Year-end summary | 2020 panoramic view of the digital asset industry, these may be your most concerned

The digital asset industry has experienced a turbulent year. Despite setbacks, industry participants still have great expectations for 2020.

Ryan Selkis (@twobitidiot) is a veteran entrepreneur in the industry. He was one of the founders of Digital Currency Group (DCG) and CoinDesk, and currently serves as the CEO of blockchain analysis company Messari.

Recently, a report released by Ryan Selkis and his Messari team outlined 120 trends and opportunities in the cryptocurrency field in 2020. Overall, the report believes that the industry will grow in the coming year.

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This report covers 10 industry hotspots, Bitcoin trend, Ethereum trend, DeFi trend, Web 3 trend, stablecoin trend, policy trend and so on.

Original report link: https://messari.io/pdf/crypto-theses-for-2020.pdf

Here are some of the contents from the translator:

Disclaimer:

This article is not an objective analysis, but a collection of our firm beliefs for the next 10 years, which is mainly based on my close research and full-time work in this industry in recent years, and with the support of our excellent team of analysts Finished.

As you read this article, keep in mind that one of my core thought models is that there are two different types of assets and communities.

On the one hand, there are asset-first, technology-assisted protocols, such as Bitcoin, stablecoin, and any other asset designed to serve as a currency.

Winners here usually need strong memes and something collective and marginal religious.

Then comes technology-first, asset-assisted protocols, things like digital resource tokens (decentralized file storage and computing), "work" tokens (predictive market predictors), and governance tokens (basic protocols for managing valuable assets) Voting rights).

In either case, the agreement cannot be separated from the asset.

If you are a cryptocurrency enthusiast or professional, this report is definitely for you, don't miss it.

Views on investment

  1. Updated the top 20 hotspots (such as BTC: Digital Gold, ETH: DeFi Reserve, LTC: BTC Test Network 4, BSV: Fake Satoshi, etc.)
  2. Bitcoin will lead the market, otherwise, altcoins will shed blood: the widely advertised "halving" is actually nonsense, because the decline in the ratio of new currency issuance to market capitalization is actually very small, and 13 and 17 years The bull market is actually driven by new buyers. Today, Bitcoin is the asset that is most likely to attract the next major new buyer organizations, but it may not suddenly spike higher, but it will roll up like a snowball.
  3. "Selling" will continue, and most tokens will fall 99% from historical highs, mainly because once teams and low-cost investors start to liquidate positions, they will put incredible selling pressure on the market.
  4. Yes, cryptocurrencies are about the post-dollar world: more than 95% of the value of cryptocurrencies (excluding exchange tokens, which are quasi-securities) is caused by the currency premium of top cryptocurrencies. If a large amount of negative income debt continues to accumulate, if central banks continue to flood the market with cheap capital, and if distrust continues to rise, then cryptocurrencies will be relatively strong assets. But if the trade war accelerates, or if the Great Recession breaks out, then the "hedging" sentiment will put us into a long winter.
  5. Gold and Digital Gold Baskets: If you are a gold lover, I do n’t know why you do n’t take 2% of your gold to allocate Bitcoin, unless you are legally prohibited from doing so for some reason .
  6. There is nothing new under the sun. If Bitcoin has gradually become a new form of digital gold, then there are still a lot of other interesting and valuable monetary and non-monetary assets among cryptocurrencies. At present, the largest is still cryptocurrencies (including stablecoins), followed by smart securities, and then a smaller range of digital tokens (such as governance rights, digital resource and other use case rewards);
  7. Staking rewards crazy inflation;
  8. Optimistic about Staking in the medium term: For some time, Staking may have to be operated by an oligopoly supplier, just like mining today. Tezos serves as a model, and you can think of it all as a hands-on marketing campaign for the Ethereum staking bubble early next year.
  9. Crypto securities will continue to disappoint;
  10. Stablecoins will soon surpass Bitcoin in scale: If some major central bank digital currency projects come to fruition, these interoperable global stablecoins may scale beyond Bitcoin in the short term;
  11. Although many funds are bleak, I am optimistic about the funds, and the worst time has passed;
  12. You may see a large influx of capital into passive index funds, and it turns out that regulators only want to approve cryptocurrency products that drive down prices;
  13. Grayscale of the digital currency group has unique regulatory advantages. They basically occupy a monopoly position in the US cryptocurrency ETF market temporarily;
  14. The macro race: This looks dramatic, but the next 12-24 months will determine whether cryptocurrencies will be an important asset class in the 1920s or will gradually enter the long nuclear winter.
  15. The ICO is dead, but the ecological fund is still alive: There does not seem to be much catalyst for the ICO market in 2020, and private token liquidation may become the death knell for ICOs for some time. Looking into the future, it will be interesting to focus on how project foundations with huge funds manage large vaults.
  16. Infrastructure mergers and acquisitions will continue: Top exchanges will acquire a large number of service suites, and BitMEX, Coinbase, Binance, Kraken, and Huobi are expected to complete nearly $ 1 billion in acquisitions in the next 24 months. In a bear market, the number of transactions will increase, and in a bull market, the size of transactions will increase.
  17. Agreement mergers and acquisitions: I am sure we will see more cases of agreement mergers and acquisitions. We have just seen that the content platform Steemit was acquired by TRON. Similar situations will continue to appear, which seems to be an inevitable proof of equity system.

