So we have spent more than 500 days in crypto winter. Too many big events have tormented our psychology and confidence, retail selling off, miners letting go, whale wars, seemingly immortal empires have collapsed. There's no guarantee that the market won't crash again, but perhaps it's time to put the pain behind and look to the future.
“The time is good for the hunting trips of the remaining old wolves.”
In the article below, I will analyze and evaluate the potential of emerging trends in the market. From there, we predict stories that could become the main trend that will pull the whole market up in the next bull season (expected 2024-2026). Projections are based on research and personal experience, so they may be right or wrong. Please refer to them for more information.
List of content in the article:
DEX & Derivatives & Wallet & Cross-chain solution
Liquid Staking Derivatives
Real Yield
Layer 2 Wars
AI
NFTs & nftFi
Web3 & Decentralized Social
Memes & Memechain
A few other minor things
Important note (must read)
Okay, Let's dig in!
DEX
After the historic collapse of the FTX empire, users tend to shift to using more decentralized financial services. In fact, FTX is the last straw that has caused the flow of asset transfers through DeFi to skyrocket. Since its appearance, DeFi has been continuously eating away at CeFi.
DEXs are one of the areas that benefit the most from this shifting trend, especially DEXs with UI/UX optimization, fully integrated derivatives tools, farming, fee optimization... .brings a CEX-like experience.
The multi-chain DEX trend is also being strongly deployed, with just a few clicks on a single interface you can buy ETH on the Ethereum network with BUSD on the BNB network. This trend leads to the development of cross-chain infrastructure projects such as LayerZero and Axelar. You learn more about Omnichain, it is a necessary trend of the blockchain industry.
The derivatives segment on DEX will also benefit, but the time when this segment explodes most strongly is when cryptocurrency enters mass adoption, when the fluctuation range narrows, similar to stocks, users will look for Derivatives to take advantage of high leverage to maximize profits. From there, pushing the volume of derivatives transactions on DEX to all-time high milestones.
Saying that does not mean that the future of CEX comes to an end, CEX and DEX always exist to complement each other, CEX helps new people easily get acquainted and approach. In the coming years, the legal system will become increasingly stricter, this will help increase safety and confidence for investors and also pave the way for CEX to attract more users. Simply put, CEX is a funnel to attract users to DeFi.
As money flows into DeFi, Wallet projects also benefit. It is expected that the keyword "wallet" will be pushed when Metamask releases their token.
DEX is not a short-term trend, it is a mandatory component in the decentralized financial market structure. In the coming time, DEX will grow faster and stronger than the general expansion of the industry. But to become the main trend that pulls the whole market to the top, I personally don't think so, retails needs something new.
Watchlist: Pancake, Wombat, GMX, Axelar, Stargate Finance, Open Ocean, Hashflow, LayerZero, Curve.
Real Yield
Previously, the yield of DeFi Protocols largely came from token inflation, or in other words, the project printed more tokens into circulation to reward investors, more deeply, taking money from buyers later to reward those who entered first. . If the users are increasing, everything is still fine, but when there are no more people coming in later, the liquidity pool will be depleted, leading to a sharp drop in the price line. This model does not bring sustainability.
And from there, the Real Yield movement emerged to help DeFi escape this mindset. Accordingly, projects need to find ways to generate sustainable revenue sources from their own activities, not from token inflation. In general, the revenue source of projects mainly comes from transaction fee, trading fee, lending brorowing fee, investment yield.
A good project is one with high and sustainable real yield. But for long-term investment, you need to consider how the value flows to token holders. The revenue is large but it is not certain that the holders have benefited much from that revenue source.
The real yield movement emerged strongly from the leader of GMX, which also pays real yield to investors, but GMX has a very magical mechanism to encourage stakes to prevent dumping. You can read the explanation articles. GMX's operating mechanism to better understand. After that success, a series of GMX fork projects were born and also achieved impressive results.
The mechanism of GMX and projects in the real yield field must be said to be very good. If this trend is pushed in an uptrend, the effect must be several dozen times greater than the current results.
But the thing is, Real Yield is not a segment of the market structure, the nature of the projects associated with this movement are in other segments such as Derivatives, Yield Farming, so consider it as an evaluation criterion. The project is more like a crypto portfolio. Maybe you will want to add "real yield" to your set of hidden gem hunting criteria.
Real Yield is a very good movement for the market, investors tend to switch from speculation - that is, buying tokens to wait for the pump and then dump them - to investment trends - that is, holding for a long time to claim yield, thereby bringing the model to life. The economics of Crypto come closer to traditional.
Real Yield will still be a hot keyword in 2023. It seems that Arbitrum is wanting to build its ecosystem associated with real yield, thereby creating momentum for this movement to continue to bloom and spread to other chains.
At the time of writing, real yield has been exploding for a while and the position is no longer good for those who come in later, so you should consider timing or follow the trend in other chains.
Watchlist: GMX, Dopex, Synthetix, Gains, Level, Thena, MUX
Liquid Staking Derivatives
Liquid Staking Derivatives, as far as I can see, are still just in the beginning stages. The reason LSD emerged in early 2023 was due to the Shanghai upgrade effect of Ethereum plus Binance listing RPL.
In the future you will see Bitcoin LSD, cross-chain LSD, NFT LSD, LSD whatever, and then Synthetic LSD. This balloon will silently be blown up even louder.
🔗 To understand more about LSD, you can see another article of mine explaining in detail here: https://twitter.com/KudoDefi/status/1615715712798195716
In this segment, besides SSV, Lido and Stader, I have not added any projects to the watchlist. Because there are not many value capture projects for holders, the price increase still comes mainly from fomo.
There is an upcoming important event for this segment, the Shanghai upgrade of Ethereum. Shanghai hopes to make users more open to staking, thereby leading to an increase in stake rate in the long term. Shanghai is a pre-planned event that everyone knows about, so its impact has seeped into the price line many months in advance, so the market may not go as you expect, the shaking mainly comes from MM and short-term traders.
Watchlist: SSV, Lido, Stader
Layer 2 Wars
Among the Layer 2 solutions for Ethereum, the two names that are being mentioned most are Optimistic Rollup and ZK Rollup. 2022 is the year that Optimistic takes over, mainly led by Optimism.
Note: at the time of writing this article, Arbitrum has not yet launched the token, I will still keep the original content so you can easily follow the thoughts in the article.
Optimism has its advantage by releasing tokens early. Although Arbitrum has not yet launched tokens, the project's achievements also demonstrate its great strength (TVL at its highest point was $2.6B, currently at writing article is $1.3B, total transaction reached more than 96M), not to mention Arbitrum has just successfully blown the real yield trend.
Although the Optimistic solution is very developed, according to experts and large funds (ConsenSys, a16z, Pantera, ..) zero-knowledge Rollup is the complete Layer 2 solution. Even @Vitalik the father of Ethereum supports the zkRollup solution.
ZK's problem lies in compatibility with EVM, which requires time to perfect. Please see images comparing solutions below. I will have a detailed article about these technologies later.
According to my observations, the coming period is not only a battle between Layer 2 projects but also between Optimistic and zero-knowledge solutions. It is likely that Arbitrum or zkSync will release their tokens to spark this war.
Names dragged into this war include:
Optimistic Rollup: Decision, Optimism, Goals, Boba
zkRollup: zkSync, StarkNet, Loopring, ZKSpace, Mina, Aleo
Personally, I consider zkRollup to be a better expansion solution in the long term, because zkRollup achieves most of the advantages of Optimistic.
Recent moves by Polygon - the largest scaling solution on Ethereum - also show that they are gradually moving to ZK Rollup, by acquiring Hermez Network (a zk solution development project), launching Polygon Zero - zkRollup solution uses Plonky2 Proof.
I have high hopes for a Layer 2 war in 2023. If it happens, the "layer2" narrative will be pumped very strongly, but to become a mainstream trend that pulls the entire crypto market to its peak, I'm still skeptical, because of the timing. The 2023 pump will not match the macro.
Watchlist: zkSync, Arbitrum, Optimism, StarkNet, Aleo
AI
Since ChatGPT launched, it has created a fierce AI wave. ChatGPT only took 5 days to get 1 million users, which is very impressive compared to Facebook's 10 months and Twitter's 2 years.
In the early stages, I assessed AI as more of a traditional project, and it is true that OpenAI currently has nothing related to blockchain. Projects in crypto are just pushing the pump and dump boat along the AI wave.
But it seems that the creators do not want to stop there, recent signals show that they want to go further with the AI trend, typically CZ and Elon Musk. I tried asking AI about the possibilities of combining AI and Blockchain, and here are the results:
I will continue to closely monitor this area to make changes when necessary, especially observing OpenAI. If it pokes anything into the blockchain, it must be deeper than this area.
NFTs & nftFi
In 2022, we will witness the entry of a series of big brands into NFTs. Typical names that can be mentioned are Nike, Gucci, Reddit, Trump, Starbucks. Up to now, 43/100 top global brands have entered this field.
The current NFTs market cap is about $23B (according to data from nftgo), which is still too small for its potential.
Compared to crypto, NFT has many strengths in reaching more traditional users. Firstly, legally, NFTs are imbued with artistic value and collectible value, so they will not be considered securities. It will be difficult for a set of NFTs to get caught up in litigation like crypto. This gives broadcasters more space to act.
The second is community culture, each NFT build has its own "belief". When this belief reaches the user's insight, they collect and hold to express themselves, not simply to speculate for profit like crypto. Social networks also know how to please users by allowing NFT to be set as an avatar to show off their personality. When Decentralized Social projects come into operation, nft will have more space to perform.
It can be seen that nft and web3 are the gateway to bring crypto/blockchain quickly into society, or in other words "Web3 and NFT are the gateway to crypto mass adoption".
Next uptrend season, nft's role is certainly indispensable. 2023 could be the year of setup window for the next huge bull season nft trend.
If you pay attention, you will see Binance continuously educating users about NFTs, along with a list of bluechips on BinanceNFT. China opened a government-backed NFT exchange earlier this year. Market leaders such as BAYC, Memeland, and Azuki are preparing for new plans. More and more liquidity support projects for nft are popping up.
With this NFT segment, I will follow projects belonging to the ecosystem of YugaLabs, Memeland, Azuki, Frank and Mr. CZ. We will also pay attention to local collections from the emerging market of Japan.
A small note, usually NFTs will not fly at the same pace as crypto, usually one beat ahead or one beat behind. In 2021, when the market peaks in October and November, nft peaks in January and February 2022.
In the near future, a large amount of ETH will be unlocked after the Shanghai upgrade. This number is mainly from long-term whales, so it will be difficult to lure them to sell at low prices, but luring them to buy nft is different 👀.
For retail investors like us, we shouldn't love art too much. When we make a profit, we should find a profit-taking point.
nftFi
At the time of writing nftFi seems to be quite strange to the community, but a booming future of the economy around nft is inevitable. We can mention some pieces of the puzzle in nftFi as follows:
Aggregator: Blur, Hyperspace, Gemxyz
nft AMM: Sudoswap
Lending Borrowing: BendDAO, JPEG’d, NFTfi, FRAKT, DROPS, NFTY Finance
Fractional NFT - fragmentation: TESSERA, Unicly, Szns, Insrt Finance
Derivatives: Nftperp, Tribe3, FloorDAO
nftFi is currently in its very early stages and still needs more time to perfect the product. Sufficient conditions for nftFi to explode lie in the development of NFT. It is quite confident that there will be an nftFi trend when the NFT marketcap increases beyond the old peak.
In the long term when NFTs and RWAs are popular, I'm sure this segment will be extremely popular. If you know about DeFi summer, remember it will repeat with nftFi.
In early times like this, it's best to choose projects with products, revenue or strong potential to survive the stormy season.
Web3 & Decentralized Social
Web3 is a very broad concept with many subcategories within it. You can refer to the image below to know more.
It roughly consists of 4 main layers, the Protocol layer is the L1/L2 blockchain, built on top of it is the Infrastructure layer for Web3 including Socialgraph, Identification, Security, Storage,... the layer above is the dApps for users. . And finally there is the Access Layer - tools to interact with web3 such as browsers and wallets.
You see, web3 is very large, almost everything that the blockchain industry has web3 uses. So to pump the entire web3 system is quite difficult, so digging deeper into each small piece inside will be more reasonable.
To become a mainstream trend, there needs to be a new story that attracts users, creating a premise to pull cash flow into the market. There is an area that I highly appreciate will become the main trend for the next bull season. If successful, it can pull hundreds of millions of users into the market like the way GameFi did back in the day. That is Decentralized Social, also known as deSocial a.k.a DeSoc a.k.a SocialFi.
Why Decentralized Social? Necessary conditions for a story to become a mainstream trend in crypto include:
The story is novel and applicable.
Easy to communicate, attractive to the outside crowd.
Backed by a technology platform.
Convince retails to believe that it is the future of the future to cling to for life and death.
Gain favor from Giant Investors.
Sufficient conditions are: game theory + shill & pamp!
According to these things, both SocialFi, AI, and NFT all meet the standards. NFT needs a lot of education and I also predict it will explode in parallel with SocialFi, these two areas are related and complementary to each other. As for AI, as analyzed above, it currently has quite a few connections to the blockchain, more of a traditional appearance. If AI overturns the bet, it will be calculated later. Anyway, SocialFi paired with NFT is still the most reasonable.
In addition, have you noticed that since acquiring Twitter, Elon Musk is actively converting Twitter to a Web3 social network. Binance also has a project to develop its feed into a form of Social Network. Uncle Jack Dorsey left his position as CEO of Twitter to build Damus - a decentralized social network. Those small points add to my belief that Decentralized Social will be the next big trend.
The only thing I'm waiting for from SocialFi is the "game theory" that makes retailers throw money into it like crazy.
Below I will go deeper into Decentralized Social.
Decentralized Social
The story of Decentralized Social is to take advantage of the power of blockchain technology to help users secure and control personal information, anonymity, freedom of speech, protect content copyright, and help creators earn from their own contributions. content I create.
Four important areas for the development of Decentralized Social include:
Blockchain Layer
Socialgraph layer
dApp layer
Storage solution
Currently, the two segments Socialgraph and dApp are being developed very strongly by all parties, led by Lens Protocol, and a recent popular project is Hooked Protocol - Binance's 29th Launchpad.
The problem with deSocial lies in its ability to scaleup. As you know, to operate a social network with hundreds of millions, even billions of users, speed and data storage capacity are huge issues. The current blockchain infrastructure still needs more time to meet this need.
Positive signs are the recent entry of giants in the cloud data storage industry such as Google Cloud, AWS or BNBChain's recent expansion project, Greenfield, which promises to overcome the problem of on-site storage costs. chains are expensive.
Along with that, the development of new generation L1 such as Sui, Aptos, Kadena and L2s with high speed and low cost will be the premise for deSocial to come into practice. And don't forget, this fall we have Ethereum's Proto-Danksharding upgrade, promising to bring the speed of Ethereum 2.0 up to 100K TPS, this is a huge catalyst for Decentralized Social.
Even though that still can't meet the needs for deSocial to run smoothly, look back at GameFi, when it exploded so violently, the infrastructure couldn't do anything to meet it. It only needs to be backed by a technology platform to convince retails to believe in its advantages, the infrastructure can follow.
An explosive trend is to verify its value. If it is truly valuable, it will enter a period of stable development. If you pay attention, you will see that after the GameFi trend, capital flows from funds are still pouring into Game/Metaverse a lot, but this time they do not speculate on pumping and dumping the price line, they invest, invest to claim real yield. Because the values it wants to prove have been tested. Likewise with SocialFi.
So if the SocialFi trend reaches which areas will it benefit?
dApp projects built on-top that interact directly with users are of course the ones that will be strongly communicated to attract cash flow, not to mention this is a great place to draw game p./onzi. Similarly, looking at GameFi, Game products are the things that are most heavily communicated and pumped, at the same time they are also the least sustainable and easiest to sell: D.
In order for money to flow to the dApp layer, it must first go through Socialgraph's L1/L2 and native token layers. Below I will list the potential areas in Decentralized Social:
dApp Social: Projects that interact directly with users, currently there are not many but when the trend comes they will spring up like mushrooms after the rain.
deSocial Infrastructure: Platform projects include: Social graph, Privacy, Name services, Souldbound Token, solution to convert web2 to web3.
Blockchain Layer: L1/L2 blockchain infrastructure. You may not have noticed, but it is L1 guys like Ethereum that accumulate the best value from all trends. Their age and size make them unable to pump and dump like trend-following projects but the price flow The ultimate value is all directed towards it to help it grow sustainably.
Storage Solution: Data storage solutions are also an area that benefits a lot from this trend. This segment is often less noticed by retails, but mainly comes from organizations, builders, and whales. In fact, this segment is also quite long-term and sustainable, because it is an important and mandatory segment in the blockchain industry structure.
In addition, you can look at the Access Layer such as browsers and wallets.
Watchlist (excluding L1/L2):
Lens Protocol, Hooked Protocol, Cyber Connect, Farcaster, Damus, Mask Network, DeSo Protocol.
DTTD, Phaver, CosTV, Mirrorxyz, Lenster, Lenstube, iMe.
ENS Domains, SpaceID, Unstoppable Domains, Flux-Web3 Cloud.
There are also many other projects in early stage, this segment is expanding at a very fast pace so you need to follow closely to add or remove projects to your watchlist.
Memes & Memechain
“Memes are not narratives, memes are not trends, memes are an ideology 💁♂️”
Memes have no rules, they can suddenly lead a trend on a nice day, or simply pump like crazy after a quote from ElonMusk. But basically, memes are an indispensable dish in the crypto party. The memes system doesn't require much analysis, simply betting on those that have a community, MM team and KOL support.
Below is my watchlist:
Ancient memes always bring a certain peace of mind: DOGE, SHIBA, PEOPLE
Emerging memes: CONK, FLOKI, BONK, THE, CAW, XEN
Things that have died once cannot die a second time: LUNA, LUNC, USTC, FTX
And don't forget skin-in-the-game in meme-chains like Dogechain, Shibarium
Some other little things
Bitcoin PoW still exists, miners are still upgraded and sold, PoW will still be hyped and push up the price. Some PoW projects to research: Flux, ETHW, Kadena, Aleo.
Tokenization of real assets, also known as Real World Assets, is becoming more popular, and of course the economy around it will also grow. Imagine that in the future you can buy, sell, and mortgage real property with just a few clicks. Until then, we need to wait for the blockchain infrastructure to be complete, stable, and the legal corridor to be approved.
Along with the completion of the legal corridor, CBDC is gradually being applied by many countries.
DeFi godfather Andre Cronje's comeback is a big push for the Fantom ecosystem to get back on track. You should learn about the ve(3,3) model and DeFi projects on FTM.
Adding more while I post this:
Zero-Knowledge will be the foundation technology for the coming period
Decentralized stablecoin, Real World Asset will be the factor that changes the face of DeFi
AAA games with fully on-chain will be the trend
IMPORTANT NOTE
First, the above are personal projections based on research and personal experience that may or may not be correct. Furthermore, the current forecast is relatively early; in the future there may be unforeseen disturbances. So you need to closely follow the market and do your own research.
Second, capital management is extremely important in the crypto market in particular and investment in general. You should have a reasonable allocation strategy for your investment portfolio, not all-in on the trend. For myself, although I strongly believe in Decentralized Social, I only allocate about 30% to this category, most of it is still for things that bring safety and sustainable value such as BTC and DeFi.
Remember that no matter what trend comes, things that belong to the platform such as BTC, L1, and DeFi will still grow strongly. $BTC will surpass its peak when the uptrend comes.
🔗 Another article about market experience here, you can refer to: https://www.binance.com/en/feed/post/263883
Finally, prepare your luggage firmly, the uptrend season will come.
Notes:
You may read this article in just 10 minutes, but I spent many weeks researching and writing a complete article. If you find this article valuable, please help me spread it to the community by sharing the article.
Each of your Likes and Shares gives me more motivation to write more. Next time, I will go deeper into each segment and analyze potential projects more carefully. Don't forget to follow Binance Feed and my channels.
Binance Feed: https://www.binance.com/en/feed/profile/118634362
Twitter: https://twitter.com/KudoDefi
Link3: https://link3.to/hoangdefi
Thank you. Wishing you a successful hunting trip 🫡
Hanoi, February 6th, 2023.
