A Crypto Future
An exploration by 0xsmac and Compound Crypto
Introduction
At Compound we believe in building views of the various futures that we believe in across all of our core areas of focus. We do this over long time horizons and multiple cycles because the best way to learn about things is to study them when they are coming apart.
In 2023, crypto has in some ways done just that. Facing an uncertain future with inevitable tailwinds and formidable headwinds, we’ve been internally trying to think through the nuanced progression of a category we care deeply about. This has resulted in a living, breathing exploration in understanding how our world could evolve, year by year, in granular detail, and how crypto as an industry and technology could play its role in that evolution.
This is that exploration.
2027
Ragequit
The cyclical nature of crypto continues. By 2027 crypto has reached over 2 billion users and surpassed $30 trillion in total market value. While I’d prefer to continue postulating on new use-cases and emerging behaviors this technology enables, the goal of this exercise has always been to project the most likely outcome given the priors. The excitement and novelty of new developments throughout 2024-2026 will undoubtedly lead to an overextension. Alas, 2027 marks the meat of the next crypto bear market. While this may seem dark at the moment, 2027 is a long way off; 4 years ago we were still a full year away from DeFi Summer.
Interestingly enough, the new crypto winter is brought on by advances within quantum computing. It’s become a new-again shiny thing for investors, but also creates FUD around the sustainability of blockchains; some loud criticisms are levied that blockchains will be overwhelmed by transaction volume, throughput and are ultimately susceptible to quantum computing breaks. The heart of that criticism centers around:
Breaking the encryption behind ECDSA would allow hackers to steal coins, forge transactions or potentially disrupt consensus
Powerful 51% attacks are much easier to imagine & there’s little social consensus around how we’d react in the aftermath of an event like this; on top of this, re-staking platforms have onboarded a meaningful set of ETH validators (>10%) with varying degrees of implicit social consensus
The prize for a successful 51% attack is significantly larger than ever before, with app-chains most vulnerable thanks to limited validator sets
Perpetual fears that the private keys behind wallets could be cracked
The FUD is so powerful because it’s a faceless threat that’s easy enough to comprehend for most users at a surface level. It’s also too complicated for many to appreciate the technical hardening blockchains continue to undergo. These fears are valid, but also a bit stretched as blockchains have already been working on quantum-safe encryption & signatures like BLISS or XMSS, sharding networks have made 51% attacks less likely, and much more complex hash functions are used. Re-staking layers have steadily grown adoption throughout the years and remain controversial. Many purists think they’ve unnecessarily added obfuscated leverage into the system, creating an existential risk. Others argue the validators participating are sophisticated enough to understand the additional risks they’re taking on, and that this market for decentralized trust has directly contributed to rapid innovation. The earliest days were extremely chaotic as multiple 8-figure slashing events occurred, much to the surprise of restakers who evidently were unaware of the source of the additional yield they were earning. Despite these hiccups, it’s widely accepted that the ability for developers to bootstrap cryptoeconomic security has been a meaningful net benefit for app development.
Global tensions only add stress to the landscape. Instability in Europe is roiling traditional financial markets as a few specific EU member states lash out about potentially leaving the union. Economic, financial, social and political tensions bubble to the surface. Most of the financial conflict is rooted in disagreements over austerity measures, monetary policy and EU budget contributions & distributions. Southern European countries – specifically Greece, Italy, Spain & Portugal – increasingly resent countries like Germany pushing for stricter austerity.
At the same time net recipient countries in Central and Eastern Europe demand continued funding and subsidies which stands in stark contrast with Brussels demands to reduce the EU budget. Beyond financial friction, the larger social and political tensions are most concerning as Western European countries continue to be overwhelmed by large influxes of migrants and refugees from the Middle East and Africa. Central European countries continue to refuse to meet refugee quotas, only amplifying tensions.