Infrastructure trends

1. Lending market: DeFi lending has experienced a lot of hype in 2019, but the real crazy growth is actually centralized lending. The current volume of the DeFi lending market is approximately $ 650 million. At the same time, Celsius has lent more than $ 2 billion in 90 days. Even the emerging lending business such as Blockchain.com, which began operating in the second half of 19 The amount of money borrowed each month also exceeded $ 100 million.

Most of these loans are cryptocurrencies, and investors use them to short related assets. Recently, we have seen that loans that use cryptocurrencies as collateral to borrow cash account for an increasing share. Genesis Capital ranked third in its Detailed analysis is provided in quarterly insight reports.

2. Exchanges as open finance: I encourage you to take the time to read the article on Multicoin's exchanges as open finance .

3. Exchange theft incidents will continue to increase: Seven cryptocurrency transactions worldwide have lost more than $ 150 million in digital currencies this year due to hacking attacks. In the next few years, with the expansion of these teams, the goal may only become Bigger.

btc

Bitcoin trends

1. For most people, the best option is still "Bitcoin", not cryptocurrency : the reason is that you can explain Bitcoin to a five-year-old child, and it has the least attack surface (because of the poor functionality) And also the easiest to understand (digital gold).

2. Halving is just a self-fulfilling prophecy . For high inflation assets, the claim of halving makes sense. Intuitively, observe that Bitcoin inflation has fallen from 3.7% to 1.8% in 6 months ( Other conditions are the same), and it will not actually impact the supply. On the other hand, the halving event does remind people that the supply of bitcoin is very limited, so discussions around this issue are likely to trigger new demand, such as Grayscale and Square will often report related purchase activities.

3. There is only one bitcoin : I think we can call it fighting on the issue of BCH, which is more serious than altcoins like Litecoin, and for those who praise BSV, the reality is It will be even more bleak, and it is difficult for us to see a meaningful Bitcoin hard fork again, unless (1) the block reduction is too low, which will cause pressure on network security, and (2) the soft fork upgrade implemented by developers will cause bitcoin The privacy properties of the coin are too good, which forced the exchange to conduct a hard fork to meet compliance goals.

4. Lightning Network's weak growth this year, it is unrealistic to say that it is not disappointed. Of course, Bitfinex's support for LN is a milestone. Of course, I know that there may be some completely private channels and Bitcoin that have not been observed, resulting in data being underestimated, but the channel capacity of $ 6 million on the surface? Compared with the DeFi application on Ethereum, this is actually equivalent to the adoption of Nuo and Bancor … Nevertheless, I think that the irrational prosperity moment of the Lightning Network is about to occur, the relevant locked-in funds will increase by 50 times, and the channel capacity will increase to 1. Billion dollars .

5. Enhancement of Layer 1's privacy features: I spent an hour looking for a Bitcoin roadmap to see if the community has any proposed dates for the deployment of privacy technologies, such as Dandelion, Schnorr Signature, and Taproot. I think it's unclear when some of these protocols will be deployed in the Bitcoin protocol, but I expect that in the third quarter of next year (latest by the end of next year), there will be a soft fork to enable Schnorr signature integration This upgrade is the key to most exciting feature additions that Bitcoin developers are working on .

