On August 24, 2024, Nick Tomaino, founder of crypto VC 1confirmation, published the Q2 LP letter 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. These developments have far exceeded their greatest expectations.
He also expressed his three strongest 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 posture, and SocialFi and other new use cases that are unimaginable today will emerge through application chains, L2 and L3s.
The full text is 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; total assets under management (AUM) for Bitcoin ETFs has reached $78.8 billion, and for Ethereum it’s $8.8 billion.
The Biden administration’s anti-crypto stance has been completely rejected by the American people and both parties, and now both sides have realized that anti-cryptocurrency is not feasible. Cryptocurrency companies have donated $119 million to political candidates in this election (accounting for 48% of total donations from US companies).
These developments have exceeded my wildest expectations when I started working at Coinbase 12 years ago.
At the same time, one could argue that no interesting new use cases have emerged recently. Many of the concepts that have driven cryptocurrencies, such as memecoins on Solana and NFTs on Bitcoin, are re-emergence of DeFi and NFTs that first appeared on Ethereum a few years ago. These recycled ideas, while appealing to existing users and capital, fail 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 the teams that are driving the industry forward by enabling new and unique consumer behaviors.
Here are our most bullish cryptocurrency themes today:
Ethereum will surpass Bitcoin in market cap in the next 5 years . Bitcoin is worth about $1.2 trillion today, about 4 times Ethereum’s market cap ($321 billion). I believe both will continue to grow, but Ethereum will eventually surpass Bitcoin. The reason is simple. Bitcoin has become digital gold bought by institutions and is the most influential blockchain in the past 5 years, but Ethereum is still not fully understood. Ethereum is the decentralized internet on the chain that the world’s most talented developers are building, and Ethereum is the digital oil that powers it. Ethereum is scarce, profitable, and useful. And because its market cap is now much smaller than Bitcoin, Wall Street will be able to buy more Ethereum. They will do so, and they will actively promote the Ethereum narrative to become mainstream around the world in the next few years.
Prediction markets will be the breakout use case of 2024 and will grow 100x in the next few years . PolyMarket is a 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 continues to grow this year. Without stablecoins on Ethereum, PolyMarket with $11+ billion in volume 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 anywhere there is an official media narrative and people disagree, the market is expected to grow 100x.
DeFi and NFTs will return stronger, and SocialFi and other new use cases that are unimaginable today will emerge through Lisks, L2s, and L3s . Non-custodial products that do not require trusting third parties will continue to grow. Lisks, L2s like Base, and Lisk-specific L3s will bring scalability and improved user experience, with crypto as the ultimate growth target. L1 tribalism will fade, and good developers will build where they can capture the most value and have the most control.
