HTX Ventures's EthCC 2024 Insights: Infrastructures are Strong, Applications Need Innovation
Singapore
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July 24, 2024 12:42 PM Eastern Daylight Time
Singapore / July 24, 2024 – 2024 marked the 10th year anniversary of Ethereum ICO. To learn from front-end developers and connect with like-minded VCs and ecosystem users, several investment analysts from HTX Ventures have attended the largest annual European Ethereum event EthCC last week. This article outlines some of our observations about the current market situation.
Optimize Ethereum
Vitalik Buterin delivered a keynote speech in Brussels on "Hardening the L1: Optimizing Ethereum as a Highly Robust, Dependable and Permissionless Base Layer for L2s." In his speech, Vitalik reaffirmed Ethereum's roadmap to provide the most decentralized and secure settlement Layer 1 for various Layer 2s, with five main improvement directions for Ethereum outlined:
Decentralized DeFi: To maintain the decentralized nature of the Ethereum network, encouraging solo staking is essential. This can be achieved by lowering its barriers to entry through things like easing node operation and reducing the staking monetary threshold. Other risks that need to be considered include the risk of liquidity staking and the related risk of MEV (Miner Extractable Value).
Layer 2 Solution: To achieve Ethereum’s roadmap, efforts need to be focused on increasing the data availability bandwidth for Layer 2 storage and lowering the cost of storage on Ethereum.
Security and Privacy Protection: Vitalik encourages validators to prepare for 51% attacks by providing automatic coordination on the same minority fork when an attack occurs. He also suggests potential solutions for future quantum attacks.
Light Clients: Promoting the adoption of light clients like Helios for Layer 1s, and developing similar solutions for Layer 2s, user's secure blockchain interactions can be ensured without relying on centralized servers.
Protocol Simplification: To ensure Ethereum remains a robust base layer, its technical debt needs to be reduced.
2. Investment Slowdown
The pace of investment for VCs across the market is temporarily slowing down due to three main reasons: the ambiguity of market liquidity, listing trends/macro situation, and high FDV (Fully Diluted Valuation) VC rounds. As the market makes some value corrections and the political and economic situation clarifies in the latter half of 2024, VCs are expected to resume a more active investment pace.
3. Misaligned Invest Direction
The consensus agrees that having strong consumer applications is crucial to getting more people to use blockchain technology. However, VCs’ funding is telling a different story. Currently, a large part of funding is still going towards infrastructure, especially AI, security, privacy, and blockchains. This investment trend is even more significant within the Ethereum ecosystem. The current misalignment of investment direction is partly due to the lack of innovative narratives among consumer applications.
4. Alternative Ecosystem Focus:
Outside of the main Ethereum ecosystem discussion, three other main types of blockchain are at the center of attention:
Community-Driven Blockchains: Blockchains like Ton focus on creating good user experiences and consumer applications that can be used by millions of non-crypto users.
Parallel EVM Blockchains and Modular Solutions: Solutions such as Monad and Avail leverage Ethereum while offering improved functionalities.
BTC Ecosystem: The Bitcoin ecosystem is also exploring user applications.
5. Macro Expectation
Due to the release of blockchain ETFs, the crypto market is becoming more in sync with the traditional financial system. The upcoming US presidential election and the expected Fed rate cut will affect crypto regulations, economic direction, and the liquidity of the U.S. dollar and related pegged currencies. Currently, as the probability of Trump winning the election is increasing, the market holds an optimistic view toward the future of the crypto market post the end of 2024.
HTX Ventures' Engagement
Alongside attending the main event, HTX Ventures sponsored and spoke at several side events, such as the LSDFI Summit and VC<> Start-Up Connect. Our researchers and Managing Partner shared insights on "Restaking Development'' and "How to Successfully Launch a Web3 Ecosystem."
This year's EthCC conference showcased an unshakeable status of the Ethereum ecosystem and provided forward-looking technical discussions and application explorations. HTX Ventures is committed to supporting the long-term development of the Ethereum ecosystem and continually seeking technologies and projects that will advance the crypto user experience.
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About HTX Ventures
HTX Ventures, the global investment division of HTX, integrates investment, incubation, and research to identify the best and brightest teams worldwide. With a decade-long history as an industry pioneer, HTX Ventures excels at identifying cutting-edge technologies and emerging business models within the sector. To foster growth within the blockchain ecosystem, we provide comprehensive support to projects, including financing, resources, and strategic advice.
HTX Ventures currently backs over 300 projects spanning multiple blockchain sectors, with select high-quality initiatives already trading on the HTX exchange. Furthermore, as one of the most active Fund of Funds (FOF) investors, HTX Ventures collaboratively forges the blockchain ecosystem alongside premier global blockchain funds, including Dragonfly, Bankless, Gitcoin, Figment, and Animoca.
Feel free to contact us for investment and collaboration at VC@htx-inc.com.
About HTX Ventures
HTX Ventures, the global investment division of HTX, integrates investment, incubation, and research to identify the best and brightest teams worldwide.
With a decade-long history as an industry pioneer, HTX Ventures excels at identifying cutting-edge technologies and emerging business models within the sector. To foster growth within the blockchain ecosystem, we provide comprehensive support to projects, including financing, resources, and strategic advice.
HTX Ventures presently backs over 200 projects spanning multiple blockchain sectors, with select high-quality initiatives already trading on the HTX exchange. Furthermore, as one of the most vigorous Fund of Funds (FOF) investors, HTX Ventures collaboratively forges the blockchain ecosystem alongside premier global blockchain funds, including IVC, Shima, and Animoca.
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