6.It's crazy to keep up with the progress of Bitcoin and Ethereum. Bitcoin doesn't have a real roadmap, and Ethereum will always have bouncing tickets. Thanks to LucasI Nuzzi, a digital asset research company, for providing this excellent chart, which at least helps us organize the state of innovation and long-term roadmap for Bitcoin;

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In addition to Lightning Network and privacy technology upgrades, what I am most excited about is research on mining pool protocols, which can make Bitcoin as decentralized as possible.

7. More and more new energy miners : Denver-based mining company Crusoe Energy Systems is opening a fourth mine in Rocky Mountain. The company recently completed a $ 70 million financing, while other mining companies such as Bitmain and Layer1 also Mining deployment in the United States; if Bitmain's IPO is really successful, it is expected that it will trigger more companies to participate in Bitcoin mining (though Bitcoin will experience a halving event)

8.Sidechain will usher in some applications : Similar to Lightning Network, the concept of Bitcoin sidechain has not been used much since it was launched in 2014. It seems we are far from achieving the vision of trust to minimize sidechain. However, sidechains such as Liquid and RSK have also ushered in some development.However, if the Bitcoin sidechain is only a lower version of the Ethereum financing and lending infrastructure, it will be difficult to get excited.

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Ethereum trends

1. Forecasts on the progress of Ethereum 2.0:

Ethereum's "Serenity" phase will not be implemented until the middle of 2020 at the earliest. The complete ETH 2.0 may wait until 2022. Its launch is divided into 7 phases. Phase 0 marks the start of the "Beacon Chain". Become the backbone of the new blockchain.

The development team plans to launch Phase 0 on January 3 next year, but it is amazing that they can launch before the end of June.

The first phase will introduce 64 separate shard chains (previously planned to be 1024). In the first phase, the shard chain will only contain simple data sets (no smart contracts and transaction execution). Like phase 0, the letter The standard chain will continue to run in parallel with ETH 1.x throughout the stage. Don't expect the first phase to land before 2021.

Phase 2 marks the full launch of ETH 2.0. At this time, the contract will be allowed to execute on the chain and a new eWASM virtual machine will be introduced. At this time, existing Ethereum DApps can migrate their contracts from ETH 1 X to the new network. Specific shards in.

Even if the second phase intends to completely replace the original Ethereum blockchain, ETH 1.x may still exist as a shard of ETH 2.0. It is very optimistic to release the second phase before the end of 2021, and it can be regarded as a victory before the end of 2022.

The last four stages are less defined, so there is no additional timeline:

Phase 3 will implement a client with minimal state (the so-called stateless client is just a statement);

Phase 4 will allow cross-shard transactions;

Phase 5 will improve network security and data proof availability;

Phase 6 will introduce meta-sharding;

2. Overview of ETH 1.x research / governance / roadmap:

Let us reiterate that ETH 2.0 is a brand new blockchain, and the existing 1.x network will continue to operate and require more critical upgrades.

To this end, ETH 1.x developers set three goals to improve system performance and mitigate the problem of blockchain inflation: (1) introduce client optimization to increase transaction capacity, (2) limit disk space requirements, and delete Reduce old, memory-consuming data (reduce node operating costs), (3) upgrade EVM to eWASM;

ETH 1.x developers decided to divide the main tasks into four working groups:

  1. State lease
  2. Construction of old data (Pruning);
  3. eWASM;
  4. Simulation: This group is responsible for developing some testing tools to support and evaluate the work of other groups;

3. Privacy of the Ethereum platform:

Following the recent "Istanbul" fork, the privacy guarantees of certain types of Ethereum contracts should be significantly improved. The upgrade reduced gas costs including zero-knowledge proof technology contracts, such as AZTEC, and in addition, JPMorgan Chase revealed that they are adding zk-snarks technology to their private Ethereum fork Quorum. In addition, more and more wallets (such as Argent) have also added "mixers" to their products, and these tools have obviously improved the privacy of the Ethereum platform.

