Looking forward to 2022, which projects will bring you ALPHA benefits?
Original author: Ansem (Twitter @blknoiz06)
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2022 Overall Market Outlook
Hello! For my fellow degenerates and other readers who somehow stumbled onto this page, I'm going to try to tease out some of my first quarter thoughts here. This is the second time I've written a tirade like this, so please bear with me (lol) and hopefully it will be more organized than the hundreds of scattered tweets from my twitter feed.
2021 is clearly a breakthrough year for crypto assets. From institutional acceptance to retail adoption, cryptocurrencies have far exceeded any period in their history. Crypto assets have enjoyed a strong two-year bull run, partly due to a dovish FED that fueled risk appetite among market participants, coupled with rapid innovation in web3 protocols. It is astounding that, in this cycle, we can boast from this typical news"Watch this token go up 10x"Get a feel for how popular cryptocurrencies are in society. Visa bought a punk, Adidas bought a boring monkey, many TradFi firms such as Jump recognized the long-term legitimacy of cryptocurrencies, Crypto.com bought the naming rights to Staples Center, FTX bought the naming rights to the Miami Heat , billions of dollars seem to be raised by cryptocurrency funds every other week. Facebook just changed its name to Meta, and the issue of stablecoin legislation was front and center in Congress. Cryptocurrencies have moved quickly to the forefront of public consciousness, and this time it won't be disappearing anytime soon.
Due to the nascent nature of the industry, the cryptocurrency market will still go through parabolic boom and bust cycles, that's for sure, but from my vantage point, I see many Fortune 500 companies trying to get themselves out of this new metaverse To benefit from it, all they can do is support these existing decentralized protocols. If this situation continues, cryptocurrencies are likely to become more closely intertwined with traditional markets. With this progress, encrypted assets should transition to a slower growth trajectory, and the performance of various tracks at different times will vary. As with the stock market, this is a trend we've seen over the past few years that has begun. The inability to adapt to the new narrative of cryptocurrencies has been the most expensive lesson for retail investors; whether it is directly receiving retroactive airdrops, or simply understanding the direction of the market so that they can make more informed investment decisions, they are willing to stand Frontiers benefit the most by trying new things. To underscore the ever-changing trend of cryptocurrency market leaders, we can look at three separate iterations of DeFi protocols, originating from the strength of LINK and SNX in early 2019.
Chainlink and Synthetix are two protocols that were some of the first major innovations in DeFi, and after rising 50x against Ethereum from early 2019, the charts of SNX/ETH and LINk/ETH peaked in the first DeFi Summer of August 2020 . Now their bear market against ETH has been going on for over a year, with SNX/ETH down -92% from their highs. After the first DeFi Summer in 2020, it performed well in the second wave of DeFi in early 2021. One of the most well-known tokens is Sushi. As a fork project of Uniswap, Sushi started from 0.5 in November 2020 The USD has risen 40 times from its lows, reaching a peak of around $22-23 in February 2021.
Other DeFi blue-chip tokens at the time, Aave, Comp, and Uni also peaked against ETH around the same time, and traded largely sideways against the U.S. dollar before the cryptocurrency market crashed sharply in May. After the peak of DeFi 1.0 in February and the consolidation of the summer, we are seeing the emergence of a third wave of DeFi protocols, spearheaded by OHM, DPX, SPELL, TOKE and others, most notably SPELL and OHM. These protocols have also quickly gained the attention of the market, all of which have achieved more than 100 times the income at the beginning of their establishment, and have achieved billions of dollars in market value at the peak.
Currently, these protocols are all down sharply from their then-current highs, but it remains to be seen whether they will continue their downtrend against ETH or be able to maintain value better than their DeFi predecessors.
While all of this is happening this year, we also have a thriving multi-chain ecosystem. In the past year, many L1 competing public chains have introduced a large number of new users to DeFi, and the market has directly reflected the effect of this user growth on the market value of their projects. During a time when SNX/ETH is down 92%, Solana is up 10x against ETH since August 2020, or 25x if you start at the January 2021 low. So, when market participants think we're headed for a multi-year bear market just because certain coins have risen so much, I think there needs to be some more nuanced analysis of that rhetoric because some other coins have actually Been walking for months.
