Layer 1/Layer 2

Based on Ethereum ecology, to improve performance within the limit of "Impossible Triangle", the current path has been clear. The first is layer1, that is, other public chains share the data pressure of Ethereum.

One of the main trends in 2021 is the increase in the use of many layer 1. This field is currently dominated by Solana, avalanche, Terra and binance smart chain. Each chain has a growing ecosystem with a value of more than $10 billion.

The second is layer2, which is based on the Ethereum main network, but transfers the settlement to the layer 2 network to improve efficiency. This is also the direction that Ethereum is working on. Layer2 is often called rollups because they "summarize" or bundle transactions before sending updated transaction data back to Ethereum and execute them in a new environment.

As for the most critical data verification link of blockchain, layer2 currently has two technical solutions, one is called "optimal rollups" and the other is called "ZK rollups". Both technical routes have teams developing corresponding networks and ecological support, such as arbitrum of "optimal rollups" and dydx of "ZK rollups".

Between layer1 and layer2, there is another scheme called "side chain", which is partially compatible with Ethereum main network, but does not belong to layer2. They are specially used to deal with the excess capacity of Ethereum, rather than compete with the whole Ethereum, and host Ethereum applications in a complementary manner.

In 2021, a side chain named "polygon" attracted people's attention. At present, polygon's side chain is an industry leader with a value of nearly $5 billion. Its ecology has deployed more than 100 defi and game applications, including the most mainstream AAVE and sushiswap.

Cross chain bridge

Starting from the most active users of defi, according to the statistics of defi Lama, the lock up volume of defi on Ethereum has exceeded US $100 billion, and other public chains such as BSC, Solana and avalanche have also attracted nearly US $49 billion, becoming a very active financial scene.

Although many public chains have large-scale data, different chains are like data islands, and assets on different chains cannot be freely exchanged. In addition, many emerging public chains are not as developed as Ethereum and lack many infrastructure, such as stability currency, NFT games and so on.

Therefore, assets in other chains need to be introduced into their own public chains through cross chains. In the current common cross chain methods, in addition to cross chain withdrawal in centralized institutions such as exchange wallets, the most common is various decentralized cross chain asset bridges.

For the cross chain bridge, the most important issue is how to reach a consensus, which is largely related to the safety of investors' managed assets. At present, the cross chain bridge of centralized exchange is the most convenient cross chain bridge for users, but the cross chain bridge of centralized exchange has the problem of single point of failure, In addition, the current cross chain bridge is still gradually developing in the direction of unmanaged, in order to further ensure the asset security of users.

DAO

The full name of Dao is "decentralized autonomous organization", i.e. "decentralized autonomous organization", which is an organizational form trying to get rid of the traditional bureaucratic management mode and complete independent operation with blockchain technology.

Decentralized autonomous organizations (DAO) can use blockchain based governance to achieve individual global coordination. Dao can be used for many purposes, including managing the operation and capital of blockchain projects (makerdao), managing the investment capital (the Lao), managing the use of game assets (YGG Dao), coordinating friends with benefits, or coordinating the purchase of assets (constitution Dao).

The number of Daos included in deepdao website has reached 187, with total assets under management of more than 12 billion US dollars and more than 1.6 million members. Although in the blockchain field, this is not a huge data. However, institutions including Sequoia Capital began to pay attention to this new term.

Encrypted VC transformation

The market value of cryptocurrency officially exceeded US $2 trillion in 2021 and has now reached US $2.5 trillion, an increase of 175% over the beginning of the year. With the explosive growth of market value, the financing in the field of encryption is also rising rapidly. According to statistics, in 2021, the encryption industry publicly disclosed 1529 primary market financing, with a total amount of about US $32.6 billion, a year-on-year increase of 814.2%.

However, equity financing in the field of encryption is different from other fields. Under the "vie" framework, the main capital exit channel of traditional VC is for enterprises to land in the secondary market for IPO. However, the blockchain field comes with a new financing mode ICO (prohibited in China). The key difference of this decentralized financing mode is that users can participate in the growth of the community at an earlier stage. Under the traditional venture capital mode, ordinary investors have the opportunity to share the growth dividend of the enterprise only after landing in the secondary market.

In the field of encryption, firstly, the concept of "company" has been weakened. Due to the existence of "Web3" and "Dao", communities and organizations are more mentioned. Users naturally have a sense of distrust of the centralized platform.

The hottest project in the encryption community in the past two weeks is called "opendao", which is a project imitating the head NFT trading platform "opensea". The reason why the project can be hot comes from the dissatisfaction of encryption players with "opensea". Recently, it has been reported that a new round of financing is being carried out and IPO is being prepared. The idea of "openda" is not the same as that of the current "opensea" platform, but it is not the same as that of "openda" users.

At the end of 2021, there was a debate on "Web3" in the encryption community, including Elon Musk, chairman of Tesla, and Jack Dorsey, former CEO of twitter. During the debate, they pointed the contradiction to the venture capital institutions in encryption finance and believed that VC had seized too many interests.

In 2021, an investment institution in the form of "Dao" also appeared. This organization includes highly influential and deep-rooted investors in the technology field in the community, and the performance of the projects they incubate even exceeds the achievements of some traditional VC.