4. Will ConsenSys be resurrected?

As the price of Ethereum plummeted, ConsenSys laid off hundreds of employees at the end of 2018, and it also experienced a project spin-off. But I said last year that "the rumors of the death of ConsenSys have been exaggerated." A cursory look at their homepage shows the direction of the company's new business logic. It is expected that they will have a huge 2020, like Microsoft I wouldn't be surprised if such a strategic cooperation company invested 9-digit funds in them.

DeFi Trend

1. Maker will no longer be everything about DeFi: The progress made by DeFi in 2019 can be largely attributed to MakerDAO. Maker's Dai supports most of the DeFi ecosystem. At present it is still the largest mortgage stable coin. Program.

However, it is no longer the only important DeFi protocol, and it is likely to face severe new competition in terms of borrowing and stablecoins. According to data from DeFi Pulse, Maker's "dominance" has dropped from 90% at the beginning of the year to just below 50% currently.

2.Synthetix will continue to grow;

3. DeFi is still relatively centralized. Many DeFi protocols claim to be open, non-licensed, and anti-censorship, but it is too early to believe that this ambitious proposition. In the early stages, don't trust the "De" in DeFi.

4. The DeFi ecosystem hides security vulnerabilities that have not yet been discovered. At present, most DeFi participants show a benevolent attitude towards their peers. This may be because most early adopters are early token holders who have consistent ideas. If 2019 is the DeFi loan year, then 2020 will be the DeFi derivative year.

5. The original DAO had a grand vision, similar to a leaderless SoftBank People's Vision Fund. We saw a lot of small and sophisticated recovery experiments in DAO design. Examples include MolochDAO (the distribution of ETH 2.0 funding grants) MetaCartel (Web 3.0 dapp development grant) and MarketingDAO (Ethereum's community-managed marketing fund). These projects have worked so far because they manage public goods and expenditure accounts, not investor capital. The success of the DAO in 2019 shows that it can effectively coordinate human financial actions, and by 2020, the "for-profit" DAO should not be too far away.

6. Centralized exchanges are beginning to experiment with open finance. For some large exchange public chains (such as Binance Chain), it may go to protocols such as fork Compound;

7. Decentralized exchanges test centralized finance: In the past year, Uniswap was the only bright spot in the DEX market. In the foreseeable future, centralized exchanges and OTC platforms will still account for 99% of the total market transaction volume %;

8. The lending market has generally become a growth market, which is especially important in the field of DeFi. Of course, pledged borrowing is just the beginning of DeFi, and the new financial system will not be built solely on pledged borrowing. We still need to wait for better decentralized identity and credit scoring applications to fill the void in today's DeFi lending equation. Until we reach our destination, borrowing will be limited by the value of all cryptocurrencies as collateral. Discussions about the risks of DeFi bank runs are currently inadequate, but Alethio explains the mechanism well in an excellent article .

9. The outbreak of DeFi wallets: The new DeFi interface is actively competing to become a one-stop shop, and users can hold, trade and loan in the same place. The most successful interface will be the tool that simplifies user operations. InstadApp and Zerion have raised funds from well-known investors such as Pantera Capital and Placeholder. I expect these and other teams (Linen and Argent) to raise more funds in 2020;

10. Earlier this year, I thought the prediction market, the token management registry, and the "continuous organizations" were all exciting. But currently the prediction market has taken a serious step backwards and I am still excited about the concept of "continuous organization".

Web3 trends

1. Computation and storage: Decentralized storage, computing and other concepts seem to be out of play this year, but we still believe in this area. I have been more optimistic about digital resource tokens recently. Filecoin released a testnet last week. Net, Storj is in the final beta stage and plans to launch the product in early 2020. Areweave may be another platform worth watching.

2. Oracle: In addition to Chainlink, the respective DeFi protocols (including MakerDAO, Compound and UMA) each introduced a new Oracle oracle design in 2019 to eliminate the trust layer related to their price feed. Applications such as financial protocols and derivatives require ultra-reliable data. It is expected that the number of newly released Oracles will gradually decrease, and with the consolidation of various solutions, a unified oracle contract standard will eventually be formed.