Looking ahead to 2022, we'll see if certain sectors continue to experience bear cycles amidst the macro bull cycles in cryptocurrencies, or if we end up with another broad market 90% decline like in previous cycles. The difficulty for traders is identifying which coins are currently mispriced in the market, how to take advantage of them, and finding which new trends are sprouting before everyone else does.
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FAANG developers → Shady super programmers
One of the most important phenomena of the recent success of cryptocurrencies is that there are now a large number of smart people working on web3 and Dapps development. I believe we will see more talented developers leaving web2 technology companies for web3 companies, as the industry has become more legitimized this year. It is clear that developers who can expedite work to quickly fill inefficiencies in the market can have an immediate impact in cryptocurrency, and there are many opportunities for innovation here. Especially with the growth of platforms using languages other than Solidity, such as Golang and Rust, these are more attractive to traditional developers who have never touched cryptocurrencies before. Before, let’s be honest, there wasn’t any incentive for talented engineers to focus on cryptocurrencies. In an industry where new grads can easily earn six-figure salaries and senior developers can make $300,000+, no one cares about Ethereum, especially when Ethereum’s flagship application is Crypto Kitties and the ICO-dominated chain The era in which there were no real usage scenarios. Right now, there is real value being traded on these networks, and the token incentives for developers to build in these new ecosystems are huge. You can feel the conversation changing among the SV tech brothers as people realize that web3 is not going away.
Blockchain infrastructure is one of the most neglected verticals in cryptocurrency right now, as users do not directly use these services, so they are not on the radar of most people. Although a large number of ETH users know what Metamask is, few users know that Infura helps the vast majority of Dapps run on Ethereum behind the scenes. Infura allows developers to build without having to pay attention to the development and operation of the technology. Therefore, they do not have to operate their own Ethereum nodes to access the data of the blockchain, but can use the services provided by infura. Infura on Ethereum is equivalent to AWS for most traditional developers. As we develop in this multi-chain world, there are many other services emerging to serve developers on other chains. It's the track that I think will accelerate in 2022.
One of the games that first caught my attention, and one of my favorite games of the year, is Pocket Network. I know this team because they helped solve part of the RPC problem of Harmony, which is the chain where Defi Kingdoms is located. Before this incident, I didn't know what POKT was, but their infrastructure has improved my personal experience tenfold, while the lack of RPC on Harmony's network was a bottleneck for massive user entry. 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 paying developers when they use the service, thereby incentivizing full node users.
There's also some other interesting infrastructure that I'll touch on later,They are Aleph.imfirst level title
A new multi-chain world: which L1s will remain competitive and what are IBCs?
In 2022, I don't believe AVAX, LUNA, and Solana will be the EOS of 2018.
Comparing the altcoins of 2017 to the altcoins of 2021 is a lack of insight because there was very little that users could do on these public chains four years ago. Today, users can already access many encrypted financial native applications that are different from traditional financial systems by directly connecting with other users in these decentralized applications. Back in 2017, I and many other market participants had much lower expectations for these blockchains, and I don’t recall any (nearly any) dapps being used on other L1 competing chains at the time. It was my second month into crypto, I read NEO's white paper and thought I'd found the best thing since sliced bread, but to my dismay, a few months later I found , altcoins have fallen by more than 90%. The actual usability of these altcoins is very different now, which is why I think this cycle is completely incomparable to previous cycles.
So, which L1 competing chains will win? While they've all improved a lot, there will still be some standouts among them. Over the past year, a lot of L1 have built cult-like communities, but we also had a community like this in 2017, if you look at the hashtag of any old coin on twitter, you will find that the old antiques that still exist are prove. A fervent community may spur price pumps in the short term, but the team building and innovation behind these protocols is what builds long-term competitive advantage.
