Excerpt from Messari Annual Report: Top Ten Investment Topics in the Crypto Market

Author: Messari
Compiled by: W3.Hitchhike

I. The Collapse of Institutional Trust

Why should we understand this?

Perhaps you are one of the many investors from the "millennial" and "Generation X" cohorts, who often say that "only a miracle can allow retirement," as everyone is worried about soaring public debt, unstable inflation rates, and the unknown challenges that come with interest rate hikes. If you are one of them, then for you, cryptocurrency is the lifeboat amidst the torrents of this era.

Currently, 70% of Americans no longer trust Congress, and you may be one of them. You no longer believe that decision-makers will do the right thing, as they spend recklessly and are not punished even for insider trading. You might be looking for a less centralized decision-making body, and for you, cryptocurrency is a vote against centralized institutions.

Maybe you are just a populist—coming from the "left" or the "right"—who feels anger after learning about Wall Street's "misdeeds," which clearly birthed the last financial crisis but were hardly affected by it, and even sought to profit from federal government policies. Or perhaps you are concerned about the monopolistic practices of large corporations, censorship, and personal data privacy issues. For you, cryptocurrency is the "silver bullet" that pierces through all of this.

The image below may resonate with most people. (*Source: * A16z: How to Win the Future)

Of course, you might just be in the cryptocurrency market to make quick money, enjoying memes and jpegs, and that’s perfectly fine too.

Whether you are a "missionary" in the crypto world or a speculator, you will find that the force driving this crypto movement is our pursuit and longing for the belief in decentralization. Web3 (the organic combination of decentralized networks and financial systems) is an excellent alternative to the declining traditional institutional system.

This brings to mind my first prediction for 2022: Unless we all live in a more authentic world, things will only get worse. Throughout 2022, inflation will remain above 5% (70% probability), and the interest rate hikes at the end of the year will hinder the stock market's momentum and harm growth stocks (60% probability, with a decline in the S&P 500 next year). In the short term, these signals will favor the development of cryptocurrency, but in the medium term, risks in the crypto market will rise, as more users will be forced to "strip" from the market, and cryptocurrency companies will face comprehensive scrutiny from various banking institutions and governments.

II. The Arrival of the Crypto World/Web3 is Inevitable

This is the only bearish expectation in this report. The development momentum of the crypto world (recently referred to as "Web3") is unstoppable in the long term.

Chris Dixon describes it as "an internet owned collectively by builders and users, mediated by tokens." Eshita describes the evolution from Web1 to Web2 to Web3 as moving from "read-only to read-write, and then to write, read, and own." Regardless of which model you prefer, in the long run, the benefits for users in Web3 will surpass those in Web2 (the monopolized internet economy).

In this report, we will gradually analyze and interpret many contents, but the theme is singular:

We are transitioning from the internet hegemony of "rented land" to a brand new era full of infinite possibilities. In this frontier, the development of cryptocurrency is like an inevitable revolution that frightens all the profiteers in monopolistic economies.

In fact, we already possess all the key factors needed for success:

• Talent: Talented, passionate, and visionary young people are pouring in and building the crypto world.
• Capital: The cryptocurrency market has raised a significant amount of venture capital, crypto startups are beginning to fundraise, and the number of emerging liquidity protocols online is rapidly increasing.
• Timing: During the last bear market, key infrastructure in the crypto world was deployed, making it easier for society to accept and accommodate the launch of the "crypto movement" (a politically charged technological revolution).

In a recent article by Eric Peters, he mentioned that we are currently in a period of societal transition. The younger generation is keen on emerging investments and is unwilling to invest in the traditional investments favored by the older generation, as traditional institutions only help the already wealthy older generation to continue "wealth creation," while these new investment methods have the potential to disrupt those traditional investments (even leading to their bankruptcy). This opposing situation is inevitable, as young people have realized that traditional institutions are exploiting them.

DeFi offers savers a 5% annual yield, while Wall Street only offers 0.5%. The emergence of NFTs (non-fungible tokens) provides creators with greater earning opportunities, without the 50% cut taken by Hollywood. The rise of GameFi and SocialFi breaks the monopoly, with internet giants losing 100% of their market share, while institutional risks are also reduced.

I am 99% confident that the cryptocurrency market will experience an order of magnitude growth by 2030, as this market has a strong expected appeal. We are in a period of comprehensive transformation of the global economy, and the emergence of cryptocurrency will have a greater impact than mobile communications, even the internet.

