Late last weekend, the founder of Messari, Ryan Selkis published a 165-page 2022 theses which laid down his observations of the crypto and blockchain space.
Here are some pointers that stood out to me in terms of which themes in crypto to look out for in 2022:
One section of the report stood out to me: NFTs allow you to own a piece of “your favourite entertainer”. With NFTs, you can unlock a lot of utilities and possibilities when it comes to engaging with your favourite brands.
Here’s the example shared:
“Let’s say you bought one of the first 1,000 NFTs for your favorite indie band’s new album. They go mainstream, and now you’ve got backstage passes (via your NFT) for their next tour stop in your town. You get a split of the royalties from a Netflix documentary on their rise. In fact, your NFT gives you voting rights in the DAO that voted on the royalties deal in the first place! Maybe that NFT gets you an Audius airdrop.”
We are already seeing NFTs evolving from just “profile pictures” into NFTs with utilities, and music NFTs are on the rise. For example, certain NFTs give you exclusive access to alpha clubs.
Mike Shinoda (Linkin Park) also recently launched his first music NFT. There are also soccer fan tokens enabled by the Chiliz blockchain.
We expect to see even more NFTs being utilized to engage with fans over the next 12 months.
Crypto to watch: Audius, Chiliz.
The second theme that stood out in the report is on Play-To-Earn (P2E) Games. This year saw the rise of P2E games such as Axie Infinity, which reached over US$600 million in annual revenue.
“Today’s gaming giants generate US$120 billion in annual sales with a 100% default take rate. Compare that to Axie, a meh game not even available in app stores. Its play-to-earn model reduced customer acquisition costs to zero, attracted millions of users and a $10 billion market cap in less than a year. That’ll wake ‘em up.”
Next year, we may start seeing gaming companies entering the crypto space via merger and acquisitions. In fact, AAA gaming company, Ubisoft, just announced that it will launch in-game items tokenised as NFTs on the Tezos blockchain.
“It’s not just opportunism that will drive them. The threats posed by inaction are real, too.”
Crypto to watch: Ultra, Axie Infinity, Aurory and many more
Another theme to watch next year is the rise of tokenized funds. In the traditional finance space, we are very familiar with Exchange Traded Funds (ETFs).
The ETF space itself is actually less than 30 years old. However, there has been hardly any innovation in the space over the past 30 years.
With blockchain technology, it is possible for fund managers to easily set up tokenized funds to either track performance of the traditional market via synthetic assets, or to set up a token which tracks a basket of crypto based on themes.
One such protocol is Index Coop which is a crypto index fund. On Index Coop, you can invest in the DeFi Pulse Index (DPI). The DPI tracks the performance of top DeFi projects, including Uniswap, Aave, Maker, Sushiswap and more. Basically, buying a unit of DPI token is equivalent to holdings all these cryptocurrencies.
We foresee there will be more similar products which makes it easy for anyone to easily invest in a basket of crypto.
Crypto To Watch: DPI, MVI, BED
Another area which will be big next year is the learn-to-earn movement.
“The “learn-to-earn” plays will be easy to integrate into the Web3 wallets and hosted wallets alike. They’re
user education initiatives that pay for themselves in the form of more crypto natives, and thus, more long-term holders.”
According to Ryan in his report, learn-to-earn is going to slowly replace credentials and largely gamify and invert the education funding model.
We are already seeing this module being leveraged by Coinbase and Coinmarketcap via their learn and earn module. We expect to see more of that in the near future.
While this is not a “theme” per se, with blockchain technology, there is a near infinite improvement to quarterly reporting, as information is open to inspection at all times.
What it means is that instead of waiting for quarterly reports, tools such as Dune Analytics, Token Terminal, Nansen, Messari, allow protocol statements to be dynamic documents powered by live feeds of data streaming directly from the blockchain.
In the decentralized world, financial data is transparent, widely available, and accessible at all times.
We expect to see more analytical tools being build over the next few years, which will fundamentally change and improve information asymmetry.
Traditional finance will have to step up their game because once the world has had a taste of the open free and transparent data available on the blockchain, we cannot go back to the old ways of how things are being done.
Tools to watch: Dune Analytics, Token Terminal, Nansen, Messari
Price of DeFi and Bitcoin
Another thing that stood out to me for the report is the potential of the space and the opportunity cost of not being in crypto.
If Bitcoin history were to repeat itself, hitting a MVRV of 3 again this year would take us to the US$100,000-125,000 range.
MVRV is basically a score that uses blockchain analysis to identify periods where Bitcoin is extremely over or undervalued relative to its ‘fair value’.
In terms of decentralized finance, despite DeFi’s monstrous 2020 run, DeFi trades at less than 1% of the global banks’ market cap, which shows how much upside remains long term.
The opportunity cost of not being in the crypto and blockchain space is just too high.
[Editor’s Note: This article does not represent financial advice. Please do your own research before investing.]
Featured Image Credit: Chain Debrief