Original title: "Delphi Digital Report Speed Reading: Trends to Watch in the Crypto World in 2022"
Original source: Delphi Digital
Original compilation: angelilu, Foresight News
The 2022 forward-looking report released by Delphi Digital analyzed hot topics, projects, and encryption trends. Foresight News compiled and organized the report. The following is an overview of hot topics.
Expansion Wars:The expansion battle between public chains will continue to heat up until L2 solutions are available;
Cross-chain DeFi / Interoperability / Bridge:With the rise of the Cosmos ecosystem, cross-chain bridges will benefit indirectly from the battle of public chain expansion;
Stablecoin：Curve's TVL will reach $23 billion, making it the No. 1 application in DeFi;
Decentralized Derivatives: The decentralized derivatives trading platform will be launched in various expansion solutions;
Metaverse, GameFi, and P2E:The concept of playing and earning has opened the era of chain games, and game chains are competing one after another;
DAO：The increase in the number of DAOs will drive increased demand for governance and coordination tools;
NFT：2022 ushered in a hot start, and NFT tools and infrastructure came to the fore;
Creators and brands entering the Web 3 space:More influential people connect with fans through NFT and Token, and music NFT will explode in the next few years;
The "homogenization" of the encryption market will change: mainstream cryptocurrencies such as BTC will gradually show the characteristics of traditional large-scale assets, and the broader cryptocurrency market depends on whether the assets or protocols are successfully used.
Expansion war
With the rise of major public chains in 2021, names such as LUNA, SOL, and AVAX have attracted the attention of a large number of investors. Although Ethereum’s L2 solution and the switch to ETH 2.0 are hyped, Ethereum still has high fees. In 2019, the "expansion war" will continue to heat up. Other public chains will use different methods to expand throughput, reduce transaction costs, and attract outstanding developers to join in, thereby competing for market share. Ethereum's high fees and congestion will continue to push developers to other L1s until L2 solutions are more practical (i.e. StarkNet, dYdX for transactions, Immutable X for NFT minting/trading).
Modular Blockchains and Data Availability: The rise of Rollups brought the concept of modular blockchains. A full-fledged blockchain consists of three core components: execution, settlement, consensus, and data availability. However, a blockchain does not need to perform all of these functions by itself. Instead, modular chains specialize in one or more of these components and outsource the rest to other specialized chains for greater scalability. For example, a core element of a modular blockchain stack is a specialized data availability chain, such as Celestia, which has a very high data capacity. Many reels can take advantage of this capacity, choosing to dump their data to Celestia for shared security while focusing on scaling their execution.
The ETH merger is arguably the most important milestone in Ethereum history, marking Ethereum's transition from PoW to PoS, but it has been pushed back since there was no hard deadline set for the merger. The merger is publicly expected to happen by the end of the second quarter, but you can follow the update here. From an investor’s point of view, after EIP-1559, ETH fees are divided into base fees and tips. After the merger, the tip part of the fee will go to the validator/staker, and this tip income will flow to the staker along with the block inflation. Otherwise, it will make ETH an asset with positive returns. In addition, after Ethereum launched EIP-1559 in August last year, it has become a deflationary asset.
Notably, as more traditional institutional investors enter the crypto rabbit hole, institutional capital flows have begun to expand beyond BTC and ETH, likely to the more liquid L1 assets in the top 10-20 coins favorable.
Cross-chain DeFi / Interoperability / Bridge
Interoperability and the Rise of the Cosmos Ecosystem
As mentioned in Delphi Digital's in-depth research report on Cosmos, in an interoperable IBC world, once siled blockchains can communicate with each other. Looking ahead, Cosmos’ Q2 roadmap shows the launch of Interchain staking, Interchain accounts, liquidity staking, and the launch of better bridges to connect Cosmos, developments that will enable its next wave of growth. It is worth noting that Interchain staking can actually promote the incubation of the Cosmos ecosystem, because it makes it easier for developers to launch applications.
DeFi supporting IBC: The Cosmos Hub will have numerous competing Hubs, such as Evmos, Archway, and Juno, which offer a different value proposition from the Cosmos Hub, which can further stimulate Cosmos DeFi. In fact, Osmosis is already competing with the Cosmos Hub, facilitating more than 2x the number of IBC transfers than the Cosmos Hub in the last 30 days. Delphi Digital believes that Season of the Universe will make the market large enough for players to coexist. Osmosis is dealing with Cosmos-native DeFi, while THORChain chose not to join IBC in favor of Asgard, it still has a huge market to leverage native BTC and other assets.