All this tension culminates with Italy formalizing a vote to leave the EU. It resents restrictions on its economic policy and budget deficits, feels strongly about migration issues given its position as a frontline state and sees the nationalist Lega party gain support as financial conditions deteriorate. While the vote doesn’t pass, it serves as a wake-up call to the EU.
“Instability in Europe is rolling financial markets”
Crypto is not immune to this volatility and the long-tail of crypto assets are doubly punished because of this geopolitical uncertainty. There are some who view this tension as the inevitable march away from arbitrary economic unions and toward a more open, unconstrained financial existence. This feels overly idealistic though, as many continue to overlook the longstanding national security benefits that built these alliances in the first place. Younger generations continue to feel less allegiance to the nation they were born in and associate far more with the digital communities they’re a part of. But the boomers haven’t fully ceded control just yet.
While the peak of the bull market saw some 100+ projects making credible claims of $100M annual recurring revenue, that universe shrinks precipitously. There is still incredible value capture for the dominant L2s (Arbitrum, Base) where activity levels have far higher floors now, but application-specific activity and growth slows meaningfully. This becomes an important moment for many teams born in the aftermath of the previous crypto winter; they’ve been building predominantly during a period where fresh capital is rolling in indiscriminately.
“The peak of the bull market saw some 100+ projects making credible claims of $100M annual recurring revenue.”
As conditions tighten, product differentiation becomes paramount. This will be especially true for the non financial-first verticals: social, gaming, storage, discovery, media. While network effects aid crypto-social, this isn’t necessarily the case for gaming. More and more users are gravitating toward ephemeral gaming; while aggregate hours of gaming continues to rise, there’s less congregation around large individual games. The average gamer is now cycling through games much quicker making large AAA-game outcomes more difficult while smaller “minigame” studios reap the benefits. In the depths of this pullback, some 30% of those more successful projects (i.e. $100M ARR) are suddenly faced with existential dread as their revenue dries up. While crypto bear markets are becoming less severe, the pool of non-native builders has grown such that many are still not accustomed to how fickle users can be or how quickly the tide can turn thanks to the nature of open-source software.
On the brighter side, by this point BTC and ETH are solidified. Similar to how FAANG stocks performed during the overall stock market drawdown in 2022-23, BTC and ETH are now relentlessly bid by younger generations who control an increasing share of global wealth. A lot of the reflexivity in crypto prices is now muted – at least for these two large assets – thanks to the widespread adoption of spot ETFs and the infinite bid these now get from 401(k) plans. Despite this, we still see bitcoin draw down ~30% back to $150,000.
The institutional ETFs are here en masse and there is now regular traditional media coverage of the crypto startup scene. It mostly lacks nuance but it’s permeating the mainstream zeitgeist. The maturation of market structure also helps here as liquidation cascades are simply less prevalent given the enormous liquidity provided by these traditional institutions. The talent washout from the overfunded early 2020’s tech bubble has finally cleared. Many of these people have already begun a new wave of startups in crypto and technology more broadly. But the fruits of this labor won’t be seen immediately, so things feel worse and more dire in the moment. Incidentally, this is a fascinating time for crypto investing.
There are new capital allocators who arrived near the top of the 2026 cycle. More interesting though is the evolution of cryptonative funds; some struggle to adapt to a far more competitive world. Being “cryptonative” is not enough anymore. That moniker dilutes over time as crypto becomes less niche, the user base expands and account abstraction makes it seemingly less meaningful. New non-native builders who came from traditional technology want to know how these investors will help them navigate the idea maze and commercialize. There is healthy skepticism from this new wave of builders around the quality of support they’ll receive from crypto funds. Some adapt, survive and continue to push the space forward, but for many it proves difficult to regain the benefit of the doubt they previously enjoyed.
