Delphi digitals 2023 and my notes form it!

Bull markets are where most investors make money and Bear markets are where you fight to preserve thise gains

Without speculations, capital wouldnt flow to such risky ventures (and society would still be stuck in the Stone Age)

Every cycle was a speculation on the back of new innovation triggers and it bringed more capital, users and pushed crypto markets to new heights

Best projects appeard in Bear markets and this might apply for current bear. But building is only one side, what is important as well is demand. Demand leads to more usage -> faster feedback cycles -> better products -> more demand and more usage. We are now facing demand shortage

BTC experienced short-lived spike in 2013 but true mainstream cycle happened in 2017(Digital gold narrative)

NFTs

They are bullish on it in the long run. NFTs can attract a broader audiance and this will bring in new sources of demand and buying power and will serve as a primary gateway to onboard the next generation of web3 participants. More brands an big tech companies will integrate NFTs into their bussiness model.

Nov 22 was the worst month since June 21 in terms of liquidity

NFT-fi summer?

NFTperp, Hook Protocol

NFT lending - Astaria

NFTs will be the preferred medium for social and fan tokens. Huge wave of creators, celebrities, and sports brand will launch NFTs

This could firstly emerge in Asia

NFT projects could lauch their own tokens (Like $APE) - Azuki, Moonbirds, Clone X - could be next(I am personally not sure about their performance and true utility, but it could be good to catch some scalp trades)

Phy-gital = physical and digital together(A new buzz word?)

More sells of NFTs combined with physical items in 2023

Longterm vision - Every physical asset can be tokenized and easily sold as NFT or a house to be partially sold and have multiple owners and they can use the NFT to earn interest on it, matter of few clicks no middle man and legals

DEXs

It might take months to years for them to compete with CEXs.

Cons are you dont have one or two people who can rug you like FTX. With public blockchains dexs are easy auditable.

Orderbook based dexes: 0x, dYdX, Injective, Sei, Zeta

Openbook - community fork of Serum

Onchain orderbooks will see strong traction (appart from new names like Rahe Trade, there isnt much design-level innovation happening with decentralized perpetuals)

AMMs: Uniswap, Sushi, Balancer, DODO

AMMs still grasp more volume than orderbook dexes

Delta hedging is extremely difficult to implement, but more delta-neutral AMMs and sustainable yiled projects are starting to emerge.

(GammaSwap, RageTrade)

Using crypto hard and the harder it stays, the thicker the wall between this industry and mainstream adoption will be.

In future we to create UX aggregators that act as unified front end for all Defi

In future dex aggregators will expand more than DEXs. And UX aggregator that unifie all aggragetors into one front end.

Aggregators for borrow, lend (yield in general), options, perpetual swaps

Bridges - Layer Zero might looks promising with its ChainLink integration

Axelar can integrate with EVM chains (already supports ETH)

New cross chain dapps Mars, Prime, Composable finance and RageTrade

Mars and Prime allows you to borrow or lend against your collateral on different chain (Mars on Cosmos) Prime for EVM L1s and L2s

They dont think Solana is dead.

They highlight Jito, Firedancer, OpenBook and Ellipsis

Solana has the second largest NFT space

Despite the upgrades we might still see some downtime of Solana network

They like Cosmos, not only they already invested and have prepared projects to build on top of it (Astroport, Mars, Levana?)

Comos looks promising and huge step for it is dYdX moving there

Sei and Injective - defi optimized chains (they focus on peprs, options, stablecoins) + Sei aims to be base layer for SolanaVM and MoveVM rollups

ETH

L2s have surprass ETH in TPS in 2022

EIP-4844 comes in 2023 (after Shanghai upgrade)- will reduce tx fees for Rollups (we are paying two fees on L2 and on L1(ETH) the EIP will reduce the ETH fee

EigenLayer - this project is citied in every report as major boom.

It will enable ETH validators to re-stake their ETH for further use (gains)

Celestia as to be first modular blockchain network, launch in Q2 2023. Projects - Eclipse, Astria(Cevmos)

It all gives me vibes that 2024 will be more about Zk-rollups and a bit of Optimistic rollups

Privacy - Aztec- using zk rollup for privacy on ETH + Penumbra -fully private dex

L1s with ZKp smart contract platforms. Blockchains that does not need l2

Aleo (200M$ raise) private by default and using zk knowledge for privacy.

(So question here is will be scaleable enough and how much time they will need to develop the ecosystem)

Mina

Gaming

• 2023 wont be year for games

(Sipher, EmberSword and Illuvium)

Closing thoughts ❗️

2020 was Defi, 2021 NFTs, 2022 reality check and 2023 will be a year to get back to our roots, with renewew focus on the infrasctructute layer to scale to bilions

Each wave of adoption follows a similar trend where hype starts to build, new entrants pile in, prices rise which brings more people, speculation starts - prices goes even higher, new entrants start to get priced out, demand wanes and assets finally reprice to more justifiable valuations given the market current state. (2017-2018 ICO mania, DeFi summer 2020, NFT boom 2021 and we will see it again.

Year ahead of markets

Crypto is macro

Whats happening in macro has a direct impact on the crypto market

And liquidity in the markets is important.

