CoinDesk reported on the 30th (local time) that Andrew Kids, the general partner of the large Ethereum hedge fund’DARMA (Digital Asset Risk Management Advisors) Capital’, presented 16 predictions for the cryptocurrency industry next year.
Andrew Kids is the co-founder of’LiquidStake’, a liquidity solution for Ethereum 2.0. Earlier, he served as the chief of global business development at Consensys, a blockchain software developer.
As an industry expert who has closely watched the blockchain, cryptocurrency, and decentralized ecosystem, he has been providing industry prospects every year since 2016. He predicted that next year, the blockchain cryptocurrency industry will be at the center of the economy, politics, and society as a whole.
In particular, Ethereum, the basis of dapp and defi (decentralized finance), will be the protagonist of 2021, following Bitcoin, which was in the spotlight as a new asset type in 2020. The outlook for the cryptocurrency industry for next year by Andrew Kids is as follows.
1.Bitcoin’Digital Gold’, Ethereum’Digital Crude Oil’
This year, Bitcoin has proven its intrinsic value of’digital gold’. In the next year, the perception of Ethereum as a’digital crude oil’ is expected to spread.
Contracts such as sales contracts, employment proposals, insurance policies, medical prescriptions, confidentiality agreements, and ISDA standard contracts are the elements that make up and link the world. It is no exaggeration to say that the whole world moves based on contracts.
Ethereum is a technology that can convert contracts into digital form. Digitizing contracts means digitizing a $270 trillion global economy.
Next year, Ethereum will absorb all contracts around the world and solidify its position as the substrate for the global digital economy. It is expected to further upgrade the economy as a whole, not just an asset type.
2. Ethereum 2.0, stage 1 operation
On the 1st of this month, Ethereum 2.0 successfully completed phase 0. The network’s consensus algorithm has been changed from Proof-of-Work (PoW) to Proof-of-Stake (PoS), enabling faster processing with less computing power.
Next year, the first phase of Ethereum 2.0 will be promoted. By dividing the Ethereum blockchain into 64 chains, a shard chain that processes transactions in parallel and distributed is introduced. Increased throughput and significant advances are expected in terms of scalability.
3. Bitcoin exceeded 50,000 dollars
Bitcoin provides a function of storing value through a fixed supply. Bitcoin has surpassed $20,000 in three years and is on the rise.
The entry of institutional investors, which started this year, is expected to accelerate next year. Bitcoin price is expected to rise to $50,000.
Earlier, Michael Novograz, CEO of Galaxy Digital, also predicted that the price of Bitcoin would reach $50,000 within a year.
4. Ethereum rises to $2000
The transition to Ethereum 2.0, which will greatly enhance network capabilities, is attracting attention from several companies and institutional investors. This is expected to take the value of Ethereum to the next level.
On the 28th, Ryan Watkins, an analyst at Mesari, a cryptocurrency market analyst, said, “Next year institutional investors will start buying Ethereum in earnest.”
5. DeFi’s total deposit assets will exceed $150 billion
The DeFi division, which has emerged rapidly this year, is expected to grow rapidly next year. The total deposit assets are expected to exceed $150 billion, and DeFi-dedicated cross-chain technology is also expected to take place.
Currently, the foundation of the DeFi ecosystem is Ethereum. Next year, networks that try to enter the DeFi sector through their own tokens that can operate in the Ethereum-based DeFi ecosystem may emerge.
In particular, as bitcoin tokenized products that can be used in the DeFi ecosystem such as tBTC, ren, and wBTC become popular, the size of DeFi deposits will grow significantly.
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6. Web 3.0 Era, From Application Layer to Protocol Layer
The transition from the Web 2.0 era to the Web 3.0 era is in progress. Web 2.0 is a participatory, sharing, and open platform capable of providing interactive information, and data is managed in a centralized server. Web 3.0 provides personalized information and strengthens personal authority through artificial intelligence and big data. Data is distributed and managed through blockchain and cloud.
In the Web 2.0 era, applications were more valuable than protocols. Currently, the world’s largest Internet companies are not HTTP protocol operators, but applications companies that provide the most valuable experiences to end users.
When the Web 3.0 era begins in earnest next year, the protocol that can implement the characteristics of Web 3.0 is expected to be greater than the value of applications.
7. Layer 2, explosive growth
Ethereum is expected to establish itself as a layer 1 blockchain next year.
On the other hand, it is expected that numerous layer 2 solutions to complement the base layer and compose applications will emerge through unique features such as scalability, privacy, and interoperability.
