“Capture Investment Trends” BitMart Off-the-Chain AMA #1 Recap
On January 11th, we kicked-off our inaugural BitMart Off-the-chain Twitter Space AMA series with a special episode, “Capture Investment Trends from Evolutions of Five Major Crypto Verticals,” with co-host, Cipholio Ventures. During this enlightening session, our esteemed guests and hosts delved into Cipholio Venture’s annual report and shared their expert perspectives on their areas of specialization.
The event included:
Main Speakers
Jessica, Hedge Fund Investor of Tree Rings Capital
Zhan (Little CZ), Founder of Timely.fans
Erich Grant, Cofounder of C14
Jason Li, Cofounder of MPCVault
Alberto, Cofounder of DeFi Talks
Co-Hosts
Eric, Managing Director at Cipholio
Jonas Zhao, Investment Manager at Cipholio
Key Takeaways
- Global Macroeconomic Environment
Question: What is your opinion on the current macroeconomic situation, potential recession, market recovery, and their potential impacts on the crypto market?
According to Jessica, Hedge Fund Investor of Tree Rings Capital, the crypto market was largely impacted by the macro economy last year, which is composed of three elements: growth, inflation, and unemployment level. By analyzing these elements, the Merrill Lynch investment clock model suggests that we are currently entering a recession cycle, due to the indicators such as the decline in home sales for six consecutive months, a reading below 50 for both the manufacturing and service Purchasing Managers’ Index (PMI), and a negative 10-year, three-month yield curve. Inflation might see a strong downward trend in the first half of 2023. By the end of 2023, Consumer Price Index (CPI) could be around 4–4.5% year over year, but a weaker labor market could put further pressure on growth, and it is uncertain if this trend will continue.
The crypto market has a higher correlation with the US equity market, such as the Nasdaq and S&P 500. For the US equity market, particularly the S&P 500, there might be a potential 20–30% downside before reaching the bottom. However, for the crypto market, the key factor is liquidity, as there is no strict valuation framework yet. Factors such as monetary liquidity, investor sentiment, and the willingness to take on risk will play a significant role in determining the crypto market’s performance.
Jessica concludes that it is difficult to predict whether we have reached the bottom of the crypto market yet, but before the macro environment improves and before the US equity market reaches the bottom, the crypto market is likely to remain volatile.
2. Layer 1 and Layer 2
Question: What are your favorite L1 and L2 chains? And what makes an L1 and L2 chain successful?
Jason Li, Cofounder of MPCVault, expresses his interest in Ethereum which is his favorite chain or ecosystem. The move from proof-of-work to proof-of-stake in 2022 brought changes to the economics of Ethereum and it attracted liquidity from other side chains during bear markets. Additionally, many interesting proposals were introduced in the Ethereum space, such as account abstraction, which could help increase wallet adoption and usability for consumers who are new to the crypto space.
Although Ethereum is the number one chain on which payments are happening, BNB Chain is also used widely as a way of payment with lower transaction fees. Especially for companies who are using MPCVault, Jason’s team sees a lot of payment volume outbound on some of these Ethereum compatible. More new move-based ecosystems, such as Aptos and Sui, are emerging in the blockchain space. These projects aim to provide a stable, fast, and scalable ledger, which is the ultimate goal of the blockchain industry.
When it comes to what makes an L1 and L2 chain successful, Jason mentioned that the success of L1 and L2 chains depends on product-market fit, the ability to derive value from the blockchain and its native currency, and the strength of the ecosystem including the presence of infrastructure and application layers. Attracting developers to the ecosystem and investing time in building it are both crucial for success. Marketing can be challenging, but building a strong ecosystem is key.
Question: Do you think payments will play an important part in 2023?