Although we are swaying in the unique cycle of the crypto market, it currently seems that the market's residual heat is still present, and the capital market is still bubbling beneath the surface.

Therefore, I categorize the subsequent trends into three scenarios:

1. The most likely scenario is that the market will experience explosive growth before the end of the first quarter of 2021, followed by a shallow but long and painful bear market;
2. The entire industry will soar, creating a $20 trillion bubble that lasts for a whole year, comparable to the currently booming internet industry—though this sounds more like a joke, considering the global loose monetary policy, the expanding government deficit, and the surging momentum of the cryptocurrency market, it is not impossible.
3. The market will rise slowly and steadily, indefinitely. ("Supercycle" theory).

Ironically, the most bearish scenario here (entering a bear market after the explosive growth in the first quarter of 2021) may be the most bullish for long-term investment, and vice versa. At this stage of our development, "highly Bitcoinized" and the permanent rise of the cryptocurrency market will only occur under a very "dystopian scenario."

III. Bridges, NFTs, and DAOs

"Web3" can be said to be all-encompassing, covering cryptocurrencies (digital gold and stablecoins), smart contracts (L1 & L2), decentralized hardware infrastructure (video, storage, sensors, etc.), non-fungible tokens (NFTs) (digital IDs and property rights), DeFi (financial services for exchanging and collateralizing web3 assets), Metaverse (creating digital land in game-like environments), and community governance (DAOs, decentralized autonomous organizations).

I expect the growth of the entire Web3 to involve various fields, but there are three areas that are particularly underdeveloped: NFT infrastructure, DAO-related construction, and cross-chain bridges.

We are witnessing rapid innovation in the NFT space, akin to the Cambrian explosion, and this is just the beginning. I am not sure how high the bubble of individual NFTs can rise, but I know that there is still a lack of reliable and universal NFT infrastructure. NFT trading platforms, financial primitives, developer tools, community-oriented business models, and decentralized identity/credit management systems are all still in their infancy. These core infrastructures will be one of the hottest investment areas in 2022.

The construction related to DAOs is similarly urgent, as this is a pressing issue for the entire cryptocurrency community. Currently, community members show apathy towards voting in community governance, which is quite severe, and the time taken for community investment processing is too long. If you, like me, foresee that in the next decade, a token-governed open market will replace corporate structures; however, the current community collaboration needs to improve by a factor of 100 to be more efficient than centralized models.

Moreover, if every transaction in a DAO has to go through a board-level proxy vote, then you can understand why 2022 will be the year of DAO development. (I have made a portfolio investment and established an operating system for participating in web3 through a bet agreement with Messari).

The core issue lies in the "channels" of cryptocurrency: scalability and interoperability solutions.

Ethereum reached its capacity limit this year, so other public chains began to take on the market value that Ethereum could not accommodate, with many public chains experiencing explosive growth of 50-100 times in value, and investors are turning their attention to new public chain ecosystems to profit from them. However, all public chains (along with L2s on Ethereum) need to communicate with each other, so the current pain point in the cryptocurrency world may be the lack of cross-chain bridges.

If the future is a multi-chain architecture, then whoever can launch better cross-chain connectors and help assets flow freely between parallel chains, relay chains, and layer twos will grasp the immense wealth of the future digital world.

If these concepts sound unfamiliar, that's okay; you can read the NFTs section (Chapter 6), the DAO section (Chapter 9), and the L1 interoperability section (Chapter 8) of this report for more details.

IV. Decoupling of the Crypto Market

Different areas of the crypto world have different value orientations. Our understanding of the industry has shifted from "everything is cryptocurrency" to "it can be divided into tokens, smart contract protocols, DeFi applications, decentralized network platforms, NFTs, W2E (work-to-earn) markets…"

More and more investors have begun to keenly pay attention to the actual usage of various networks and the underlying microeconomic theories implied in the market, trading based on corresponding trends. This is still a meme-driven market, but many memes reflect the fundamentals? (Perhaps). Ari Paul wrote a rather insightful article about the recent decoupling of the cryptocurrency market.

