An anonymous reader shares an opinion piece from CoinDesk, written by Ryan Zurrer. Zurrer is founder of Dialectic AG, an alternative-assets focused multi-family office. Previously, he was a Director at the Web3 Foundation and led the investment team at Polychain Capital, pioneering the SAFT as a legitimate investment instrument. From the report:
Crypto is set to bifurcate and we will begin to see two parallel economic superhighways being built and used. One economic superhighway will be for know your customer (KYC)-compliant “digital currencies” such as central bank digital currencies (CBDC) or corporate-backed digital currencies such as USDC or diem (formerly libra). In parallel, the other economic superhighway will be a detour-filled adventure of crypto-anarchist money Legos being stacked and iterated on by anonymous teams, self-organized via a myriad of DAO-like governance structures. It’s all about to get quite strange. Diversification is the only coherent path forward both within crypto ecosystems and beyond during these uncertain times.
In 2021, we are going to see layer 2 apps for the first time and not only to entertain or as early experiments. We will see entire micro-economies emerge and transform thousands of people’s lives. In 2021, we’ll see more anonymous teams governed by DAOs popping up and experimenting with exotic derivatives and porting real-world assets on-chain with NFTs. Layer 2 will also usher in crypto’s own “SoMo” (social + mobile native) moment, whereby applications will look to be native and seamless on many of the apps that billions of users already have on their home screen: WeChat, WhatsApp, Facebook, the App Store and so on. This is where corporate-cryptos and CBDCs will have a clear advantage and will foster significant innovation. We’ll see the backers of CBDCs and corporate-cryptos spend lavishly to seed ecosystems of layer 2 app development.
We’ll continue to see consolidation between crypto projects. DeFi yield strategies will begin to stack on one another combining debt, exchange and derivative strategies under unified liquidity while novel layer 1 experiments, often branded abhorrently as “Eth Killers” will ironically need to combine teams, treasuries and economically rebase to survive against Ethereum’s accelerating network effects, community and composability. We’ll also see an acceleration in “treasury raids” as protocols with enormous sums of money leftover from the 2017 initial coin offering (ICO) era are pressured by their token holders to pay a dividend, tie the treasury to the token or unwind and distribute the funds back to project funders. For those who got into crypto because of ideals like freedom and self-sovereignty, Zurrer says “we’re likely to see a significant portion of the space migrating to FATF-compliant regulations regarding KYC/anti-money laundering and primarily transacting in centralized digital currencies.” He encourages everyone to “remain open-minded about the innovation that CBDCs and corporate currencies will bring” as they “will drive adoption beyond what we’ve achieved thus far.”