AR & VR is now pervasive. Monitors are quickly being replaced by more advanced, adaptive, responsive and malleable digital representations – first for home entertainment but the larger shift is in the workplace where they’re quickly becoming obsolete. The recreational capabilities for the second and third generation of these products are truly mind-bending. We now see AR hardware combined with tokenized dispensaries to allow users to experience the same highs they previously reached through cannabis or psychedelics. Throw the headset on, choose the type of high you’d like, pay for a time-based session. There are other more niche experiences these products enable as well, virtual synthesia being one of the more unique ones. In hindsight it should have been obvious how transformative GPS on mobile would be: everyone in the developed world with the power of the internet, on a local device, with precise geolocation data. But hindsight is 20/20 for a reason. In a similar way it will seem laughable that we didn’t see all the new use-cases for AR/VR right underneath our noses. Everyone in the developed world with the power of augmented sensory experiences, on a local device, with highly personalized data.
The leading tech giants, while still massive, are each struggling to varying degrees with existential risk thanks to crypto, AI and a societal push toward ownership over extraction. While some (i.e. Meta) continue aggressively leaning into open-source ideals, those slow to adapt – or worse those who resist drastically – overestimate how quickly their value may erode.
Less “sexy” pockets of capital continue migrating on-chain thanks to massive efficiency gains and instantaneous settlement. Receivables financing & factoring are now predominantly on-chain, which seems like an odd marriage given the old- school culture of this industry. But instant settlement has unlocked incredible capital efficiency above and beyond 7-day and 30-day factoring models. Similarly, project finance, now a $500 billion market globally, is leveraging crypto rails for wider distribution of access to underserved assets. An industry previously dominated by large private equity firms is quickly becoming an avenue for retail to finance core infrastructure projects.
Incidentally, the appetite for these types of projects is only buoyed by the continued fumbling of infrastructure development by governments, especially in the United States. Previously underserved long-tail markets are benefiting hugely from lower capital costs and this particular area becomes a massive PR boon for crypto development writ large. As younger generations become more heavily involved in local-level politics we begin to see instances of municipal bonds being issued on-chain. Creative financing for local infrastructure capitalization becomes another intriguing use-case for tapping into global liquidity markets through crypto networks.
Enterprise-level security on-chain is extremely robust now. Primarily driven by unique decentralized monitoring models, better automation of smart contracts and improved economic alignment for security node operators & individual protocols. The cost for audits has been driven down massively thanks to these and more sophisticated LLMs. Some well-known crypto audit firms quietly die as they struggle to adapt their business model, while a handful of new entrants see incredible adoption and success.
The underrated and overlooked adjacent benefit here is the sizable compression for baseline security costs at crypto startups; what previously sucked up an inordinate amount of runway dollars for early-stage companies is now far less punitive. More projects can launch relatively safely, with greater optionality for the capital they raise. This becomes especially important as we cycle into a period where funding is more difficult for entrepreneurs and runway extension is top of mind. While on-chain security has improved, the flipside of this is that social engineering attacks have become pervasive. As the world creeps toward fewer human-to-human IRL social interactions, these attacks become increasingly easy to carry out.
While the bear market of 2027 is painful, the tone of this pullback is quite different thanks to the sizable capital inflows over the previous few years. Financial exposure to crypto assets no longer carries the stigma it did 5-6 years ago, and the space is one of the few areas of meaningful growth for financial institutions. Unsurprisingly, the narrative shifted materially when crypto received the “blessing” of traditional tech and finance. As we approach another election cycle in the United States, both parties are now catering to crypto-adjacent industries in an attempt to capture the younger vote. Despite the slower pace of activity in 2027 (into the early part of 2028) we’re now entering a period of wider acceptance, both for the technology itself and for the principles underpinning it.
2028
Will We Make It?
By 2028 the NFT landscape has shifted dramatically. While initial iterations of NFTs focused almost exclusively on profile pictures, art and gaming assets, the zeitgeist of NFTs is materially different in 2028. We now view them much more like containers for specific types of composable data to live – be that text, image, video, mapping, movement, location, etc. PFP’s still exist of course, but the way in which we all subconsciously thought of Punks or Apes when we heard “NFT” is now laughable.
