Overall Crypto Market Outlook 2022

Article translation: Block unicorn

Article translation: Block unicorn

2021 is clearly a breakout year for crypto assets, far surpassing any other period in its history, from institutional acceptance to retail adoption. Crypto assets have enjoyed a strong two-year bull run, partly due to a dovish Federal Reserve that fueled risk appetite among market participants, as well as rapid innovation in web3 protocols. Shockingly,The popularity of cryptocurrencies in society during this cycle is astounding, aside from the typical news rhetoric that yells "Look at this coin up 1000%!": Visa buys a punk, Adidas buys a boring ape, many TradFi firms like Jump acknowledge long-term legitimacy of cryptocurrencies, Crypto.com buys Staples Center, FTX buys Miami Heat's American Airlines District, crypto funds keep raising billions seemingly every other week, Facebook rebrands as Meta, and stablecoin legislation is front and center on Congress’ minds. Encryption has effectively fast-tracked to the forefront of the public conscience, this time not in a negative way, and it's not going away anytime soon.

Although the crypto market will still go through parabolic boom and bust cycles due to the industry's infancy, from my vantage point I see many Fortune 500 companies trying to position themselves to benefit from this new virtual world, There is no other way to truly do this without supporting these existing decentralized protocols. If this continues to be the case, cryptocurrencies may become more tightly integrated into traditional markets. As this unfolds, crypto assets should transition to a slower growth trajectory, with various sectors outperforming the stock market at various times, a trend we have already begun to see over the past few years.

The inability to adapt to new narratives in cryptocurrencies has been the most expensive lesson for retail investors, while those most willing to be at the forefront of trying new things benefit the most, whether directly by receiving backdated airdrops or simply by interacting with the market Moving toward alignment, enabling them to make smarter investment decisions. To highlight this ongoing transformation of crypto market leaders, we can look at three separate iterations of DeFi protocols that originated in early 2019 with the strengths of LINK and SNX. Chainlink and Synthetix are two protocols that are some of the major innovations in DeFi. The SNX/ETH and Link/ETH charts topped out during the first DeFi summer in August 2020 after peaking from a 50+x rally against Ethereum in early 2019. They have been in a bear market against ETH for over a year now, with SNX/ETH down -92% from their highs. After the first DeFi summer in 2020, there was a second wave of DeFi in early 2021 that performed well, and one of the most famous stocks was Sushi. As an innovative branch of Uniswap, Sushi rose from a low of $0.50 in November 2020 to a peak of about $22-23 in February this year, a 40-fold increase. Along with other “DeFi blue chips” at the time, Aave, Comp, and Uni peaked against ETH around the same time, and their USD pairs traded mostly sideways until a sharp sell-off in crypto markets in May. Following the peak of “DeFi 1.0” in February and the consolidation of the summer, we see a third wave of protocols spearheaded by OHM, DPX, SPELL, TOKE, etc., most notably SPELL & OHM. These protocols also quickly caught the attention of the market, achieving over 100x growth from their inception and reaching multi-billion dollar market caps at their peak. Currently, they are both well below their local highs, but it remains to be seen whether they will continue their multi-month downtrend against ETH, or whether they will be able to maintain value better than their DeFi predecessors.

While this is all happening this year, we also have a thriving multi-chain ecosystem. Over the past year, many alternative layer 1 blockchains have brought a large number of new users to DeFi, and the market has directly reflected the user growth in each project's market cap. During the same period when SNX/ETH fell -92%, Solana rose against Ethereum by about 10 times since August 2020, and 25 times if measured from the low point in January 2021. So when market participants think we should be in a multi-year bear market because the alts are up too much, I think some nuance needs to be applied to that analysis because some alts have been in a bear market for several months now.

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I think the five main trends for 2022 are:

1.Accelerated growth of talented developers joining web3 (DAO) from web2 + increased usage of development tools and blockchain infrastructure/middleware.

2.Layer 0 ecosystems like Cosmos and IBC are finally becoming more cohesive as the multi-chain DeFi trend continues to prominence, and existing alternative layer 1 ecosystems strengthen their newly formed communities.

3.The actual modular blockchain architecture is closer and closer to mainnet, with specialization of execution layer/data availability layer/settlement layer.

4.The emergence of many different successful games - economies that find creative ways to attract non-crypto users into the world of digital assets and financial sovereignty.5.Everyone* is trying to join the Metaverse, from big tech companies to high-profile celebrities to clothing brands, and by 2022 we will see crypto partnerships and attempts to grab land in the web3 space as user attention shifts in this direction A significant increase.

