Top Crypto Predictions to Watch Out for in 2023 | European Blockchain Convention

foreign looking forward to seeing you the ground is yours thank you very much we've got a tall order here I think most of the panels have talked about the future and their predictions for either this year or next year to some degree but it's um our role to have our entire session focused on pretending that we all have crystal balls or our actual oracles um but bear with us as we try to dig deep inside to see the future it's obviously very difficult to do in the crypto space um I guess we should introduce ourselves I'm I'm James Ryan I'm currently the head of marketing at a soon to launch um decentralized exchange called gamma X and I've been in the crypto space for I guess about five years starting with being the head of marketing um at the brave browser and their token project and a few exchanges in between before that I was a journalist um so we can go ahead hi I'm Sarah well I was working for a BMW for several years and I decided to leave like the the world the corporate world like only one year ago I started working for a VC base in Munich and we had made only three Investments this is why our this is how I professionally got into the blockchain space and since January so pretty new I got the managing director of blockchain Finance group and we are basically helping startups in the referee space to grow so we are Excel we are an accelerator incubator and yeah trying to find and build great startups hi um it's Chia great to be here I invested at penterra Capital uh we managed about 5 billion investing globally um C to series B uh I hope to focus a lot of the D5 infra web 2.5 side of things it used to be a fintech uh tried by fintech VC uh X rocket internet before that and have a legal background before that hey my name is Pierre I work as a as an investor Atlantis which is like an early stage crypto VC fund we're like focused on first money in pre-sheets it vertical agnostic we have 65 million dollars in their management and I also built off metrics which was like a web free fundraising that they said that got acquired by Missouri Last Summer and yeah that's it hi everyone so very happy to be here Alexis krikoran I'm the founder founding partner of node Gates uh briefly on me I used to be before joining The Marvelous World of blockchain Technology investment banker for close to a decade most advising on Merchant Acquisitions but also Capital raising for some of the world leading investment Banks and a couple of years ago got the crypto back very excited about discovering this new technology what I love in it really is the technology and all the applications Innovation is really my cradle and node Gates what we do it's a new Venture that I'm building together a business partner is really about being the partner for entrepreneurs and also investors in web 3 when who are looking to raise capital and the others who seek to invest into it there's a lot of you know uncertainty as to where the world is going to go so Crystal Ball I agree but I'd love to share some of the things I've seen already all right great well we'll start with the first since we have a lot of investors or I guess all investors on the panel we'll have some of our questions I think really focused at that community so starting off with you Alexis will investor sentiment improve or deteriorate in 2023 and uh two-part question what will be the biggest factors influencing which direction it's headed yeah thanks for the question um so in terms of inverse sentiment it's fair to say the year has started from a difficult footing certainly outside macroeconomic factors are not helping the industry itself is facing a crisis let's let's face it since last year's events investors are very careful all the investors I spoke to tell me they are having a lot of capital to deploy a lot of dry powder but they really don't want to invest in the wrong place and I think some of the world leading Venture Capital funds got their their fingers very burnt last year so they'll be disciplined however sentiment will definitely improve it will particularly improve as you start to see some of the builders who are building use cases real world assets as some people like to call it I think real asset based blockchain technology applications and here I'm talking about physical assets as well as intangible assets and you will also see the cryptocurrency markets it's interesting if you look at you know the the factors you mentioned right if you do a correlation between bitcoin price and amount of VC funding over the last couple of years you have almost a perfect curve right VCS have to a very large extent invested together with prices of underlying cryptocurrencies and they continue have this High correlation however this this switch from a speculative mindset that the hedge fund short-term liquidity opportunities and no tokenomics analysis investment this is slowly shifting towards more long-term investment opportunities so it will it will improve and this is this is also a matter of where the industry is going yeah you want to go and chime in yeah maybe to add a few a few things I personally think that like 2023 is going to be like like a blood path for the startups car system like broadly speaking and obviously crypto will follow like many startups raised like pretty big funding rounds in 2021 unlike insane terms and I mean if they have like two years in the running race pretty easy to do the math they will have to raise again this year but they will struggle uh so like good startups will do like flats or down rounds okay startups will die and like a very good status will probably raise like full-on funding rounds but that's going to be tricky um I also think as you said that um of course like PC fans I've uh dry powder to deploy but they will wait they will deploy over the last the next like three to four years instead of maybe one year so you basically divide this like dry powder by like three or four um and like many fans are also like struggling to raise like follow-on fans um because LPS are more careful and fans will be uh less big than what they they used to be so yeah there's gonna be a tough here I think we have to keep that in mind and I also think that found very soon as