Messari published a 168-page report based on their crypto theses.
It provides an insane amount of valuable information for free.
Here are the takeaways from the top 10 trends in DeFi for 2023:
It provides an insane amount of valuable information for free.
Here are the takeaways from the top 10 trends in DeFi for 2023:
1. Revenge of the dApps
Three Ethereum-based apps are now generating more monthly fees on a combined basis than the Ethereum L1:
β’Uniswap
β’Lido
β’OpenSea
Meanwhile, Ethereum's flagship dApps are quickly conquering competing chains.
Three Ethereum-based apps are now generating more monthly fees on a combined basis than the Ethereum L1:
β’Uniswap
β’Lido
β’OpenSea
Meanwhile, Ethereum's flagship dApps are quickly conquering competing chains.
We've seen AAVE & Uniswap launching on other chains and coming to the top in their segments.
Yet DeFi market cap relative to ETH is nearly at ATL.
The fear of new regulations may explain this.
But given that TradFi is valued at $23 trillion, DeFi potential remains massive.
Yet DeFi market cap relative to ETH is nearly at ATL.
The fear of new regulations may explain this.
But given that TradFi is valued at $23 trillion, DeFi potential remains massive.
2. Uniswap, the Final DeFi Unicorn
Uniswap's concentrated liquidity proved to be a massive improvement in liquidity efficiency.
Now it looks like there's not a lot left to be done to significantly improve the current AMM designs.
Uniswap's concentrated liquidity proved to be a massive improvement in liquidity efficiency.
Now it looks like there's not a lot left to be done to significantly improve the current AMM designs.
However, AMMs can still compete around offering dynamic fees & their reference pricing oracles.
But in 2022, it became clear that Uniswap can't be dethroned by forks with marginal improvements.
The only question that remains is what will happen with Uniswap's Fee Switch.
But in 2022, it became clear that Uniswap can't be dethroned by forks with marginal improvements.
The only question that remains is what will happen with Uniswap's Fee Switch.
3. Real-World Collateralized DeFi
The collapse of CeDeFi companies proved once again that decentralization and transparency matter.
While centralized lenders got wrecked, DeFi lenders that have shown interest in real-world assets (RWA) have done extremely well.
The collapse of CeDeFi companies proved once again that decentralization and transparency matter.
While centralized lenders got wrecked, DeFi lenders that have shown interest in real-world assets (RWA) have done extremely well.
MakerDAO added $500M in exposure to U.S. Treasuries.
Now RWA accounts for 57% of its revenue.
Besides that, AAVE will also launch a stablecoin soon.
The interest paid by the borrowers will generate new income for the DAO.
Overall, DeFi lenders seem to manage risk better.
Now RWA accounts for 57% of its revenue.
Besides that, AAVE will also launch a stablecoin soon.
The interest paid by the borrowers will generate new income for the DAO.
Overall, DeFi lenders seem to manage risk better.
4. Undercollateralized DeFi Lending
This sector took a big hit this year.
Maple, an on-chain credit market, was heavily affected by the FTX collapse.
Yet crypto can't compete with banks without undercollateralized lending.
This sector took a big hit this year.
Maple, an on-chain credit market, was heavily affected by the FTX collapse.
Yet crypto can't compete with banks without undercollateralized lending.
Smart contracts, soulbound NFTs, and decentralized social identities could probably be used to make this sector more viable and decentralized.
But it's too early to predict how undercollateralized DeFi lenders will work in their final form.
But it's too early to predict how undercollateralized DeFi lenders will work in their final form.
5. Superfluid Collateral & Synthetic Stakes
Liquid staking protocols played a major role in convincing ETH holders to stake their ETH.
Earning 5% APR on a liquid asset that is almost deflationary is extremely attractive.
Liquid staking protocols played a major role in convincing ETH holders to stake their ETH.
Earning 5% APR on a liquid asset that is almost deflationary is extremely attractive.
At the moment, Lido and Rocket Pool seem to be the most promising liquid staking providers.
