact on Markets and Token Models
- Blockstack Announces SEC Filing for $50M Regulated Token Offering
- Provenance.io Blockchain Raises $20 Million in Security Token Offering
Games are gaining traction
Since mid-2018, the blockchain based games category has been touted as a potential breakout vertical — not without reason. A quick look at stateofthedapps.com or dappradar.com is enough to see why. Gambling and gaming dapps take the lion’s share in engagement and interestingly, most of that activity is happening on the EOS and Tron blockchains. While this is not the permissionless innovation that we expected, in reality, for this use case there is no real need for total decentralization. That said, it’s hard to imagine a groundbreaking, paradigm shifting Dapp built on blockchains that are so easy to censor and tamper with. However, for the moment, there is no such Dapp and so EOS and Tron take the day.
Some resources
- The Evolution of the Blockchain Gaming Industry
- Hashed’s New Incubator Will Initially Focus on Blockchain Gaming
- Forte and Ripple’s Xpring to bring blockchain to gaming
- Enjin overview
Ecosystem funds will brute force dev adoption
Aka, ‘If the mountain will not come to Muhammad, then Muhammad must go to the mountain’. EOS, Tron, Ripple, Algorand — the list goes on. Total capital committed to ecosystem funds among the 4 projects mentioned here, exceeds $500M. Wowzers! While the good people at Ethereum are hard at work debating ways to untangle their thumbs, centralized outfits are investing aggressively to eat their lunch. My prediction? Expect some wild winners and spectacular failures here.
Some resources
- Algo Capital Announces $100 Million Blockchain Fund
- Xpring: a Ripple $150 million fund managed by Blockchain Capital
- Block.one, SVK Crypto Jointly Launch US$50m EOSIO Fund
- TRON unveils TRON Arcade: 100 Million USD Game Fund
- ConsenSys Wants to Raise $200 Million from Outside Investors
Enterprise; wink wink
So while crypto winter hit us hard in 2018, Enterprise was busy implementing all sorts of blockchain solutions, in order to capture many of the efficiencies that blockchain tech can bring in settlement, supply chains, contract execution and beyond.
Some resources
- Blockchain Goes To Work At Walmart, IBM, Amazon, JPMorgan, Cargill +
- Thoughts On Blockchain Enterprise Adoption
- Ethereum Continues to Lead the Way in Enterprise Blockchain Adoption
- Oracle Accelerates Adoption of Enterprise Blockchain Worldwide
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