as much as they can uh to to face it so do people agree that that's we're either faced with some sort of bloodbath or I think mass extinction was another term that's being thrown out or is it you know maybe going to be more of a consolidation and some of these companies may be absorbed from others or in general does anyone comment on sort of the general environment what's going to happen with you some of these smaller mid-sized companies yeah well I mean some some thoughts that just came to my mind especially um on following up what um yeah sorry just said was um that for a startup it's not enough to convince one or two VCS or Angels you always have to have several and if like the VCS are like waiting for like maybe more stable environment it's super hard for the startups to really do the fundraising because like they they really have to convince several VCS and if one is hesitating maybe the other is as well so it's always the same I mean like in there one or two years ago it was exactly the other way around so the first we see started to invest and the other VCS followed super smart super fast sometimes and sometimes even too fast because we all know some of them didn't do the due diligence the proper way so and now it's the other way around so maybe you are talking to several ivcs and they are kind of okay maybe we invest but then they there's one or two hesitating and then the others might don't address as well so this is something just came to my mind and this makes things even more difficult but like the others already said there is from my point of view there's still a lot of money in the market and at a certain point the money has to go somewhere and I was just thinking about um if people start investing again because at the moment we have in the housing market in the shares everywhere we have like every everything just crashed down and now we have like everything is going sidewards but at a certain point of time I guess if macro environment gets more stable Etc there will be certain point where we start investing again and then people might think about what has the highest upside potential and if you then think about this so crypto blockchain everything around web3 space it has the highest potential I mean of course there are a lot of risks involved as well but nevertheless I think the potential is way higher than for example in the housing market and this is why I think as long as startups can survive the next month and we all don't know how long the next months will be but if they are able to survive some more months there might be great chances to get funding afterwards so so assuming that most of us agree that there is money available that would be heading into the crypto or blockchain space web three like what are some of the specific areas um that even in sort of maybe a a little bit um nervous markets still are going to make make sense kind of growth areas or areas that are on the horizon for this next year young dude you haven't do you have any thoughts on that or do you have any thoughts on that yeah yeah um I think one thesis that we've uh followed I think pretty strongly is that um there's a huge opportunity set to be made right now a lot of the incumbent players that have existed um and dominated the space of the past two three years have to a large extent a lot of them have blown up all suffered a lot of losses and so a lot of the incumbent players that we see um you know all are not necessarily in the best position to continue being a market leader we've seen that across um all set quite a lot of sectors and so while two three years ago uh maybe a year and a half ago I might say hey this sector's you know extremely hot extremely difficult um plenty of well-capitalized players in the space um I I think the opportunity set emerges to kind of take them down especially with all the kind of events that have happened over the past year and so you know we really look across the entire Spectrum from Basic things like custody from Basic things like some of the institutional Enterprise players out there um I think there's a lot of that has existed that remains kind of new Open Spaces in terms of kind of emerging spaces you know I think uh it's very fairly standard narratives that that you see out there that do make sense we've been spending a lot of time um account again around real world asset yields um a lot of time around what some of the new emerging consumer Trends can look like um in the depth of this market and so pretty excited about some of those uh infrastructure players that are being built that we funded over the past three months so what about um I know one area of interest that I think you had um was in the in the environmental Arena and there's obviously a lot of capital going in in the traditional space um you know from alternative energy sources to electric cars um and I know you know Carbon capture you know potentially one area where the blockchain can can have some impact do we feel that that's something that's going to maybe emerge or grow this year so well what what I think that might be important for the next year or I can see many startups starting to build in that area is the refi space you just mentioned the environmental aspect and what I personally like a lot about the refi space is like you have people uh you have people from the financial markets but you have also a lot of people coming that really want to build something in in the way that saves our planet I mean so um and I really like so Charles hoskinson the founder of cardano he once said and I I can't I kind of have to rephrase it but he says like the the goal is to put the greed of people together with um some some positive outcomes and I think this is something really amazing and I think this really works in the refi space because people want to earn money but people want to build something that helps the environment and the planet to you to be safe and to survive and this is what I really what I see and I think it's going to be super important um at the moment many things focus on the carbon space those CO2 topics so this is for me what I see at the moment the biggest space in the refi space but I think there will be many more use cases coming within 2023 and yeah maybe one fact like the carbon