3. New social platforms: Decentralized social media projects are still in their early stages, but the potential is there. Even if Twitter eventually becomes a client of this open standard, some will argue that the value of this platform will come from the management of the parent client, not the original unfiltered data warehouse. But if I have to choose a candidate, I will not trust Facebook, but I will choose Jack (Twitter);

Stablecoin trend

1. Tether is one of the early killer applications in the cryptocurrency world. Although there are various problems (such as rumors about solvency and the problem of Bitfinex's insufficient reserves at one time), it usually has few discount transactions. The situation is premium, which is amazing.

2. USDC, Paxos, etc .: These stablecoins are basically issued by regulated financial institutions. Their deposits are audited by real accounting firms every month. USDC and PAX are currently the most competitive competitors. They are trying to surpass them. Tether. It is unclear whether these assets can be substituted because they rely on close banking relationships, and issuers are likely to try to blacklist any assets that involve suspicious or illegal transactions, and they will eventually go on long-term with the central bank's digital currency competition.

3. About DAI: The stablecoin asset is indeed a bright spot in the bear market. Dai survived a major market test in 2018. Last month, it also switched from a single mortgage model to a multi-collateral model, and it ushered in another one. A major milestone, this model may one day open the door to support thousands of mortgage assets. Although the competition in the stablecoin market is very stimulating, I think that the ETH locked by Maker CDP and the Dai in circulation will achieve double growth in 2020;

4. I predict that Dai will eventually become the stable currency choice dominated by emerging markets such as Latin America, where no one really wants to hold local currency;

5.Algorithmic stablecoin: Above we discussed stablecoins supported by fiat currencies and mortgage stablecoins, but there is a third option that has not been fully explored. It is algorithmic stablecoin. In December last year, an algorithm that was hyped up was stable The currency project Basis was forced to close down and returned investors' funds. The outside world was worried that its dual token structure would conflict with US regulators. I am more optimistic that one of its competitors, Reserve, is Peter Thiel, Coinbase, DCG, etc. Projects supported by investors, who are expected to fully launch products targeted at several emerging market economies by 2020;

6. Libra: It seems a bit strange to bury the biggest stablecoin story of the year in the middle of the stablecoin section, but frankly, this is where it belongs. The Facebook / Calibra team severely underestimated how unpopular their statement would be, and all their meaningful payment partners (Visa, Mastercard, Stripe, PayPal) were scared away by the tough tactics of Congress.

Libra wants to run a basket of stablecoins, which will not be possible in the next few years. Instead, they are more likely to adopt a single currency stablecoin.

7. Federal Reserve / European Union: Although there is no news about the Federal Reserve or the European Central Bank officially supporting the central bank's digital currency, both organizations are increasing their research on the possibility. Fed Chairman Powell seems to be enthusiastic about this idea. On the other hand, European Central Bank President Christina Lagarde seems more interested in this idea. At present, France has planned some pilot projects, except for the United States. We will see competition from various CBDC (Central Bank Digital Currency).

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Policy trends

1. Possible failure points of cryptocurrencies: banks. The cryptocurrency industry has more or less promoted three small banks: Silvergate, Metropolitan, and Signature. Silvergate, which was recently listed on the NYSE, may need special attention. It regularly submits documents to the US Securities and Exchange Commission (SEC), and Provides services to more than 750 cryptocurrency companies. At present, the bank hosts more than 1.3 billion US dollars of cryptocurrency customer deposits, accounting for about 60% of its total deposits. It can be said that this bank is really a cryptocurrency bank, and this For its customers, it also means some risks.

2. The tax reporting nightmare will continue: If you are an early player in the industry, you better not put all your assets in one exchange or wallet. Many will be subject to unfair audits and penalties, and the current tax reporting infrastructure is immature.

In addition, the latest IRS guidance on forks and airdrops is crazy, which will seriously hurt users. Germany and France have done better in this regard, and I expect that these favorable environments will continue to attract more capital in the next few years.

3. The SEC will continue to punish ICO projects, but if the project party hires some good lawyers, paying some money can solve this trouble.

4. About ETF proposal: The US side still seems hopeless, but some other countries will launch Bitcoin ETF / ETP before the end of 2020.

5. Regulatory competition: Most of the world's largest cryptocurrency businesses come from Asia, but these companies are not actually in Asia, mainly because of regulatory issues, and friendly regulatory positions will attract more business.

Note: This article only selected part of the report.