FAANG Developer → Shadowy Super Coders

One of the most important aspects of crypto's recent success is the massive sharing of intelligent minds now working in web3 and building new dApps for users. I believe we will see talented developers move from web2 technology companies to web3 companies, as the industry has become more legitimized this year. It's clear that builders can have an immediate impact on crypto if they work fast and fill in inefficiencies in the market, and there's a lot of opportunity for innovation here. Especially with the growth of alternative platforms using languages ​​other than Solidity, such as Golang and Rust, which are more attractive to traditional developers who have never been exposed to cryptography before. Before, let's be honest, talented engineers had no incentive to focus on encryption. In an industry where new grads can easily make six figures and senior developers can easily make 300,000+, when the flagship app is Crypto Kitties and a hundred different ERC-20 token ICOs have no real use case , nobody cares about Ethereum. Now, there is real value in transacting on these networks, and the rewards for developers building in these new ecosystems are enormous. You can feel the conversation changing among the SV tech brethren as people realize that web3 is not going away.

Blockchain infrastructure is one of the most overlooked verticals in crypto right now because users don't use any of these services directly, so they're not on most people's minds. While a large number of ETH users know what Metamask is, hardly any users know about Infura(note 1)Helps power most dApps running on Ethereum behind the scenes. Infura allows developers to build without having to focus on the devOps side of the technology, so instead of having to spin up their own Ethereum nodes to access the blockchain's data, they can use these provided services. For most traditional developers, Infura for ETH is comparable to AWS. As we grow in this multi-chain world, there are many other services that are popping up to help developers of services on other chains. This is the lane I think will accelerate the fastest in 2022. What originally caught my eye was Pocket Network, and one of my favorite games of the year. The only reason I even know this team is because they helped solve some of Harmony's RPCs(Note 2)Question, here is where Defi Kingdoms is located. Before this development, I didn't know what POKT was, but their infrastructure has improved my personal experience by a factor of ten, since the lack of RPC on the Harmony network was a huge bottleneck for users before. Pocket Network connects developers and node providers, similar to Infura, but their economic structure is more focused on keeping it as decentralized as possible and incentivizing full node users by paying developers when they use the service. Some other interesting infrastructure games that I'll discuss later are Aleph.

Note 1:Infura is the Ethereum infrastructure developed by developer Michael Wuehler and started as an independent operation. , which was wholly acquired by ConsenSys in 2019 and became its business unit.

Note 2:RPC (Remote Procedure Call) is a remote procedure call protocol, a protocol that requests services from a remote computer over a network without knowing the underlying network technology.

A New Multi-Chain World: Which Layer 1s Will Stay Sticky And WTF Is IBC?

I don't believe AVAX, LUNA and Solana will be the EOS of 2018, 2022. Comparing the altcoin space in 2017 to the altcoin space in 2021 lacks deep insight as users have little to do with blockchain four years ago. Today, by directly interacting with other users in these decentralized applications, users can access many financial primitives that exist in traditional financial systems.

Back in 2017, I and many other market participants expected much less from these blockchains. I don't recall using any decentralized applications on other alt L1s at the time, in fact none at all. In my second month in crypto in 2017, I read NEO's white paper and thought I had found the best sharding tech ever, to my dismay alts dropped 90+ after a few months % after that, I don't see a huge difference in the actual availability of these systems, which is why I don't think this cycle is comparable to previous ones at all.

So, which tier will win? While we've come a long way on all fronts, there will still be some leaders who will separate from others. A lot of first tiers have built cult-like communities over the past year, but we have those in 2017 too, and if you check out any of the old dinocoin cash tags on twitter, *still* existing bag holders will attest at this point. A frenetic retail community may create parabolic price action in the short term, but the team building and innovation behind these protocols will establish long-term support levels.

Solana was the first altcoin L1 I personally found, initially because I saw a connection between Anatoly and SBF, that's when I started researching the project more because they are both very smart People, while Solana is only ~300M looks very mispriced, innovations in its consensus protocol Proof-of-History and its extremely efficient parallel runtime architecture called sealevel allow Solana to process transactions faster than other chains. Its user experience is second to none in comparison, even though it's not even EVM compatible yet (Neon Labs wen?). SBF is super advantaged in community building and business development as Solana's advisor, as he is connected to tradFi (traditional finance) through his previous relationships, and not too far through media, marketing, FTX platform. Pyth Network, an oracle that feeds dApps on Solana, has a long list of great partners from traditional finance, so you can see the benefits of this impact in real time. A lot of the criticism of SOL this year has been its "association with VCs and billionaires, but I don't think that's a negative, if anything, it's a positive for something that people are very openly supporting and putting money into. "

In my opinion, Avalanche is by far the most powerful EVM chain and offers one of the best user experiences out of all other Layer 1s this year. The development team is very strong and has an extensive research history in the blockchain field, which is reflected in the products they deliver to users. Its core innovation is its "Snowman Consensus Algorithm," which allows its validators to reach consensus faster using a subsampling voting measure while observing transactions. While its EVM implementation is the main focus this year, it only describes Avalanche's c-chain, and the possible future implementation of subnets with different VMs makes it stand out from the other layer 1s in my opinion. In the future, various application-specific blockchains can be deployed in their own Avalanche subnet, each with over 4k tps and sub-second finality. Like Solana, AVAX has a very strong team in business development, which we've seen is critical to user adoption.