Solana was the first Alt L1 I personally found, initially because I saw a connection between Anatoly (SOL founder) and SBF, that's when I started paying more attention to the project because they are both very smart People, and Solana only has a market cap of about $300 million, which looks very wrong. Their consensus mechanism POH (Proof of History) and the innovation of sealevel, an incredibly efficient parallel operation architecture, enable Solana to process transactions much faster than other chains. Its user experience is second to none, even though it's not even EVM compatible yet (Neon Labs wen?). SBF has a super strong interest in community building and business development as an advisor to Solana, and the tradFi connection cannot be overemphasized through his influence in media, marketing and the FTX platform. Pyth Network, an oracle that feeds data to Dapps on SOLANA, has a very long list of well-known partners from traditional finance, so you can see the benefits of that reach being real. 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, I'm leaning toward it being a positive, which makes people openly support SOLANA and invest their money.
In my opinion, Avalanche is by far the most powerful EVM chain and provides one of the best user experiences among all other L1s. The development team is very strong and has extensive research experience in the blockchain field, which is reflected in the products they deliver to users. Its core innovation is the Snowman consensus algorithm, which allows its validators to use sub-sampled voting when observing transactions to reach consensus more quickly. While its EVM implementation is the main focus this year, that's just describing Avalanche's C chain, and the possible future implementation of subnets with different virtual machines is to me what makes it stand out from other L1s. In the future, it will be possible to deploy various Dapp-specific application chains in its own Avalanche subnet, each with the characteristics of over 4000 tps and sub-second confirmation. Like Solana, AVAX also has a very strong team in commercial development, which we've seen is critical to user adoption.
Terra Luna is a blockchain built with Tendermint and the Cosmos SDK, focusing on its decentralized stablecoin TerraUSD (i.e. $UST), while also developing a robust Dapps ecosystem that will be connected to other Cosmos chains via IBC . Luna has the best tokenomics of all L1s as it is the only chain with a built-in decentralized stablecoin. The design of UST is such that as the demand for UST increases, LUNA will be destroyed to mint UST to match this demand and keep UST pegged to $1. Other stablecoins such as USDT with a current market capitalization of $80 billion and USDC at $40 billion have continued to grow over the past few years. As more and more people enter cryptocurrencies, the growth of stablecoins can be said to be worthwhile for you The simplest prediction of . With a market cap of only $10 billion, UST is already developing many strong cross-chain partnerships — all Cosmos IBC chains, Near, Solana and Harmony protocols, and more.
**Terra Luna is the only coin in the crypto space if you want to bet directly on the growth of stablecoins and the growth of the L1 smart contract ecosystem at the same time. **For this reason, LUNA is my favorite of all L1s, and going into 2022, I bet their ecosystem growth, stablecoin growth, and overall IBC growth will propel them over the rest of the competition.
The Cosmos ecosystem is perhaps the most misunderstood in the entire crypto space. As it turns out, ordinary market participants don't even know when they're using a chain built with the Cosmos SDK, and no one really knows what IBC does. IBC is an acronym for Inter Blockchain Communication, which allows different blockchains to communicate with each other. There have been a lot of discussions about Ethereum and modularization recently. In fact, the Cosmos ecosystem has been designed based on the core ideas of decentralization and modularity from the very beginning. Keplr wallet is still very low profile as there is nothing Cosmos DeFi related yet, but now the Cosmos chain is connected via IBC, and with the Gravity bridge that connects ETH and IBC is coming soon, they should see the next 12 Significant increase in usage during the month.
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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 dedicated chains for each of the different layers: execution, data availability and Consensus, settlement. Currently, L1 blockchains do all of the above at one level, which is why we see some blockchains hit a fee bottleneck as more users join their network. If we are going to scale cryptocurrencies to the level of the global population, it seems like modularity is the end state to make it happen, if for no other reason than all these systems will have to be optimized in the most efficient way possible.
For much of 2021, Ethereum will be unavailable to users with small wallets due to the prohibitively high fees to participate in DeFi protocols at the base layer. The market reflected this sentiment, and various other L1 smart contract platforms emerged to solve this problem for users. Ethereum’s roadmap towards a modular blockchain stack, utilizing ETH as a settlement and data availability layer, and other Rollup L2 scaling solutions such as 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 L2's solutions while still benefiting from the security of Ethereum's base layer.
My favorite project focused on building this kind of modular blockchain architecture is Celestia.
