ETHDenver: Chaos Meets Opportunity
Posted March 06, 2023
“By the way,” my Uber driver asked. “What’s all this cryptocurrency stuff about?”
This isn’t the first time an Uber driver asked about crypto. In fact, I’ve talked to more Uber drivers about Bitcoin than I have to family members.
Uber drivers tend to be more entrepreneurial and tech-savvy than the average Joe on the street.
They seemed extra-intrigued by ETHDenver, Ethereum’s largest and longest-running Ethereum conference.
“A Giant Horse Barn With Bad WiFi”
While attendance was only about 5,000 last year…
This year, about 20,000 Ethereum holders converged upon what one attendee I met in my hotel called “a giant horse barn with bad WiFi.”
The horse barn part was confusing until I got to the venue and walked inside. There, I was met with that unmistakable smell of straw, animal, and excrement -- otherwise known as “barn.”
(Just found out the venue just hosted the Rocky Mountain Horse Expo. The world makes sense again.)
As is usual for crypto, the conference was a chaotic mess.
But this time, something was different.
There’s a cohesiveness to the industry I haven’t seen before.
I’m still digesting everything I saw…
But here are a few of the takeaways.
One thing that’s dawned on me in the past week is just how much the Ethereum ecosystem has grown.
In 2019, Ethereum had a few decentralized exchanges, a couple NFT projects, and about 50,000 daily active users.
Today, it has thousands of DeFi applications and hundreds of millions of NFTs and hundreds of thousands of daily active users.
Moreover, it’s far less fragmented than it was just three years ago. NFT people know a lot about DeFi. DeFi people know a lot about privacy solutions. Privacy people knew a lot about scalability. And so on.
Before, there were fewer generalists. Now everyone’s interested in learning everything within the ecosystem.
There’s a sense that crypto is starting to get on the same wavelength. That it has better coordination and is starting to move in the same direction. Perhaps 2022 will prove to be the year of crypto’s defragmentation.
In fact, I’m betting on it.
But What About Regulation?
Everyone still agrees:
We’re still early.
(That’s why everyone still greets one another -- no matter the time of day -- with “gm,” short for good morning.)
I was actually surprised by how many founders shrugged off the regulatory landscape in the US. (Granted, many of them have a home base offshore.)
The general consensus is that we need smarter regulation and that Gary Gensler -- head of the SEC -- is going about it the wrong way.
More than a few are also confident that Gensler’s moves are irrelevant in the long-term.
(Although others believe this view is naive and breeds complacency.)
Regulators, they say, have tried -- and failed -- to slow down crypto. Where they have succeeded most is increasing crypto’s resilience.
One obvious example is Bitcoin mining. While many pundits predicted that China’s mining crackdown spelled doom for Bitcoin, the opposite happened: Bitcoin decentralized further and emerged stronger.
Sam Kazemian, founder of Frax Finance, is optimistic that the US will, in the long run, be on the side of innovation -- as, historically, it has always been.
That said, there’s a sense of pessimism in the short-term: regulation by enforcement, a la the SEC, will remain the status quo.
“The first thing we tell new projects,” one crypto lawyer told me, “is that, if you can, avoid launching in the United States.”
As expected, there’s a lot of buzz surrounding stablecoin regulation.
Stablecoins, though more centralized than their distributed counterparts, are widely hailed as one of crypto’s greatest innovations.
There are more, but here are three reasons why this is:
1. Crypto speculators looking for stability in the volatility can switch over to stablecoins in between trades without friction.
2. Transactions that would require days to settle in the real world happen in a matter of seconds.
3. Countries with high inflation have seen mass-adoption of stablecoins as an inflation hedge.
In his talk about stablecoins, David Liebowitz -- AKA “DeFi Dave” -- said:
“Although more legislators than ever see crypto as a promising frontier, the challenge for the industry remains: How can we reach across the aisle to the skeptics and come together in a way that will benefit the American economy and bring prosperity to the people? Fortunately, legislation for fiat-backed or commonly referred to as ‘payment stablecoins’ has been proposed and offers a unique opportunity to bring clarity to the current clouded environment.”
The most comprehensive bill is Senator Toomey’s TRUST act, introduced in December 2022. TRUST would establish the first federal regulatory framework for payment stablecoins.
Demand For Developers is Sky High
According to a report by DevSkiller, demand for blockchain developers increased by 552% in 2022.
This is despite the industry’s total market cap sinking from $2.2 trillion in January 2022 to $832 million by January 2023.
To be sure, this demand isn’t just coming from crypto firms: Many traditional institutions are still crypto curious.
Microsoft’s venture capital fund M12 invested $20 million into Space and Time, a startup that aims to build a decentralized data warehouse.
Blockchain gaming took up a big chunk of seed money raised.
According to a report led by DappRadar, Web3 gaming projects raised $7.6 billion in 2022, up 59% from 2021.
Zero-knowledge rollups (ZK rollups) have been all the rage in VC circles, and it showed at ETHDenver.
ZK proofs are a popular scalability solution for Ethereum. In fact, it’s listed on the Ethereum roadmap as THE solution for scaling Ethereum.
Blockchains are limited by the data they can store on-chain. ZK technology allows a blockchain to compress massive amounts of data into a small space, without sacrificing security. And with the additional benefit of improving privacy.
One of the bottlenecks -- which might prove useful for those hunting for opportunities -- is the incredible amount of processing power required to process all of the incoming information.
But that’s just one example of the opportunities present in this burgeoning space.
The next few years offer incredible opportunities in crypto.
But maybe we’re not that early.
You have to do more than just buy and hold Bitcoin and Ethereum if you want to see the type of life-changing wealth we’ve seen early adopters make.
And that window is closing…
Not tomorrow. Not in six months. But it’s closing.
I’m starting to feel a creeping suspicion we’re nearing escape velocity, where things will pick up in a big way.
It took the internet 36 years to reach a billion users.
Crypto is expected to reach it by 2027 -- 19 years after the birth of Bitcoin.
We think it could happen even sooner.
More on that, though, tomorrow.