Market will be around 50 billion by 2030 because over 2000 companies made like a net zero pledge and if they really stick to that pledge uh it's the voluntary carbon Market by the way and so if they really stick to the applied there will be a lot of involvement in that space and I think uh this is one of the things I see for for the next years and I think not only for 2023 but maybe a little uh on the long run prj yeah on the reef on the revised sites I think the like the the definition of the refi space has been like too narrow lately but I think this is because we like the like the needed infrastructure so so far as you said it has mostly been like putting basically uh carbon credits on chain which makes sense but I don't think that's the only way to solve the the climate change and I think that though like many challenges in terms of like credits verification standardization that's why most of the companies in the space so far I've not been like very successful let's be honest because we like the the underlying layer um but um yeah it's something which I used to be like very odds uh maybe like a year ago but it's definitely something we should like all uh keep an eye on and then flipping this around um from the startup perspective and I'm sure there's plenty of people on the audience that are are here looking for for investors or VCS to meet with from a startup perspective I mean what do young companies have to do differently in the current environment to attract your attention or to you know to earn the you know the investment interest I I do speak with these startups almost every day so um I would first of all accept the fact that the environment is difficult and that it is not going to be an easy journey to raise Capital it's never easy but right now people have to accept it takes longer and you need to have more due diligence made into your company so first have these expectations to start with that's an important important thing I I remind people the second is really around the use case whereas people before in the in the bull run period were investing into tokenomics mostly when they also took a native token project or in quick return opportunities you now have to identify what is the market that you're going to penetrate and how will you execute on the planet to generate the user adoption and then the review news and the returns the investor is expecting to have so first think about how much money am I going to make rather than which type of instruments I could use to raise Capital the last thing I would say is there are many different types of investors like of course I'm very lucky to be next to a very prominent you know a venture capital funds and don't only think about Venture Capital there's different kinds of ways companies in outside the world of web free get cash um I'm not going to expand into that but think about no the the various options that you have to run through to the earlier point on are you gonna make it until the market gets better people have to start getting creative you you will probably not make it if you just bump your head at the closed door of a VC fund and therefore it is keep it a bit tighter probably the the cash burn has to be reduced dramatically that's another Point sorry I'm a bit long many many teams have expanded rapidly to develop a great product that doesn't yet have the traction it needs but you're not going to get the capital today so in one way or another you have to limit and extend the runway and limit the cash burn I would say these are some of the things at least I discussed with entrepreneurs I speak to almost yeah every week maybe I can add just one little Point um so you have to adapt and pivot a startup quite often and you have to be really flexible I guess if you now realize that there is no like 100 Market fit but people are like they really they are not really into your product then you have to change and pivot even a lot faster I guess so this is something I I think is super important as well to to survive that phase and to really listen to what the advice is or maybe the the receipts tell you to to to change to adapt any any other advice for young startups yeah maybe like very very simply I just think that founder should build things that actually matter and that people want to use because when you look at let's be honest when you look at the June analytics dashboards for even like top protocols like the traction is always very tiny um so obviously we're still early but uh I think we have to be like very pragmatic and just identify what we need in the space to make it like move moving forward that's very simple but I think that many Founders tend to to to forget that so I think um you know it's natural at a conference um occurring right now that uh you know there's been talking on almost any session about sort of a post FTX environment um and it's you know a lot of it's been about um you know the added regulation that's coming in or or or people are looking for that to happen so I guess my question would be um you know how How would how how will regulation affect the environment but also maybe talk about maybe some opportunities um that this new kind of post FTX environment would would offer for entrepreneurs I'm happy to take I won't be too long but certainly uh if you follow the news you you hear a lot about what's going with the ACC the United States um it's just one case right and there are other geographies around the planet that are also looking at regulating the space there are other cases than that one regulation will come this is not is it is not a barrel that will be won in kind of way of the good versus the evil regulation is coming why because they are the policemen of financial markets they have a role they are paid literally to protect consumers so they will try always to find ways of protecting them um the weather is uh where there is a real in window of opportunity here is for every business that is safely in their business model and the way it's been built in an area that doesn't enter a potential kind of shady area or unregulated part of the world of Finance um all the all the players which are going to be regulated are going to suffer in the short term and they're going to have to adapt their business models to all