Bankless 2021 Predictions

Crypto predictions from the Bankless Nation

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Dear Bankless Nation,

In 2020 we saw:

  • Paypal supporting crypto

  • Multiple public companies collectively buying billions worth of BTC

  • Eth2 launching

  • Uniswap doing more volume than Coinbase

  • A mini mania in DeFi

  • $20B in value locked in DeFi (up from $600M at the beginning of the year)

  • Unprecedented monetary stimulus from central banks

  • A global pandemic

It was an eventful year. No one could have predicted 2020.

But we’re going to try the impossible task of predicting 2021—just for fun.

Here’s the Bankless crypto predictions for the next twelve months.

Hint: We’re kinda bullish.

- RSA


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THURSDAY THOUGHT

Bankless 2021 Predictions

Layup Predictions

  • ETH will cross ATHs and hit $2,500. We’re more bullish than $2,500 ETH as you know, so this is our layup prediction.

  • Crypto becomes a multi-trillion dollar asset class. We just hit $1T in total market cap. We’ll sustain these levels and go well beyond.

  • Ethereum will settle more than $3T in value. In 2020, Ethereum network was on track to settle over $1T in value. Next year, we expect more dollars, more bitcoin, and more capital inflow on the network than ever before.

  • At least two DeFi Protocols will reach the top 10 in market cap. Some of the top 10 assets are dumb (we’re not going to name names…XRP). We think they’ll be replaced with DeFi capital assets—assets that have actually earned their valuations. Possible candidates to reach the Top 10 include: AAVE, UNI, YFI, COMP, SNX, and MKR.

  • DeFi total market cap will cross $100B. We’re only at $28B. That’s hilariously low. Major protocol upgrades, improved products, and new protocols launching over the next year…$100B is our bearish estimate.

  • BTC on Ethereum will pass 2.5% of the total supply. That’s 420k BTC on Ethereum by the end of the year. We’re already 160K. The high yields and utility of the Ethereum economy will result in a growing cohort of new ecosystem participants that prefer their BTC on Ethereum. Who knows, people might even start using BTC exclusively on Ethereum. Don’t tell the maxis tho

  • Coinbase’s IPO will have a valuation greater than $100B. This will largely be driven by the massive tailwinds behind the mania of crypto assets. Watch for the TSLA comparisons.

  • At least two major banks will adopt Ethereum as infrastructure to settle dollar payments. The recent guidance from the OCC allowing US banks to use public blockchains and stablecoins as a settlement infrastructure in the US is about as bullish as it gets. This guidance will allow banks to significantly reduce costs and increase efficiency if they adopt the technology. (Oh and virtually none of these savings will be passed on to their customers because banks are inefficient rent-seekers. Users will still have to wait 1-3 days for a transfer, pay $30 in fees, and have limits on how much they can send. 🤷)

Ryan

  • Stablecoin marketcap exceeds $250b. There are three growth engines here. First, DeFi protocols with collateralized and uncollateralized coins. Second, crypto banks with stablecoins like USDC and GUSD. And third, traditional banks will enter the game. These three engines will get us to $250b.

  • EIP1559 gets shipped and we start burning ETH. With the work of Tim Beiko and others I’m finally seeing the momentum to implement EIP1559. This is Ethereum’s scarcity engine. It’s the final puzzle piece for ETH monetary policy. It means the protocol will start burning ETH each transaction.

  • The Internet Bond gets memed into existence. Institutional investors will watch the price ascent of Ethereum in wonder. Some will participate, then more will participate after ETH futures launch. As they do they’ll upgrade their narrative to rationalize their ETH bets. They’ll talk of staked ETH as an Internet Bond just as they talk of BTC as digital gold. Expect a Forbes or Bloomberg article using this meme. Maybe a Paul Tudor Jones type saying it on CNBC.

  • A central bank will acquire Bitcoin. They’ll either do it in secret and we’ll discover it or they’ll announce it to make a political point.

  • You’ll get text messages We’ll enter a 2017-like retail FOMO and the friends and family that know you’re into crypto will be asking for your advice. Steer them well.

  • The digital Yuan will launch, it’ll be successful, and the U.S. will be forced to consider a digital currency strategy. It’ll just be talk this year, not much action. I expect it to be a major issue closer to the next 4-year election cycle, likely interwoven with issues related to MMT, UBI, and China dominance.

David

  • At least one uncollateralized/algorithmic stablecoin will reach $1B in market cap. And it’ll stay above that level 📈 in the 1st half 2021. This uncollateralized stablecoin will become sufficiently stable and will eventually be able to be included on Curve.

  • At least one uncollateralized / algorithmic USD stablecoin will also explode 💥. As in death-spiral. Hopefully it’s not included in Curve when it does.

  • The tokenization of real-world assets will continue to underperform as a sector. We haven’t figured out an efficient legal process for getting this done. This will be a boon to the native assets on Ethereum, as there is less competition for capital and they are easier to create.

  • USD-denominated yields on Ethereum will sustain >10% APY for the majority of the year. At some points, they may even breach 30% during times of volatility. The fact that anyone will be able to access these yields will be one of the key drivers of interest in Ethereum as yield continues to dry up in legacy markets.

