Messari Research Institution Annual Report | 33 Selected Predictions for 2023

On December 22nd, Messari announced the release of its co-founder and CEO Ryan Selkis's sixth annual report, Messari Theses 2023, which focuses on the latest developments in various aspects of the crypto industry such as Bitcoin and stablecoins, L1 blockchains and Rollups, DeFi, NFTs, and DAOs. The report predicts that 2023 will be a year that further demonstrates the resilience and progress of cryptocurrencies in terms of technology and policy. Ryan Selkis stated, "In 2022, there were too many bad actors hogging the limelight, but there are still projects and people doing crucial work to drive our industry forward. It's time to refocus on these individuals and innovations." From the 168-page 2023 Crypto report by Messari, BlockBeats has distilled 33 predictions and insights into the future of Crypto in 2023 and beyond. This article is authorized for reprint from BlockBeats. Original article can be found [here](https://www.theblockbeats.info/news/33190?from=telegram). - Original Title: "Crypto Theses for 2023" - Original Source: Ryan Selkis, Messari - Original Translation: 0x22d, BlockBeats

Bitcoin and Stablecoins

1. The role of Bitcoin as a currency will continue to be questioned, which is why building stablecoin infrastructure in parallel is crucial. Stablecoins are the bridge currency to the future.

Bitcoin has grown immensely, and its continued rise will be slow but sure.

We are in a race to see whether more emerging market central banks will start buying BTC or whether large reserve currency countries will start stifling this invention. Support for cryptocurrencies is emerging in unlikely places like the Harvard Economics Department. Therefore, despite significant market pressures this year, we are closer to success than ever before.

2. Bitcoin will surpass the Euro, and people in Brussels better learn how to deal with it.

3. Concerning cryptocurrency mining, Bitcoin mining must become cleaner and more sustainable.

4. In an environment of rising interest rates, many corporate financial officers may be reluctant to add Bitcoin to their balance sheets. The next surge in demand for Bitcoin is likely to come at the global government level rather than from those large corporations, given the lack of significant adjustments to interest rate policies by the Federal Reserve.

5. Most blockchains come with a public nature that may create opportunities for privacy networks and privacy-focused Layer2 solutions like Aztec and Polygon's Nightfall. In the upcoming privacy battle, we are most optimistic about Zcash and Monero, especially Zcash.

6. Stablecoins should become America's primary export product. Although there are some arbitrary and paternalistic tendencies in the U.S. Congress, the United States will continue to lead in technology, finance, and the crypto space. American entrepreneurs have been leading in the development of crypto infrastructure and DeFi. With over 50 million Americans now owning cryptocurrency, the U.S. doesn't need to do much more to win the race, just not lose.

7. About over-collateralized stablecoins

MakerDAO is like the cockroach of Crypto, in a good way. Although the supply of Dai has halved from its peak in March 2022 to $5 billion, it has shown resilience in the brutal bear market. Despite repeated shocks to crypto lending, MakerDAO and Dai have not experienced any substantial issues or come unpegged.

8. Concerning algorithmic stablecoins

The model Terra has of collecting seigniorage from the entire system is still viable. However, growth must be sought conservatively, and insurance contracts supported by transaction and lending fees must be utilized. For example, if Terra can utilize the net interest spread from the sister lending protocol Anchor to feed into their insurance fund, they may avoid a bank run. But once you step out of conservative, fee-driven growth, the risk fences disappear. While the model is viable, perhaps we shouldn't continue to take risks, is it a good thing to give these planned black swans air to breathe?

The stablecoin market is currently quite chaotic, but Crypto still needs new successful algorithmic stablecoins, and we believe we will see an inflation-resistant algorithmic stablecoin.

9. What could be worse than a $60 billion collapse and bankruptcy of algorithmic stablecoins? - CBDCs.

CBDCs are like the Federal Aviation Administration personally piloting planes and building jet engines instead of defining competitive, rule-based air safety corridors.

L1 Chains and Rollup

10. Ethereum will clear technical debt in the coming years, define the scale and security of Rollups, and ensure the EVM remains resistant to scrutiny. The completion of the Ethereum merge this year will make derivatives like Lido's stETH ubiquitous. However, scrutiny is the main concern post Ethereum merge.

11. The war of Layer1 blockchains will be akin to the browser wars. Meaning, EVM and one or two other contenders may emerge as winners, but dozens of L1 blockchains cannot all succeed.