Compression, danksharding and more efficient storage has led to a boom in richer, dynamic data. What does this actually mean in practice?
NFTs act as packets of information that live on-chain in a privacy-preserved way, with clear ownership principles. Not long ago Meta and Google built massive business lines on a foundation of aggregating consumer data; remember “data is the new oil”?
By 2028 NFTs will be analogous to the United States’ huge underground salt caverns that store crude oil reserves. Mountains of financial, health, education, social, gaming & behavioral data will be widely accessible. Some individuals (<10% of the United States population) will be running their own local models on a tapestry of on-chain & off-chain data with personalized results, including:
Individual health insights thanks to granular genome, wearables and microbiome data
Advanced smart assistants trained on personal everyday workflow behaviors & preferences
Hyper-personalized consumer & retail experiences
Optimized personal finance automation, including insurance shopping, recurring purchases & utility monitoring
Customized learning or skill-based training
There remain many teams collecting all sorts of data indiscriminately without a clear vision for why this particular information will be valuable or relevant. This is already happening to some extent today with DePIN teams using computer vision to create hyper realistic 3D maps of the world. These types of ambitions will only grow, with the obvious frontiers (ocean & space) commanding the most interest. While that makes distinguishing where on the value spectrum different data capture sits more difficult, at a minimum the sheer volume provides massive contextual benefits.
It comes as little surprise that owners of high-value datasets begin using them as collateral and leveraging the future benefits of their use. What this looks like in practice is smart contracts programmatically controlling lender access permissions to datasets held in escrow during the loan term and data tokenization to allow partial collateralization alongside added flexibility. The obvious challenges of appraising dataset value, exclusivity rights and trusted custodial mechanisms are there, but this new dynamic opens an alternative fundraising avenue, unlocks liquidity for pre-revenue companies and chips away at the “data sale” model.
Though some smaller scale genomic data platforms launched in the early half of the decade, by 2028 there’s been exponential growth in data quantity and quality as adoption spreads. This has fostered incredible progress in whole genome sequencing spurred in part by crypto networks incentivizing the sharing of genomic data in a privacy-preserving way. The earliest decentralized, encrypted health data marketplaces have found product-market fit and are seeing parabolic activity for protected sharing. Large pharma companies – including Merck, Eli Lilly & Bristol Myers Squibb – and research institutions are using crypto mechanisms for more robust, transparent and auditable collaboration on discoveries.
The pace of analyzing genetic variants for scientific discovery is rapidly rising thanks to a cocktail of richer data, cheaper costs and reduced friction. At the same time, some patients (those with their health data on blockchain-enabled platforms) are refusing to take part in traditional pharma clinical trials because of data access & control concerns. While off-label drug use was once only prevalent in rare disease communities, we see the earliest signs of more common disease being cured outside of the traditional pharma system (~10% by this point). Biohacking has become one of the highest growth pastimes with multimodal data integration and personal biomarker analysis revealing more specific causes of disease.
Apple’s ubiquitous 30% tax is no more. Though the European Union was the first to begin chipping away at the world’s greatest business model, the United States is now onboard too. Years of political pressure, competitors (Meta) aligning much more with open-source ideals and the sheer size of Apple has led to a breaking point. Progressive web app adoption has also added a non-trivial amount of inertia as well. Much of Apple’s original anti-crypto stance has softened since 2023 in anticipation of this inevitability; the App Store tax compressing is by no means a shock, and in fact leads to their next great decade of growth. In reality the only motivation it had for resisting crypto was prolonging the extractive tax on all digital commerce.
Now that this has reached its natural conclusion, Apple finds itself strategically aligned with crypto as a whole. Part of that is because crypto poses one credible alternative of the rails on which AR/VR will run. Another motivation is directly supporting a technology that can cut the legs out from some of Google and Meta’s consumer data aggregation businesses. It’s also an elegant way to fold crypto’s privacy importance into Apple’s long standing brand of protecting consumer data. Apple has continued to lean into this over the past five years, establishing itself as the king of privacy preserving machine learning.
