Josef Je - Cryptonative economy report TL;DR

Transcript

um so yeah they say it's always good to introduce yourself but uh I was also told it's better to just like say a story rather than uh to just Mumble about like what you did previously but I'll I'll do bit of that uh so um just to give you too long didn't read I was born at zero years old um and fast forward uh I turned 18 and started studying uh logic which is kind of merge of pure math and philosophy um and I was I was an idealist then I was uh 2021 and for some reason I got uh accepted for uh a job in Middle East um where they were opening a new data center for the Central Bank of amand so I had to cut my dreadlocks and move to move to Middle

East uh I was there for a year and something and I started a company which had nothing to do with blockchain while I was studying like I discovered Silk Road and like crypto and all of that but it didn't interest me really it was just this like magic intern money it was like I didn't care about like um Finance money or anything uh my job in mind was like fairly technical but I got a sneak peek into how like the technological aspects of banking Works um and um uh yeah I was just doing my my thing but then with ethereum and I'm also again reiterating on what claudo said before I'm uh super grateful for the etherum project uh starting and uh it's also funny coincidence as this was 10 years ago um here in Switzerland um and then

finally with like uh discover ing ethereum 2016 uh 2015 he started coding in solidity I was a freelance uh DEA and auditor for about 2 years uh then I joined the ethereum foundation in 2018 and my my life flipped again from kind of doing the traditional type of thing uh into diving into these new Waters of actually living in crypto and not just like being on the on the sidelines so uh while I was at thef uh I decided to get my salary in crypto uh and uh that's kind of one of the merits of what I want to cover today uh because I was earning crypto I was like getting eat every every month um and I had a regular

regular contract I was you know about to get 30 I was like hey let's do the adult thing and let's go to a bank and let's ask for for mortgage so I can uh you know buy the roof that I'm living under uh and to my surprise even though I was like making a good Buck for uh like a person in my uh in my age uh I got rejected because well they essentially told me well it's nice that you have all these transactions but that's not real money I was like how come I pay taxes on this like how come this is not real money but I were like yeah you have to prove your credit score this is risky whatever so I so I did so I like faked having an income for uh almost two years basically by transferring bits of crypto

on an account like sending it to the the the account of the bank that I wanted to get a mortgage from um and all of a sudden fast forward two years I even switched my contract to get at Fiat um um the the internet banking showed hey you are pre-approved for this amount um so I was like yeah finally went to the bank again everything looked fine and I got a got a form in front of my face which uh just like where I ticked all the boxes it was like one extra box which asked are you exposed uh do you trade or um own any cryptocurrency I was like well work for theum foundation there's no way I can hide this so I take the box and boom that's the end of the story um and I I got upset I was like hey well

there is this entire word of defi what are we even doing doing here and that's how Pond started and pawn as as a project which essentially targets crypto Natives and this like entire cohort of people living in crypto maybe making their salary from Dows or from other crypto companies uh earning cryptocurrencies um and the target the goal is to give them access to the same Financial instrument to mortgages so what we do at Pawn is essentially creating this setup for uh crypto backed mortgages you can imagine like fixed rate five 10 15E term uh loan backed with crypto with no liquidation risk during the fixation um and um the the whole motivation was like hey this is my story

but there's a lot of people that I know being in the same situation and there is this entire generation or like cohort of crypto natives um and we got curious about like okay so that's the Assumption right but let's look at the data like let's actually see if there is a there is sufficient cohort that we could build a product for if there is actually enough like demand and money in this thing that we call the Crypton native economy so we started digging into this um so finally getting to the uh to the content of the talk here I'm going to do an introduction of um of something that we call the Crypton native economy report that we published for a third time now um and this is too long didn't read this is basically my uh pitch to get you to look at the 40 something

pages that we published on this topic um so first of all I'm going to start with definition of what the Crypton native economy is for uh is for us uh then we are going to look into the fees of infrastructure l1s l2s dabs and then finally say something conclusive so what is the Crypton native economy we basically looked at available onchain data so basically looked at how much what's what's the economic demand like how much are users willing to pay for using uh the different protocols the different daps um so we separated the report into several um um categories first look at blockchains as such then looked at the actual dabs like dexes uh liquidity provider fees bridging fees Marketplace

