1conformation founder: I am strongly optimistic about three crypto themes

On August 24, 2024, Nick Tomaino, founder of crypto VC 1confirmation, released Q2 LP letters on X.

Nick Tomaino said that 2024 has been a very interesting year in the cryptocurrency field so far. Bitcoin and Ethereum ETFs have permanently embedded cryptocurrencies into Wall Street, and both the Democratic and Republican parties in the United States have realized that anti-cryptocurrency is not feasible, and these developments have far exceeded their greatest expectations.

He also expressed his strongest three crypto themes: 1. Ethereum's market value will surpass Bitcoin's market value in the next five years; 2. The prediction market will become a breakthrough use case in 2024 and will grow 100 times in the next few years; 3. DeFi and NFT will return with a stronger attitude, and SocialFi and other new use cases that are unimaginable today will appear through application chains, L2 and L3s.

Full text as follows:

2024 has been a very interesting year in the cryptocurrency space so far.

Bitcoin and Ethereum ETFs have permanently embedded cryptocurrencies into Wall Street; Bitcoin ETFs have total assets under management (AUM) of $788+ billion and Ethereum ETFs have total assets under management (AUM) of $88+ billion.

The Biden administration’s anti-crypto stance has been completely rejected by the American public and both parties, and now both sides recognize that anti-cryptocurrency is not working. Cryptocurrency companies have donated $119 million to political candidates in this election (48% of total donations from US companies).

These developments have exceeded my wildest expectations when I started at Coinbase 12 years ago.

At the same time, one could argue that there haven’t been any interesting new use cases emerging recently. Many of the concepts that have driven crypto, like memecoins on Solana and NFTs on Bitcoin, are re-inventions of DeFi and NFTs that first emerged on Ethereum a few years ago. These recycled ideas, while appealing to existing users and capital, have failed to bring in many new users. The most important question every crypto investor must ask right now is: Which new products will ultimately attract 1 billion+ users to crypto?

Our core belief remains that authenticity will win, and it will continue to focus on teams that are driving the industry forward by enabling new and unique consumer behaviors.

Here are our strongest crypto themes today:

Ethereum will surpass Bitcoin in market cap in the next 5 years. Bitcoin’s market cap is around $1.2 trillion today, about 4x Ethereum’s ($321 billion). I believe both will continue to grow, but Ethereum will eventually surpass Bitcoin. The reason is simple. Bitcoin has become digital gold that institutions are buying and is the most influential blockchain of the past 5 years, but Ethereum is still not fully understood. Ethereum is the on-chain decentralized internet that the world’s most talented developers are building, and Ethereum is the digital oil that powers it. Ethereum is scarce, highly profitable, and useful. And because its market cap is much smaller than Bitcoin right now, Wall Street will be able to buy a lot more Ethereum. They will do so, and they will actively promote the Ethereum narrative to become mainstream around the world in the coming years.

Prediction markets will be the breakout use case of 2024 and will grow 100x in the next few years. PolyMarket is the product that really stood out this year. It is the first crypto product that people use every day (for information) without knowing it is crypto. PolyMarket has reached $11+ billion in total volume and is continuing to grow this year. Without stablecoins on Ethereum, PolyMarket with a volume of $11+ billion simply would not be possible. After the November election, I believe news, culture, and sports markets will become larger categories. Prediction markets are a great fit for any place where there is an official media narrative and people disagree, and the market is expected to grow 100x.

DeFiandNFTwill return stronger than ever,SocialFiand other new use cases that are hard to imagine todaywill emerge throughAppChains,L2andL3s.Non-custodial products that don’t require trusting third parties will continue to grow.