Terra Luna is a blockchain built with Tendermint and the Cosmos SDK, primarily focused on its decentralized stablecoin, TerraUSD [$UST], while also developing a robust dApp ecosystem that will connect to other Cosmos via IBC chain. Luna has the best token economics of all L1s as it is the only chain with a built-in decentralized stablecoin. UST is designed so that as demand for UST increases, there are mechanisms to burn LUNA to match that demand and maintain UST's peg at $1. The current market capitalization of other stablecoins USDT ($80B) and USDC ($40B) has continued to grow over the past few years, and as more and more people get into cryptocurrencies, stablecoin growth is arguably one of the easiest bets to bet on. one. UST has a market cap of just $10B and is already developing many strong cross-chain partnerships:Terra Luna is the only game in the cryptocurrency space where you can directly bet on both stablecoin growth and layer 1 smart contract ecosystem growth.For this reason, LUNA is my favorite of all the biggest Layer 1s in 2022, and I bet their ecosystem growth, stablecoin growth, and IBC growth in general will propel them above other competitors.

The Cosmos ecosystem is perhaps the most misunderstood in the entire crypto space. It turns out that the average market participant doesn't even know when using a chain built with the Cosmos SDK, and no one really knows what IBC does.IBC stands for Inter-Blockchain Communication ProtocolModular Blockchain and ETH 2.0

Modular Blockchain and ETH 2.0

Modular blockchain design describes a system architecture that separates the different parts of a typical monolithic blockchain by creating specialized chains for each of the different layers: execution, data availability and consensus, and settlement. Right now, layer 1 blockchains do all of this work themselves, which is why we’re seeing some of them hit a fee bottleneck as more and more users join their networks. In this reality, modularity seems to be the end state if we are to scale encryption to the global population, and if for no other reason, all of these systems must be optimized in the most efficient way possible.

Due to the high cost of interacting with DeFi protocols on the base layer for most of 2021,small walletof users cannot use Ethereum. The market has reflected this sentiment with the return of various other layer 1 smart contract platforms that have emerged and solved this problem for users. Ethereum’s roadmap towards a modular blockchain stack, utilizing ETH as the settlement and data availability layer and other layer 2 scaling solutions like zkRollups and optimistic rollups to handle the majority of transactions, will be fully implemented this year. Once this transition is complete, users will be able to use the network's layer 2 solutions while still benefiting from the security of Ethereum's base layer.

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Digital assets that make money while playing

Gamification Axie Infinity achieves what no other cryptoasset has done before 2021 by creating an in-game ecosystem that millions of users interact with every day. As the first play-to-earn game to attract a massive audience, they barely interact with cryptocurrencies in any other way, and they've demonstrated the power of these economies when executed correctly at scale. Many people in the Philippines earn more from playing Axie Infinity than they earn from actual work, demonstrating the possibility of a profitable economy that prioritizes users. The challenge moving forward with this trend is how to maintain these economies so that they are sustainable in the long run, and how to keep attracting new users.

NFT mania is wild in 2021, with people paying millions for cypherpunks, boring apes, and even digital EtherRocks. We’ve seen massive sales of NFTs, whether because they were the first on-chain or the most popular at the time. Sometime in the summer, even with high fees in ETH, every new 10k profile picture item is sold on opensea for multiples of the mint price and immediately resold. Although we see a lot of interest in NFTs in 2021, the next iteration will be digital assets that provide utility to users. We haven’t even scratched the surface of the possibilities of integrating NFTs directly into blockchain games and other DeFi primitives.

One of the main attractions of web3 versus web2 is that users are no longer a product being sold, but network participants who are rewarded for their active contributions. My most bullish project for 2022 is Defi Kingdoms, which is at the center of three major trends in crypto over the past few years:DeFi + NFTs + multi-chain collaboration. Defi Kingdoms is well positioned to be the first game to capture thought-sharing *fun* earn while playing on multiple chains, already competing with Axie Infinity for game content volume, while Axie's user base is only a fraction of Axie's, while Only on the Harmony blockchain. Two of the main features of DFK are its decentralized exchange, where you can trade various crypto assets, and hero NFTs that you can use to summon other heroes, perform quests, and eventually compete against other players in PVP. Their in-game economy and hero NFTs benefit users more than any other ecosystem I've seen to date. On their dex, users who hold the governance token Jewel in the bank will receive 30% of all transaction fees. For those who provide liquidity, they will be rewarded with most of the initial token distribution, partially locked, instead of doing early deals with VCs and others in the seed round like most projects. Even with a game ecosystem of heroes, most of the costs associated with summoning new heroes are reintroduced into the system.