The rapid growth of the DeFi division this year has caused problems with high gas costs (gas fees) and slow processing speed. Advances in Layer 2 technology can provide extended solutions to handle microtransactions that do not need to be processed on the mainnet.
DApps can move to such a Layer 2 solution to increase transaction processing speeds per second from 100 TPS to 2000 TPS. Ethereum scalability projects such as ZK-Rollup and Optimism are expected to be in the spotlight.
8. IPFS·Filecoin, to the world data storage stage
In 2016, IBM stated that “90% of the world’s data has been generated in the last two years.” At the time, four years ago, the world generated 2.5 quintiles (100 kilo) bytes of data.
All devices connected to the Internet, such as smartphones, smart TVs, computers, and cars, generate data. The amount of data generated is increasing exponentially every year. For this reason, there is a need for inexpensive and easily accessible unlicensed data storage.
IPFS and FileCoin, the next-generation communication agreement to replace HPPT, are Layer 1 protocols to provide large-scale distributed storage. The storage scale exceeded 1 exabyte (1 billion gigabytes) in a month after the launch of the mainnet in October.
The technology to connect Ethereum, IFPS and Filecoin is already under development. In the next year, it is expected that contracts, transactions, data storage, and sharing will be possible through decentralized protocols.
9. Ethereum killers cannot survive without attacking the niche
Over the years, various Layer 1 blockchains have presented themselves as “Ethereum killers” and have presented faster and more sophisticated smart contract platforms, but no cases have yet to be fully demonstrated.
These projects may not be cut off from the market until niche use cases are discovered. Like NEAR, which has established itself in the game sector, and Dfinity, which uses WebAssembly instead of Solidity, it is necessary to create an uptrend by providing differentiated applications or technological advantages.
The current Ethereum market share is comparable to that of Google in search. Chain-to-chain other protocols also support this share.
Even if an open source ecosystem based on other protocols emerges, the market share change is expected to be insignificant since Ethereum will eventually connect to the base layer.
10. The beginning of the cryptocurrency IPO craze
Major companies in the cryptocurrency industry, such as Block Pie, Celsius, and Coinbase, are promoting IPO. In the case of Coinbase, the corporate value is expected to exceed $40 billion within one year.
We can expect the future to issue digital securities in the future through tokenization technology that can complement or replace the stock market.
11. China moves digital yuan into operation
The launch of a digital renminbi developed to innovate cross-border trade and investment appears to be imminent. China has already introduced digital renminbi payments to tens of thousands of people, from closed experiments to open experiments with the general public. Currently, digital renminbi is also being introduced for services with a large user base.
12. US, digital dollar development is sluggish
US CBDC work is expected to continue to be postponed. Due to the corona 19 and the presidential election this year, there has been little progress in the development of state-run digital currency. It is expected that a lot of time will be spent recovering the market next year.
The necessity of state-run digital currency is becoming more and more clear, but the US is likely to be distributed through the old method for some time. Meanwhile, it is expected that a dozen other countries will continue to pursue CBDC work.
13. Public blockchain, entering the enterprise sector
Next year, public blockchain use cases in the enterprise sector are expected to appear.
Blockchain leaders such as Microsoft’s Yoke Rhodes, Ernst & Young’s Paul Brody, and Consensys’s John Wolfert are developing the Ethereum-based open source protocol’Baseline’.
The protocol is expected to maximize the use of the public blockchain in the enterprise sector by connecting the enterprise blockchain and Ethereum’s public network with P2P messaging and zero-knowledge encryption technology.
14. Revitalization of Non-Replaceable Token (NFT) Market
NFT, which displays unique products such as works of art, high-priced brands, and collection cards in digital form, is being evaluated as a promising solution to the problem of product counterfeiting. Innovative companies such as crypto art issuance and brokerage platform SuperRare and fantasy football game platform Sorare are expected to lead the popularization of NFT next year.
15. Cryptocurrency venture investment increases
The venture investment market for the web 3.0 and cryptocurrency industry has grown steadily over the past five years. Next year, next-generation cryptocurrency ventures will emerge, creating large-scale industrial opportunities. It is expected that a small number of blockchain experts who belong to large Silicon Valley ventures will independently raise funds and create a next-generation cryptocurrency venture industry.
16. Expansion of cryptocurrency derivatives market
In February of next year, the Chicago Merchandise Exchange (CME), the world’s largest derivatives exchange, will launch Ethereum futures. Ethereum is the second cryptocurrency product registered with the CFTC, providing additional cryptocurrency investment options to institutional investors seeking regulated products. In addition to Bitcoin, Ethereum-based exchange-traded funds (ETF) can be expected.
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