Bankless: Five Crypto Trends to Watch in the Second Half of 2022
Original compilation: TechFlow intern
Original compilation: TechFlow intern
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The Many Impacts of ETH Mergers
As far as Ethereum is concerned, the topic worthy of attention in the second half of the year is The Merge.Its launch, timing and execution will have some impact in the short term, but the substantive impact will follow.
The long-awaited Ethereum 2.0 upgrade will see the network transition from PoW to PoS consensus mechanism - which will have an impact on every aspect of the Ethereum ecosystem.
First things first: moving to PoS will result in a significant reduction in Ethereum’s energy consumption, alleviating concerns about the environmental impact of the network — especially ESG-conscious investors.
Note: ESG investment: refers to the integration of ESG concepts into the investment research practice, and on the basis of traditional financial analysis, through the three dimensions of E (environment), S (society), and G (governance) to examine the medium and long-term development potential of enterprises. We hope to find investment targets that create both shareholder value and social value, and have sustainable growth capabilities.
This change also paves the way for many protocols that are easier to implement upgrades in PoS networks. These include improvements to scalability such as Danksharding, Proto-danksharding, and lower layer 2 call data costs via EIP-4488.
This is in addition to changes that mitigate MEV's negative externalities, such as PBS (Proposer-Builder Separation), which separates block production from validation.
Post-merge, these upgrade changes will be accelerated as more core developer resources will be freed up to focus on delivering these upgrades instead of looking down on the merge.
The Ethereum 2.0 upgrade is also an important bullish catalyst for the ETH asset, and the transition to PoS will significantly reduce the issuance required to secure the network, which, combined with the fee burning already implemented through EIP-1559, will likely lead to a deflationary ETH.
The cancellation of PoW will also alleviate the severe structural selling pressure, and the operating cost of PoS validators will be much lower than that of PoW miners.
In the end, the merger will be an important driver of Etheruem's staking economy. Currently, more than 12.97 million ETH has been pledged, accounting for about 10.8% of the total ETH supply, and the completion of the merger may lead to an influx of new pledgers and restore confidence in liquid pledged derivatives (LSD).
Protocols like Lido, RocketPool, and Stakewise — which have been trading below ETH amid heightened market volatility and tight liquidity — will balance out and then take off quickly. Withdrawals on the beacon chain will not be activated until the Shanghai upgrade of ETH.
How to get involved:
Ethereum itself
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A more prosperous L2
L2 is expected to continue to grow in the second half of 2022. L2 represents the present and future of Ethereum scaling.Optimistic and zero-knowledge (ZK) Rollup are used as the execution layer to provide users with a fast and cheap transaction experience while still maintaining the security of the underlying Ethereum L1.
Despite some growing pains, L2 adoption by users and developers continues to rise steadily. Currently, the value locked in Ethereum L2 exceeds $3.81B, and the TVL denominated in ETH is close to the historical high.
In addition, many L2 native applications take advantage of its strong scalability and have gained a lot of usage, for example: Perpetual exchanges such as dYdX, GMX, and Perpetual Protocol are currently progressing towards billions of transactions.
Despite a general slowdown in the on-chain economy, the L2 ecosystem continues to grow. Optimism’s network revenue is on track to grow 5.5.% sequentially in Q2, while Ethereum L1 is down 46.3%.
This growth could be attributed to the launch of Optimism’s native token OP in May. It is the first of the "big four" L2 (which also includes Arbitrum, zkSync, and Starkware) to issue a token.
At least one of the “big four” L2s will likely issue tokens in Q3 or Q4 as a significant catalyst for the respective ecosystem developers, users, and applications.
How to get involved:
Invest or earn airdrops of individual L2 tokens
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The Rise of Cosmos and Lisk
Another theme to watch in the second half of the year is the Cosmos ecosystem. Cosmos aims to create the "Internet of Blockchains", and through the Cosmos SDK, developers can create sovereign, highly customizable blockchains dedicated to individual applications - called AppChains.
These networks can either bootstrap their own validator sets or leverage shared security through interchain security, and an upcoming upgrade will allow chains to outsource their validator sets to the Cosmos Hub.