Reversal in global liquidity is one of - if not the most - important catalysts for a renewed bull market

US&China households wealth is nearly 50% of global personal wealth

Many people are trying to predict fed pivot but most are focused on when the Fed will pause rate hikes and if/when they start to signaling a new wave of rate cuts

For Delphi what really matters is when we see a reversal in liquidity conditions - this will bring more influnce on the markets

(We saw this dynamic during 2017-2018 cycle)

-the crypto market had one of the best bull runs on record (during 2017)even as Fed (and other central banks) started to raise interest rates… it wanst until liquidity conditions started to detoriorate that BTC topped out

Keep an eye on changes in liquidity

If US and China move towards a more expansionary liquidity enviroment, this would give us stronger conviction that bottom is truly in the rearview

Aggresive monetary tightening, demand for dollars and US safe havens, and the contraction in global liquidity helped propel the dollar to 20-year highs

There can be an SPX bottom in OCT 23 with an index value in the range of 2550-2650

OR

Closer to 3260 and it would occur in Q1 23

Closing thoughts vol.2 ✍️❗️

They believe the bull might start in 2024-2025

If the aggregate amount of debt grows, more balance sheet capacity is required to refinance existing debt obligations, which is where the real vulnerabilities lie (another reason why QE has to return)

#delphidigitals #cryptoreport2023 #crypto

My thoughts about @coinbase_official.lens report 2023

Coinbase report 2023

Market drawdown, rising interest rates and liquidation cascades and recent events with FTX has made it difficult for capital allocators and will take at least several more months for them to deploy more capital into the markets. This leads to low liquidity on the markets and projects that had funds on FTX might have locked their capital for several years.

Themes:

• a new quality institutionals investors (they will invest more into higher caps with better tokenomics, like BTC ETH and there is very low chance that crypto will decouple from from tradtional risk assets)

• New opportunities to emerges in this market drawdown (AI, LSDs)

From May 2022 the corelation between eth btc and stock markets has declined as well for other commodities and bonds.

ETH

Ethereum has strengten the position on the market with sucessfully launched Merge, still it cant be only monopol on the game so new L1s might appear plus already existed ones could grasp some liquidity on their chain. Eth became deflationary with EIP 1559 and a lots of ETH locked (13% of total supplyfor fully effective locked ETH) in for staking and their are not withdrawablw until Shanghai fork. After Shanghai fork, we can expect around 50-75% ETH to be staked. (Makes me bullish kinda on ETH because if we count other providers/services in, it will be huge number of locked ETH) + LSDs

Re-staking with Eingelayer or Obol. Brings more posibilites to secure new features on ETH and get stakers additional yield. It has also risks, if Eingelayer is attacked or provides faulty services, stakers can be slashed for part of their 32ETH.

DeFi we see outflow from Dec 21 180bn$ to 42bn$ to Nov 22 and early Dec 24bn$

There might be room for permissioned DeFi as more institions wants to go in this sector

Tokenization

Institutions like Societe Generale issued OFH tokens based on AAA-rated French home loans and they can use it as collateral to borrow up to 30M DAI and JP Morgan DSB Bank and SBI Digital tokenized currencies and sovereign bonds via Polygon in early Nov 22. It can have potential for less liquid assets like real estate, but it might take time because of regulations.

BTC

As the price of BTC went down and prices for electricity went higher because of he war at Ukraine (at European countries)and rising mining difficulty, bitcoin miners are selling their mined BTC and as well their reserves. The sell ratio at Nov 18 2022 is 135%. However, despite all the facts, with lack of liquidity, forced institutinal selling did not affect Bitcoin function, at 2022 Bitcoin processed 255k txs per day.

Lightning network is growing but still public node capacity is 100k$. If we compare it to ETH capacity of 42bn$.

Mt.Gox

in 2023 we might expect huge distribution of BTCs to the market. However the scheduled unlock was rescheduled to late 2023 Sep

NFTs

Trading volume is far below the peaks as of start of 2022. But this can be part of healthy correction as for NFTs we can further use them for digital identity, ticketing, membership/subscriptions, tokenization of real-world assets and supply chain logistics. Big brands are adopting NFTs - Starbucks, Adidas, New York Knicks, Reddit…

Regulations are coming in 2023.

Lending and borrow shloud mature because of crashes and gain more bonity. It might take couple months for institutions to recover the regular activity before the crashes. Compound and Aave are still functional and fully operational.

L1/L2s

Capital is moving from Solana, Avalanche to Tron and ETH based scaling solutions like Polygon, Optimism and Arbitrum. We see heathly demand for L2s but this does not mean that L2 will be in the position winner take all market

Stablecoins

Around 145bn$ in circulation, represents 17-18% of total crypto market cap. Its 5x more than stablecoin ratio at the beginning of 2021. 91.7% of all stables represents fiat-backed stables. USDT 67bn$ and USDC 44bn$ are taking majority of it.

As of representation of 18% of total crypto MC.

And a ways of hedging, potential for mainstream commercial use - merchant payment and cross-boarder remittances and easy global transfers which are better then fiat global payments.

Which will drive demand for stablecoins and blue chip defi projects starting to launch their own stablecoins (Aave - over collaterized GHO that could help lower capital efficiency costs and Curve - stable design based on LLAMMA, where the collateral type is dependant on price performance)

It looks like 5% rate hikes wont be enough to tame the inflation. Although the emotions and sentiment of the market changes with every Fed meeting. Stay safe a try to study good sources and do not leave the crypto space. Those who will leave, will have no chance to catch up with the market and let opportunity slip through their fingers.

I have read more than 800 pages of reports. Will share with you my thoughts and notes. Please also DYOR and bear in mind that I might not cover all what is inside those reports. Everything shared are my and only thoughts and nothing should be considered as investment advice.

Shared reports will be from predictions and visions for 2023:

Delphi Digitals

Coinbase

Messari

Pantera Capital

A16z

Vanguard

#bitcoin #crypto #defi #2023reports