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Earn while playing, the gamification of digital assets
（Play-to-Earn, The Gamification of Digital Assets）
Axie Infinity has achieved what no other crypto asset has in 2021 by creating an in-game ecosystem where millions of users interact with it every day. As the first play-and-earn game to lead a large number of users to interact with cryptocurrencies in other ways, they have shown how powerful these economies can be when executed at the right scale. In the Philippines, many people are making more money playing Axie Infinity than their regular jobs, demonstrating the possibility of a profitable economy that puts users first. The difficulty in moving this trend forward is maintaining these economic cycles so that they can continue over the long term, thereby continually attracting new users.
NFT mania is insane in 2021, with people paying millions for Crypto Punks, Bored Apes, and even EtherRocks. We’ve seen huge sales of NFTs, whether it’s because they were the first to go on-chain or just the most popular at the time. For a while in the summer, every new 10k profile-pic project (10k profile-pic project, referring to 10,000 limited-edition NFT avatar projects) was sold out, and immediately sold out on opensea even though the cost of ETH was high. It can be resold at several times the initial coinage price. While we've seen a lot of interest around NFTs grow in 2021, the next iteration will be to provide users with practical digital assets, and we haven't even touched the direct integration of NFTs into blockchain games and other DeFi infrastructure. As the space matures and more money continues to come in, I think we'll see a lot of strong teams emerging in 2022 that deliver products to users that not only look good, but also deliver to the market in a number of different ways. Users provide value.
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Metaverse Mania: Using NFTs for Web3-style Modern Marketing
（Metaverse Mania: Modern Marketing in Web3 with NFTs）
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Quarter I, 2022 (Quarter I, 2022)
The focus of the core position is composed of a combination of layer 1s, layer 2 scaling solutions, blockchain middleware infrastructure, and DeFi + metaverse. The largest positions in the first quarter will be Jewel LP positions, Near ecology and Cosmos ecology. Near Eco has an ecological fund of 800 million, a strong development team, and a bullish technical K-line. It has broken through to new highs from more than 100 days of consolidation, so their positioning is very good. The Cosmos ecosystem had many development milestones in the first quarter, including Interchain Security, Liquid Staking, Interchain Accounts, Evmos ["EVM-on-Cosmos"], and the emergence of a cohesive Cosmos Defi ecosystem. Other developments will greatly improve the user experience within the ecosystem, and Interchain Security should address the issue of token holders accruing value to Atoms. Blockchain infrastructure and middleware is one of the least talked about areas because users don't directly interface with it, but it's one of the most important verticals in cryptocurrency. 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 is building an interactive world of the Metaverse. You'll be able to use your Treeverse Founder's plot to complete quests with your Timeless NFT characters, buy gear, and build land while earning their in-game currency, $SEED. DeFi Kingdoms is a well-functioning decentralized exchange, and it is also a multi-chain game. Users can cooperate with their DFK heroes to form a guild. They can use these heroes to do tasks, upgrade levels, summon other heroes, and Compete with other players in PVP in the future.
If my bullish logic for 2022 is wrong, then the best way to hedge is to look for short positions near the current range resistance of BTC and ETH to prevent the short-term bear trend from continuing until it collapses. Any ALT/BTC, ALT/ETH trading pair will still do well and I will close out my short positions if we break up and confirm the upside strength of the overall market.
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Layer 1s / Layer 2s
▶️ NEAR Protocol
NEAR is a sharded POS layer 1 blockchain, it is developer- and user-centric, has a very strong technical team, and there is almost no hype in the media... What I quickly realized this year is , when I was out bingeing not paying attention to cryptocurrencies in the bear market of 2018, there were actually a lot of really smart people building the technology that is today. If you, like me, discovered crypto in 2017, you probably forgot about it too when the price dropped 90%, and here you are trying to catch up again. So, if that's you, then welcome back!
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▶️ Aurora
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▶️ Octopus Network
Octopus Network is a multi-chain network that aims to create an ecosystem of interoperable professional application chains, which utilizes the security of Octopus Network. Octo does not have its own chain, instead, it is a set of smart contracts that run within the Octopus Relay on NEAR, combined with a set of validator nodes, and the application chain will pay validator node fees for the security of its applications. Its structure is similar to Polkadot, but for Lisk, the cost of launching its network on Octo is much lower than the cost of launching parachains on Polkadot. These application chains are planned to be built with the Substrate framework and a dedicated application front end. Once the implementation of the Substrate-IBC Pallet is complete, these Lisks will also be IBC compatible and able to communicate with other NEAR projects, as the Octo Bridge will deploy a NEP141 wrapper contract for each Lisk token.