Cosmos chains can also be connected via Inter-Blockchain Communication (IBC) - a trust-minimized bridging and communication protocol. IBC is currently enabled for over 30 Cosmos chains, allowing users to transfer assets frictionlessly between enabled networks.
This novel stack of technologies has attracted more and more attention and interest from developers. For example, dYdX, the largest decentralized perpetual exchange by trading volume, recently announced plans to develop V4 of its protocol as a Cosmos application chain.
Given the protocol’s history of early adoption of new technologies — it was one of the first to be deployed on Starkware — it’s a signal indicator that more high-profile applications may follow suit and start building on Cosmos. Since native tokens can be obtained through verification and staking"L1 premium", the project may be more interested in the application chain.
Cosmos, like all Layer 1s, is going through its own growing pains. Osmosis, a decentralized exchange, was recently stopped due to loopholes, and it is still difficult to enter the ecology through traditional methods such as cross-chain bridges or exchanges.
After dYdX crosses the chasm, the influx of users, capital, and attention should help catalyze and fuel the growth of the ecosystem in the remaining months of 2022 and beyond.
How to get involved:
Invest in Cosmos Lisk's L1 token
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ERC-4626 Revolution
DeFi revenue will be significantly compressed in 2022 due to a sharp drop in on-chain activity, lending demand, and speculative desire.Nonetheless, single-token staking is already on the brink of its next growth phase, thanks to the adoption of ERC-4626.
Pioneered by a group of prominent EVM developers, ERC-4626 is a new tokenized vault standard.Just as standards such as ERC-20 and ERC-721 allow for the easy creation of fungible and non-fungible assets on Ethereum and their integration into applications, ERC-4626 promises to make it easy for developers to create DeFi by providing a template their own treasury.
ERC-4626 is an extension of ERC-20, which means that these tokenization strategies are as composable as assets such as USDC, DAI, UNI, etc. The popularity of this standard will have a huge impact on the risk-adjusted return of DeFi.
4626 can brighten up the DeFi user experience by improving capital efficiency, users will be able to trade, LP and use these new tokens as collateral, earning rewards for participation while earning benefits from the underlying strategies run by the treasury itself.
Miners will be able to save on Gas costs and manage risk more easily, as 4626 strategies (like traditional DeFi vaults) can automate position management and compound returns. These factors should increase the attractiveness of deploying funds to DeFi by reducing risk and expanding returns.
Various protocols have begun to take advantage of the 4626's capabilities. For example:
A structured product of the stETH/ETH recursive leverage strategy on Aave,
Both Index Coop and Galleon DAO's icETH and ETHMAXY are 4626 compatible.
Yield protocol Timeless Finance and upcoming NFT lending protocol Astaria, among many others, will also leverage the standard.
Given the huge benefits of the 4626 product, future staking will see users minting or buying, and holding these tokenized yield strategies, rather than just depositing into numerous separate protocols.
Protocols and DAOs that adopt the standard early should see huge growth in users of their products, as DeFi users realize the benefits this new type of token offers.
How to get involved:
Invest in the governance token of the DAO based on 4626 assets under management
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macro uncertainty
Weakness in traditional markets has seeped into the cryptocurrency space throughout the first half of 2022, and this cloud is expected to hover over the market in the third and fourth quarters. Both bond and stock markets are off to their worst start in decades as the Federal Reserve has been forced to sharply raise interest rates and shrink its balance sheet to fight runaway inflation.
Rising interest rates, a flattening yield curve, soaring commodity prices and the persistence of supply chain problems -- trillions of wealth have been destroyed by falling asset prices -- have begun to fuel fears of recession and stagflation.
Cryptocurrencies have also fallen deep, with major assets like BTC and ETH down about 71.1% and 78.9% from their ATHs, and many small-cap assets have fallen more than 85% from their peaks.
The big drop reinforces the notion that crypto no longer operates in isolation, as there is a strong correlation between BTC and the S&P 500, which is currently at 0.85.
While it may have little impact on the long-term adoption of blockchain and the eventual eventuality of Web3, continued macro uncertainty will certainly weigh on cryptocurrency prices for the foreseeable future.
How to get involved:
Create DCA or one-time strategies to build long-term positions
in conclusion
in conclusion
the most important is,
the most important is,Prices may take time to reflect the fundamental shift brought about by the first four themes and as a result of the fifth.Original link