fees royalties and so on um that's already enough data for it on its own but it definitely wouldn't you know I'm sure there's a lot of economy sitting here and it would be like hey that's not the whole economy it's definitely not but this is what we are capable of doing uh just now uh so what we skipped is basically all of the revenues of uh centralized exchanges Consulting and like de payments which is also something that's uh attached to uh the Crypton native economy uh Dow paid salaries Dow treasuries that's also something comes from my interest from EF because I was looking into how much money it's actually needed for the core development to be secured uh and you can see some of my older talks uh which will give you a glimpse of like how much money there is

actually sitting in the ecosystem and how much um how much is needed to basically cover the entire core development uh we also didn't consider yields um uh from uh basic like blending even though we actually built a lending lending platform and uh something that we didn't include but won't include because we we don't think this actually right fit as Mining and token rewards so basically uh block rewards validated rewards uh which are from other source than actually user paid transaction fee um there are some other limitations which you can read in the report itself uh so basically all the numbers I'll be presenting are denominated US Dollars and because bunch of these fees were paid and these

different cryptocurrencies um uh the conversion is basically considered at the time of the transaction uh this also means that a lot of the data that you will see will be influenced by the price movements that you see on on macro level uh we also excluded some of the minor categories but it doesn't really matter as you will see a bit later so just a quick glimpse into the 2022 numbers because we did the report uh last year already so on l1's um the combined the combined let's say Revenue was uh 5.4 uh billion dollar 80% of that was if you remain net uh the DAP fees were around the same um bpark uh 5.98 billion dollars and the top 20 dabs um were

responsible for almost 90% of all of these fees uh majority uh nft marketplaces so basically that was the year where opy made over billion dollars just on people uh um YOLO into buying nfds and the other bigger cohort is uh the centralized exchanges mostly mostly Unis swell so this is the rough uh um split and again you can see this in the report itself so I won't stay on this slide uh now finally 2020 three numbers uh so um most people that I know of are kind of um more on the side of like us being as a as an industry being in the bull

market um which kind of sparked last year uh so we actually looked into like did anything change um between 2022 and 2023 uh can we say it was a it was a like bull market start or not uh so what has changed so we basically saw uh we basically saw uh September and October being kind of the bottom after afterwards like things sparked back um and the narratives kind of changed so what picked up was uh lsds liquid staking derivatives uh and l2s and the the narratives that kind of faded away not completely though uh were metaverse and nft so basically part of part of the reason is uh decreased demand part of

the reason is that there was this like Raised To Zero from all these nft marketplaces that basically cut the fees um what we added as well is uh looking back into 2022 and comparing these numbers across the board so finally l1s there is a slight drop 17% drop from uh 2022 $4.5 billion um um something changed though something significantly changeed is that uh ethereum wasn't um wasn't as powerful as the previous year so as you can see in uh September uh end of end of summer um ethereum was basically overtaken by all of these other L ons combined which I mean still means that ethereum plays a

major role in the ecosystem uh but something definitely changed there and we'll get into what that was a bit later um um so here's just the long-term comparison you can see that like 2021 2022 was definitely much much bigger year for for ethereum um mostly because the the nft hype uh which is kind of an interesting thing to say even uh also another thing which is quite important has changed uh which is good to good to be aware of of which is well bunch of l2s started when 23 um so this is just for uh for an anchor so you can see uh the the user base of ethereum was actually pretty stable despite the the the l2s that

picked up and um uh the fees uh the fees I mean it seems like it's not but the fees stays relatively stable throughout the year as well um now this is the important graph so this is these are the L2 L2 monthly transactions versus ethereum transactions so as uh as you see ethereum transactions stay stable uh l2s are picking up big time and basically surpass ethereum around February last year uh Bitcoin is another interesting interesting um phenomenon uh which even last year is like basically maintaining a stable base it's kind of past all of the Hypes there was definitely

definitely like a price hype or the the the hype that FS the price increase uh but otherwise the the user base is for stable um any guesses what happened in November last year why the why the fees picked up ordinals yeah so that's uh that's why nfts weren't actually that de uh and this was actually quite significant for uh Bitcoin as such um did I click the right button yeah this is just a okay yeah this is just so you can see the the user based off the theorem actually stays fairly stable um how we explain this is basically the move of users to l2s uh what was quite interesting is

looking at projects like Tron because they actually uh seem to be reporting um increasing us bases despite the the bare Market uh and increased fees as well and there seems to be an interesting traction um will be a subject for another report on its own I'm definitely not a not a person following Tron that much um um Bitcoin is basically uh kind of caught up with the rest of the ecosystem essentially thanks to ordinals um um again the user base has the most like rigid user base as it seems um another interesting project uh BNB chain also one of the ones that has uh the most users or at least that's that's what's reported uh the fees were