"In this cycle, the market has validated that non-mainstream digital currencies still have utility. In previous cycles, it was meaningless to become an expert in the cryptocurrency field. Four years ago, DeFi and NFTs basically did not exist. Most other 'sectors' also did not exist and were meaningless. In the past, we thought that 'decentralized file storage,' 'smart contract platforms,' 'privacy,' etc., were disconnected from cryptocurrency, and then it turned out that this view was very arbitrary and absurd. Now, DeFi yield farmers or NFT speculators can become full-time professions, and you even need a small team to keep up with each track to stay on top of the market."

This is an important developmental stage, and it is also a stage where private investment funds will have a significant and sustained competitive advantage. Currently, the market's protocol "reports" are filled with information asymmetries, the technical learning curve is steep, and risk management infrastructure is limited, all of which make the threshold for cryptocurrency investment very high.

Cryptocurrency funds are now at the most crucial moment in their existence, and this situation may continue into the new year.

V. Permanent (Risk) Capital: Entering, Consuming, and Never Exiting

The amount of capital entering the cryptocurrency market this year is astonishing.

The financing volume of these specialized cryptocurrency funds and the growth of their core assets have set records. Some of these funds (like Multicoin) may be among the best-performing investment firms in history, which explains why they can acquire large amounts of liquid cash without pressure.

*(Source: * Crypto Fund Research)

Currently, it is hard to imagine the scale of the private cryptocurrency fund market. In 2015, when DCG raised $25 million, it was one of the largest financings among cryptocurrency investment firms at that time. Now, Polychain, Paradigm, a16z, Multicoin, 3AC, and some other companies each manage billions of dollars (sometimes exceeding $10 billion), with cash flowing in their medium-sized trades every so often at $25 million. Hedge funds plan to allocate 7% of their assets to the cryptocurrency market within five years, and pensions are also beginning to be used for direct purchases.

In the context of negative interest rates, large capital allocators are continuously improving asset allocation efficiency, and most can no longer ignore the cryptocurrency market.

The cryptocurrency market has created $3 trillion in liquid value over the past decade, which is now enough to rival the total value of all venture capital-backed startups. Institutional entrants have taken note of this, and they are likely to deploy capital in a different way to avoid market crashes like those in 2014 and 2018. When newcomers enter the market, capital often experiences two changes—flowing in and decreasing (devaluation), but it will never flow out.

At this time, capital may flow into emerging tokens with high beta coefficients, but when the market recovers, capital often does not exit (except for tax purposes). Instead, it tends to stay in "blue-chip" cryptocurrencies like BTC, ETH, or SOL.

If you are unwilling to directly engage with the cryptocurrency market, that's fine. The demand for cryptocurrencies has spurred the prosperity of the crypto market, and corresponding hedging risk exposures have emerged in the market.

According to Dove Metrics, in the third quarter, $8 billion of the 423 transactions belonged to private investments, nearly half of all investments (totaling $17.8 billion) since the beginning of this year, which has already exceeded the total of the previous six years. In the history of the cryptocurrency world, nearly 90% of the large-scale transactions occurred this year, not including Coinbase's direct listing. About 75% of the funds are concentrated in infrastructure and centralized exchanges, and all of this happened before the announcements from FTX and DCG (and possibly the upcoming Binance financing announcement).

In fact, such institutions already exist at this time.

VI. What is the Upper Limit of the Crypto Market?

We all know that a "crash" is imminent, and this cycle may be smoother than previous ones. However, we previously mentioned that the market still has "residual heat," so how much upward space remains before the crash arrives? What are the signals of "topping"? Is it when Shiba Inu's market cap reaches $30 billion? Or when NFT billboards appear in Times Square?

Now let's discuss what I consider to be the signals of "topping," starting with Bitcoin.

1. Bitcoin: The king has no real rivals (I will elaborate on the reasons in Chapter III). As a non-yielding monetary asset, Bitcoin is often used for pricing and valuation, so it is frequently compared to its "relative"—gold. However, Bitcoin still has fundamentals worth tracking. The best judgment method may be the "market value to realized value" promoted by Coin Metrics.

This is a ratio comparing the market value of freely circulating Bitcoin (the amount of currency circulated in the past five years) to its "realized value" (the sum of the prices at which each Bitcoin last circulated on-chain at the current time). When the realized value skyrockets, the market value can remain unchanged, and vice versa. One is a "snapshot" of Bitcoin's current price, while the other is a dynamic measurement metric with traffic.

