Thread by @kaiynne

Here is part 2 due to 25 tweet limit on threads 😓.

When was the last time we hit a 50m+ install base of a transformational platform? It was 2010. Here is the first three years of iPhones sales.

Instgram, Uber and other Apps that launched as the iPhone install base scaled were able to tap into this new platform to grow at phenomenal rates.

What does that have to do with DeFi? DeFi is not really user facing, it feels like it is because we’ve relied exclusively on enthusiasts since 2018. But the average user is more likely to interact with DeFi as infrastructure via a mobile wallet in the future not directly.

Now let’s pull all these threads together. The intersection of NFTs and culture will drive massive user growth over the next few years. But there is an still an unsolved issue holding us back. Scaling.

The Ethereum ecosystem is scaling but this year has been slower than many people expected. But by early next year we will have multiple production ready layer twos, combine this with ETH2.0 progress and Ethereum will be able to handle 50m+ users next year.

Once all these conditions are met we will begin to see apps that leverage the DeFi infrastructure we have built over the last few years to provide 10x user experience for financial products by aggregating and improving the overall UX.

Unfortunately, no matter how much we might wish it DeFi itself is not capable of driving user growth alone. It is too niche. But once we have millions of people who get Ethereum UX patterns, we will be able to transition these users to a far better financial system.

Like the rise of the App Store it is impossible to predict what shape this will take, but when you combine a transformational technology with a huge user base amazing things happen.

Crypto UX seems weird now, but so did email once (the crypto boomers will understand) new user behaviours take time to train but eventually they go from weird to common knowledge. The concept and power of self-custody will become part of our culture in the next decade.

To the point where most people forget it was ever weird in the first place. But the key is you need something to drive this, NFTs are the killer app for crypto and will drive adoption for the foreseeable future. NFTs are still super early, the design space is huge.

DeFi will undoubtedlybe the financials rails of future. It is simply too efficient compared to TradFi and no amount of regulation is going to slow this down. Especially when you have tens of millions of users adopting new apps that leverage DeFi rails. The Uber effect.

The volumes we see across even the most popular DeFi protocols right now are trivial compared to what is coming. We have a tiny niche audience of enthusiasts currently, but DeFi will conquer the world, it will just do it in stealth mode.

What does this mean for DeFi tokens? The way I see it playing out is you will have small number protocol contributors who hold tokens, then you will have enthusiasts who also hold tokens and then you will have a huge user base that just want to consume services not govern them.

The revenue these DeFi protocols generate will be enormous, so you will also have a group of people who simply want exposure to the asset class without having to govern it. Staking services and other forms of passive exposure will expand their user bases drastically.

At scale DeFi tokens that generate cash flow will be primarily priced based on these cash flows rather than on almost complete speculation about future growth, as they are now. The dominant protocols will have valuations many multiples higher than today.

The future is going to be built on open protocols, this will lead to a massive increase in market efficiency. Lower barriers to entry for startups will allow for rapid progress once we have a large enough install base. This will create a positive feedback loop.

The end state is a world where most infrastructure runs on Ethereum. The dominant protocols will capture an insane amount of value, but they will do so by being open, transparent and composable. wagmi.