What Are Crypto VCs Bullish on in 2023?
Read in 5 mins
In this episode of The Blockcrunch Podcast, host Jason Choi speaks with Kinjal Shah & Yuan Han Li, Partner and Associate at Blockchain Capital about verticals that could take off in 2023, frameworks for investing in verticals, and making Web3 development more accessible for builders.
Read our notes below to learn more.
Intro
FTX collapse is proof that we need decentralized systems.
Kinjal Shah joined Blockchain Capital in 2018 after working in tradfi and is on the investment team to focus on consumer infrastructure specifically in the NFT and DAO space.
Yuan Han Li has been with Blockchain Capital team for 8 months and focused on scaling and decentralized infrastructure.
Exploring Consumer Vertical
The focus is on consumer infrastructure and providing infrastructure to make it easier for users to access applications in the space.
NFT infrastructure is well-developed with projects like Stardust, Upshot focusing on NFT pricing data, and WorkDAO addressing compliance challenges.
The crypto market is not yet ready for consumer-facing applications, such as Airbnb or ride-sharing platforms.
The user experience of wallets needs to be improved and developers need to be more comfortable with integrating in-game assets into their games.
The focus should be on taking baby steps to improve the infrastructure and make it ready for consumer adoption.
Improving wallet UX with Account Abstraction
The account abstraction thesis is a concept in the Ethereum community that focuses on making private keys less important in the blockchain ecosystem.
The account abstraction thesis aims to find a way to make private keys less crucial, such as through the use of programmable accounts that can be controlled by multiple keys or other secure methods.
This approach could make the blockchain more user-friendly and accessible, while still maintaining the core value of self-custody.
Account abstraction allows for programmable wallets and features like key rotation and multiple private keys with different permission levels.
Private keys are a major obstacle to onboarding new users to crypto and account abstraction may be the best solution to make private keys less important.
TODAY’S EDITION IS BROUGHT TO YOU BY LEDGER STAX WALLET
Ledger’s latest innovation, the Ledger Stax, is a credit card-sized hardware wallet complete with touchscreen and Bluetooth capabilities. Did we mention it’s designed by Tony Fadell, the creator of Apple’s original iPod?
Act now, click the link below and preorder the Ledger Stax to use crypto on the go.
Unlocking more use-cases in NFTs
The concept of dynamic NFTs have the potential to unlock a range of new use cases.
Dynamic NFTs introduce programmability into the NFT, allowing the metadata to change over time which could enable applications like change of appearance over time, or financial contracts with expiry dates.
Data tracking, indexing, and special infrastructure for sub-sectors such as Uniswap V3 positions are important.
Apps verticalizing into its their own app-chain and app-rollup
There are trade-offs in using app chains and roll-ups like sacrificing composabilitiy, gaining sovereignty and fee capture.
Ultimately roll-ups will win over app chains and applications will choose to become more sovereign via roll-ups.
Some projects like Ethereum and Solana are hindered by being bound to the roadmaps and having more control over the value capture and product experience can be more beneficial from a business perspective.
Using an app-chain for gaming would make more sense.
Depends upon the specific application and the projects choosing one of the two models.
Making Web 3 development more accessible
The blockchain space is not ready for the no-code era.
The tech should be accessible to encourage app development.
The blockchain space is finally ready for Web2 developers to begin building on it.
Zksync, Scroll, and Polygon are willing to help Web2 developers choose the right solution and assist with development.
Layer 1 landscape & new developments
The future of the blockchain industry lies in the modularization of blockchains, such as data availability layers, salmon layers, and execution roll-ups.
Building a roll-up allows for innovation on the virtual machine without compromising on security and decentralization.
Building a new trust network and virtual machine from scratch on a new layer one blockchain is seen as unnecessary extra work.
There is an underestimation of time and effort to bootstrap a L1. It’s difficult and requires a 5 year period.
Once L2 tokens are launched and gain traction, developers of new L2s will see the benefits of developing on roll-ups, which will allow them to innovate in their area of expertise.
Value capture of dApps vs protocols
The debate in the crypto consumer world is whether to build app first and bootstrap the protocol later, or start with the protocol and attract developers to build on top of it.
Application layer will be important for the consumer growth in the future.
There is a potential for applications to generate more economic value than the protocol and that could change the incentives for the protocol.
Projects to watch out for in 2023
WorkDAO is a company that helps DAO and web3 companies legally pay their contributors in a way that allows them to contribute to web3 without worrying about how to pay rent with tokens.
Zksync is easy to use and fully EVM-compatible, allowing developers to deploy their applications with minimal changes.
Check out these important links
TODAY’S EDITION IS BROUGHT TO YOU BY LEDGER STAX WALLET
Ledger’s latest innovation, the Ledger Stax, is a credit card-sized hardware wallet complete with touchscreen and Bluetooth capabilities. Did we mention it’s designed by Tony Fadell, the creator of Apple’s original iPod?
Act now, click the link below and preorder the Ledger Stax to use crypto on the go.