30% of all summoning costs are given to players later as quest rewards and 10% of all summoning costs are paid to xJewel stakes in the bank. As the project moves multichains to Avalanche and more in the future, there will be airdrops for those currently actively playing on Harmony. Even taking into account future roadmap milestones, certain land purchases and other upgrades in the game are only available to those actively exploring and leveling up heroes. The problem with many of the current existing DeFi projects is that holding tokens does not really benefit users, by plugging these tokens into a well-designed game economy, players are incentivized and rewarded for active participation.

Metaverse Mania: With NFT

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Q1 2022

The core location focus consists of a combination of layer 1, layer 2 scaling solutions, blockchain middleware infrastructure and DeFi + metaverse games. The largest positions in Q1 will be Jewel LP positions, Near Ecosystem and Cosmos Ecosystem. Near Ecosystem is positioned with an 800M ecosystem fund, a strong development team, and a bullish technical chart breaking out to new highs from 100+ day consolidation. The Cosmos ecosystem had many development milestones in Q1, including interchain security, Liquid Staking, interchain accounts, Evmos ["EVM-on-Cosmos"], and the emergence of a cohesive Cosmos Defi ecosystem. Interchain security should address the accrual of value to token holders for Atoms, while other developments will greatly improve the user experience within the ecosystem. Blockchain infrastructure and middleware is one of the areas of most interest because users do not directly interact with them, but it is one of the most important verticals in the crypto space. Pocket Network, LIDO, Arweave, and Aleph.im all play important roles in this space. Treeverse and Defi Kingdoms are my favorite NFT/GameFi projects. Treeverse is a mobile-first MMORPG that's building an interactive world in the Metaverse. You'll be able to use your Treeverse founder plots along with your Timeless NFT characters to complete quests, buy equipment, and build land while earning their in-game currency, $SEED. Defi Kingdoms is a powerful decentralized exchange and a multi-chain game earning game, where users can cooperate with their DFK heroes to form guilds, which they can use to find, upgrade, and summon other heroes.

Notes:

Notes:Portfolio Allocation

Portfolio Allocation

Tier 1/ Tier 2

• NEAR

NEAR is a proof-of-shard layer 1 blockchain that is developer- and user-centric, has a very strong technical team, and has little to no media hype... I quickly realized this year that while I Partying during the bear market of 2018 and not paying attention to cryptocurrencies, but there are actually a lot of very, very smart people building technology that exists today. If you're like me and discovered crypto in 2017, you probably forgot about it too when the price dropped about 90% and now you're trying to get up to speed again. So, if that's you, then welcome back!

Anyway, the biggest difference between NEAR and other chains is their focus on usability, not only for users but also for developers. One of the big hurdles getting newcomers to crypto these days is the difference in user experience: asking people to understand blockchain technology, manage their private keys, avoid scams, and navigate to the correct website is a lot of typical non-tech-savvy users, we Already seeing BAYC users, their Boring Ape NFTs keep getting stolen. To do this for end users, NEAR allows developers to abstract away the confusing parts of interacting with many blockchain dApps by setting up a NEAR account: logging users in without having to choose a wallet each time, enabling users to easily subscribe to Manage permissions per application, hide infrastructure costs by allowing developers to pay usage fees on behalf of users, and provide predictable pricing for transactions. Ease of use for new developers: NEAR nodes run WASM, can compile from popular languages ​​like RUST, and they provide a wide range of tools to make it easy for developers to use, including one-click deployment, integrated unit testing, and simple front-end integration + debug.

• Aurora Engine

Aurora Engine is a high-performance EVM based on the NEAR protocol blockchain. Aurora's fees are abstracted from the user and easily accessible through other bridges such as Aurora Bridge and Allbridge. Most of the activity on NEAR is currently happening on Aurora, but I expect that to change with the projects launching after NEAR's $800M Ecosystem Fund.

• Octopus Network

The Octopus Network is a multi-chain network that aims to create an interoperable ecosystem of dedicated application chains, utilizing the Octopus Network to ensure security. Octo does not have its own blockchain, but instead a set of smart contracts that live in the Octopus Relay on the NEAR blockchain, combined with a set of validator nodes, the application chain will pay for the security of the application. Its structure is similar to that of Polkadot, but it is much cheaper for Lisk to bootstrap their network on Octo than parachains on Polkadot. Each of these application chains plans to use the Substrate framework and a dedicated application front end to build them. Once the implementation of Substrate-IBC Pallet is completed, these application chains will also be compatible with IBC.

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Metaverse/DeFi

• Defi Kingdoms [gem]

Polygon [Matic] is one of the leading research teams building various zkRollup solutions for ETH 2.0, while also maintaining its own proof-of-stake layer 1 chain. The monthly chart should close at an all-time high after breaking out of the previous year's high in May, consolidating for most of the second half while the other L1s are in the spotlight.

Avax and Luna For the above reasons, if Solana has an active LP pair, probably add that as well.