The natural extension of this – tax revenue shrinking while privacy-preserved data ownership grows – is a move into healthcare services. It’s one of the only markets large enough to absorb a multi-trillion dollar company growing at double digits over extended periods. Despite repeated calls for its demise, Apple once again shows its ability to reinvent itself, pushing into new services markets while maintaining a stranglehold on premium hardware.
“We cross 100 million MAU for the first time”
This shift only adds fuel to the fire as crypto gaming is having its moment. We cross 100 million MAU for the first time, and while individual retention rates lag (35% D1 retention for casual games) the change in user behavior makes up for this. More ephemeral minigame studios are the big winners here. While the exuberance and excitement of “fully composable AAA-games where you own your skins” was a great narrative in 2022-23, the reality was few understood the development cycle for these games. Many at that time also failed to appreciate just how restrictive app store owners refusing to integrate crypto into mobile games would prove. By 2028 though, blockchains are far more performant, the UI/UX is wildly improved and we’ve seen a much-needed injection of talented non-native builders. Roll-ups on Ethereum are now averaging 5 figure transactions per second (TPS) while chains like Solana and Monad are pushing 6 figure TPS speeds. Removing the App Store burden leads to quicker experimentation and the improved economics makes smaller-scale development palatable. These tailwinds and the maturation of the space lead us into a golden age of gaming x social x gambling.
The existing form factors are still there – yes you can level-up characters, unlock rarer NFTs or traits and trade skins on marketplaces, but this is now table stakes for crypto gaming. New form factors look wildly different though. Some of these include:
Social graph gameplay (i.e. localized social competitions and leaderboards with fractional ownership of in-game competitors influencing outcomes)
VR gameplay with dynamic odds reacting real-time to in-game events
AR mobile experiences enhanced by crypto location-based incentives and physical-digital ownership pairing
Early commercial versions of digital twins and synths being used in-game as replicas of real life: from looks, to personality/demeanor & motion capture movement
Some studios are even experimenting with in-game reputation scoring that affects gameplay for users in real-time, serving as a way to churn unpleasant (or unwanted) players from the user pool
The lines of gambleFi and gaming are now so blurred it’s difficult to parse the differences and separate the two. Add another half decade of sports gambling permeating everyday life (with ESPN now a major player) and the social stigma of sports, e-sports and digital experience gambling is long gone. What used to be a derogatory statement on crypto, “the financialization of everything” has returned with a more positive spin.
It’s not that crypto has actually enabled the financialization of everything, but rather it’s removed friction in places where immense demand for financialization exists. It is commonplace to wager on the growth of wallets, accounts, people, videos, memes, art, transportation, media, space, you name it. Financial coordination at-scale is very different from the financialization of everything. The degree to which we gravitate toward shared social experiences has not changed, but the medium has shifted toward digital experiences, with varying layers (including none) of financialization woven in.
All of the applications that facilitate any form of crypto-enabled gaming/gambling end up squeezing the traditional casino industry; crypto games are provably fair and the global scale means lower take-rates for everyone competing in adjacent spaces.
While the innovation and explosion of new experiences around gaming is exciting, there are some edge cases of designers trying to push the stakes a bit too far; we hear whispers of a future in which players can gamble with far more sensitive stakes (memory, organs, blood types, health data). People argue about the merits of this but it’s inconsequential in the grand scheme of things.
At least at this point.
It’s become evident by 2028 that microgrids powered predominantly by solar, wind, batteries and fuel cells are crossing the chasm to gain widespread adoption at greater scale than anticipated.
An overlooked but important element of distributed energy growth has been peer-to-peer energy trading networks that have proven viable. Direct energy trading between consumers had been extremely difficult in the past, but energy platforms are using smart contracts to automate p2p markets at the neighborhood and community scale. The velocity of energy becomes comparable to traditional money velocity principles, namely that higher velocity is associated with healthy, expanding markets.