However, stETH & rETH can possibly lose their peg at some point until ETH can finally be unstaked.
But going forward, this sector is expected to grow significantly.
However, stETH & rETH can possibly lose their peg at some point until ETH can finally be unstaked.
But going forward, this sector is expected to grow significantly.
6. The Perp Walk: dYdX as an Appchain
Despite botching its decentralization, dYdX has a strong product market fit.
Happily, the dYdX V4 upcoming launch on its own Cosmos chain will address the centralization concerns.
Despite botching its decentralization, dYdX has a strong product market fit.
Happily, the dYdX V4 upcoming launch on its own Cosmos chain will address the centralization concerns.
dYdX took a risk when deciding to move to Cosmos from an Ethereum L2.
The migration to its own chain, however, will offer numerous benefits, including increased customizability and scalability.
Overall, 2023 is expected to be a challenging year for dYdX.
The migration to its own chain, however, will offer numerous benefits, including increased customizability and scalability.
Overall, 2023 is expected to be a challenging year for dYdX.
7. On-chain Asset Managers
On-chain asset managers are almost invisible.
Despite ETFs being very popular in TradFi, the customized indices for crypto didn't gain any traction yet.
But dApps that allow fast creation of on-chain funds are expected to have a great year.
On-chain asset managers are almost invisible.
Despite ETFs being very popular in TradFi, the customized indices for crypto didn't gain any traction yet.
But dApps that allow fast creation of on-chain funds are expected to have a great year.
8. New Novel Markets: Two Truths & A lie
a) Protocols like Nori & Toucan started getting more popular.
They revamped the broken carbon trading markets to reduce carbon footprints.
By tokenizing carbon offsets, they bring transparency and liquidity to green markets.
a) Protocols like Nori & Toucan started getting more popular.
They revamped the broken carbon trading markets to reduce carbon footprints.
By tokenizing carbon offsets, they bring transparency and liquidity to green markets.
b) Given the size of the real estate market, physical real estate plays that leverage crypto have potential.
But these will not take off anytime soon.
c)"I believe in prediction markets."
c) is the lie. There seems to be real demand only for sports betting & price speculation.
But these will not take off anytime soon.
c)"I believe in prediction markets."
c) is the lie. There seems to be real demand only for sports betting & price speculation.
9. DeFi Censorship
2023 is going to be a decisive year for DeFi.
With more regulatory clarity being expected soon, some protocols have already started to implement restrictions on their sites.
Uniswap Labs delisted a few tokens and AAVE geofence U.S. users last year.
2023 is going to be a decisive year for DeFi.
With more regulatory clarity being expected soon, some protocols have already started to implement restrictions on their sites.
Uniswap Labs delisted a few tokens and AAVE geofence U.S. users last year.
As bad as it sounds, most DeFi transactions will likely be KYC'd within the next few years.
However, non-KYC'd transactions will likely also be processed.
30-40% of Ethereum's blocks still continue to process transactions from addresses on the U.S.'s blacklist.
However, non-KYC'd transactions will likely also be processed.
30-40% of Ethereum's blocks still continue to process transactions from addresses on the U.S.'s blacklist.
10. Bullish Unlocks ->Down Bad
On-chain hacks resulted in $3b losses in 2022.
Security and sustainable token design need to be taken more seriously.
Speaking about bullish unlocks, this is a bull market meme.
During bear markets, watch out for tokens with huge unlocks.
On-chain hacks resulted in $3b losses in 2022.
Security and sustainable token design need to be taken more seriously.
Speaking about bullish unlocks, this is a bull market meme.
During bear markets, watch out for tokens with huge unlocks.
That's it!
If you have time, I highly recommend you read the report:
messari.io
Thank you @twobitidiot and @MessariCrypto for writing such a fantastic report.
If you liked this thread, please leave a like and retweet the 1st tweet:
If you have time, I highly recommend you read the report:
messari.io
Thank you @twobitidiot and @MessariCrypto for writing such a fantastic report.
If you liked this thread, please leave a like and retweet the 1st tweet:
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