Defi Kingdoms is a decentralized exchange, NFT marketplace, and immersive game-to-earn gaming ecosystem. At its base layer, it is a dex that lives on the Harmony ONE blockchain and allows users to trade between various crypto assets. Jewel is the governance token of DFK. Users can pledge Jewel to DFK Bank to earn 30% of all transaction fees on the platform. In addition to being able to deposit Jewel in the bank, users can also provide liquidity between different encrypted asset pairs in Gardens at various APRs of 400-600% currently. These APRs are so high because the purpose of Defi Kingdom is to incentivize early contributors to bootstrap the ecosystem. DFK is a fair community release without any venture capital, and providing value to gamers is the focus of the team's long-term vision. LP rewards are designed so that there are unlock rewards and lock rewards in Jewel. The unlocking rewards are claimed immediately, and the remaining rewards are locked until July 2022, and then unlocked linearly until July 2023. The percentage of unlock rewards increases with each epoch and is currently at a 30% unlock/70% lock split.

LP positions: Jewel-Matic, Jewel-Avax, Jewel-Luna.

Blockchain infrastructure

Blockchain infrastructure

• POKT network

The Pocket Network is an extremely important piece of Web3 infrastructure that operates as a decentralized relay network for blockchain API requests. Their economic structure is designed to incentivize full node operators by paying developers when they need to use the network to access their application data. Many developers need access to high-quality read/write directly from the blockchain, but don't always have access to RPC specifically for their application. Pocket describes themselves as the "Uber of servers" because technically, when you query their network, you don't know what *server* you'll be connected to, but they handle all service requests through their blockchain, providing Users provide what they need. As more developers use the pocket network, node operators earn more money by participating in the network.

The economic system of Pocket Network is very clever, it is designed in such a way that it greatly reduces the cost of developers using the network. There are 3 main functions: Staking, Minting and Burning POKT. On the application side, you can put POKT in escrow when using the protocol. For developers, instead of paying a company for some infrastructure-as-a-service, they can pre-stake POKT through Pocket Network to access the network, and then use the network until they unescrow. Because Pocket Network is not a centralized company that needs to charge fees to cover security deposits or pay for cloud hosting services, all of this overhead is eliminated and is much cheaper for developers. About nodes in the pocket network that serve developer requests.

I've been speculating on how to leverage the external non-crypto development talent that joins crypto, and this seems like one of the best ways to do it. To me, POKT is one of the most effective ways to bet on the growth of builders, users, and speculators within the crypto space. As the community of web3 developers grows, more web3 applications will need to access blockchain data, and more people will use those applications.

• Arweave

Arweave is a decentralized network focused on permanent data storage, many NFT projects use Arweave as their backend to store data, and many blockchains use Arweave to store transaction data. Rather than using AWS to store data, teams can use Arweave to store all of their application's data. Rather than trying to bet each week on which 10k pfp NFT project will succeed, it's easier to bet on the infrastructure that many applications need to use. Arweave's blockweave architecture and SPoRA consensus mechanism make it more scalable than other storage solutions like Filecoin, and one of my favorite pairings for next year is AR/FIL.

From a technical standpoint, the past three months have been consolidating all-time highs from May, assuming this is a re-accumulation ahead of an upward expansion that should occur relatively soon.

• Lido

Lido is a multi-chain Staking (equity pledge mining) solution. It allows individuals to stake their tokens through the Lido platform and receive tokens representing that collateral, which can then be used in other DeFi ecosystems. Lido is very well positioned as it doesn't have much competition in this area and can be deployed on multiple blockchains with incredible speed. In a world where users are active on various blockchains, the ability to have full access to your funds cannot be overemphasized. Looking at technical charts, the Lido is trading near all-time lows, testing major support levels. Even though they've been releasing code at a breakneck pace, they haven't gotten the attention of most of the crypto space, and I think that's going to change as more people start using their services.

• Aleph

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Cosmos Ecosystem

• ATOM 

ATOM is the native token of the Cosmos Hub, which connects all other blockchains built using the Cosmos SDK through a cross-chain communication protocol. One of the main complaints about ATOM is token economics, as the focus is primarily on developing Tendermint and the Cosmos SDK for teams building their own specialized ecosystems as Cosmos zones. Now, the focus is on connecting all these ecosystems together and linking the collective value to the Cosmos Hub. Through interchain staking, ATOM stakers will provide security not only for the hub, but also for smaller blockchains connected via IBC; this means stakers will not only be paid in ATOMs, but will also Earn rewards in each of the native tokens.

• LUNA

LUNA is one of the strongest alternatives in 2021 as its core use case: the decentralized stablecoin UST has experienced impressive growth. The main product Terra Luna offers users is its flagship 20% APR saving deal, Anchor. Now, LUNA is focusing on building more Defi ecosystems and connecting to the rest of the Cosmos chains via IBC. The launch of Astroport, Mars Protocol, Levana Protocol, and others will bring more attention to an already thriving community. UST's growth should accelerate in 2022 as Terra Luna positions itself directly at the center of the developing multi-chain world.