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Meatverse / DeFi
▶️ Defi Kingdoms [Jewel]
Defi Kingdoms is a DEX, NFT trading platform and an immersive play-and-earn game ecosystem. At its base layer, it is a dex running on the Harmony ONE blockchain, allowing users to trade between various crypto assets. Jewel is the governance token of DFK. Users can deposit Jewel into the DFK treasury and earn 30% of all transaction fees on the platform. In addition to being able to mortgage gems in the vault, users can also provide liquidity between different cryptocurrency asset pairs in Gardens (the farming pool of the DFK platform), and the current annual interest rate is between 400-600%. These APRs are so high because Defi Kingdom intends to incentivize early contributors to lead the development of the ecosystem. DFK is a fair community, launched without any venture capital participation, and providing value to the game's players is a key focus of the team's long-term vision. The design of LP rewards is like this: there are unlocked rewards and locked rewards, paid in the form of Jewel. Unlocked rewards are available immediately, while the rest of the rewards are locked until July 2022, after which they will be unlocked linearly until July 2023. The ratio of unlocking rewards increases with each era, and is currently 30% unlocked/70% locked.
LP Positions: Jewel-Matic, Jewel-Avax, Jewel-Luna
Polygon [Matic] is one of the leading research teams building various zkRollup solutions for ETH 2.0, while also maintaining their own POS layer 1 chain. Its monthly chart is now near all-time highs after breaching its previous yearly high in May, and has been consolidating for most of the second half of the year, while the rest of the L1 has been in the spotlight.
Avax and Luna, for the reasons mentioned above, may also join this if Solana has an active LP pair.
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▶️ POKT Network
Operating as a decentralized relay network for blockchain API requests, Pocket Network is an extremely important Web3 infrastructure. Their economic structure is set up to incentivize full node operators by paying developers when they need to use the network to access data for their applications. Many developers need high-quality read/write data directly from the blockchain, but don't always have access to RPC specifically for their applications. Pocket describes itself as"The Uber of Servers", because technically you don't know what server you're going to connect to when you query their network, but they handle all service requests through their blockchain to provide users with what they need. As more developers use Pocket Network, node operators earn more money from participating in the network, which in turn incentivizes more node operators to join the network.
The economic system of the Pocket Network is very clever, and it is designed in such a way that it can greatly reduce the developer cost of using the network. There are three main functions here: staking, minting and burning n (burning) POKT. On the application side, you have the ability to put your POKT into escrow when using the protocol; for developers, they don't need to pay the company for some infrastructure-as-a-service projects, and with Pocket Network, they can pay for access to the network Pre-stake POKT, then use the network until they cancel this escrow. Because Pocket Network is not a centralized company that needs to charge fees to pay for security deposits or pay for cloud hosting services, all these overheads are eliminated, which is much cheaper for developers. Regarding the nodes within the Pocket Network that serve developers’ requests, they pledge POKT to obtain the right to work within the network, and they will earn a certain amount of POKT for each request on the service application side.
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▶️ Arweave
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▶️ Lido
Lido is a multi-chain liquidity collateral solution. It allows individual users 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 has few competitors in this space and its ability to be deployed on multiple blockchains incredibly quickly. In a world where users are active on various blockchains, having full access to your capital cannot be overemphasized. From a technical candlestick perspective, Lido is near all-time lows and is testing a major support level. Despite how quickly they've released code, they haven't gotten the attention of most people in the crypto space, and I think that's going to change as more and more people start using their services.
▶️ Aleph.im
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▶️ ATOM
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▶️ LUNA
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▶️ SCRT
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▶️ ANT
Aragon is focused on providing groups with all the necessary tools and infrastructure to build their own DAOs. DAOs have become more common lately, as original cryptocurrency investors are looking for more formal ways to collaborate on their ideas, and organizations choose to structure them this way rather than as a business in traditional markets.
