Ethereum
Where crypto angel investors should deploy capital after Ethereum ETF approval
The following is a guest post from Tim Haldorsson, CEO of Lunar Strategy.
In nine short years, Ethereum has evolved from being a pioneer of on-chain smart contracts and programmable cryptography to becoming the backbone of decentralized finance and blockchain infrastructure. The SEC’s recent approval of ETH ETFs is just a single step in this journey, although it is an important one that has solidified Ethereum’s status as a worthy mature asset class a serious investment.
This opinion piece will highlight the most promising sectors of the Ethereum ecosystem that I believe angel investors should closely monitor to take advantage of this economic momentum.
Layer 2 decentralized finance (DeFi)
Ethereum paved the way for the birth of decentralized on-chain markets, planting the seeds that blossomed a global DeFi sector with a market capitalization of $104.55 billion. DeFi is a complex rabbit hole filled with unique financial mechanisms unparalleled in traditional finance. However, they rely on the security, speed and decentralization offered by Ethereum smart contracts. Layer 2 networks like Base, Arbitration, and zkSync emerged to solve Ethereum’s scalability issues, reducing usage costs and increasing transaction speeds without sacrificing privacy or security. These improvements make Ethereum’s technology more accessible and perfect for DeFi activities.
In the DeFi space, projects such as lending and borrowing platforms, futures and perpetual trading platforms, token seeding and launch platforms, as well as centralized and decentralized exchanges have emerged. proved extremely successful. Even back when ETH was only attracting the attention of a small niche of market participants, these technologies were being transformed into a myriad of business models that were proving real demand for DeFi solutions at scale. Some of the leading DeFi protocols have even reached multi-billion dollar valuations, highlighting the strength of this sector.
As Ethereum becomes a recognized commodity, DeFi’s future growth potential becomes even more certain, making it a lucrative area for angel investors to deploy capital.
Artificial intelligence
Artificial intelligence is one of the most important technologies of our time, comparable to the impact of blockchain technology. The world needs AI technologies that are reliable and free from centralized control.
Blockchain enables secure, private, decentralized frameworks for AI services, essential to preventing monopolies over scarce computing resources and providing broader access to decentralized machine learning networks. By leveraging the Ethereum blockchain for AI projects, developers are already creating AI services that remain secure and decentralized.
This intersection of AI and blockchain provides an attractive playing field for investment as demand for decentralized and secure AI solutions continues to rise. AI projects built on Ethereum have already reached market caps in the billions of dollars, showing discerning observers that it is a powder keg of explosive growth. The recent approval of ETH ETFs could be the spark that ignites the next stage of expansion this sector is ready for.
Decentralized Physical Infrastructure (DePIN)
Of pine is one of the exciting blockchain-dependent sectors that have emerged through the miracle of smart contracts. In a nutshell, it merges physical infrastructure with digital networks of decentralized participants and facilitates the global exchange of limited but in-demand resources such as sensors, data storage or wireless connectivity in exchange for cryptographic tokens.
DePINs provide decentralized governance, peer-to-peer infrastructure sharing, tokenization, and enhanced security and privacy for traditional and digital industries.
As the demand for DePIN increases, the market for these resources will also increase, leading to token appreciation and market expansion. Ethereum powers the smart contracts that execute these DePINs, making it a crucial part of this ecosystem. With the recent approval of ETH ETFs, more angel investors will likely turn to DePINs, recognizing their high return potential and significant real-world impact.
ETH takeover
Staking is a fundamental aspect of securing decentralized networks like Ethereum through economic game theory. Validators, who manage the nodes powering the blockchain, are required to stake ETH. If they follow the rules, they earn rewards; if they try to cheat, they lose their staked ETH. Currently, over $100 billion worth of ETH is at stake— this shows how important this mechanism is for the functioning of blockchain networks.
Resttaking takes this concept further by applying the same game theory to secure any protocol on the blockchain. This allows small participants to maintain high levels of security through proof-of-stake mechanisms that would otherwise be inaccessible. Rollback helps create a more resilient network for multiple protocols, making it prohibitive to attack a single participant within the larger proof-of-stake pool.
Liquid restake services further simplify the process for those looking to stake tokens without managing complex validators. These services issue liquid restoration tokens, which accumulate the yield and interest of validator rewards and can be traded or re-staked to generate additional rewards. The growth of this sector highlights its importance as a pillar of blockchain security, making it a hot area for angel investors.
Conclusion
The approval of ETH ETFs has made Ethereum one of the leading investment vehicles. The Ethereum ecosystem offers many exciting opportunities for angel investors, from Layer 2 DeFi and AI integration to DePINs and retaking.
It is important to study these sectors and understand both their key narratives and their growth catalysts. This way, investors can deploy smart capital while contributing to the growth of Ethereum.