• SCRT

Secret Network is a layer 1 blockchain focused on programmable privacy. It had its best performance in the fourth quarter, and its market cap remains relatively low compared to other more popular chains. The SCRT ecosystem should see significant growth in 2022, starting with the launch of the Shade Protocol as a DeFi hub, and the "Stash Network" as an NFT marketplace. The main attraction of user privacy is huge for DeFi, currently all your financial history is fully visible on the blockchain. One of the main disadvantages of web3 vs. web2 right now is the lack of privacy for users, it is commonplace for traders to track the wallets of large funds and other traders, and blockchain analysts will only get better with time.

• Aragon

Aragon is focused on providing groups with all the necessary tools and infrastructure to build their own DAOs. Recently, DAOs have become more common as crypto-native individuals are looking for more formal ways to collaborate on their ideas, and as organizations choose to structure this way rather than as businesses in traditional markets.

NFT

• Treeverse

Treeverse is building an interactive MMORPG with built-in NFTs that can be used in-game. They first focused on android development, followed by iOS and PC/Mac. The team is led by @Loopify and has raised funding in a $25M seed round led by Animoca Brands. ROOT will be the governance token of the game, and SEED will be the token you earn by playing the game. The art and animations released by the team so far have done really well, and I look forward to following development as they get closer to release.

• Strange Clan

The Strange Clan game will be the first Metaverse to exist in the Cosmos ecosystem. It's a 3D world built on the backend by the Passage3D team using Unreal Engine and Akash's decentralized cloud computing network. Characters in the game will be able to complete quests, buy and sell equipment and log into the game's NFT marketplace, discover creature mounts for their characters and participate in Passage guilds.

• Aurory 

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Views on other professions

Solana

Solana had two major catalysts in Q1: Phantom's mobile wallet and Neon Labs' EVM-compatible implementation. Both of these should be great for attracting new users and developers to the SOL ecosystem. In the short term, I think there is better performance from an R/R perspective, as Solana has the largest market cap of any other L1 besides BNB, but I still think the current range is more upside than distribution previously re-accumulated. Sentiment for the Solana DeFi token is at peaks and lows, think next year we will see an increase in developers joining the Solana ecosystem, with many top applications outperforming Solana in returns. There are a lot of projects worth looking at in the recent hackathon.

avalanche

Avalanche The main catalyst for me this quarter was the launch of the DeFi Kingdoms Crystalvale space. In the second half, AVAX outperformed almost all other chains in terms of onboarding users, which should be a great partnership when combined with a game like DFK. The AVAX/Crystal pool after the single-stake Jewel pool was probably my largest position in Q2. I'm not sure about the timeline for launching projects using their subnet architecture, but it's another fundamental catalyst that separates them from other chains.

Boomercoin, aka Bitcoin
Bitcoin is in a very strange place, being the riskiest asset for traditional financial allocators that is now considered safe enough, but at the same time the lowest risk investment for crypto natives. I've said before that I think Bitcoin dominance is an indicator of risk-on/risk-off in the crypto market, and I still think that's the most accurate way to think about it. As crypto matures, there will be many competing smart contract platforms that will capture a larger share of the total cryptocurrency market capitalization, but none of them will compete with Bitcoin as it can fulfill its unique role as hard money . So when the altcoin market expands like a bull market, btc is usually trending down, but as the bubble peaks and the market pulls back.

In the fourth quarter, BTC reached new highs twice in October and early November, but failed to break through each time. One thing I've noticed is that all BTC ATH breakouts this year have aligned with local lows on the ETHBTC chart. I don't think it's a coincidence. It’s clear to me that investors outside of crypto, as well as crypto natives, have a changing perception of these smart contract platforms. In the past few years, the emergence of DeFi and NFT has been the main focus of the crypto space, while BTC maintains its role as a hard currency, non-crypto and crypto-native investors want a piece of this fast-growing ecosystem. While there are a lot of very outspoken bitcoin pundits who swear dirty words about every other alt in the crypto space, I think there is a rapidly growing, albeit much quieter, group of old folks who own a lot of bitcoin with little exposure to other cryptoassets. Crypto native. As traditional financial asset allocators start looking at bitcoin as an investment, many bitcoiners are turning to altcoins as they start moving down the risk curve. If you're a trader like me, it's a good balance because as long as there's a steady stream of money flowing into the crypto market, it's easier to take advantage of alternative opportunities without worrying about BTC.

