Decentralized domain names on Ethereum Name Service, MEV-based business models, and generative art could all be hot topics in 2023, according to Richard Chen, general partner at 1confirmation.
Chen has shared with the community three of his predictions for the crypto industry in 2023.
Cryptocurrency-focused investment firm's general partner bets on decentralized identity via Ethereum domain name service, Ethereum Name Service (ENS), as one of the main trends that will dominate the crypto and blockchain industry this year.
In addition, Chen noted that decentralized applications and wallets could develop a new business model based on MEV (Maximal Extractable Value) and that generative art on the blockchain will become one of the key stores of value for high net worth individuals.
As is tradition, Chen shares with the crypto community a series of three annual predictions based on underrated industry products.
Predictions for the crypto industry this 2023
Ethereum Name Service (ENS)
Ethereum's domain name service, ENS, is one of the projects that has gained the most prominence in the cryptocurrency industry. Currently, ENS has the largest user base of any NFT project. The figures revealed by the project through Twitter show that more than 2,2 million users registered for ENS in 2022. In addition to this, Chen noted that ENS was the tenth most called smart contract on Ethereum in the past year.
Ethereum Name Service provides the infrastructure needed to build Web3 services and to construct a fully decentralized sovereign digital identity on the blockchain. Therefore, in the same way as other NFT projects have done, ENS will also help users and projects build loyal communities, the expert said.
Data from Dune Analytics shows that the ENSvision domain name marketplace has become the leading verticalized marketplace for decentralized names, even more so than the industry’s largest NFT marketplace Opensea. Chen sees this as a bullish sign for ENS in 2023.
Source: Dune Analytics
MEV business model for DApps
As for the Maximum Extractable Value (MEV) strategy, Chen believes that this year projects and users will begin to come up with new ways to directly capture these profits and distribute them fairly among users and projects, he said.
As a prediction, Chen points out that MEV could be the reason for decentralized applications or DApps to consider migrating to their own blockchains, in order to control the sequencer or order of transactions and give rise to a new form of revenue. The expert indicated that controlling the sequencer creates “a new business model for DApps because MEV seekers pay DApps for the right to order transactions in a certain way to do their frontrunning or backrunning.”
The MEV business model also applies to wallets, which could create their own private mempools for user transactions.
While MEV is widely regarded as a threat to the Ethereum network, Chen believes that thinking that MEV is entirely a problem for the network is a mistake and that several of its features are critical to maintaining a healthy DeFi ecosystem.
Generative art
Generative art, created from blockchain-based autonomous systems, represents a paradigm shift in the traditional art world.
Chen explains that this artistic modality is the new frontier of art, as it enables artists who believe in the future potential of NFTs to create higher quality artworks, build a passionate community of collectors, and establish a new store of value.
While most NFT art projects currently in existence create new products to increase their appeal and utility, Chen noted that this is often the wrong approach, as as long as external dependencies are introduced, projects will have to continue building new products to reward their holders and not lose value.
Currently, the market capitalization of the blockchain art market is $1.700 billion, according to data from the Cryptoart platform, so there is tremendous growth potential for this market in the future. In a few decades, art historians will look back and will define generative art as a new era, just as they did with the Renaissance and other artistic movements of the past.
Continue reading: The Metaverse and Web3 will be the main technological trends that we will see in 2023, according to ESET
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