<img src="https://cryptoslate.com/wp-content/uploads/2024/05/angel-investor-ethereum.jpg” />
The following is a guest post by Tim Haldorsson, CEO of Lunar Strategy.
In nine short years, ethereum has gone from pioneering on-chain smart contracts and programmable cryptocurrencies to becoming the backbone of decentralized finance and blockchain infrastructure. The recent SEC approval of eth ETFs is just one step on this journey, although it is an important milestone that has solidified ethereum's status as a mature asset class worthy of serious investment consideration.
This opinion piece will highlight the most promising sectors within the ethereum ecosystem that I believe angel investors should watch closely 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 have flourished crypto/#:~:text=The%20Decentralized%20Finance%20(DeFi)%20market,a%20%2B0.03%25%20daily%20change.”>a global DeFi sector with a market capitalization of $104.55 billion. DeFi is a complex rabbit hole full of unique financial mechanisms that are unparalleled in traditional finance. However, they rely on the security, speed and decentralization that ethereum smart contracts offer. Layer 2 networks like Base, Arbitrum, and zkSync have emerged to address ethereum's scalability issues, reducing usage costs and increasing transaction speeds without sacrificing privacy or security. These improvements make ethereum 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 launch and seeding platforms, and both centralized and decentralized exchanges have proven to be immensely successful. Even in the days when eth only attracted the attention of a small niche of market participants, these technologies coalesced into a myriad of business models that demonstrated real demand for large-scale DeFi solutions. Some of the top DeFi protocols have even reached multi-billion dollar valuations, underscoring the strength of this sector.
As ethereum becomes a recognized commodity, the potential for further growth in DeFi 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 can be trusted and free from centralized control.
Blockchain enables secure, private, and decentralized frameworks for ai services, crucial for preventing monopolies over scarce computing resources and for 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 is an attractive playing field for investment as demand for decentralized and secure ai solutions continues to rise. ethereum-based ai projects have already reached multi-billion dollar market caps, proving to keen observers that it is a powder keg of explosive growth. The recent approval of eth ETFs could be the spark that ignites the next leg of expansion for which this sector is prepared.
Decentralized physical infrastructure (DePIN)
DePIN is one of the interesting blockchain-dependent sectors that have emerged thanks to the miracle of smart contracts. Simply put, it merges physical infrastructure with digital networks of decentralized participants and facilitates the global exchange of limited but highly in-demand resources, such as sensors, data storage or wireless connectivity, in exchange for cryptographic tokens.
DePINs offer decentralized governance, peer-to-peer infrastructure sharing, tokenization, and enhanced security and privacy for traditional and digital industries.
As demand for DePIN grows, so will the market for these resources, driving token appreciation and market expansion. ethereum powers the smart contracts that run these DePINs, making it a crucial component of this ecosystem. With the recent approval of eth ETFs, more angel investors are likely to pay attention to DePINs, recognizing their potential to generate high returns and significant real-world impact.
eth Reset
Staking is a fundamental aspect of securing decentralized networks like ethereum through economic game theory. Validators, who run the nodes that power the blockchain, must stake eth. If they follow the rules, they get rewards; if they try to cheat, they lose the staked eth. ethereum#:~:text=ethereum%20staking%20is%20on%20the%20rise%20this%20month.&text=30%20days%20ago%2C%20the%20reward,market%20cap%20of%20%24100.7B.”>Currently, over $100 billion has been staked in eth—That's how important this mechanism is to operate blockchain networks.
Restating takes this concept further by applying the same game theory to securing any protocol on the blockchain. This allows smaller participants to maintain high levels of security through proof-of-stake mechanisms that would otherwise be unattainable. Resumption helps create a more resilient network for multiple protocols, making it prohibitive to attack a single participant within the larger proof-of-stake pool.
Liquidity recovery services further simplify the process for those looking to stake tokens without managing complex validators. These services issue liquid recovery tokens, which accumulate yield and interest from validator rewards and can be exchanged or rolled over to generate additional rewards. The growth of this sector underlines its importance as a security pillar for blockchains, making it an attractive area for angel investors.
Conclusion
The approval of eth ETFs has made ethereum a leading investment vehicle. The ethereum ecosystem offers many exciting opportunities for angel investors, from ai integration and Layer 2 DeFi to DePIN and buybacks.
It is important to study these sectors and understand both their core narratives and growth catalysts. This way, investors can deploy smart capital and at the same time contribute to the growth of ethereum.