Bitcoin still has value for me as a long-term investment, and in my opinion it would be wise to keep the BTC stack for many years to come, as I don't think there is any other better form of currency for long-term storage of value, but as far as the bull market goes As far as trades go, I think it's a better hedge against downside. I expect BTC to fluctuate in the 42k-53k range for some time, possibly testing the 58-61k weekly subdivision area before continuing to consolidate further. My worst case scenario is a break below the 42k-53k range and eventual test of 2021 lows around 27k, but I think that's a hard bottom already set. To me, the most likely scenario for Bitcoin is to oscillate in this area before pushing to new highs later in the quarter.
Ethereum By midyear, ETH should have all the necessary scaling infrastructure to effectively realize its vision of a functional modular blockchain stack. If there are no further delays to the merger, Ethereum will switch from Proof-of-Work to Proof-of-Stake in late Spring/Summer, and zkRollup solutions like zk-sync 2.0, Polygon Hermez, Polygon Miden, Starknet, etc. should be fully established in production. Only a few zkRollup implementations currently exist, such as dYdX and Immutable X, but none of the existing solutions leverage the EVM as much as the future. zkRollups will allow Ethereum users to experience low fees due to the novel use of rolled-up zero-knowledge proofs, which allow transactions to be executed off-chain and batched into a proof that the base layer can use to confirm the validity of those transactions. I've tried one of the zkr dexes, ZigZag, which is very fast and easy to use. I hope the UX of these apps is as good as other dApps on L1. It will be interesting to see if users of alternative layer 1 blockchains decide to use these rollups instead of the chains they are used to. It seems unlikely to me that scaling solutions for ETH will take this market share away from L1 bringing non-crypto users directly into DeFi unless these aggregated user experiences are much better than other layer 1 blockchains , if we take Arbitrum as an example.

So why don't users care? Or more precisely, why don't they care so far? I think there are two main reasons. First of all, the main source of ETH's TVL is crypto-native rich ETH users, who are not really troubled by the high fees of ETH. If their 8-figure stablecoin farm is running without interruption, and they feel their funds are safe on mainnet, they don't have to worry about paying higher gas fees to be safe. They have absolutely no problem waiting for a full transition to Proof of Stake and will have their 32 ETH ready to run their node. So even if Arbitrum offered much lower fees, this group of users would not gain much from bridging and then using the same applications that exist on the base layer. They're not looking for the next 100x because Ethereum *is* their 100x.

Now, the second reason highlights the composition of another core user group, which is mainly new retail, who are new to the encryption field and chasing the next 100 times. This group loves every new Ponzi scheme, will recklessly imitate new stealth launches, and rant when they see these massive ecosystem incentive funds adding liquidity mining to new users. The reality is that for this group, they are looking for the shiny new thing and what they think will make the most money in the shortest amount of time, which is usually not what they see in Ethereum. Currently, Solana and Avax are like the cool uncle at the picnic who will give you money to go to the movies with your friends, and Ethereum is the grumpy uncle who goes on and on about how the kids don't respect their elder.

Ethereum's claim to fame is the security and decentralization of the network, and while this is important to the crypto network in the medium to long term, it's not a selling point for new user onboarding. Maintaining the security of the network should be the main concern of developers and builders, not something users care about on the front end, as long as their experience is not affected. In my opinion, all of these networks will tend to decentralize over time, as long as the developers have this core focus in their long-term roadmap, and many of these alt L1 users don't live a year.

The current target market for Web3 is not people over 60 with their retirement funds in Fidelity and savings in Wells Fargo and Chase, the group of people who will bootstrap these systems is the younger generation who don't have any loyalty to these banks and aren't interested in trying these More interested in new things. If your selling point is just "a decentralized and secure network where you can interact with DeFi applications and earn 5% per year instead of 0.01% per year", if you have an integrated application all of this is behind the scenes for They do, but you're not going to attract most of the new active investors, because now that's the default for every smart contract platform.

In the short term, I don't think ETH is a good deal for several reasons:

1.Its market value is much larger than other monomer L1s, and its user experience is worse than all other monomer L1s.

2.If L2s are going to compete with L1s, they will need to have a seamless onboarding experience and be as attractive to new users as the rest of the ecosystem, so the top performing L2s may have tokens and be accessible directly from centralized exchanges. Unless you think these tokens are completely worthless, holding tokens of these networks should be much better than just holding spot ETH.

3.ETH is not optimized for a modular architecture, while there are other chains in development that are further ahead in development, with equally capable development teams and a similar system architecture, there are other teams focused on the modularity that ETH has turned to from the ground up Architecture part. NEAR is a sharded PoS blockchain with EVM compatibility via Aurora and will soon have the potential to connect multiple application chains with its "Octopus Network". ETH 2.0 has a similar design, but is much harder to do quickly due to its existing design and the sheer amount of value that exists on the network. The merger has been delayed many times because it has to be done really well since all the existing $$$ exists on Ethereum and other L1s can build without these hurdles. Today, ETH is a monolithic blockchain, but is moving to a settlement and data availability layer with rollup as the execution layer. There are other teams like Celestia that are solely focused on being a data availability layer, but similar to NEAR, because they're built from the ground up, they can focus entirely on doing one thing really well.