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NFTs
▶️ Treeverse
Treeverse is building an interactive MMORPG game in the form of NFT as the main game asset. They first focused on Android development, then iOS, and then PC/Mac. The team leader is@Loopifytext
▶️ Strange Clan
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▶️ Aurory Project
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▶️ Solana
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▶️ Avalanche
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▶️ Boomercoin,aka bitcoin
Bitcoin is in the very odd position of being the riskiest yet sufficiently safe asset for traditional financial allocators, yet at the same time being the least risky investment for primitive investors in cryptocurrencies. I’ve said before that I think Bitcoin’s dominance is a measure of increased/decreased risk in the cryptocurrency market, and I still think that’s the most accurate view of it. As cryptocurrencies mature, there will be many competing smart contract platforms that will grow into a larger piece of the total cryptocurrency market capitalization, but none of them will compete with Bitcoin because Bitcoin fulfills its role as a hard currency. A single role, which cannot be achieved by other public chains. So when the altcoin market expands like it did during a bull market, btc market share usually tends to trend down, but when the bubble peaks and the market pulls back, btc market share usually tends to trend up because bitcoin almost always falls more than alts Gain less, and alts usually rise several times crazily in a short period of time.
In the fourth quarter, BTC rushed to new highs twice in October and early November, but failed to break through each time. One thing I've noticed is that all of the BTC ATH breakouts this year have coincided with localized lows on the ETH/BTC chart. I don't think it's a coincidence. In my opinion, there has clearly been a shift in the perception of these smart contract platforms by investors outside of cryptocurrency and by original investors in cryptocurrency. The emergence of DeFi and NFT has been the main focus of the cryptocurrency field in the past few years, while BTC maintains its role as a hard currency, non-cryptocurrency and cryptocurrency-native investors hope to get a piece of this fast-growing ecosystem. While there are a lot of outspoken Bitcoin bigwigs who gossip about every other asset in the crypto space, I think there is a rapidly growing, albeit much quieter, older group of crypto original investors who have Large amounts of Bitcoin have little exposure to other crypto assets. As traditional financial asset allocators warm to bitcoin as an investment, many bitcoin holders are also warming to altcoins as they begin to move down the risk curve. If you are a trader like me, this is a good balance because as long as there is a steady stream of money flowing into the crypto market, it is easier to take advantage of the altcoin opportunities without having to worry about BTC.
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▶️ Ethereum
Ethereum By the middle of this year, ETH should have all the necessary infrastructure scaling to effectively realize its vision of a functional modular blockchain stack. If the merger is not delayed further, Ethereum will move from proof of work (POW) to proof of stake (POS) in late spring and early summer, and zkRollup solutions such as zk-sync 2.0, Polygon Hermez, Polygon Miden, Starknet, etc. should be built and put into production. There are only a few zkRollups up and running at the moment, such as dYdX and Immutable X, but none of the existing solutions leverage the EVM like future solutions. zkRollups will allow Ethereum users to experience low fees due to rollups' novel use of zero-knowledge proofs, which allow transactions to be made off-chain and batched into a proof that the base layer can use to confirm the validity of those transactions. I tried one of the zkr dexes, ZigZag, it is unbelievably fast and easy to use, I expect the user experience of these apps to be as good as other Dapps on L1.
It will be interesting to see if users of other L1 blockchains decide to use these rollups schemes instead of the chains they are used to. In my opinion, it seems unlikely that ETH's scaling solution will take this market share away from L1s that directly onboard non-cryptocurrency users into DeFi without any friction, unless these second-layer solutions have a better user experience than other first-tier solutions. Layer blockchains are much better. If we take Arbitrum as an example, which is basically the same speed as the other L1s, with a slightly higher fee, then we can see that the increase there is minimal in comparison.
So, why don't users care about Layer 2 solutions, or more precisely, why haven't they cared so far? I think there are two main reasons. The first reason is that the main source of ETH’s TVL is wealthy users of the cryptocurrency’s native ETH, who aren’t really bothered by ETH’s high fees. If their 8-figure stablecoin farm is running non-stop, and they feel their funds are safe on mainnet, they don't necessarily care about paying higher gas fees to ensure that safety. They have absolutely no problem waiting for a full transition to POS and will have 32 ETH ready to run their node. Therefore, for such users, even if Arbitrrum offers much lower gas fees, the bridge uses the same application on the base layer, which will not bring them much benefit. These users are not looking for the next 100x growth target, because Ethereum already is. These old ETH users are different from Moonboi Ape User 123 who joined in August 2021. They are not pursuing the next OHM fork project, new algorithm stable currency or any other creative pvp DeFi game.