New liquidity guidance: The emergence of IBC native DEX like Osmosis will make it easier to promote the liquidity guidance of community-led and organic projects on IBC without relying on CEX. Token users, stakers, and liquidity providers such as ATOM and OSMO may get more airdrops this year.
IBC dominance: Although the fundamentals of ATOM are improving and the token economy will gradually improve in the future, it is expected that it will be difficult for IBC to maintain the dominance of the ecosystem because of the large number of new protocols entering. However, Cosmos did have a healthy start, with 3 million IBC transfers across 27 blocks in Cosmos over the past 30 days.
Bridge / Cross-chain
Another way to leverage alternative L1 and scaling solutions is through bridges and cross-chain infrastructure. Ultimately, the goal of cross-chain infrastructure is to seamlessly transfer assets on-chain in an efficient (and hopefully) decentralized manner. With more and more L1 and L2 solutions on the horizon, it's too soon to pick a specific asset, or even a group of assets, that ultimately wins the race. What is certain, though, is that competition in this space will only heat up, as the multi-chain narrative that exploded in 2021 is not going away anytime soon.
The above table shows that the TVL of some cross-chain bridges has risen sharply since September, and is currently about $9 billion. From September 1st to early January 2022, the average return rate of this group of cross-chain bridges is 108%, while ETH Its return of -1% marked the take-off of the replacement L1 in the second half of last year, and it performed quite strongly.
Here are some cross-chain bridges listed by Delphi Digital analysts:
Hop Bridge (Hop): Hop is a pioneer in cross-Rollup development. Although the current TVL is relatively small at about 100 million US dollars, the protocol has not launched Token yet. Hop Bridge will become a basic part of Rollup centered on Ethereum .
THORChain (RUNE): The most important milestone of THORChain is the introduction of treasury nodes, allowing the community to combine in Rune and contribute to the security of the network. This in turn will allow the pool to grow without a cap.
Synapse (SYN): Synapse connects different L1s and L2s, SYN has outperformed most other L1s since its launch in September, but is riskier than SOL, LUNA, AVAX, etc.
Cosmos (ATOM): Under the expansion battle between L1 and L2, the cross-chain liquidity bridge will become an indirect beneficiary. Cosmos should shine in a multi-chain future, with more and more chains and protocols using their infrastructure and IBC.
Stablecoin & Curve Wars
Stablecoins will explode in 2021 with a total market cap of over $150 billion. This surge proves that Stablecoin is the "killer application" of cryptocurrency, and the product and market are highly compatible. Assets like USDC and USDT are ubiquitous in the entire cryptocurrency ecosystem, and this trend will continue.
Decentralized Stablecoins
If regulators start cracking down on Stablecoins, it may push users and builders to use decentralized Stablecoins as an alternative, check out Delphi Digital's article on LUNA and UST here.
Delphi Digital also predicts that the symbiotic relationship between decentralized stablecoin mint Curve (CRV) and Convex will make it the #1 TVL application at $23 billion (current TVL is closer to $19 billion at launch), It surpasses other DeFi blue chips in terms of performance.
Decentralized Derivatives
Decentralized derivatives are heating up rapidly in 2021, and there is still huge room for growth before it surpasses its centralized counterparts. dYdX is dominant in the DeFi derivatives space, and Delphi Digital expects it to remain a significant player, but the competition for decentralized derivatives in 2022 may see more perpetual contract trading platforms in various scaling solutions Introduced and warmed up.
In the current state of dYdX, its Token lacks value accumulation except for its governance capabilities. This may change after the launch of dYdX V4. Below are some other perpetual contract agreements and DEXs listed by Delphi Digital analysts:
Vega: Decentralized derivatives, spot trading market.
GMX: Using the oracle pricing model, it doubles as a spot and leveraged trading platform.
In addition, the feasibility of emerging options and structured products has increased in the development of various L1 and L2. Ribbon and Opyn launched decentralized option products in April 2021. The integration of options agreements and perpetual contract platforms is another area of innovation, enabling delta hedging and improving capital efficiency. Delphi Digital analysts list two option items:
Zeta Markets: An options trading platform that uses a base Serum order book and has a native Zeta AMM plugged into it. Combined with Solana's high-throughput, low-latency, low-fee environment, this could be an incentive for institutional players to seriously trade DeFi options project.
Dopex: Using the covered call strategy, the call option is not sold to the market maker (the market maker collects the price difference), but is directly sold back to the buyer of the call option on the platform. Dopex is also developing a Deribit-like options chain with pricing based on IV multipliers represented by market makers.