Erich Grant, Cofounder of C14, believes that as the world moves to faster and cheaper blockchain technology, there will be more utility for merchants, processors, and financial institutions to utilize cryptocurrency for faster settlement times. Currently, settlement times with processors in the US can take up to a day, and internationally it can take up to two weeks, which is a significant pain point. Erich suggests that tokenizing assets and moving these flows on the blockchain can save merchants money and reduce the risk for all parties involved in the process.
Question: How do you imagine the future in terms of how many L1s and L2s there will be, and how many of them will dominate the market?
Jason shares two views on the future of blockchain technology. The first is that the definitions of L1 and L2 will become blurrier because they perform functions of different layers and it will be hard to strictly define them as one or the other. The second view is that there will be a few large L1s, and these layers will not be very different from each other and will each take a segment of the market, making it hard for competitors to replace them. Additionally, there will be a long tail of blockchain networks that will do more application-specific things in specific settings, resulting in a power loss distribution of a few large ones and a lot of smaller ones.
3. DeFi
Question: What will be the next growth of the Defi ecosystem and will Defi take over CeFi?
According to Alberto, Cofounder of DeFi Talks, the DeFi market has seen significant growth in recent years but still has a way to go in terms of security and reliability to attract more institutional adoption and regulatory frameworks. The user experience also needs to be made simpler for wider adoption. Additionally, the bear market has led to a focus on the habits of current users rather than the needs of potential new users who need to be brought into the industry for wider adoption. Alberto points out that the industry will need to focus on embracing a wider point of view to continue growing.
Erich Grant agrees that while DeFi has the potential to solve many problems of centralized exchanges, it can be difficult for the average person to use. Both Alberto and Erich highlight that the concept of self-custody and managing one’s own keys can be intimidating for new users. To continue to grow and reach mainstream adoption, they believe that institutional solutions and clearer regulations need to be put in place, and easier ways are required for retail participants to enter the market. They are optimistic about the short-term potential of DeFi but acknowledge that there are challenges that need to be addressed to reach its full potential.
4. Gaming, NFT, and Social
Question: How do you see the adoption from the gaming and social side?
Zhan, Founder of Timely.fans, believes that NFTs have the potential to improve people’s lives by creating new communities, allowing individuals to monetize their digital assets, and providing opportunities for people to become financially successful. He predicts that NFTs will become more accessible to ordinary people and action games will be the next trend in the NFT market. Zhan is working on a project that aims to help creators monetize their time, knowledge, and skills by creating NFTs. The NFTs will have two utilities, one as digital art and the other as a way for people to meet the creators. He suggests that using NFTs can help creators set a fair price for their works, and bring more Web2 users and creators to the blockchain, which is necessary for the continuing growth of the Web3 ecosystem.
The current market conditions may make it difficult to attract users from traditional web platforms, but the hope is that in a healthier market with more incentives, it will be possible to bring more users to the Web3 ecosystem. Timely.fans has learned from experiences on Web2 platforms and now has tokens to incentivize users to join the Web3 platforms. They are working with third-party providers to allow payments with credit cards and providing resources to help users learn how to use a crypto wallet. They believe the best way to introduce Web2 users to the Web3 ecosystem is to give them a small amount of cryptocurrency or NFTs, to provide them with a personal stake in the ecosystem, and motivate them to learn more about it.
This concluded the 1st episode of a series of excited Off-the-Chain Twitter Spaces we have planned. Thank you all for joining us this time, and we would like to invite you to join our 2nd episode at 9 PM EST, Jan 25. We will delve into Web3 in 2023: What’s New, What’s Next? with trailblazers from leading projects, L1s & L2s, and crypto ventures. We look forward to hosting you!
Disclaimer: The content shared in this article reflects the views of the respective speakers and not the view of BitMart. Nothing shared in this article should be considered as financial or legal advice. The use of BitMart services is entirely at your own risk. The value of digital currencies can go up or down and there can be substantial risk in buying, selling, holding, or trading digital currencies. You should carefully consider whether trading or holding digital currencies is suitable for you based on your personal investment objectives, financial circumstances, and risk tolerance.