The second reason shows the group portrait of newbies in the cryptocurrency space, who are chasing the next 100x growth goal. This group loves every new Ponzi scheme and will all in new projects regardless of the consequences. When they see these huge ecosystem incentive funds and promote the liquidity mining of new users, they will still be happy. The reality is that this group is looking for the shiniest new thing and what they think will make the most money in the shortest amount of time, and these are often not seen on Ethereum. Currently, Solana and Avax are like the cool uncles at the picnic who give you money to go to the movies with your friends, and Ethereum are the whiny uncles who say kids don't respect their elders anymore and will Tell your parents that you and your friends were drinking and eating hot dogs at the park.
The security and decentralization of the network that made ethereum its claim to fame, while important to the crypto network in the medium to long term, is not a selling point for attracting new users. For users, as long as their own experience is not affected, maintaining network security should be the main focus of developers and builders, not what users care about on the front end. 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 L1 competing chains in less than a year. Has user activity. The current target market for Web 3.0 is not the 60-somethings with Fidelity retirement funds, Wells Fargo, and Chase savings. It will be those who are not loyal to the banks and are interested in the new Things are more interested in young people. So, if your selling point is just "a decentralized, secure network where users can interface with DeFi applications and earn 5% per year instead of just 0.01%", you might convince some non-crypto boomer users (if You have an integrated app that serves them behind the scenes), but you can't attract a ton of new active investors, because that's the default for every smart contract platform these days.
In the short term, I don't think ETH is a great business for the following reasons:
Its market value far exceeds other monomer L1, but the user experience is worse than all other monomer L1;
If L2s are to compete with L1s, they will need a seamless new user experience and attract new users like the rest of the ecosystem, so the top performing L2s may have tokens and be directly accessible from centralized exchanges. Unless you think these tokens are completely worthless, holding the tokens of these networks should be much better than just holding spot ETH.
ETH is not optimized for a modular architecture, there are other chains that are further ahead in development with equally capable development teams and a similar system architecture, and there are other teams that focus on the modular architecture part of ETH's shift from scratch. NEAR, a sharded PoS blockchain compatible with the EVM via Aurora, will soon have the potential to connect multiple application chains through its Octopus network. The design of ETH 2.0 is similar, but due to its existing design and the large amount of value that exists on the network, it is much more difficult to do it quickly. Merge has been delayed many times because it has to be done really well, due to the fact that all existing value exists on Ethereum while other L1s can be built without these hurdles. Currently, ETH is a monolithic blockchain, but is moving to a settlement and data availability layer, with Rollup as the execution layer. There are also teams like Celestia, they only focus on the data availability layer, but similar to NEAR, because they are built from the ground up, they have the right to pour their hearts into one thing
Once ETH transitions from a settlement layer, execution layer, and data availability layer to a pure settlement layer, some of the value of Ethereum’s market share will be captured by the rest of the ecosystem. In zksync 2.0, users can choose to use ZK Rollups for on-chain data availability, or ZK Porter for off-chain data storage. Zk Porter's transaction efficiency is higher and the cost is lower, but ZK Porter's account must be protected by Guardians (Guardians) - Guardians refer to the holders of ZK Sync tokens. These will be used to track ZK Porter status and data availability for these accounts, and since the ETH roadmap focuses on Rollups, the plan is to have most daily transactions executed off-chain. For zkPorter and other similar design patterns to be successful, they need users to stake tokens to maintain the security of these additional systems. I expect the market to find a balance between evaluating the settlement layer and other layers of the new module architecture, and I firmly believe that the entire module system will benefit greatly once it is fully deployed on mainnet. Initially though, I'd like the implementations of these other layers to get more value, since they'll be starting from scratch.
