CoinFund in Paris

I took a few minutes to sit down with some of my colleagues on the CoinFund investment team to hear about their recent trip to EthCC and get to the bottom of the upcoming merge.

For those who haven’t attended yet, EthCC is the Ethereum Community Conference that takes place annually in Paris. I find it to be a consistently high quality event that offers a lot for everyone, from seasoned devs to the cryptocurious. The trend towards side events is still going strong, and many provide opportunities to choose your own educational adventure during busy (and often sold out) conferences.

Luckily some of the team is still in Europe and the rest of us have long since recovered from any jet lag so let’s see what they have to say.

-Kelsey McGuire

Kelsey: What are some of the emerging trends you saw at EthCC? Which specific web3 verticals received attention?

Billy Dishman: Two exciting areas that I saw receiving more attention at ETHCC were new DeFi primitives and ReFi.

After the initial wave of innovative DeFi 1.0 products gained traction in the summer of 2020, many of the projects spawned during the last year either mirrored the same DeFi primitives on another base layer from Ethereum or used a novel liquidity mechanism to draw in users and total value locked. At EthCC, there were several teams finally looking ahead to tackle the next core areas of DeFi, specifically fixed-rate lending, structured products, and uncollateralized lending. The other area gaining traction with developers and adoption is ReFi. The level of development and experimentation within ReFi has taken off over the past year. The focus on tokenizing carbon credits and the increasing composability between protocols was exciting to see and hear about.

Leidina Dervishi: I totally second Billy’s commentary regarding the focus on DeFi primitives, and I would say this was a conference where we saw consolidation in verticals + a general trend of building lower in the stack.

NFT marketplaces, NFT collections, DeFi mullet yield products and similar consumer facing applications that rely to some extent on Web2 retail appetite were less common, and instead we saw infrastructure startups building security, insurance, and governance solutions.

To touch on governance, DAOs are always a hot topic of conversation at conferences, but Balaji’s The Network State brought an interesting philosophical flavor to discussions this time, with more imagination around how decentralized architecture can innovate social structures. Many projects were tackling proof of personhood, distributed identity, and governance scalability.

Vangelis Andrikopoulos: One of the dominant focus areas that came out of ETHCC was interoperability. It seems that almost all products from low-level infrastructure to high-level dApps attempt to provide some form of bridging. Apart from core infrastructure that aims to provide arbitrary messaging across chains, we saw more oracles getting into the interop space, offering improved end-point primitives and further customization while dApps focused on bridge & DEX aggregation. Developers continued to show a clear preference for products that allow them to reach the whole web3 space with one endpoint batch.We haven’t reached peak interop yet but we are getting there.

Interestingly, there were more tradfi builders coming into the space attempting to improve it with DeFi primitives. The vast majority of founders talk about onboarding non-crypto people and have clearly started shifting their focus on building relevant UX.

Kelsey: What was the general sentiment during the week?

Billy: This was the first conference that I can remember over the past year where it feels like we left the conference with the price of the market higher than when we started. The general developer was breathing a sigh of relief that prices seemed to have bottomed out near term and now was the time to build with little distraction. Despite the pullback in prices, most teams I met with were still actively hiring and were full speed ahead on pushing new updates and products.

Leidina: Spirits were high, developers were deep in build mode, and a silver lining to building in a bear market is more affordable hiring for early stage teams. In meeting with teams that I had met at previous conferences, it was clear that the market had allowed room for more introspection, and during a pause in retail demand, teams have been able to shift gears from marketing initiatives to focus on their infrastructure and GTM. It was also amazing to see some investors dedicate panels to addressing entrepreneurs and advising them on where to focus in the current market conditions.

Vangelis: ETHCC once again attracted confident, focused, and highly competent developers. Hacker houses, such as the one run by Blockdaemon that we participated in, were full of focused teams with high-conviction, heads-down building their products while ignoring the bear market. ETHCC’s reputation combined with a bear market gave unstoppable veterans devs an opportunity to accelerate.

And how about that merge we’ve all been hearing about?

Billy: The merge was definitely front and center for most of the conversations at ETHCC. The excitement was palpable given it is arguably the largest thing to happen in crypto since the Ethereum ICO. Many of the conversations centered around what would happen post-merge and how to ensure that Ethereum’s layer 2s start to gain market share relative to Ethereum’s layer 1. I would encourage everyone to watch Vitalik’s speech about the longer-term future of the Ethereum Protocol.

Leidina: So this was probably the number two or three question that came up in a lot of conversations, and there was excitement around this event being both a historic technical feat and positive catalyst for liquid markets. I would say though, I was more often engaged on this topic by other investors rather than builders, so perhaps the merge is more priced in than we think? Kidding 🙂

Vangelis: The majority of devs I spoke to prefer Eth foundation’s approach favoring security and code correctness over speed. Vitalik’s speech made everyone more bullish and clearly articulated that the merge is only part of Ethereum’s ultimate goal.