10 Highlights From Messari’s Epic ‘Crypto Theses 2024’ — Part 2

Click here to read Part 1

Published December 19, and clocking in at 193 pages (a 23% increase from 2023’s Theses), Messari’s “Crypto Theses 2024” is (IMHO) the industry’s most insightful overview of the crypto ecosystem, and a must-read for every crypto enthusiast. TL;DR “Crypto remains inevitable”.

The report is authored by Ryan Selkis, Co-Founder and CEO of web3 data provider and research powerhouse Messari, While Ryan was supported by the accomplished Messari research team, the report is written in the first person by Selkis. I’ve been a Selkis fanboy since Jan. 2020 when he spoke at CryptoMondays NYC and mesmerized us with his discussion of his Crypto Theses 2020 and tales of breaking the Mt. Gox hack in 2014. I also believe that Messari Pro, a “one-stop shop for all your crypto data and research needs”, is an essential tool for any serious crypto investor.

The report provides a comprehensive state-of-the-state of crypto coupled with thought provoking predictions about 2024 and beyond. Each chapter is overflowing with insight:

Given the length, I broke this post in to two pieces, each covering five chapters. I write this every year to force myself to read the entire Theses, go down rabbit holes, and LEARN. But, as educational as the report is, few will read it’s entirety. So below are my most intriguing highlights in each of the first five entertaining and sagacious chapters of this prodigious report.

#6 “Top 10 Trends In CeFi” Highlight — Everyone Else in TradFi

This was the least interesting of the 10 chapters. We know Cooinbase killed it! Kudos to Brian and the team. We know CZ got a massive fine and may face jail time. Most also appreciate that, as Ryan wrote in the Everyone Else section that “Fidelity is the TradFi firm with the highest potential to lead the field in 2024 and compete most aggressively with Coinbase”.

The. most salient point in this section to me was the final sentence … “If we see a sustained price rally, Wall Street will go shopping”. Just like “The Four Horseman” in investment banking in the the early days of the internet were all purchased by the investment banking giants of the day, so too will many of the leading centralized providers of crypto financial services (e.g. exchanges, custodians, digital asset managers, …).

#7 “Top 10 Trends In L ayer-1 Networks” Highlight — Solana’s Resurgence + MOVE It or Lose It

I went to Solana Breakpoint in 2021, and wrote a post that highlighted that most of the community members I met were there for the money, not that anything’s wrong with that. I followed up with a webinar on Solana that January with Kyle Samani and other Solana thought leaders. But I remained skeptical. I described Solana as a VC lead community. But I missed what they were building, a mass market blockchain lead by degens. And degens rule bull markets.

What was most illuminating in this section was the numerous applications that are “Only Possible on Solana.” These include:

• DePIN: Projects like Helium, Hivemapper, and Render (arguably the hottest AI project in Web3) migrated to Solana.
• Payments: Visa expanded its USDC settlement pilot to Solana and Shopify integrated with Solana to enable payments via USDC through Solana Pay’s plugin.
• Consumer apps: Cheap NFT minting enabling new consumer use cases, such as DRiP which partnered with artists to distribute 78 million free NFTs since late March, for a total of 413 SOL (just $0.00036 per NFT).
• DeFi: Super cheap fees, fast finality, and onchain order books create a unique DeFi UX.

Solana has clearly emerged as the industry’s clear #2 “operating system.”

I’m a fan of Layer-1 protocol Aptos (see the video in Chapter #1 in Part 1), and Ryan gave them a shout out, along with Sui, highlighting their pedigree coming out of Meta’s Diem and Novi projects, respectively. Ryan also highlighted their innovative Move programming language, providing safety and flexibility not possible with other web3 programming languages.

#8 “Top 10 Trends In DeFi” Highlight — LSTs

Liquid Staking Tokens (LSTs) are yield-bearing instruments “..issued by liquid staking protocols and have become the largest DeFi sector by TVL”. Per the chart below, ETH staking growth accelerated in April post the Shapella upgrade which enabled staking withdrawals:

About 24% of ETH is staked, with liquid staking taking ~40% of the market. While liquid staking pioneer LIDO dominates the liquid staking market with ~70% share, centralized competitors like Coinbase, and other decentralized services like Rocket Pool, are also growing. And future growth prospects look bright. For example, derivative use cases of stETH, like interest bearing stablecoins, look promising. Eigenlayer is a particularly exciting new product enabling re-staking, which allows the use of stETH to secure additional networks. LSTs are rocking, now accounting for the majority of lending activity on Aave and surpassing ETH as collateral on Maker. Ryan even thinks a staked ETH ETF is possible in 2024.

#9 “Top 10 Trends In Consumer Crypto” Highlight — Network States

The Network State is a movement started by crypto OG Balaji Srivasian (he was a co-founder of Coin Center in 2014, an early CTO at Coinbase ..) and one of the leading voices on the macro issues surrounding crypto. I’ve been a fan boy since I saw him keynote a crypto event hosted by CSFB in 2017.

Last year, Balaji published “The Network State” a 262 page book he introduces with this description:

Technology has enabled us to start new companies, new communities, and new currencies. But can we use it to start new cities, or even new countries? This book explains how to build the successor to the nation state, a concept we call the network state.

Ryan writes that “… the three scariest words in the English language are Balaji was right.” Balaji’s pessimistic predictions are playing out daily as culture wars escalate, anti-semitism grips the world, and we retreat further into our social media bubbles powered by mis-information. If we can start a new global form of money (BTC) and a new permissionless internet (ETH), why not try to start a new country? It’s an aspirational and audacious idea. If anyone can bring us to that promised land, it’s Balaji. Below, watch Balaji’s opening remarks at the first Network State conference in Amsterdam just prior to Breakpoint (Ryan was in attendance).

#10 “Top 10 Trends” Highlight — Wallet-Centric Future: Smart Contract Accounts

Ryan starts Chapter 10 the by highlighting what is, arguably, the most important fact to appreciate about crypto:

“It’s difficult to overstate just how much innovation there has been in peer-to-peer infrastructure over the past two years”

He then highlights 10 areas of innovation, all of which are moving the ecosystem forward. I particularly loved Ryan’s quote highlighting both the problems and promise of DAOs/early crypto governance:

“It’s a shitshow, and it’s glorious”

I highlight the wallet centric future because that’s how we get to mass market. We all know crypto is too complex to go mass market today. Just like the internet was too complicated to use before Marc Andreessen brought us the Netscape browser. The biggest way we abstract away the complexity of crypto is via account abstraction (AA), which is “ … a core Ethereum roadmap initiative aimed at replacing externally owned accounts (EOAs).” EAOs are the basis of how wallets like Metamask function.

Account abstraction replaces EOAs with smart contract wallets or “smart accounts”. Smart contract wallets are dynamic, and allow for things like “…. apps that pay for fees on behalf of users, more efficient bundled transactions, security features like spending limits, multifactor authentication using hardware devices, single-step multi-chain operations (again, important because of the cost to creating a new smart contract wallet on Ethereum), and more”.

No one knows if 2024 is the year crypto goes mainstream. But after reading Messari’s Crypto Theses 2024, more than ever, I believe that “Crypto remains inevitable”!

At the bottom of Part 1 I highlighted five other insightful outlooks for crypto 2024. WAGMI!

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This content is for educational purposes only. It does not constitute trading advice. Past performance does not indicate future results. Do not invest more than you can afford to lose. The author of this article may hold assets mentioned in the piece.