The future of Defi will not exist on only one blockchain, I don't think we have seen the final state of these smart contract platforms yet. In a field of rapid innovation and iteration, it seems to me that we are more likely to have a multi-chain ecosystem of networks, all operating simultaneously, rather than having one solution work well and all others fail . Decentralization applies not only to the design and implementation of systems that maintain network security, but also to the diversity of viewpoints, users, and developers in the crypto space.
Others I thought were worth a look but didn't write about in detail:
Curve Wars: CVX / CRV / YFI / BTRFLY
SYS+MUTE
Spell & MIM + Sushi
FXS
INV
GMX / dYdX / PERP / MNGO / Drift Protocol
DPX / RBN / PsyOptions
Dusk
MetisMagic (TreasureNFT)
Ninja on Sol
Levana Protocol
Summarize
Summarize
At the end of the last article I wrote for the fourth quarter of 2021, I asked a few questions that I thought about in the next few years:“What will be the killer app of the 2020s? Amazon in the 2010s, Facebook in the early 2000s, and what will it be in the metaverse? How to attract millions of non-crypto users?”
I'm still actively thinking about this, but I believe the answer may be right around the corner. There is currently only one Dapp attracting millions of daily active users - Axi Infinity. Although DFK is still in its very early stages, it is the first decentralized application I have seen that connects DeFi and games in a way that is interesting for users. Uniswap is a revolutionary development, but clicking to add ETH/USD LP, and then calculating your short-term losses and trading gains is not fun. I don't know how many regular dex users participate in the governance of these platforms, or actually use their tokens for anything other than speculation. The gamification + mobile accessibility of these DeFi original elements is the next step that can really open up a large part of the target market for DeFi, because users will be willing to participate in the ecosystem, rather than simply guessing. Additionally, due to the active participation of users in the ecosystem, the tokens of these games, if properly designed, can have more utility than typical governance tokens.
"Which untapped market segments will be more popular in the next few months or next year?"
To answer this question, I think one of the least discussed and most important market segments is the underlying infrastructure that drives these Dapps. Expecting non-crypto users and developers to join without providing them with the proper tools to interact seamlessly is a high bar to ask. If we want a fully decentralized web, then we need to make it very easy for users to participate without having the knowledge of a high-level engineer, or living in the crypto world every day for the past decade. Also, if we want more developers to enter the field, then all of these systems need to be provided with the necessary tools and documentation to make new applications easy to deploy, and have a community willing to help and answer questions. are all critical.
Looking back on 2021, there are some things that I have not done perfectly, and I hope the new year can improve:
Excessive trading in volatile markets
Selling spot too early and not sticking to a long-term trading plan
Need to be more radical when my ideas are out of mainstream and indecisive
Not set up on each chain at the beginning of the year, it would be very useful to know which wallets/bridges to use
Operations are not consistent with diary, I am more accurate and awake when I write everything down
Favorite trading pair:
long Avax / short Ada
long Jewel / short Axie
long Atom / short Dot
Here are some bold predictions for this year:
The number of Keplr users will exceed that of Metamask
The top 10 by market capitalization will be DeFi Kingdoms
Phantom will have more than 20 million users by 2023
The performance of DeFi in the SOL ecosystem is far better than that of Solana
DAOs composed of crypto-native traders will become more and more common
There will be at least one P2E guild among the top 25 by market capitalization
By the end of next year, more people will use encrypted mobile apps than chrome plugins
SoL/Luna/Avax flips Ethereum and keeps
Atom Market Cap Exceeds $100 Billion
DeFi options gaining a lot of attention
Important Stablecoins Pass Legislation Allowing Banks to Hold Stablecoins on Their Balance Sheets
One of the top tech companies starts using AVAX subnet as a dev network for blockchain development
I tweeted the other day about my main concerns for 2022 and the years to come, namely modular blockchain architecture and value gains:
In a modular blockchain stack, which layer should capture the most value, or should it be roughly equal across all layers?
I honestly don't have an answer to this question, but as it scales over the next few years, I think it's going to be one of the most important things a trader needs to think about, and how to position positions accordingly. My initial thought was that teams that focus on building really efficient and dedicated chains would do well, which is why I'm a big fan of zkSync and Celestia coming later this year.
