5 Key Takeaways from Consensus 2022

Consensus is the largest crypto conference of the year. Since its creation in 2015, it has served as a platform for crypto’s most recognized thought leaders to present new ideas and explore how key challenges are being addressed. 

As an annual conference, Consensus takes place regardless of market conditions. At this year’s conference, over 17,000 participants gathered in Austin, Texas, in the teeth of the bear market. Our view of the mood was simple: Participants are looking at this bear market as an opportunity to build for the long term. Five key themes stuck out to us from the event.

#1 Regulation plays a key role in unlocking the next bull market, and it could be the biggest yet

Crypto needs unambiguous regulation if we want it to go mainstream, and the recent unraveling of Terra and Celsius only cemented that further. As on-ramps to crypto from traditional markets continue to be built, thoughtful consumer protection regulations will be imperative to bridge the gap.

Several panels highlighted the misalignment between the SEC and the CFTC on the issue of defining crypto assets as “securities” or “commodities.” Although this is partly a reflection of crypto’s uniqueness as an asset class, the lack of regulatory coherence is also a cause for concern. 

Why? Because as mass adoption continues, regulations will need to establish a coherent framework to address a variety of crypto-related regulatory gray areas. One promising area: The recently proposed Lummis-Gillibrand bill supports different areas of crypto being regulated by a spectrum of appropriate agencies, much like traditional finance. Conference participants expressed confidence that clearer regulation could enable the transformative power of crypto and blockchain technology to make itself felt across industries, and herald the next bull market. 

#2 Beyond Ready Player One, the Metaverse takes aim at significant real-world impact

While the 2018 sci-fi movie Ready Player One popularized a gaming-centric vision of the Metaverse, the possibilities extend well beyond entertainment. 

Take urbanization and social impact. In one panel, entrepreneur Pierina Merino described a partnership between her mixed-reality platform FlickPlay and the city of Santa Monica, the first U.S. city to join the Metaverse. FlickPlay provides an interactive map of the city’s retail district where users can collect tokens as they move around the area. They can then use these tokens to unlock digital experiences or to redeem for physical goods at area retailers. Beyond promoting local businesses, the venture has the potential to help reduce crime by expanding foot traffic in underutilized areas.

Another example showcased at the conference was Spatial Labs, which is pioneering the future of fashion with physical apparel embedded with a unique chip that links it to a matching digital counterpart; this will enable people to simultaneously wear their apparel in both physical and virtual forms. 

With potential applications like these spanning virtually every industry, Citi estimates the total market opportunity for the Metaverse could be between $8 trillion and $13 trillion by 2030.¹

#3 Crypto is more than just money and finance—it's about rewiring the world

Filecoin, the leading provider of decentralized data storage, had a big announcement about the future of the data economy. 

Filecoin’s primary use case is as an “Airbnb for storage.” It aims to reduce the risks and high costs that come with centralized data storage (consider how the major outage of Amazon Web Services in December 2021 affected a variety of popular online services from Slack to Hulu). While decentralized storage is Filecoin’s principal offering, it announced at Consensus that “storage is only the start.” Filecoin is creating a programmable layer atop its storage layer to facilitate the building of smart contracts that will support storage for NFTs, DAOs, tokens, and insurance among other applications. 

Filecoin’s potential for mass adoption is one that cannot be overlooked: It is currently ~6x cheaper than AWS, operates in over 44 countries, and offers much faster data retrieval than centralized alternatives. This, coupled with the network’s integration with some of the most recognized Web3 projects (e.g., Polygon, Near, OpenSea), will play a critical role in Filecoin’s positioning as a key player in the open data economy.

#4 In the multichain future, the success of blockchains will be intertwined

Historically, new blockchains have tended to prioritize compatibility with the Ethereum network. While this remains true, several major blockchains are deploying new technology in an effort to interact just as extensively with networks beyond Ethereum. 

At a panel moderated by our team, the founder of Moonbeam (a blockchain built within the Polkadot ecosystem that hosts applications across a variety of use cases) discussed the emphasis Polkadot’s roadmap is placing on communication among blockchains in its ecosystem, such as between Moonbeam and Acala (a blockchain that powers aUSD, the go-to Polkadot stablecoin). 

To better facilitate seamless interoperability, Polkadot recently deployed a new technology that allows blockchains hosted on Polkadot to communicate efficiently without compromising  security. Meanwhile, these blockchains are leading the charge in increasing their compatibility with other independent ecosystems, such as Ethereum. 

While such technologies enhance interoperability, they come with risks to bear in mind. How might the challenges of one blockchain have a ripple effect on others within the ecosystem? For instance, if Acala’s stablecoin, aUSD, depegs, how would that impact Moonbeam’s DeFi ecosystem (which leverages aUSD)? And if the blockchains hosted on Polkadot are also enhancing their connectivity to outside networks like Ethereum, to what extent could events in one blockchain ecosystem impact another? 

At the end of the day, the crypto community believes the benefits outweigh the risks, and that cross-chain communication is less of a bonus feature and more of a non-negotiable as the industry continues to mature.

#5 Empowering creators is the next frontier in the development of Web3 and the Metaverse

One of the most powerful narratives surrounding Web3 is a movement toward a more inclusive internet, in which users can reclaim ownership over their identities and creative activities from extractive, centralized institutions.

In a panel titled “The Minds that Imagined the Metaverse and VR,” author Neal Stephenson (who coined the term “Metaverse” in his 1992 novel Snow Crash) and Jaron Lanier (one of the pioneers of virtual reality) discussed innovative ideas that aim to empower the individual. 

Stephenson described Lamina1, a new Layer 1 blockchain he recently co-founded. The project promotes a “free Metaverse” aimed at helping artists and other value creators get paid appropriately for their work and preventing centralized monopolies from taking control. Lanier pitched another approach: Instead of launching an entirely new blockchain, “value chains” can be encoded on already existing ones. This would allow every contributor that provides incremental value during the building of a product or service to receive a cut of the fees from its commercialization. 

While both approaches have challenges, the fact that influential minds are putting so much effort into using Web3 and the Metaverse to empower creators is a strong indication of crypto’s importance for the future of society.

(1) Source: Citi, "Metaverse and Money: Decrypting the Future"