I believe that by reading this title in this article, at the very least, you may have been a little frightened by this statement, since one of the things that I comment most about is that ether is one of the assets with the greatest asymmetry between potential return versus risk in the market.
That is true, however, I believe that in the coming years this vision will be quite different and perhaps that is the driver for the next major market cycle that I will explain in this text.
Applications vs Infrastructure
Today we live in a very interesting era in the market.
Most applications are in a highly competitive market with diverse incentive models (liquidity mining), low-scalability platforms, and diverse changes in the competitive landscape, with a market behaving through narratives, such as in 2020 when we look at DeFi or with NFTs in 2021.
This dynamic ultimately hinders the ability to project the growth of these projects, as well as understanding when these projects have or do not have good market value.
In addition, it makes it impossible to capture the value of new ecosystems that are emerging.
This is one of the many scenarios by which smart contract platforms such as Ethereum, Solana, Near, Avalanche, among others capture so much market value and as a result are today my main investment thesis, but this vision is beginning to change.
What the market was like and what it will be like
Increasingly, smart contract platforms are being optimized and becoming Ethereum Virtual Machine (EVM) compliant, in other words, at the current market moment, unlike 2021, applications are migrating to multiple platforms.
2020 Applications vs 2022 Applications
An obvious example of this process is Aave, the main lending application in the market, which was previously only present at ETH, is now integrated into more than six different ecosystems.
Where are we?
This is a sign that we are going through the moment of building crypto market infrastructure to consolidate a multichain model, at this moment we are in the phase of developing the scalability of smart contract platforms, bridge solutions between multiple ecosystems and oracles.
Time of the infrastructure application cycle
Once this is finalized, the smart procurement platforms will all be interconnected and more scalable, which will make the competitive dynamics between the application market clearer and lead to consolidation of that market.
In this phase, the brand and product construction of the applications will define their value and they will tend to capture market value more effectively and therefore tend to be more valuable assets than platforms like Ethereum.
As in today's technology market, where applications like Amazon and Facebook are more valuable than infrastructure companies like Cisco.
The people who know how to distinguish these moments of market cycle and take advantage of this dynamic, will be the ones who will get the best result within the crypto-asset market.
This is the challenge.
