Due to the inevitable interruptions of on-site events related to COVID-19, I had my first opportunity to attend an in-person crypto conference, Messari Mainnet 2021, in almost two years (Devcon 2019 was my last one). Let me first say, it was great to be back in person with the crypto community. I got a chance to see a lot of familiar faces and many new ones. After three days of attending talks, meetings, and networking events, here are the five trends that emerged most notably at the conference, which I believe are the ones to watch going forward.
DAOs: So Hot Right Now
There were multiple panels and talks at Mainnet 2021 about DAOs. The topics ranged everywhere from managing DAO treasuries to how working for a DAO enables you to be your own boss. This new way to form an organization is quickly gaining steam as new emerging crypto startups and current, established organizations are looking at DAOs as a new, possibly better way to organize and build a community.
As you might have heard, getting inspiration from many of the successful DAOs already out there, ShapeShift took the leap earlier this year to transition our centralized organization to a decentralized one, with the DAO leading the project going forward. Most of the meetings and conversations I had with people at Mainnet 2021 were about the transition ShapeShift is making. People were not asking why, but how we are doing it, because they are looking for a model to follow as their organization is also considering the possibility of starting as a DAO or transitioning to one.
These DAOs aren’t just limited to protocols and blockchains either. We are starting to see DAO diversification such as MetaCartel’s Venture DAO, which is sort of like a traditional VC firm, and Decrypt, the established crypto media outlet, looking to transition into a DAO. Like many things, DAOs are going to be another innovation that started in crypto and will most likely make its way into other industries as well. It is going to be very interesting to see if non-crypto-related companies also start looking at DAOs in the next couple of years as a structure for their start-up business.
Multichain DeFi Has Arrived
While ETH is still the king in the DeFi space, the rise of DeFi on other blockchains is starting to emerge very quickly with Cosmos, Solana, and Polkadot leading the way. For end-users, this will be a welcome emergence, since those three blockchains have much lower transaction costs and faster confirmation times, allowing users much more control over their DeFi positions.
Solana was all the talk of the event due to it hitting an all-time high of $214 before the conference and having great momentum behind it. However, the winds did get taken out of Solana’s sails a week prior due to suffering from a denial-of-service disruption. The disruption could be viewed as a positive sign for the young blockchain, since it showed massive interest in the project and demand from users wishing to build on top of it.
Polkadot is still in its early stages of development, but what sets it apart from the others is that, technically, Polkadot is a layer 0 blockchain. Layer 1 blockchains, or parachains, are built on top of Polkadot, and they all have shared network security, consensus, and cross-chain interoperability. Polkadot is targeting Dapp developers by promising a lower economic barrier to entry to allow developers to shift their focus away from the costs of running their Dapp or blockchain toward providing a great DeFi solution.
In my opinion, Cosmos is emerging as the up and comer to watch and already has robust solutions that rival some of the best ETH solutions. The Keplr wallet lets users have access to multiple blockchains built using the Cosmos SDK, and with that, the ability to stake those assets with commissions as high as 20% depending on the validator the user selects. The Osmosis blockchain allows liquidity providing, and, depending on the pool, you will see APRs greater than 200%. These are all DeFi solutions you will currently see on ETH but have much, much lower transaction costs for end users, giving them an easier way to move between blockchains via IBC.
For those that have been in the crypto space for a while, the lack of interoperability between blockchains has been a long-time pain point. ETH has tried to solve wrapped token assets and allowing other chains to be EVM compatible in a similar way to Binance Smart Chain. Cosmos is trying to tackle this problem via IBC. Polkadot is doing this through relay chains and parachains on their network. While none of these solutions is true interoperability, it’s definitely light years from where we were just two years ago. It shows that the crypto community understands that lack of blockchain interoperability is a problem that needs to be solved.
There seems to be some hope on the horizon. In a pleasant turn of events, it seems the crypto community might finally be ready to start working together to solve the problem instead of competing against each other. It was great to see representatives from different blockchains and protocols on the same panel talking about this problem and being open to collaborating. In fact, it was announced at Mainnet 2021 that Electric Coin Co. (ECC) has entered into an agreement with Protocol Labs, the Filecoin Foundation, and the Ethereum Foundation to explore Halo R&D. This is not an interoperability solution but does show that various blockchain communities are starting to work together on solutions behind multiple blockchains and not just their own. As the old saying goes, teamwork makes dream work.
In the meantime, while we are all waiting for interoperability between blockchains, THORChain is leading the way as the simplest and most innovative solution to easily move between blockchain. Following the automated marketing making solutions on ETH, like UniSwap and SushiSwap, THORChain is using that same model to allow cross-chain swapping and making it very easy for the end user. Simply connect a wallet to THORChain’s platform or ShapeShift’s platform, set up your swap, confirm your transaction, and that’s it. For a more technical explanation of how THORChain works, I highly recommend this write-up from ShapeShift’s own CEO, Erik Voorhees.
The VCs Have Arrived in Full Force . . .
Normally when I go to a crypto conference, most of my meeting requests come from blockchains, tokens, or protocols that want to partner with ShapeShift. While I still got a healthy amount of these requests at Mainnet 2021, the majority of requests I received were from venture capital firms looking to get into the crypto game. Some were there for research purposes, but there was a good-sized contingent there armed with checkbooks and looking for new projects to invest in. I will say, it was weird attending a talk and seeing a representative from a large VC firm like Andreessen Horowitz sitting next to me.
This isn’t limited to just U.S. VC firms either. There was a representative from a VC firm from China at an after-hours networking event and I shared a lunch table with a gentleman from an international investment firm based out of Switzerland. For those of us that have been working on crypto for a while, we know that crypto is borderless. Seeing VCs from all over the world is confirmation of that. It is going to be very interesting to see the growth of crypto and blockchain technology over the next couple of years as cash flows into the space and VCs are trying to bet on the next unicorn crypto start up. It seems like web3 companies are going to be the hot investment play going into 2022.
… And So Have the Regulators
You know the regulators are starting to pay attention to crypto when an attendee of Mainnet 2021 got served by the SEC walking into the event on Day 1:
Regulation isn’t something that most attendees want to talk about at a crypto conference. However, it was in both the back and forefront of everyone’s mind. It was a topic of conversation at The Future of DeFi panel in which Andre Cronje compared crypto regulation to the war on drugs. It also came up in The Future of Web3 chat when Zooko Wilcox spoke about how in his talks with regulators, they seem to understand crypto and DeFi better than I think we are all assuming. Crypto has now gotten to the point where it is too big to be going unnoticed by lawmakers and regulators any longer. We know this because it seems like every day top officials like Securities and Exchange Commission Chairman Gary Gensler are commenting on crypto and the lack of regulation.
Wrapping It All Up
As we all know, the crypto industry moves at a lightning pace. Shows like Mainnet give us a retrospective view of the past year and a great glimpse into things to come. While none of these trends will come as a shock to any of us in the industry, the show helped to not only solidify some suspected, dominating trends but confirm the great interest in DAOs, ShapeShift’s chosen path for the future. I’m excited to watch it continue to unfold, with some probable unexpected turns along the way!