If you are not a HODLer and cannot endure a four-year bear market, then whenever MVRV reaches 3, it is the best time for you to profit (when MVRV drops below 1, you can sell a kidney to buy in). In the previous three "double bubbles," the market could almost only be viewed through indicators like MVRV, as the previous "bubbles" had little record on price charts, and the time MVRV stayed above 3 was gradually shortening. In 2011, MVRV stayed above 3 for four months. In 2013, it stayed there for 10 weeks, and in 2017, it stayed for three weeks. Earlier this year, it only stayed for three days.

If history repeats itself, what would that mean? When MVRV reaches 3 again this year, Bitcoin's price will reach the level of $100,000–$125,000!

If things develop to this extent, Bitcoin's next target will be to match gold's market value! Based on today's gold prices, matching gold's market value would mean Bitcoin's price would reach $500,000. So Bitcoin may still have a tenfold investment opportunity. However, based on Bitcoin's historical return rates, this return is not high. (Of course, unless the ceiling completely disappears, which means fiat currency fails, and we have implicitly agreed to price in Bitcoin. 1 BTC = 1 BTC)

2. Ethereum: Recently, there has been a lot of "hype" talk among ETH giants. Can ETH surpass BTC in this cycle? The answer is unlikely. Not only because Ethereum faces scalability challenges, but also due to the intense competition among public chains, and the market is more inclined to build a multi-chain parallel ecosystem in the future. I still wonder if all other public chains can "jointly overthrow" Bitcoin like FAMGA's market cap exceeds M1 (h/t Arthur Hayes' metaphor).

So can Ethereum surpass Microsoft, Apple, or Google? Currently, Ethereum is 3-5 times behind them. Can ETH exceed the combined market cap of FAMGA? That would be 15-20 times behind, and that requirement is quite high, especially considering that Ethereum currently accounts for only 5% of FAMGA's total market cap, ETH still seems "cheap."

3. Other Public Chains like Solana: The new entrants in the crypto world are vying for the third position in market cap (at $60 billion). Polkadot ($40 billion) and Avalanche ($30 billion) are also in the race. If these public chain protocols aiming to replace Ethereum believe they have a higher beta coefficient than ETH and will eat into Ethereum's market share and shake its dominance, have they considered Terra ($16 billion), Polygon ($12 billion), Algorand ($11 billion), or Cosmos ($7 billion)?

Market competition has two points: business development (building and deploying applications) and ecosystem drainage (whether they can attract developers to build projects on non-Ethereum blockchains). The "Ethereum killers" have sufficient funds for fierce competition, but as an investor, your choice is either the winner or to buy a basket (betting against Ethereum's dominance). In either case, these assets are linked to ETH.

4. DeFi: The long-term outlook for DeFi is excellent, so it can be shorted against banks (with caution). Although DeFi achieved remarkable results in 2020, its trading volume is still less than 1% of the global banking market cap, indicating that there is still significant upside potential in the DeFi market. Some top DeFi protocols have stagnated in price, but if you firmly believe that the cryptocurrency market will replace traditional centralized institutions, it may reward you with a considerable risk-return opportunity (greater than any risk-return opportunity in today's market). Currently, competition among protocols is fierce, and they are about to face regulatory scrutiny, while technical vulnerabilities are everywhere, and systemic risks could paralyze the entire market. High gas fees are undermining unit economic efficiency. From multiple indicators (mainly turnover and P/E ratio), DeFi remains eye-catching, but the current calculations only benefit "whales."

5. NFTs: Given that NFTs are non-fungible and have poor liquidity, it is challenging to summarize the "market cap" of NFTs in any form. DappRadar estimated the market cap of NFTs at $14 billion in early September, and this number has been rising ever since. As NFTs open up a design space for cryptocurrency users and create another crypto economy, this field has a very promising development outlook, with expected scales that are frighteningly large. Meltem believes the NFT market cap could reach at least the level of LVMH ($375 billion), while Su Zhu believes the NFT market cap will reach 10% of the entire crypto market ($225 billion). I do not think they are wrong, but to a greater extent, this only indicates that NFT creators still have significant opportunities, and there is still much room for market infrastructure development, which does not indicate the investability of most specific NFT projects (see Chapter 6).

VII. The Long Bear Market

We love the cryptocurrency market; we enjoy its long-term and short-term aspects, but the most captivating is the mid-term.

"When will the market crash?" I think unless you have experienced the long bear market of the crypto world, you will not truly understand it.

In the winter of the crypto world (a long bear market), many will lose confidence, unable to endure the collapse of their souls and years of hardship. "The government may intervene with regulation," "It's too early for these products to launch."

"I told you this was a bubble," similar bearish remarks will emerge endlessly. Besides the massive paper (or actual) losses, you will see people collapse, going bankrupt due to excessive leverage (or poor tax planning), becoming pessimistic and indifferent, abandoning other promising projects, and generally losing long-term expectations for the crypto market. Worse still, the next bear market will be a nightmare brought on by regulation, and we will not have the atmosphere of a bull market to help us face issues such as consumer rights protection, market fraud, product abuse, systemic risks, ESG, and market behavior compliance. Meanwhile, the number of "grassroots" groups in the crypto market will significantly decrease, as when you lose 90% of your savings, you have to find a real job, making it even harder to "fight" against traditional markets.

All of this sounds harsh, but perhaps this time it won't be so bad.

After the market collapse, the first thing to do is to return to the essence: do you still believe in everything about the crypto world? You need to silently ponder the following questions in your heart.

1. Is the centralized world really heading towards decline?
2. In the future, is Web3 a "chip" worth looking forward to in the fight against the traditional world?
3. Are the components of the new fields we envision (bridges, DAOs, NFTs) still worth significant investment in the next phase?
4. In the next downturn cycle, will it be easier to find fundamentally strong projects?
5. Is there still ample funding available to support interesting projects?
6. Do you still believe that the crypto market will return to a bull market in 5-10 years?

If you still believe in all of this, put on your helmet, embrace the winter, and pay attention to these "winter survival tips": leverage early, time your taxes well, cash out in time, and do not attempt to speculate on the "topping" time.

• About leverage: This should be self-evident: if you are not a professional trader, your leverage is merely a transfer of funds in the eyes of professionals. The volatility of cryptocurrencies is enormous, and the upside potential is vast. You do not need to gamble here or go into debt.
• About taxes: Most people are aware not to go into debt for unnecessary investments (like buying Dogecoin with a credit card), but they may overlook their "leverage" due to inadequate planning—remember to sell and cash out in December, as taxes will need to be paid. If you started with $10,000 on January 1, traded it to $100,000 by December 31, and then lost it down to $25,000 on January 1, 2022, you will owe the government more than you hold in assets, and your "performance" ends here. Thank you for participating.
• About shorting: Please do not short. Even if you are right, you are likely to "blow yourself up" by not timing it correctly. If you lose, others will dance on your grave to celebrate because they profited. Even if you win, no one will like you, and you will lose long-term expectations. PS: I am just reminding everyone here, not telling you what to do.

Another thing to remind those speculators is that they may feel this is a great time to buy low-priced coins in a bear market. However, the market can absolutely crash harder than you imagine, prices can drop lower than you think, and the bear market can last longer than you expect. The meme-like state of the crypto market, as if it were a drug from hell, can easily get you high; you will slowly feel the pain disappear, but it will also take time to detox.

If you are a young team newly entering and engaging in the cryptocurrency market, please do your best to protect your team and members from the "nuclear reaction" effects of the market collapse. Many teams are misusing their assets and failing to do core work; Messari kindly reminds you: "Do not waste money."

If you are an ambitious employee of a Web3 company, working for a "infrastructure company" with ample funding is certainly not a bad choice. Before signing the contract, remember to ask the recruiters about their track situation and cash situation (most should still be fine at this time).

Those who made a quick buck in the short term will evaporate, but the next cycle's unicorns will emerge in the cold winter of the market. Surprisingly, the success of cryptocurrency largely depends on its resilience. "We will all succeed" is an interesting bull market meme, but in a bear market, it seems better to shout "We will all survive," because at this time everyone is laughing at you, the market has plummeted by 80%, competitors in the industry are going bankrupt, and customers will gradually disappear.

During a bear market, you no longer need to consider digital currencies on your personal balance sheet; you need to be more cautious and careful.

VIII. The Public's Choice: Coinbase Opens the Door to Traditional Markets

Will the performance of the cryptocurrency market surpass that of the companies supporting it?

Although Coinbase's market cap reaching $70 billion is indeed astonishing, after their Series B financing in 2013, Coinbase's market cap has never kept pace with Bitcoin. And such examples are not uncommon; many other infrastructure companies considered "blue chips" have also struggled to keep up with cryptocurrencies. In terms of Bitcoin, the decentralized investment company Digital Currency Group is a veritable cryptocurrency asset incinerator, with its market cap down about 80% since 2015 when calculated in BTC.

If you compare these companies with tokens from mainstream public chains like ETH, the numbers become even uglier.

On the other hand, Binance's BNB has appreciated to an all-time high in four years, largely because BNB incentivized new users to register on the exchange platform and could be exchanged for about 20% of Binance's profits. BNB's market cap is over $90 billion, while the entire company's market cap is 3-4 times that number.

The birth of cryptocurrency IPOs and ETFs is more important for attracting institutions and strengthening the mainstream recognition of cryptocurrencies than for helping retail investors gain returns. Coinbase is expected to become a trillion-dollar company. The BITO ETF is the fastest ETF ever to raise $1 billion. These publicly accessible ETFs are like tickets to enter the crypto world; they may be significant for your parents (referring to the older generation), but not so much for your friends, who can access better native cryptocurrency tools (including tokenized derivatives and related indices).

Regarding these new ETFs (COIN and BITO), their greatest role is to provide free marketing for cryptocurrencies, allowing outsiders to learn about the native crypto market. Through Coinbase, you can track their non-trading lines to gain a good understanding of which custodial services are emerging.

SBF also likes this free intelligence. With top products like BITO and futures ETFs as "public relations," we can ruthlessly slap Gary Gensler, the chairman of the U.S. Securities and Exchange Commission, in the face and expose him as a fraud. So, besides digital currencies, holding some of these securities products also has its benefits.

(In Chapter IV, learn more about Gary Gensler, and in Chapter V, learn more about the unreasonable happenings regarding ETFs.)

IX. Imitation and Trends

Sometimes in the crypto market, you don't need to think too much.

The crypto market often has a social and meme-like nature. Just look at how quickly retail investors follow the top investors in the industry to support new projects. Capital itself is also highly liquid. This year, billions of dollars have been poured into such "follow-the-leader" trades, whether in projects or memes, with numerous imitations, and funds are constantly flowing between these high-heat imitations.

The positioning of venture capital in the crypto market is changing, with builders and those quickly catching up with trends both reaping benefits. Because the market is inefficient but can quickly reflect trends, it is necessary to suppress winners and eliminate losers. As SOL's price rebounds, more funds flow into the Solana ecosystem, where assets in the Solana ecosystem earn more than those on Ethereum, and new applications are continuously updated, attracting more attention, thus forming a virtuous cycle. These are all driven by top traders, but skeptics believe these are Ponzi schemes.

The development of the crypto market has its own rhythm. Suppose a project suddenly becomes popular and takes the lead in its track; in that case, a similar hot project may quickly emerge because people now believe the market is like this (in a sense, this also aligns with the meaning of asset (investment) diversification). The rotation of hot topics is becoming faster and more real. The market has come to a point where, for some, igniting a new hot topic is as simple as shouting "Make BTC bigger, make ETH bigger, make XXX bigger."

Now the information channels are richer; you can listen to FTX explain how to hype assets, read articles written by influencers on social media (like Twitter), or check the top 20 funds to compare their held assets to enrich your investment portfolio.

*(Source: * Messari Pro Q3 Fund Analysis)

X. Disclosure of Information (Not Investment Advice)

Our analyst team discloses their asset holdings every month. Our team is growing, so this section is getting longer. The following content summarizes what analysts have outlined:

1. Their current holdings of over 5% of their portfolio;
2. Their best/worst of 2021;
3. Their expectations and thoughts for 2022.

The following content is not investment advice, so do not sue us for disclosing these potential risks. Additionally, do not accept portfolio advice from second-rate idiots; past performance does not guarantee future results.

TBI

Best of the Year: LUNA +5,746%

Worst of the Year: ANT +52%

Holdings: BTC, ETH, LUNA, PERP, RUNE, ZEC, TRIBE/TBI

FEI, OpenSea

*Marked assets that have significantly grown in my portfolio

Expectations or Thoughts: The team's expectations are my vision.

Aidan

Best of the Year: AXS (YTD return of +23,621%, hard to beat)

Worst of the Year: YAX -80% (Aidan selected the best and worst of the year in the team)

Holdings: AXS, BTC, ETH, RUNE, FTM, RGT, MKR, YFI, ANY, MLN, renZEC

Expectations or Thoughts: The "Renaissance" of DeFi 1.0 (returns have an upper limit in a bull market but a lower limit in a bear market); ATOM: bearish; predicting RON > SLP but hard to say (once Ronin's LM rewards dry up, SLP will struggle to last).

Chase

Holdings: ETH, SOL, ALCX, HNT, OHM, TOKE, OCEAN, RUNE

Expectations or Thoughts: Decentralization of Ethereum, historical proof of Solana, SBF, more users pouring in, infrastructure protocols (wireless, liquidity, data, etc.), non-custodial lending, DeFi developers.

Dustin

Holdings: ETH, SOL, RGT, AURY,

Expectations or Thoughts: Modular ecosystem + ETH scalability solutions (bearish on monolith). Bullish on metaverse infrastructure (RON is an example), but current games are terrible. Bullish on decentralized cloud computing (RNDR, AKT, etc.). Bullish on on-chain cash flow (super liquidity leads to under-collateralization).

Eric

Best of the Year: RUNE +739%

Worst of the Year: CVP -22%

Holdings: BTC, ETH

Expectations or Thoughts: Bullish on all multi-chain ecosystems and layer two applications, all Ethereum killers are overvalued, hence bearish.

Rshita

Holdings: ETH, SOL, BTC

Expectations or Thoughts: Transition from all web3, NFTs (data storage, DeFi use cases, gaming + music) applications to infrastructure, DAO construction, BTC.

Jack

Best of the Year: HNT +3,046%

Jerry

Holdings: BTC, ETH, SOL, OHM, CAKE

Expectations or Thoughts: The rise of Ethereum, numerous L1 public chains, staking protocols, the combination of DeFi and TradFi (non-chain collateral, methods to avoid over-collateralization, tokenization of real assets, etc.), DeFi can become more diverse in 2022, web3 infrastructure, GameFi aggregators, and metaverse infrastructure.

Maartje

Holdings: BTC, ETH, CRV

Expectations or Thoughts: ETH, media and entertainment facilities with huge potential, the combination of DeFi and TradFi, DAO construction, crypto.com, special-purpose DAOs.

Mason

Best of the Year: AXS +23,621%

Worst of the Year: ANT +52%

Holdings: BTC, ETH, ATOM, HNT, INDEX

Expectations or Thoughts: Modular, NFT platforms (RARI, RARE), MVI, Web3 infrastructure (AR, GRT, AKT, LPT), POOL, creator profitability (like Mirror), the combination of NFTs and DeFi (like NFTX, Fractional.art), Cosmos Hubs (ATOM, OSMO), data availability layers (Ceramic, Celestia), ZK-Rollups, Coinbase and USDC, metaverse infrastructure, governance optimization. PS: Not optimistic about overly high valuations for the bull market.

Tomas

Holdings: BTC, ETH, RUNE, LUNA

Expectations or Thoughts: Multi-chain projects, metaverse and gaming (P2E game financialization), Ethereum scalability solutions (especially ZK-Rollups), DeFi blue chips, liquidity collateral.

Watkins

Best of the Year: LUNA +5,746%

Worst of the Year: CREAM -39%

Holdings: ETH, LUNA, SOL, SYN, HNT, AR

Expectations or Thoughts: Cash, multi-chain infrastructure (long modular), Web3 infrastructure ("Web3" before Web3), ZK-Rollups, Cosmos ecosystem, decentralized stablecoin protocols and DAO infrastructure (difficult but with strong momentum). Finally, I hold a cautiously optimistic view on DeFi and believe it will return in 2022.

Wilson

Best of the Year: HNT +3,046%

Worst of the Year: BTC +92%

Holdings: HNT, ETH, ATOM, OSMO, DOT, ACA/KAR, and some SOL-LUNA-AVAX.

Expectations or Thoughts: Achieving customizable execution layers of modular L1s (with Solana being the most feasible), multi-chain infrastructure and tools, "heroes" contributing to modularity (storage like Arweave, shared security and data availability like Celestia, indexing and data query protocols like The Graph and Covalent, computing like Akash), liquid staking protocols (Lido, Rocket Pool, Acala, Umee), as well as DeFi hubs and the Cosmos ecosystem (Osmosis, Terra, Umee), ZK-Rollups, StarkWare, ZKSync, and also pay attention to projects like Aleo that can open new types of cryptocurrency application markets.

Our analyst team is continuously growing, so we cannot list everyone, but we will include our asset holdings in each new report every month.

*You can check the complete data in * this screener*.