dropping and uh didn't caught up with the with the rest of the ecosystem so essentially um if your favorite chain isn't in this table I'm sorry but these were the only meaningful ones that is actually wor while to report on so um and you the the numbers here are basically the uh the user paid fees the user paid the revenues on these chains uh from uh different chains so it's essentially ethereum Tron Bitcoin B&B chain Avalanche polygon filecoin Sol uh from L1 ecosystems this doesn't touch the l2s you'll be actually quite interested interesting to see like how these L l2s would um play with this and uh anything below salana is basically another order

of magnitude lower so um yeah you can say well you know fees are super cheap there as well but well the reality is there actually aren't as many users either um so daps finally and uh I'll be slightly over time sorry about that we started late uh so DBS uh there was a bigger drop for 48% drop over uh 2022 uh $3.3 billion uh so if ethereum used to be the the chain from all of the l1s then Unis swap is the the Dex of dexes so you can see a graph uh comparing Unis swap versus all of the other Dex is combined um and these are these are the lp fees

so this was like mostly prior to the fact when uh Unis swap started charging fees um and again this is easier for you to actually look into the report and like find the tables with the with the numbers so we also don't have as much time uh liquid Staker fees uh so this is an area that was basically new but started having uh interesting interesting movements um started to mostly pick up towards the end of the year anything weird on this graph any hunches um Lio isn't there uh and the reason why Lio is wasn't in the graph because like if it was you wouldn't see anything this

basically it's like heavily occupied by Lio and this is like a 50x from all of the other lsds combined uh uh from last year uh the space has changed a lot already in this quarter so next next report will look quite differently um Landing platforms um despite despite the bare market like January February you could still see uh overall overall demand in using lending protocols and platforms towards the end of the year when the speculation picked up uh again a slight increase nft marketplaces again we mentioned the reasons uh mostly decline you can basically see the the 2022 compared to 2023 in this graph here

you can spot the peak uh basically getting to getting to around like $2 billion uh l2s are definitely in AA which will be interesting in the next in the next report and as you see already uh bunch of these l2s uh can basically compete with a whole bunch of the l1s uh so this definitely an area of interest uh yeah I think we're on time now so so again like uh this was this was just a teaser uh please go to Crypton native. pond. XYZ or I'll I'll I'll show you a link later on uh to read the entire report give us feedback what you like to see what you feel is wrong

even we we try to validate the numbers from two sources the main source is token terminal uh the other one I don't remember but it's listed in the sources um and uh please also mention like how do you wish this report evolved um so the 2024 numbers so far suggest that 2023 was the bottom for now um ethereum is migrating to l2s uh and the L2 space definitely is interesting it's not just the hype around it um the narratives have switched from the the metaverse and like nfds hype into the actual core infrastructure had a very interesting conversation in London a few weeks back with a guy from uh perol Labs

basically noticing that majority of the people around were actually working on infrastructure and uh like our own problems but not really like the consumer facing facing stuff which is another area uh which I'm sure is like discussed on other conferences as well um the user base although is fairly stable despite the price drops the difference largely is in in the USD denomination so like the the amount of fees actually kind of corresponds to the price drops um and yeah also as you saw from basically having these like top top ones or like the you can say like the the V take call situations with like Unis Swap and Lio and so on there still is a is a huge opportunity space uh some

of these things are very early and uh some of these races have started started are ongoing on especially on the L2 side uh but there's still a lot of eras where people can build interesting stuff uh special thanks to uh Victor this this french guy right here uh this is this is a this is a picture we took uh when we left KitKat in Berlin after nft berindo uh so you can see they wouldn't let us in dress like this I guess um and but he basically spent few hundred hours on on the report uh so thank you Victor even though you're not here uh and then finally uh if you wanted to learn more if you had to this link there is a link tree uh with links to the 2022 uh mid 2022 report or like mid 2023 report and

the final report and yeah you can follow us on uh at pwn now on either farcast or Twitter and if you want if already over time if you have any questions I'll be here for the three days at our booth uh so just feel free to come and and talk to me about this and uh yeah of course like I'm I'm expecting there will be a lot of people uh from like trefi here so if you don't think this is true just please talk to me convince me this isn't true I've I've lived through this so thank you everyone thank you so much Joseph [Applause]