4.Once ETH transitions from a settlement layer, an execution layer, and a data availability layer to a settlement layer, some of the value of Ethereum's market share will be captured by other parts of the ecosystem. With zksync 2.0, users can choose to use zkRollups with on-chain data availability or use zkPorter with data stored off-chain. zkPorter transactions are more efficient and less expensive, but it requires zkPorter accounts to be protected by Guardians, which are zkSync token holders. These will be used to track zkPorter status and data availability for these accounts. Since the ETH roadmap is focused on rollups, it is planned to execute most common day-to-day transactions off-chain. If zkPorter and other similar design patterns are to succeed, they will require users to stake their tokens to maintain the security of these additional systems. I expect the market to find a balance between emphasizing the settlement layer and the other layers of this new modular architecture, and I firmly believe that the entire modular system will benefit greatly once fully deployed on mainnet. Initially, though, I'd like some more value in these implementations of the other layers, since they'll be starting from scratch.

5.The future of decentralized finance will not exist on one blockchain. I don't think we have seen the end state of any of these smart contract platforms yet. In a space of rapid innovation and iteration of new ideas, it seems to me that we are more likely to have an ecosystem of multi-chain networks, all operating simultaneously, than one solution to work well and all others to fail. Decentralization applies not only to the design and implementation of systems that maintain network security, but also to the diversity of ideas, users, and developers in the crypto space.

Others that I think are worth reading but haven't written in more detail:

Curve Wars: CVX / CRV / YFI / BTRFLY

SYS+MUTE

Spell & MIM + Sushi

FXS

INV

GMX / dYdX / PERP / MNGO / Drift Protocol

DPX / RBN / PsyOptions on Sol Levana protocol

Dusk

Metis

Magic (TreasureNFT)

Ninja if you are active in crypto

Currency field

in conclusion

in conclusion

At the end of my last post for Q4, I post a couple of questions I've been thinking about over the next few years:

“What will be the killer app of the 2020s? Amazon in the 2010s, Facebook in the early 2000s, what does this look like in the metaverse space? How do you reach millions of non-crypto users?”

I'm still actively thinking about this question, but I believe the answer may be unfolding before us right now. There is only one dApp capable of attracting millions of daily users, and that is Axie Infinity. Although still in a very early stage, DFK is the *first* decentralized app I've seen that has started to bridge DeFi with gaming in a way that's interesting for users. Uniswap is a revolutionary development, but just clicking to add ETH/USD LP and then doing the math to calculate your impermanent loss vs. your estimated earned transaction fees is not fun. I don't know how many regular dex (decentralized exchange) users participate in governance on these platforms, or actually use their tokens for anything other than speculation. Gamification of these DeFi primitives + accessible mobile access is the next step that can really unlock a large portion of DeFi's target market as users are excited to participate in the ecosystem and not just pure speculation. Furthermore, due to the active participation of users in the ecosystem, the tokens of these games, if designed properly, can have more utility than typical governance tokens.

"Which segments are not being discussed now that will be more popular in the coming months/next year?"

To answer this question, I think one of the least discussed and most important market segments right now is the underlying infrastructure that powers these decentralized applications. Expecting non-crypto users and developers to join our new world is a daunting task without providing them with the proper tools to interact seamlessly.

If we want a fully decentralized web, then we need to make it very easy for users to participate, without requiring them to have knowledge of cryptography as a senior DevOps engineer or someone who has lived and breathed cryptography every day for the past decade. Furthermore, providing all these systems with the necessary tools and documentation to make new applications easy to deploy is critical if we want to bring more developers into the field.

Looking back on 2021, some things I could have done better, and hopefully I can improve this year:

• Excessive trading shocks the market.

• Selling off the spot too early and not sticking to the long-term plan.

• Initially hesitant to be more positive when my idea was unpopular.

• Without setting it up on each chain at the beginning of the year, it is very helpful to know which wallets to use/bridges to use.

• Not consistent with journaling, more accurate and awake when I write everything down.

Favorite pair trade:

• Long term Avax / Short term Ada

• Long-term Jewel / Short-term AXS

• Long-term Atom/Short-term Dot

Some bold predictions for this year:

• Keplr has more users than Metamask

• The top 10 DeFi kingdoms by market capitalization

• Phantom users to exceed 20 million by 2023

• SOL-DeFi greatly outperforms Solana

• DAOs made up of crypto-native traders become more common

• Earn guilds with at least one game in the top 25

• More people are using encrypted mobile apps than chrome plugins by the end of the year

• SoLunAvax Flips Ethereum and Stays There

• Atom $100B+ Market Cap

• DeFi options gain a lot of traction

• One of the top tech companies starts using AVAX subnet as a dev network for blockchain development

• One of the top tech companies starts using AVAX subnet as a dev network for blockchain development

The main issues I tweeted about in 2022 and the previous days focused on modular blockchain architecture and value statistics:

In a modular blockchain stack, which layer should generate the most value, or should it be roughly equal across all layers?

I honestly don't have an answer to this question, but with scaling efforts going on over the next few years, I think it's going to be one of the most important things traders need to think about, and how to position them accordingly. Initially, my thinking was that teams that focus on building specialized chains that are really efficient and focused on one part of this modular stack will do well, which is why I like zkSync and Celestia later this year.