As traditionally opaque, complicated, overly structured energy markets have given way to smoother, lower-friction ones, it seems obvious in retrospect that market sizes will continue to expand tremendously. Just as we saw Uber misunderstood (“how can this company become larger than the entire taxi market?”), so too are novel energy capture, financing and distribution startups. US states (Texas, California, much of the Southeast from Virginia down through Georgia) implement policy incentives for community solar, microgrids and peer-to-peer energy markets.
Not long ago – 2021-22 – just a few thousand homes were participating in pilots or trials for p2p energy; fast-forward to 2028 and we’re pushing 8-figure numbers for households participating directly in these markets. Improved renewable forecasting plus smart grid optimization reduces the need for costly backup plants. Large scale renewable hydrogen production begins scaling up for seasonal storage thanks to its high energy density & resilience to degradation over extended periods of time.
As we push toward the end of the 2020s, the progress in cybernetic implants and brain-computer interfaces (BCI) becomes evident. Basic BCI for typing and computer control becomes commercially available for the first time, and while still expensive, there is an early adopter cohort receiving v1 implants. Visual prosthetics begin to restore basic sight capabilities like shape detection and motion.
The ongoing trend of biohacking expands to speculative transhumanist experiments with attempts to “hack” senses like vision and hearing via nerve stimulation. The hype cycle around many of these technologies far outpaces any semblance of widespread commercialization, but we are once again awed by human progress. While obvious risks remain, optimism grows that emerging technologies can raise living standards globally.
By the end of 2028 we haven’t quite recaptured the all-time highs of crypto market capitalization, but the relevance of this all-encompassing statistic has diminished. There’s now comfortably $20+ trillion of crypto assets, but more importantly the technology has penetrated so many verticals – albeit to varying degrees – that we no longer speak in crypto vs. non-crypto terms. Plenty of newly coined phrases are used to describe it (“digital assets”, “alternative payment rails”, “tokens”, “software currency”) but these are simply mental gymnastics for those who wrote it off years ago. Crypto is certainly not the only technology that matters, despite what many who build careers in the space would have you believe. As with most things, it has its warts, its troubled actors, its grifters and everything in between. But the noise around these shortcomings are but a footnote in the annals of history.
As we look back on these 5 years, crypto’s impact is undeniable. Global living standards have been raised, financial access has been opened, health data ownership has been enabled & cleaner technology has been financed. Beyond the leap in overall adoption, the lasting influence of this period is a shift in mindset. Self-sovereignty is no longer a fringe concept but rather a core principle for the majority of the world, albeit less so in the United States. Smart contracts are rapidly becoming the standard rather than a novel design meant for the corners of the internet. The breadth of impact is staggering and yet the future beyond 2028 is just as bright. Advancements in other technologies open more avenues for development as entrepreneurs continue to push the boundaries and discover new whitespace.
Just like in 2023, lots of humans in 2028 tell us how doomed the future will be, how the world is going to shit and how great things used to be. And yet, we can’t help but laugh because we’ve seen this calcified pessimism before and know how it ends (spoiler: not well).
The future is bright. For crypto, yes. For other emerging technologies, yes.
For humans, unequivocally yes.
2029+
Beyond
Since the goal of this piece was always to extrapolate on what our view of the future may hold, it was important that we pressure-tested all of the ideas that popped up during this exploration.
Some of those were a bit too unrelated to crypto specifically, while others seemed too far off to imagine happening by the end of 2028. In some cases that led us to ask “If we believe this idea commercializes by this date, doesn’t that mean a group of people must be working on this right now? Is that likely?”
The answer to this was often “likely, no.” We thought rather than leave all these “sometime beyond 2028” ideas on the editing room floor, we would highlight a few of the future technologies we imagine could become part of our lives sooner than most think. A few highlights:
