Before the next bull market arrives, you only need to pay attention to these 17 narratives.
Compiled by: Luffy, Foresight News
Cryptocurrency is a narrative-driven market, and in order to earn 10 to 100 times returns in the next bull market, you need to be prepared in advance. This tweet is an overview of 17 narratives in the cryptocurrency field:
The main problem DeFi faces is liquidity fragmentation. Over the years, due to DeFi applications being deployed on multiple networks (multi-chain narrative), liquidity has become increasingly scattered, and the more scattered the liquidity, the harder it is to attract users.
Omnichain solves this problem by connecting different blockchains, which allows users to switch between different chains better and provides better capital accessibility for protocols, thereby driving the adoption of DeFi.
Projects: @LayerZero_Labs, @OmniFDN, @zetablockchain.
Monolithic blockchains like Bitcoin and Ethereum have been around for more than a decade, and they have three core functions:
Execution of transactions
Modular blockchains split the above three tasks instead of executing all of them at once on L1. This fragmentation of tasks helps blockchain scale without compromising security.
Dynamic NFTs (dNFTs) are a type of non-fungible token (NFT) but with smart contract functionality that can automatically change their metadata based on external conditions, which is a huge market with use cases including RWA, gaming, music, art, and more.
A simple example: an NFT representing a property requires the ability to reflect its maintenance history, age, market value, etc. Therefore, tokenizing these constantly changing assets requires NFTs to be updated with changing metadata.
Projects: @artblocks_io, @AsyncArt, @rarible
The current DAO model includes many platforms with independent data structures, user identification, and management functions. Due to the lack of infrastructure and administrator permissions, even if the data is available, it is difficult for ordinary people to access the information.
On-chain DAO will allow open source, permissionless, and composable applications to utilize the same core database: the blockchain.
These are industry giants whose positions are difficult to shake because they have the first-mover advantage, the largest user base, and the most robust capital.
Project: $LDO, $AAVE, $CRV, $UNI, $MKR, $SNX, $COMP
Binance’s 24-hour derivatives trading volume is $33.6 billion, while spot trading volume is $7.4 billion. The trading volume of derivatives is 4.5 times that of spot trading volume.
With the development of DeFi, as well as improvements in liquidity, capital efficiency, and other aspects, more users will migrate from centralized exchanges to decentralized exchanges.
Project: @synthetix_io, @muxprotocol, @dYdX
In traditional finance, indices are the most commonly used tool for obtaining asset exposure. From retail investors to hedge funds, banks, and other institutions, everyone uses indices because of their timeliness, low risk, and low correlation costs.
DeFi, through smart contracts and tokenization, can open the door to a new paradigm for index products. Considering that as more institutions enter the crypto space, the demand for indices will continue to grow, keep a close eye on this narrative.
Project: @alongsidefi, @NEX_Protocol, @indexcoop
Decentralized exchange (DEX) is the cornerstone of DeFi. They are the most commonly used protocols, and I cannot imagine a financial system where users cannot trade assets. I am optimistic about those who are trying to innovate in this area by proposing novel solutions.
Project: @traderjoe_xyz, @CurveFinance, @mavprotocol, @ThenaFi_
Account abstraction and wallet-as-a-service
Account abstraction is a powerful concept. You can abstract various aspects of interacting with a wallet, such as gas fees, mnemonic phrases, and authorizations, to create a simple wallet that attracts the next wave of users.
On the other hand, Wallet as a Service refers to empowering wallets to enable users to communicate with other wallets via chat and access markets, making wallets easier to use while providing more functionality and services.
Real World Assets RWA
With the help of blockchain technology, real world assets such as commodities, real estate, and luxury goods can achieve unprecedented liquidity, transparency, and accessibility.
On Twitter, there are many topics about the tokenization of RWA, and I think perpetual contract products and dNFTs can be used to enhance these asset categories.
Projects: @galileoprotocol, @ClearpoolFin, @centrifuge, @NEX_Protocol
Liquidity and Staking Derivatives (LSD)
Calculated by TVL (Total Value Locked), liquidity staking is currently the largest area in DeFi and will continue to grow in the next few years because there is nothing to take ETH away from it, and it benefits every ETH staker.
This category has a big advantage over other categories in terms of composability and can incentivize developers to develop innovative products every week (which is one of the reasons why it is favored by everyone).
Projects: @Rocket_Pool, @LybraFlnanceLSD, @tenet_org, @pendle_fi, @Blockingrallaxfin
As governments begin to focus on cryptocurrency and DeFi, I believe the next wave of disruption in the DeFi industry will be related to privacy.
Some of the innovative features we will see in the next few years include sub-transaction privacy, identity verification, optional archiving, and zk proof transaction processing.
Projects: @hoprnet, @aztecnetwork, @renegade_fi, @CantonNetwork, @OasisProtocol
Among the various scalability solutions emerging every day, zkEVM is the best solution in terms of privacy, security, and scalability for the next few years.
ZK Rollup is a great technology, and I think zkEVM Rollup has a technical advantage in the market.
Projects: @0xPolygonDeFi, @zksync
DeFi insurance is rarely discussed in the space, but as DeFi evolves into more innovative products aimed at both retail and institutional users, insurance will be essential.
The US insurance industry accounts for 3.1% of GDP, while DeFi insurance accounts for only 0.37% of DeFi TVL.
Insurance provides protection against risks such as smart contract vulnerabilities, hack attacks, and other risks, filling a critical gap in the blockchain industry.
Projects: @NexusMutual, @UnslashedF, @cozyfinance
ERC-6551 allows NFTs on Ethereum to become wallets. You can connect your NFTs and use DApps without having to use wallets. This opens up many new use cases and lowers the barrier for entry for users into Web3 as they can use NFTs instead of complicated wallets.
This is a new technology and I have not found any related projects to highlight for you yet.
Super apps are not a new concept, with WeChat being a typical example of a Chinese super app. In the current DeFi space, we have yet to see super apps emerge, but many speculate that wallets will play this role.
On the other hand, you can view centralized exchanges such as Binance as super apps, where you can trade, stake, lend, post on Binance Feed, pay with Binance Card, buy and sell NFTs – it is a true super app (unfortunately, it is also a centralized app).
Projects: @Instadapp, @Uniswap
I think gambling projects will do well in the future, mainly because many regions around the world (California, Japan, Middle Eastern countries, and many others) prohibit gambling.
Therefore, decentralized gambling platforms may become a trend in the future. However, this is also the riskiest narrative among the 17 in this article because investors (VCs, angels, etc.) do not like to fund and support gambling platforms.
Projects: @0xbets, @PepesGame, @rollbitcom