Ethereum (ETH 1.10%) has had a remarkable seven-year run. Since its launch in July 2015, Ethereum is up a dizzying 34,665% and is now the second-largest crypto by market capitalization. Unfortunately, if you've waited until now to buy Ethereum, you're unlikely to see the same massive, life-changing gains.
The good news, though, is that there are plenty of new opportunities -- all of them within the burgeoning Ethereum ecosystem -- that might turn out to be more profitable than investing in Ethereum itself. As Ethereum co-founder Vitalik Buterin recently pointed out, there are five fast-growing areas within Ethereum that have enormous future potential. If you're thinking of what to buy next, these five areas offer a fantastic starting point for putting together an investment shopping list.
Five things Vitalik Buterin likes about Ethereum
It's always a treat when Buterin steps back from the hard work of building Ethereum to highlight some of the things he loves about Ethereum. In a Dec. 5 essay called "What in the Ethereum Application Ecosystem Excites Me," Buterin cited five areas within Ethereum as sources of potential growth: payments and transactions, decentralized finance (DeFi), blockchain identity, decentralized autonomous organizations (DAOs), and what he refers to as "hybrid applications" (applications that live only partially on the blockchain).
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For example, when it comes to payments and transactions, Buterin starts off with a brief description of what the experience was recently like to buy tea and snacks in Argentina with crypto. He then uses that to provide a jumping-off point for describing what Ethereum needs to be doing better. Buterin wasn't satisfied with the ease, cost, or efficiency of making cross-border crypto transactions, so any crypto project that can address these concerns in a big way would potentially be something to invest in later.
Buy the DAO
However, my favorite investment idea from Buterin is something I'm calling "buy the DAO" (pronounced like Dow, as in Dow Jones). The best way to think about a DAO is as a hyper-decentralized governance structure. If you think about corporations as generally being very top-down and very centralized, then DAOs are the exact opposite. They are decentralized, flat, and hyper-democratic. There are no "bosses" and no "layers of management." And everything gets done via smart contracts and the blockchain.
While DAO is a very crypto term, it is actually a very intuitive concept if you think about where the future of business is headed. Instead of top-down organization charts showing who is in charge of whom within a particular silo, the long-term trend is toward matrix management. Instead of bosses giving feedback to subordinates, the current trend is toward 360-degree feedback in which subordinates grade their bosses as well. And, given the rise in remote work, it's becoming increasingly clear that organizations are hiring decentralized workforces, to the point where crypto companies like Coinbase (COIN 2.01%) say they have no headquarters.
But which DAO?
In his essay, Buterin highlights a few DAOs within the Ethereum ecosystem that he is particularly proud of and that have incredible potential. However, many of these are so new and so exotic that investing in their governance tokens is definitely not for the casual investor.
A simple solution is simply to go to a site like CoinMarketCap and hunt for crypto governance tokens with the term "DAO" in them. That would lead you to popular crypto tokens like Curve DAO Token (CRV -0.59%).
And, if you dig a little deeper, you will start to discover some of the real gems of the DAO world. My favorite is Uniswap (UNI 3.84%), which is now the largest DAO in the world, as well as the largest decentralized cryptocurrency exchange in the world. More Ethereum gets traded on Uniswap in a single day than on Coinbase. For good reason, Uniswap is now one of the top 20 most valuable cryptos in the world, as measured by total market cap.
Don't get fooled by the wrong DAO
Buterin saves his best advice for last. He writes that crypto investors are so focused on finding massive, short-term gains that they overlook the types of smart, long-term investment plays that are building the future of cryptocurrency.
That sounds like great advice to me, and I think Buterin's insights into what's exciting in the crypto world right now is a great read for anyone looking for new investment ideas in 2023. As for me, I'm bullish on the idea of DAOs. They could be the future of crypto and the future of business. For now, my top pick is Uniswap, a billion-dollar unicorn with massive untapped potential for future growth. So just go ahead and buy the DAO.
