Dragonfly Partners: L2 is the center of current development, and the popularization of DID is essential

Written by: Haseeb Qureshi, Partner at Dragonfly Capital

Compiled by: czgsws, BlockBeats

Recently, Haseeb Qureshi, a partner at Dragonfly Capital, appeared on the latest episode of the Unstoppable Domains podcast, sharing insights on the current state and future of the crypto space. Podcast host 0xJosh organized his remarks, and BlockBeats compiled them. Below is the original text of his speech:

This time is different.

In 2017, we told the story of how the world would use blockchain. Then people lost confidence, and prices soared again. Today, most valuable dApps are still operating normally. The decline in token prices is closely linked to the macroeconomic environment.

Silicon Valley angel investor Naval Ravikant once said that if you don’t understand a project, it’s likely that the project is talking nonsense. If you want to be a great investor, you need to invest in people who are solving big problems. And solving big problems is both difficult and time-consuming.

Don’t predict the future; focus on the present: 1. Rollups and Layer 2 will be at the center of crypto development; 2. There is a demand in the market for interoperability + multi-blockchain scaling solutions; 3. First-generation P2E games are struggling, and the economic models of crypto games are being completely restructured.

Play To Earn will shift to Play And Earn; not everyone will make money. In poker, some people win money, some lose money, but everyone has fun. Many crypto games resemble poker. For Web3 games to succeed, they need sustainable economic models.

Blockchain is like a city: SOL = Los Angeles, ETH = New York, NEAR = San Francisco, AVAX = Chicago. If we imagine different blockchains as different cities, there is a significant missing element: the highway system that connects them.

ETH is Manhattan in New York (established, expensive, congested); everyone complains about it, yet it is the core of America. The largest DeFi protocols and NFT projects are on Ethereum. We will live in a multi-chain world.

Today, most operations on internet applications are entirely user-to-user interactions. Eventually, blockchain will be the same. Games will run on the blockchain, and users won’t need to know which specific chain they are on.

Currently, the largest Rollup layer 2 is Arbitrum. The Optimistic assumption is that the Rollup is correct; if you can prove it is incorrect, you will be rewarded. Zero Knowledge publishes proofs for each block to verify computations.

Most parts of the world operate on credit, including car rentals, student loans, and property ownership. To make DeFi competitive with CeFi, we need to establish a credit system. For this, an on-chain identity system is essential, so identity is the biggest issue in cryptocurrency.

When you interact on-chain, you are just an address. But an address can only provide very low-dimensional data. Many applications need a more robust concept of identity, such as credit. And without identity, there can be no credit.