your point on pivoting they will have to adapt those which are not yet there and have and built up purely in the future regulated space will struggle even more uh but there's lots of things that won't be regulated so you don't necessarily have to build a business that will be a security necessarily and that goes back to the earlier point so build a business that has a use case that is really useful and then think about the instruments that are attached to it to to grow it and maybe to add another thought um so crypto and blockchain is like the normally in in many markets uh the retail investors are second so they follow what the institutionals and what the banks and that huge markets are doing and the retail investors are following later and for crypto it's the other way around so the retail investors have been first in have been working in that space and investing and doing everything around it yeah in the market basically and so now the the retail in sorry the institutionals need to follow and I think regulation is the only option that the institutionals will be able to follow so I don't want to say whether it's good or bad or whatever so I'm I'm yeah but I think it's necessary to to open up the market for them yeah I also think that the FTX collapse is actually a good thing for um D5 because as we also um like defile ending Solutions decentralized exchanges just like kept working as expected and uh that's pretty powerful so I think that more and more companies will actually put as many things as they can like on chain um and just like build real transparent businesses it's interesting I was on a panel earlier where the sentiment was overwhelmingly against government regulation and in a sense that the industry can and should um you know self-police um I personally think there should be you know partnership and that's what we need but in general does the invest investor Community welcome more regulation or or fear it as many entrepreneurs do or are you neutral on it I think regulation is a tool um I I don't know if anyone here in the room will comfortably say that crypto as an industry has not harmed consumers or any consumer and I think that if you can't say that with confidence then we need to be thinking more carefully about Market structures to protect consumers from harm and if you can't do that then uh we will have regulations to post upon us again for the good of the market and so while I do think we need to accelerate a lot of Market structures that protect consumers we haven't really done a good job as evidenced by everything that's happened and I don't even need to point to specific things so I think it's pretty self-evident there and so I think you know if we take one huge step back uh fundamentally and slightly biased because I spent many years investing in traditional fintech but fintech is extremely crypto is for me a subset a very different world but still fundamentally a subset of fintech and fintech is incredibly complicated and so to your earlier question about how do we think about right relations in the space I think that the ba not just on product Market fit to successfully build Adventure back company has increased because of constraints of capital the bar for your knowledge of regulatory issues has also increased unfortunately imposed by the by the market so I think it's not just a measure of oh you know I I can hustle really really hard and do this but unfortunately the minimum standard of regulatory awareness and how to navigate these situations such as fundamental increase to at a point which is you know not something I think most people can wing it um and so I think that that level of awareness that hey the bar actually is now you know I won't say hi but like much higher than before I think that's something that found something to be aware of um and that's something you planned for right unfortunately lawyers cost a lot of money um and unfortunately a lot of uh what's been going on I wouldn't say there's a terrible level of opaqueness I think there's actually quite a fair amount of certainty in terms of things that you cannot do and I think that those are some of the things that if you're a early stage founder you need to work around so before we open up I think we have a couple minutes before we open up to questions but I wanted to do some kind of change it up and do just a quick a quick read on a few things for example if I asked um do you think that the you know ftc's enforcement unit budget is going to go up or down this year I think we'd all say up um so just with a quick thumbs up um thumbs neutral thumbs down on some things in the blockchain space so nfts for 20 2023 are we're going to see upswing downswing neutral quick okay so we got two neutrals and three thumbs up and and why why is it a thumbs up for you I think the space will hopefully get out of um being only um compared with some pictures because there's so much more behind the technology and I think we in 2023 we will be able to um yeah involve evolve in that space that it's more than only pictures um defy lending and borrowing platforms so someone who has a thumbs up what's where do you think the big opportunity there is you we already can see it frankly um it's it's no it's nowhere kind of forecast uh frankly um centralized Finance is suffering it's moving away to decentralized finance decentralization is the underlying use case of Bitcoin to start with the the there is a trend towards it and I think the the protocols also are attracting lots of talent and money and naturally it's a it's a virtuous virtue Circle in there and so I'm up for that all right so in terms of let's see how optimistic we are um and since it's so critical to the investment culture Bitcoin at 30k we got two two abstains and two F's yeah nobody knows ethereum ethereum at 2K I'm not legally allowed [Laughter] all right um all right we've got a few minutes left for questions yeah come on to your chance here some important people up here on stage [Music] hello uh I would like to ask uh what is the secret uh source so what we'll attract you on a startup the most like what should have uh founder or what kind of project uh so are you willing to invest I mean at what stage like early stage yeah I mean I think it's like pretty straightforward I think it's the earliest stage is basically like a bet on the team um the idea the markets um yeah I think that's just like a simple as that in the crypto space because of compatibility it's pretty easy to build like a startup because we can like Fork could but you have to build something really Innovative that can that can build like real modes against like potential competitors but I think like I mean we we at like this we mostly do like pre-seat funding rounds and it's always about the team primarily yeah maybe to add one thought it's the team team and the second thing is of course the product and especially sometimes in the crypto space you have to take care that you're not too early even that can happen and sometimes it's like if if the product is just too early in the market it's not that far it might be problem as well but team is always first especially the in the yeah pre-seat uh super early stage uh how did you value um the difference between digital platforms that can bring massive web free onboarding but let's say low Tech versus deep tech companies like as a balance for investment uh I write focus a lot infra which I'll classify asleep Tech here for the purposes of this conversation um again I think it boils down to pmf right pmf is just easier to measure for Consumer players because you can point to user adoption etc etc pmf for infrastructure players again it's just talking to developers having a good understanding of you know historical problem set how it's developed and why this piece of technology as a role to play moving forward anybody else yes a question here hi um what is your opinion on governance of decentralized infrastructure platforms and its influence from the VC point of view yeah I think obviously we should avoid like conflicts of interests uh I guess you refer to what happened with the Unis proposal to deploy on on the BNB chain with a16 but I don't think that's uh all about what VCS do it's more about like I think that decentralized governance system is currently completely like broken and just doesn't work just have to look at the participation or rates they're like very low and nobody cares um so yeah I think we have to to rebuild the whole thing from scratch I don't have like the the secretes in mind but I just don't think that's that currently works and honestly that's very hard to implement and I also think that early stage style types should not be focused on like decentralizing their governance because that will like um slower the processes and that just like doesn't make any sense to me all right all right nice to meet you I'm Dave um sort of an expansion onto the first question Pierre you mentioned that um one of the important things of an early stage is the team so as a I'm currently a university student is there any advice you would give to us to sort of like position ourselves well into like being a good team member maybe a leader into um like the startup space especially with blockchain and then I guess sort of into that like things that we should sort of research into or like learn more about to better prepare ourselves I'm going to I'm gonna I'm maybe the only like serial entrepreneur up here because I've started my own companies and worked on a million startups and um have mentored interns and kids right out of college and I and I know this was the case with me just like be willing to do whatever asked of you and to be flexible you know startups um need people who are are proactive and um you know take the initiative um but and it's again I don't want to be like a whole generational thing but I do find with younger people they want to have like a relationship with the CEO from the beginning and be doing like really sort of high level stuff but it's typically not what Young companies need they need someone who's going to be a team player who's going to be a utility infielder willing to do a lot of different things and and give yourself like a diverse set of skills because again startups need people who can be slotted in and be able to Pivot in in in and really not sort of single-mindedly focused but but have like a variety of skills I think that will make you super useful to a young company yeah maybe I can add to that because uh you know I studied a corporate career in Investment Banking in in very very gigantic investment Banks and they moved to startups and now found my own right so I've I made the switch um if I were to talk to myself you know 15 15 years ago I would say go for what you feel strongly about you want to try don't be scared about the fact that you need to prove yourself to whomever um in the end you can try many different things and sometimes the safe path is the best for some people but for some others it is not and the point on how you need to be for different you can be different kind of people in different settings I'm a vastly different person now than from I was you know a junior at Goldman Sachs before a very different person and nothing to do anymore so you can you can change and also it's maturation maybe you can start as a you can start you know in a certain way in a certain field and then you just see certain things that don't really quite work out the way you want and then move to the to the to the other things so um yeah be brave yeah be brave all right maybe time for one more question maybe I can ask yeah yeah thank you very much Dimitri from Berlin so uh when we are talking about predictions and uh since we are talking about predictions I have a question it's really hard to get in Focus some new Mega Trends but what I was curious about like recently I went to Google Play Market and just write lightning and I see at least 20 applications from lightning Network and Bitcoin so that allowed to make Nano payments and which is really for me a vibrant topic since it also talks about financial inclusion and so on and what what do you think about it what do you think about Nano payments what do you think about lightning Network and maybe what do you think about nostril protocol is there some future or maybe not in 2023 maybe later thanks I know you may have stamped us with that question I think I think our times have been anyways so but but thanks for for sharing that all right thank you a round of applause thank you [Music]