12. If the scalability advantages of ZK Rollups become more apparent, they may surge as they theoretically offer users cheaper transaction fees. Rollups have better interoperability, throughput, and lower costs, but whether they can effectively compete with other L1 blockchains remains to be seen. Rollups have the security of Ethereum, but transaction costs are still an order of magnitude higher than many L1s.

13. The value accrual of Rollups and modular blockchains is questionable as it is still unclear how much economic value will flow to consensus and data availability layers compared to transaction settlement and execution. Some DApps will have to monitor liquidity whether due to insecure cross-chain infrastructure, ultimately fragmenting between Rollups. As we move towards reduced reliance on Ethereum L1, a cheaper, more available multi-Rollup world, expect some new tools in this space. We still need cross-chain bridges.

14. Aptos, Sui, and other newcomers have strong teams, supporters, and networks, but the value of newcomers in the crypto winter ultimately remains questionable.

15. At the end of 2020, we believed Ethereum's leading position was unassailable. The end of last year became uncertain as we were pessimistic about the timely completion of the merge. Now, I am optimistic again about Ethereum's dominance, unsure if we should be excited.

DeFi

16. Uniswap V3 is an unbeatable AMM protocol, but this does not mean other DEXs cannot compete with it. Competition may revolve around dynamic fees adjusted with transaction volume or volatility or the performance and reliability of oracles. It is certain that other DEXs cannot replace Uniswap through tokenomics or margin price advantages. Compete on value, not fees.

17. Lido is expected to be the highest-generating DApp in the Crypto industry in 2023. In the new year, Rocket Pool's market share will increase by 5-10 times.

18. In 2023, Crypto asset management companies will shift their investment focus to DAOs. It is now easier to create rule-based asset management companies with code, allowing on-chain funds and index protocols to appreciate more easily.

19. Cryptographic protocols like Nori, Flowcarbon, KlimaDAO, and Toucan are worth watching as they lay the foundation for reducing carbon footprints by transforming the fragmented carbon trading market, capable of bringing transparency, liquidity, and aggregation to the global green market. Whenever possible, invest in sustainable, environmentally friendly, socially conscious organizations.

20. Most DeFi users and their transaction volumes may need to complete KYC in the coming years.

21. The $3 billion on-chain attacks in 2022 will continue to drive investment to security audit companies in 2023.

NFTs

22. The potential of NFTs is still worth believing in.

23. Yuga Labs had an interesting year, though ApeCoin is puzzling, this virtual community of nearly 100,000 people is as puzzling as TikTok and the Kardashian family. Equally puzzling is the fact that Dogecoin and Shiba are more valuable than Uniswap. However, the Ape community has indeed grown something in this hellish year.

24. We will continue to see more NFT experiments on Elon Musk's Twitter. There will be more in the decentralized social sector.

25. In 2023, NFT fashion items will open up a new opportunity for brands. There is a high demand for both purely digital and physical/digital hybrids. Gucci sold digital versions of physical bags on Roblox for $800 more than the "real" ones.

26. GameFi is currently the most hyped sector in Crypto, and we are bearish on GameFi.

27. The future of AR/VR still looks promising, but those who bet on it this year have had their faces swollen.

28. OpenSea will become a $100 billion company. Coinbase NFT failed, FTX NFT disappeared, and OpenSea's dominance becomes more apparent.

29. The design space for NFTs is much larger than FT, and the claws of regulation will only touch NFTs once DeFi, privacy products, and DAOs are solved. NFTs will become a universal standard for packaging financial assets, just like packaging monkey JPEGs now.

DAOs

30. Cryptographic infrastructure will grow exponentially in regions where the government heavily controls dissidents and suppresses speech, presenting a huge opportunity to cater to gray market clients. Cryptographic infrastructure will become the backbone of a free and open network, valued in the tens of billions of dollars.

31. While it won't happen overnight, DAOs will change countless aspects of the economy, politics, and society in the coming years.

32. However, the current governance structure of DAOs is unsustainable, with many DAOs holding a significant amount of their native tokens, lacking portfolio diversity, and missing out on the opportunity to enrich portfolios during bull markets. 2023 will be a bloodbath for crypto startups, and in decentralized communities, the situation will be worse.

33. 2023 will be the best time to create media DAOs, where $10 million is enough to fund a crypto media giant consisting of 50 top industry researchers and journalists.