Selected 33 Predictions for 2023 by Messari

Original Title: "Crypto Theses for 2023"

Author: Ryan Selkis, Messari

Compiled by: 0x22d, BlockBeats

On December 22, Messari announced the release of its sixth annual report, Messari Theses 2023, authored by co-founder and CEO Ryan Selkis, focusing on the latest developments in various aspects of the crypto space, including Bitcoin and stablecoins, L1 public chains and Rollups, DeFi, NFTs, and DAOs. The report predicts that 2023 will be a year for cryptocurrencies to further prove their resilience and progress in technology and policy. Ryan Selkis stated, "2022 had too many bad actors stealing the spotlight, but there are still projects and people doing the critical work to push our industry forward. It’s time to refocus on these people and innovations." From Messari's 168-page 2023 Crypto report, BlockBeats has distilled 33 predictions and outlooks from Messari for 2023 and the longer-term future of crypto:

Bitcoin and Stablecoins

1/ The role of Bitcoin as a currency will still be questioned, which is why building stablecoin infrastructure in parallel (the right way) is so important. Stablecoins are the bridge currency to the future.

Bitcoin is already large, and its continued rise will be slow, but it will certainly be strong.

We are in a race to see whether more emerging market central banks start accumulating BTC or whether large reserve currency nations begin to stifle this invention. Supporters of cryptocurrency are starting to appear in places like Harvard's economics department, which were previously unlikely. Therefore, despite significant market pressure this year, we are closer to success than ever before.

2/ Bitcoin will surpass the euro, and people in Brussels better learn how to deal with it.

3/ Regarding cryptocurrency mining, Bitcoin mining must become cleaner and more sustainable.

4/ In an environment of rising interest rates, many CFOs may be reluctant to add Bitcoin to their balance sheets. With no significant signs of a shift in interest rate policy from the Federal Reserve, the next surge in demand for Bitcoin is likely to occur at the global government level rather than from large corporations.

5/ The public nature inherent in most blockchains may create opportunities for privacy networks, as well as privacy-focused Layer 2s like Aztec and Polygon's Nightfall. In the upcoming privacy wars, we are most optimistic about Zcash and Monero, especially Zcash.

6/ Stablecoins should become a major export product for the United States. Despite some autocratic and paternalistic tendencies in Congress, the U.S. will continue to maintain its leadership in technology, finance, and crypto. American entrepreneurs have been leading the construction of crypto infrastructure and DeFi. Today, over 50 million Americans own cryptocurrency, and the U.S. doesn't need to do much more to win the race, as long as it doesn't lose.

7/ On over-collateralized stablecoins

MakerDAO is like the cockroach of crypto (in a good way, of course). Although the supply of Dai has halved from its peak of $5 billion in March 2022, it has once again demonstrated resilience in a brutal bear market. Despite repeated shocks to crypto lending, MakerDAO and Dai have not experienced any substantial issues or de-pegging.

8/ On algorithmic stablecoins

The model of Terra, which charged a minting tax across the entire system, remains viable. However, growth must be sought conservatively, leveraging "insurance" contracts supported by transaction and loan fees. For example, if Terra could utilize the net interest margin from its sister lending protocol Anchor and provide it to an insurance fund, they might have a chance to avoid a bank run. But once you step away from conservative, fee-driven growth, the risk fences disappear. The model may be viable, but should we continue to take risks? Is it really a good thing to give these planned black swans oxygen?

The current stablecoin market is quite chaotic, but crypto still needs new algorithmic stablecoins to succeed, and we believe we will see an anti-inflationary algorithmic stablecoin.

9/ What could be worse than the collapse and bankruptcy of $60 billion in algorithmic stablecoins? ------ CBDCs.

CBDCs are akin to the FAA personally flying planes and building jet engines instead of defining competitive, rule-based air safety corridors.

L1 Public Chains and Rollups

10/ Ethereum will clean up its technical debt in the coming years, determine the scale and security of Rollups, and ensure that the EVM remains resistant to censorship. The Ethereum merge completed this year will make derivatives like Lido's stETH ubiquitous. Censorship is the primary issue post-Ethereum merge.

11/ The war of Layer 1 public chains will be similar to the browser wars. That is to say, the EVM and one or two other players may emerge as winners, but dozens of L1 blockchains cannot all succeed together.

12/ If the scalability advantages of ZK Rollups become more apparent, they may surge, as they can theoretically offer users cheaper transaction fees. Rollups have better interoperability, throughput, and lower fees, but whether they can effectively compete with other L1 public chains remains to be seen. Rollups gain Ethereum's security, but transaction costs are still an order of magnitude higher than many L1s.

13/ The value accumulation of Rollups and modular blockchains is questionable, as it remains unclear how much economic value will actually flow to the consensus and data availability layers compared to transaction settlement and execution. Some DApps will need to monitor whether liquidity becomes fragmented among Rollups due to insecure cross-chain infrastructure. However, as we continue to move towards a world with reduced reliance on Ethereum L1, cheaper transactions, and better availability across multiple Rollups, we look forward to some new tools in this area (we still need cross-chain bridges).

14/ New entrants like Aptos and Sui have strong teams, backers, and networks, but how much value they will ultimately have in the crypto winter is questionable.

15/ At the end of 2020, we believed Ethereum's lead was unassailable. By the end of last year, it became less certain as we were pessimistic about whether the merge would be completed on time. Now, I am once again optimistic about Ethereum's dominance, though I'm not sure if we should be happy about it.

DeFi

16/ Uniswap V3 is an impeccable AMM protocol, but that doesn't mean other DEXs can't compete with it. Competition may revolve around dynamic fees adjusted based on trading volume or volatility, or the performance and reliability of oracle services. It is certain that other DEXs cannot replace Uniswap through tokenomics or marginal price advantages. Compete on value, not fees.

17/ Lido is expected to become the DApp generating the most fees in the crypto industry in 2023. In the new year, Rocket Pool's market share will reach 5 to 10 times its current level.

18/ In 2023, crypto asset management companies will shift their investment focus to DAOs. It is now easier to create rule-based asset management companies with code, allowing on-chain funds and index protocols to appreciate more easily.

19/ Crypto protocols like Nori, Flowcarbon, KlimaDAO, and Toucan are worth watching, as they lay the groundwork for reducing carbon footprints by transforming fragmented carbon trading markets, capable of bringing transparency, liquidity, and aggregation to the global green market. Whenever you can invest in a sustainable, environmentally friendly, socially conscious organization, you should do so.

20/ Most DeFi users and the trading volume within them may need to complete KYC in the coming years to continue.

21/ The $3 billion in on-chain attacks in 2022 will continue to attract investment for security audit firms in 2023.

NFT

22/ The potential of NFTs is still worth believing in.

23/ Yuga Labs had an interesting year, and while ApeCoin is perplexing, this virtual community of nearly 100,000 people is as baffling as TikTok and the Kardashian family. Equally perplexing is the fact that Dogecoin and Shiba are more valuable than Uniswap. However, the Ape community is indeed one of the few things that has grown in this hellish year.

24/ We will continue to see more NFT experiments on Twitter under Elon Musk's leadership (there will be more in the decentralized social space).

25/ In 2023, NFT fashion will open up new opportunities for brands. There is significant demand for both purely digital and physical/digital hybrid items. Gucci sold a digital version of a physical bag on Roblox for $800 more than the "real" one.

26/ GameFi is currently the most overhyped sector in crypto, and we are bearish on GameFi.

27/ We remain optimistic about the future of AR/VR but do not plan to bet on it; those who do this year have had their faces swollen.

28/ OpenSea will become a $100 billion company. Coinbase NFT has failed, FTX NFT has disappeared, and OpenSea's advantages have become more apparent.

29/ The design space for NFTs is far greater than FT, and regulatory scrutiny will only touch NFTs after addressing DeFi, privacy products, and DAOs. NFTs will become the universal standard for packaging financial assets, just like packaging monkey JPEGs today.

DAO

30/ Crypto infrastructure will grow exponentially in regions where governments heavily control dissent and crack down on speech, and there is a huge opportunity to cater to gray market clients. Crypto infrastructure will become the backbone of a free and open network, worth hundreds of billions of dollars.

31/ While it won't happen overnight, DAOs will change countless aspects of the economy, politics, and society in the coming years.

32/ However, currently, the governance structures of DAOs are unsustainable, with many DAOs holding large amounts of their native tokens and lacking portfolio diversity, missing opportunities to enrich their portfolios during bull markets. 2023 will be a bloody year for crypto startups, and the situation will be worse in decentralized communities.

33/ 2023 will be the best time to create media DAOs, where $10 million is enough to fund a crypto media giant composed of 50 top researchers and journalists in the industry.