Shifting Narratives - The Daily Gwei #408
Shifting Narratives - The Daily Gwei #408Like sands through an hourglass, so are the narratives of crypto.If there’s one thing I’ve learned from all my years being involved in the crypto ecosystem it’s that most people cannot accurately predict what’s going to happen in this industry over any time-frame - not even from the highest level. Very few saw the major 2021 narratives coming - NFTs, dog tokens, alt-L1’s, web3 - these narratives blind-sided almost everyone but did make the few who saw them coming stupidly rich. Though it’s not enough to see the narratives coming - you need to have conviction on your predictions - and even fewer people have this. 1/ In late 2020 there was a strong narrative being pushed that you didn't need to buy/hold ETH - all you needed was BTC + DeFi blue chips (aka the "crypto barbell" strategy).
That turned out to be horribly wrong with ETH strongly outperforming BTC and most DeFi in 2021. My least favorite narratives are the ones that make absolutely no sense but somehow manage to gain widespread popularity/acceptance. For example, there’s been a pervasive narrative brewing over the last month or so that layer 2’s are actually bearish for ETH because they are going to have their own tokens which people will buy instead of ETH. This narrative is nonsensical for so many reasons but I really only need to state one to break it down completely: layer 2 networks have to pay Ethereum for their security (in ETH) and then most of that ETH is burned thanks to EIP-1559. This narrative is obviously being pushed by those who are short ETH in some way (usually by being long on competing ecosystems) and that’s exactly why it’s a narrative that breaks down so easily. Sadly though, it is one that I see continuing to persist simply because the financial incentives are there. NFTs are another explosive trend that basically no one saw coming in 2021 and it really changed the whole landscape of crypto. Many people thought that DeFi would be the gateway for mass adoption but have now shifted to believing that NFTs will easily be the largest on-boarding vehicle for mass adoption - and I totally agree with that. This isn’t to say that DeFi isn’t incredibly cool and useful, but most people don’t actually want to think too deeply about finance because it’s considered “work” whereas something like NFTs is mostly entertainment. You can basically contrast this with how the internet achieved mass adoption - it was through entertainment (social media, video streaming, online gaming) and not things that felt like or were actual work (email, building websites, paying bills). Now we’re at the part of the year where everyone is giving their 2022 predictions and they are varying wildly - from many believing that 2022 will be a strong year for the “multi-chain” thesis to people making big bets on social tokens, DAOs and crypto-gaming. The Ethereum community is making the prediction that 2022 will finally be the year that layer 2’s see real adoption (we even have a hashtag for it - #L222) but honestly I think this relies on these layer 2 networks issuing native tokens to incentivize usage - we’ve seen the playbook work extremely well for both DeFi and alt-L1’s. If done correctly, I do believe 2022 will be an explosive year for Ethereum-based layer 2’s and we’ll see their liquidity, active addresses and volumes skyrocket. All in all, if you want to stay ahead of the pack and catch narratives before they play out, then I believe that you have to “reset” your thinking. You need to put yourself in the same frame of mind that a new crypto person is in as they have no prior context/history of crypto, no tribe affiliations, and no “bear market ptsd” holding them back. If you can manage to use the years of wisdom you’ve accumulated up until this point while resetting your priors on what this industry can be going forward, then I truly believe you can become unstoppable. Have a great day everyone, Enjoyed today’s piece? I send out a fresh one every week day - be sure to subscribe to receive it in your inbox! Join the Daily Gwei EcosystemAll information presented above is for educational purposes only and should not be taken as investment advice. If you liked this post from The Daily Gwei, why not share it? |
Older messages
Cheers to 2021 - The Daily Gwei
Thursday, December 30, 2021
So long and thanks for all the ETH.
Watching the Burn - The Daily Gwei #407
Wednesday, December 29, 2021
A watched ETH always burns.
Regens and Degens - The Daily Gwei #406
Tuesday, December 28, 2021
Harnessing degenerate behavior for regenerative good.
Good vs Evil - The Daily Gwei #405
Monday, December 27, 2021
The road to hell is paved with good intentions.
Web2 Not Found - The Daily Gwei #404
Thursday, December 23, 2021
Web2 is owned by the few; web3 is owned by everyone.
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