  • At least one major game studio will announce their intentions to integrate some component of Ethereum for NFT asset integration inside their game. This will largely be possible when L2 rollups provide the infrastructure for tradable gaming assets with the latency and speed needed to offer a compelling gaming experience.

  • None of the L1 versions of the following protocols will experience a hack, exploit, or loss of user funds due to a fault in the design of the protocol. Qualifying candidates here include Maker, Aave, Compound, Synthetix, Uniswap. Note that faulty ERC20 tokens from 3rd party teams do not count!

  • Yearn will lose some user’s funds due to a faulty strategy.

  • USDC will come close to rivaling Tether in total USD supply. Tether will face strong regulatory headwinds, which will benefit USDC growth.

  • Stablecoin supply on all other non-Ethereum blockchains will be an afterthought. Virtually of all the crypto stablecoin supply will be on Ethereum. There’s pretty much no way to use it elsewhere.

  • Tron will go the same way as XRP, one way or another. Maybe the regulators will get their bats and start cracking knees.

  • There will be an unsustainable social token mania. Major celebrities and influencers will mint tokens named after themselves and airdrop them to fans. And they will have ridiculous market caps.

  • No significant new L1 will launch. Not much else to say here.

  • There will be significant hype and speculation around decentralized staking-as-a-service providers. It may likely be premature because they won’t really matter until the merge of ETH 1 and ETH 2, which will not happen in 2021.

  • The emphasis on desktop usage for interacting with Ethereum and DeFi will lose dominance to mobile usage, as the new entrants into the ecosystem are less power-users and more used to a mobile environment.

  • Desktop DeFi usage will continue to be dominated by MetaMask. MetaMask dominance will only be lessened by growth in mobile DeFi usage, and not by being replaced by a competing desktop app.

  • Discord will become the dominant platform to discuss crypto, pushing out Telegram (and thank god for that).

  • Libra (Diem) will launch, and no one will really care except for regulators.

Lucas

  • Uniswap will reach $1T in annualized volume. The protocol is already trading just shy of $1B per day. The napkin math here means that daily volumes only need to reach $3B per day—not a bad target at the current growth rates and an upcoming V3 upgrade.

  • Value of crypto art sales will cross $1B. For reference, digital art from major platforms is on track to trade roughly ~$24M per year (does not include Nifty Gateway). This is tiny. The digitization of this asset class allows for significantly higher liquidity than ever before. Ownership can now be transferred instantly anywhere, to anyone, at any time. Equally as important, the breadth of digital art is wider. A piece of art could not only have visual aspects, but audio too. What if the NFT is Taylor Swift’s cover art from her new album that also plays the album’s top hit? What would that sell for? Once a handful of popular creators realize the potential, story will write itself.

  • There will be a DAO-like black swan event. Smart contract audit firms are completely packed right now. We’re talking months before you can get an audit scheduled by any reputable firm. Auditors are under a lot of deadlines and need to push things along. It sucks to say but mistakes are more likely to happen under these conditions, and one of them will be costly. Let’s hope it’s not Eth2…sorry

  • DPI crosses $1B in market cap. The index sector is starting to shape up and the Index Coop’s DPI has only been around for a few months—most of which has been amid a DeFi bear market. This will become the go to asset for new crypto investors to get into DeFi. All DPI needs to do is garner enough liquidity that allows major on-ramps like Coinbase and Binance to list it. Once this happens, it should be enough to propel the DPI into unicorn status via (1) increased liquidity and (2) a price increase in the index’s underlying assets (another DeFi bull cycle).

  • Retroactive distributions will become highly lucrative for power users. There’s plenty of projects out there that could tokenize. And it’s becoming industry standard to enact a retroactive distribution to the protocol’s past users. I wouldn’t be surprised if the next year is filled with more untoknized projects launching their native token and distributing significant percentages of the supply to historical users. This doesn’t include new projects that are looking to gain some interest (think Mirror and Badger) or even existing tokenized projects that want to reward past users for a special action they did in the past (projects rewarding users for migrating to L2, or a project rewarding V1 users once they’ve migrated to V2, etc.).

  • DeFi derivatives will boom. In 2019, we had stablecoins and lending. In 2020, we had AMMs. In 2021, we’ll see the derivatives sector finally come into play in a big way. We’ve reached the point where there’s finally a robust ecosystem of derivatives protocol on mainnet. Highlights include: Synthetix and UMA for synthetic assets, Hegic and Opyn for options, FutureSwap, dYdX, and Perpetual Protocol and others for leveraged trading products. My guess is that we’ll finally see these protocols start chipping away at the quadrillion dollar derivatives market.

Community

Favorite Responses from the Friday Open Thread

This poem 🔥🔥🔥

Some central banks will fight crypto, others will embrace it. Which side do you think yours will fall under?

Right after CME futures launch, it’s the year of the Ox—seems bullish for ETH.

DeFi exploded in 2020. Not a bad bet that it will continue doing so in 2021.

We’re looking good on this. Only a few more days left tho…

Predictions for the Bankless Nation 🏴

  • Andrew Yang will appear on the Bankless Podcast 🤞

  • Bankless Nation will grow to 100k 🚀

  • Cumulative podcast downloads will reach 10M 💣


Action steps

  • Consider some of the predictions above. Which ones do you think will play out?


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Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.


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