Metaverse, GameFi, and Play-to-Earn
Axie Infinity broke out last year and proved the concept of monetizing games, and now there's a slew of P2E games trying to replicate Axie's success. Filtering noise from innovation will be an increasingly important and difficult task as the ecosystem grows. Most projects will eventually die, however, this is just the beginning of a new era in gaming, with projects like Illuvium, Crypto Unicorns, and Ember Sword bringing AAA graphics and gameplay. In addition, game chains are also competing, and the current ones are Immutable X, Ronin Chain, Solana, and Polygon.
DAO along the way
2021 is the year of DAO fame, and its definition has also changed during this year. Previously, DAO was used by protocols such as Uniswap to vote on appropriation and allocation of treasury. DAOs are now seen as group-coordinated instant entities with shared bank accounts and payment capabilities that can combine crowdfunding, deploy capital, and vote with tangible results. Experiments like Constitution DAO have demonstrated that groups of DAOs can amass tens of millions of dollars in a matter of weeks and buy assets together. Some DAOs already have hundreds of millions (or even billions) of dollars in funding and tens of thousands of users, and new ones are popping up all the time.
DAOs need to accumulate certain secondary assets to build a viable treasury, otherwise they run a significant risk of losing their original Token capital during market declines. Therefore, a large number of DAOs began to try to manage their treasury by obtaining voting escrow Token, hoarding Stablecoin, adopting PCV and deploying assets to earn income.
The increase in the number of DAOs will drive the need for governance and coordination tools. There will also be smaller sub-DAO units within DAOs. Smaller autonomous organizational units are expected to proliferate and execute on top of tools such as Orca Protocol and Squads. In addition, the number of Meme DAOs may explode, and the biggest beneficiaries of this growth will be the tools and platforms for DAO creation and management.
NFT: From static collectibles to interactive digital property rights
NFTs take off in 2021. Although NFTs have been around for a long time, 2021 is the year they enter the mainstream topic, and marketplace platforms like OpenSea also ushered in explosive growth. The NFT market has attracted many traditional companies and celebrities. NFT is also ushering in a hot start in 2022. January 2022 is the best month for NFT transaction volume and quantity, and buyers are still very excited about new projects.
NFT tools and infrastructure are also gradually coming to the front of the screen, allowing artists to customize and deploy smart contracts with a few clicks to start NFT projects without technical knowledge.
Creators and brands enter the Web 3 realm
Web 2 platforms like Patreon and Substack are game-changing for creators and brands, enabling them to own their own distribution and revenue generation. However, this is being taken to another level with the advent of NFTs and tokenized communities, the tokenization of other intangible values (i.e. fans) will create a whole new investable asset class for individuals. Artists, athletes, celebrities, and influencers have begun exploring how NFTs and tokens can create stronger connections between them and their fans and followers.
Music NFT provides music with a concept similar to copyright, but without legal red tape. It is a sub-industry that will explode in the next few years. Catalog's 1-to-1 music NFT model seems to be the most attractive, but like Royal and Sound The model also has great potential.
The "homogenization" of the encryption market will change
Fundamentals will be an increasingly important performance driver, especially as cryptocurrencies attract more capital and investor attention. How correlated assets are can be seen from the performance of cryptocurrencies over the past few weeks, driven largely by the recent jump in market volatility, which tends to reinforce positive correlations between cryptoassets rather than Consider its fundamentals. But this is not a phenomenon unique to cryptocurrencies, and traditional asset classes like equities also tend to see higher intra-market correlations during periods of heightened volatility. In these moments of great uncertainty, macro events still determine much of the price action in these uncertain times.
But just like mature financial markets, the performance of similar assets will not always maintain a high degree of synchronization, and the cryptocurrency market will further mature. The long-criticized "homogenization" situation is expected to improve. BTC, ETH, Subdivided tracks such as DeFi, NFT, and L1/L2 performed more independently. Over the next few years, cryptocurrency investing will broadly be more and more divided between "'mainstream' cryptocurrencies" and "Web 3 cryptocurrencies", with "mainstream" cryptocurrencies such as BTC continuing to be influenced by key macro factors , or gradually reveal the characteristics of large categories of assets in the traditional financial market, and the impact on the broader cryptocurrency market will depend more on the type of asset or agreement, and whether these events directly affect its value proposition. In other words, the success of these DApps and protocols will be determined more by adoption and usage activity.
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