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On August 24, 2024, Nick Tomaino, founder of Encrypted VC 1confirmation, released a Q2 LP letter on X.
Nick Tomaino said 2024 has been a very interesting year in the cryptocurrency space so far.Bitcoin and Ethereum ETFs have permanently embed cryptocurrencies on Wall Street, and both the Democrats and Republicans recognize that anti-cryptocurrencies are not feasible, and these developments have far exceeded their maximum expectations.
He also expressed three crypto themes that he strongly favored:1. Ethereum market value will surpass Bitcoin market value in the next five years; 2. It is predicted that the market will become a breakthrough use case in 2024 and will grow 100 times in the next few years; 3. DeFi and NFT will return with a stronger attitude, SocialFi and other new use cases that are hard to imagine today will emerge through application chains, L2 and L3s.
The full text is as follows:
2024 has been a very interesting year in the cryptocurrency space so far.
Bitcoin and Ethereum ETFs have permanently embedded cryptocurrencies into Wall Street; Bitcoin’s total asset management scale (AUM) has reached US$78.8 billion, while Ethereum is US$8.8 billion.
The Biden administration’s anti-cryptocurrency stance has been completely rejected by the American people and both parties, and now both sides realize that anti-cryptocurrencies are not feasible.Cryptocurrency companies have donated $119 million to political candidates in this election (48% of total donations from U.S. companies).
These developments exceeded my maximum expectations when I started working at Coinbase 12 years ago.
Meanwhile, one might say that there are no interesting new use cases lately.Many concepts that have driven the development of cryptocurrencies, such as the meme coins on Solana and NFTs on Bitcoin, are the first reappearances of DeFi and NFTs on Ethereum that appeared a few years ago.While these recycled ideas can attract existing users and capital, they cannot bring many new users.The most important question every cryptocurrency investor must ask now is: Which new products will eventually attract more than 1 billion users into the crypto space?
Our core belief remains that authenticity will win, and it will continue to focus on those teams that drive the industry forward, driving development by enabling new and unique consumer behaviors.
Here are the cryptocurrency themes we are most optimistic about today:
Ethereum market value will surpass Bitcoin market value in the next five years.Today, Bitcoin’s market value is about $1.2 trillion, about four times the market value of Ethereum ($321 billion).I believe both will continue to grow, but Ethereum will eventually surpass Bitcoin.The reason is very simple.Bitcoin has become the digital gold purchased by institutions and is the most influential blockchain in the past five years, but Ethereum is still not fully understood.Ethereum is the on-chain decentralized internet that the world’s most talented developers are building, and Ethereum is the digital oil that powers it.Ethereum is scarce, profitable and useful.And because its market cap is now much smaller than Bitcoin, Wall Street will be able to buy more Ethereum.They will do so, and they will actively push Ethereum’s narrative to mainstream globally in the coming years.
Predicting the market will be a breakthrough use case for 2024 and will grow 100 times in the next few years.PolyMarket is the product that really stands out this year.It is the first crypto product (for information) that people use every day without knowing it is an crypto product.PolyMarket has reached US$1.1 billion in total trading volume and continues to grow this year.Without stablecoins on Ethereum, PolyMarket with a transaction size of 1.1 billion US dollars is simply impossible.After the November election, I believe that the news, culture and sports markets will become larger categories.The forecast market is perfect for any place where there is a official media narrative and people have different opinions, and the market is expected to grow 100 times.
DeFiandNFTWill return with a stronger attitude.SocialFiand other new use cases that are hard to imagine today will be through the application chain,L2andL3sAppear.Unmanaged products that do not require trust in third parties will continue to grow.Application chains, L2 like Base and L3s specific to application chains will bring scalability and improved user experiences with cryptocurrencies as their ultimate growth target.L1 tribalism will fade, and great developers will build where they can capture the most value and have the greatest control.
