Pro Crypto AMA Summary

Below is a summary of the Real Vision Pro Crypto AMA our team participated in today. We’ve aggregated the questions and responses to each to provide our Delphi Pro members with a curated view of the conversation. Many of these themes we’ve discussed in our research and during our Delphi Pro Office Hours, and you can keyword search for any topics or projects to quickly see if they were discussed.

Q: Of all the layer 1 protocols out there – which one do you expect to be the most successful besides Ethereum in terms of adoption/building on and/or value increasing?

A: (Can) This is a tough question because the answer is ultimately nuanced. My answer would be Celestia. Celestia is a chain that is being developed right now, and unlike all other L1s I’ve seen, it’s the only one that can actually become an ETH killer. Its vision is similar to ETH2.0. It’s designed from the ground up to be the base chain for Rollups to plug into for shared security. Unlike Ethereum however, Celestia will not have any state execution. Meaning it’s a specialized chain for Rollups only. Because it’s specialized in doing one thing only (grow data capacity for Rollups) Celestia can host an unmatched amount of Rollup activity. If you’re interested in it I highly recommend my L1/L2 post in which I compare and contrast different L1s and also explain Celestia more in-depth.

Q: Thoughts on Curve maintaining market dominance for new projects to bootstrap liquidity and the ecosystem created around it with Convex and treasuryDAO projects purchasing CRV/CVX/similar assets?

A: (Duncan): Curve is definitely the dominant place for stablecoin liquidity and any new stablecoin looking to be competitive and attract liquidity will likely need to acquire CRV/CVX or use bribes to get CRV rewards on their pool. I am keeping a close eye on Curve V2 and how this might develop in the future for non-stable asset projects looking to bootstrap liquidity. In the most recent round of bribes projects could pay $1 for $2.77 worth of CRV emissions, so it is quite favorable for new projects looking to source liquidity in a cost-effective manner.

Q: I’d like to know more about the merge from ETH to ETH 2.0. What are some key understandings to know, how might this affect ETH price, and what does the future of ETH look like after the merge?”

A: (Alex): The Merge is a crucial milestone with Ethereum officially transitioning from PoW to PoS consensus. The current Ethereum mainnet will be merged with the beacon chain PoS system. A few major ramifications: Massive reduction in ETH issuance from PoW shutting off (Est. of issuance dropping from 5.4m ETH yr to 0.5m ETH yr per ultrasound.money). Less ETH will be needed to secure the network, and PoS will reduce energy consumption. Staking yield should increase as tx fees not burned post-EIP-1559 will continuously be paid to validators/delegators instead of formerly miners. (Staking APR from issuance only to Staking APR from issuance + fees)

So from an investor’s lens here’s some thoughts: 1) ETH becomes a net deflationary asset, on more consistent basis. The supply shock is noted as the “Triple halvening,” given it’s expected to be ~equivalent to 3 BTC “halvenings” 2) ETH as a productive capital asset becomes more attractive given it’s higher yields in a low interest rate macro environment. It should help further solidify ETH as an attractive institutional asset 3) Net-net, the Merge is a very positive catalyst. In a short period, there’s already over 9k ETH ($30bn) in the ETH2 deposit contract and we expect ETH inflows to accelerate leading up to the merge and after. Depending on post-merge APR, the validator activation queue may get slammed with demand and get backed up, meaning earlier staking entrants will benefit from the higher yields at onset. Secondary beneficiaries of the merge should also be liquid staking solutions like Lido and rocketpool.

Adding to my response around ETH/merge: Although it’s a very important catalyst, I will note that there is some uncertainty regarding the exact timing but the rough eta I’ve been hearing is Q2/Q3 which may be subject to change. Once the expected timing becomes more clear, we can expect to see interest rise similar to how when EIP-1559 dates triggered more market excitement. You can follow along here for more info. The Merge is limited to upgrading the consensus mechanism and will not fix gas fees/affect much the user experience today.

Q: For NFT’s, 2021 seemed to be the year of the PFP (Cryptopunks, BAYC), what should we be looking at in 2022? Will the PFP space still see the most action, or should we look in AI, P2E or metaverse plays (Portals, Burrows, ASM, Monkeyball, etc)?

A: (Teng): This year, I believe we’re mov