Original author:Ignas
Original compilation: Deep Chao TechFlow
The cryptocurrency market is picking up, and the question arises: What should we invest in?
Certain tokens like MUBI show high returns, but require keen intelligence and close attention to community trends to invest in time. However, there are other tokens that can provide higher returns over a longer period of time as they relate to the development of Web3 technological innovations. These projects allow us to spot price increases before they happen and then invest.
Here’s a list of 7 protocols I’m watching that are about to get big launches. Ill keep an eye on whats coming out of these projects and explain why Im interested.
1. Frax V3 and Fraxchain
Frax is rated D (unsafe) in the rankings of the non-profit stablecoin rating agency.
According to the report, Frax is insecure due to risks associated with being collateralized by the volatile FXS token, over-reliance on a centralized asset (USDC), and the core team’s significant control over voting rights and monetary policy.
Like DAI, FRAX also lost its USD peg during the USDC depeg, but currently, Frax has made the switch with v3.
Frax v3 is being gradually rolled out and sFRAX is already online. sFRAX Annualized Yield attempts to track the U.S. Federal Reserve Reserve Reserve Balance (IORB) interest rate, using the IORB oracle. Basically it can be called the risk-free interest rate on the chain.
The current annualized yield is 5.4%, and there are approximately 22 million FRAX mortgaged.
With the launch of Frax v3, FRAX is moving away from algorithmic stablecoins and transitioning to 100% collateralization. FRAX will be pegged to the U.S. dollar via Chainlink oracles and governance approval.
Then came the launch of BAMM (Lending AMM). Curve founder Michael called Frax’s BAMM “the biggest innovation in the DeFi field since crvUSD.”
BAMM allows users to leverage any token without an oracle. It operates within its ecosystem, managing asset prices and liquidity internally to prevent bad debts and ensure solvency. BAMM allows efficient use of capital and increases demand for FRAX. Please see this post for details.
To be honest, I still dont quite understand how it works, so hope to learn more about it as more details come out.
There are also FXBs, debt utility tokens that are convertible into Frax after a specific time. You can buy FXB at a discount and then convert it to Frax for low-risk profits.
Interestingly, Frax and Maker started from different starting points, but both are moving from USDC to embracing RWA. RWA allows protocols to move away from the need for leverage-based stablecoin circulation, providing more predictable returns.
Another similarity between the two protocols (Frax and Maker) is that they are both launching their own native blockchain chains.
MakerDAO is exploring forking Solana, but Frax is building a hybrid OP and zk Rollup that will use frxETH as the gas token (but potentially all Frax stablecoins will be supported). I applaud Frax for their innovative moves in decentralization, which sets Fraxchain apart from other L2s. Fraxchain is on testnet and you can try its tutorials here on Frax Telegram.
Why am I optimistic about this project?
Frax is building a high-quality blockchain ecosystem. With more upgrades and technological innovations, veFXS tokens will have higher value.
These developments take time, so I believe the current market price (FXS has a market cap of $647 million) has not yet been affected by the upcoming RWA+L2+BAMM upgrade, and may then increase in price in anticipation of these events.
sFRAX is already online, Fraxchain is on the testnet, and the BAMM/frxETH v2 code is in progress and is expected to be completed within 2-4 months.
2.Synthetix Andromeda version and eliminating SNX inflation
Synthetix is gradually upgrading to V3 to address multiple project pain points, but two pain points stand out to me:
Multi-collateral pricing: V3 is collateral-agnostic, allowing support for any collateral to back synthetic assets. V2 only allows the use of SNX. This will increase the liquidity of sUSD and the markets supported by Synthetix.
Synthetix Loans: Users can now provide collateral to the system to generate sUSD without taking on debt pool risk or paying any interest or issuance fees.
Upcoming Andromeda releases this month include the launch of Core V3 and Perps V3 Base, using USD as collateral.
Previously, Synthetix relied on sUSD, but adding USDC should attract more users and LPs. However, USDC is used for front-end integration, and Synthetix encapsulates it into sUSD for back-end Synthetix contracts.
Andromeda is an exclusive product of Base and an important subsequent upgrade, as it will test the demand for USDC as collateral, LP returns, and the fees/transaction volume generated.
Several Synthetix ecosystem protocols such as Polynomial, Kwenta, Infinex, and dHEDGE have confirmed deployment on Base, so there will be more action on Coinbase L2.
Why am I optimistic about this project?
The Synthetix DAO voted to use 50% of the fees earned on Base to buy back and burn SNX, so if the fees are higher, it will put upward pressure on SNX.
What’s more, the founders of Synthetix have proposed ending inflation of the SNX token.
Initially, inflation was used to incentivize subscriptions and increase liquidity, but over time, its effect became less and less effective. The proposal contends that making SNX deflationary by stopping inflation is more consistent with future growth of the network, including potential new developments and shifts in primary collateral.
Therefore, the Base deployment is an important test for SNX, and I will pay close attention to the transaction volume and the project partys suggestions to eliminate inflation.
3. Fluid in Instadapp
Im bullish on the Instadapp ecosystem.
The team has already launched several products such as Instadapp Pro, Lite and Avocado, but the most important product is about to be launched.
Instadapp combines the advantages of Uniswap, Maker, Compound, Aave and Curve and is changing the way Fluid lends and trades.
Below is a thread I posted on twitter about Fluid, and heres a brief overview of the main innovations.
Lenders can make loans up to 95% LTV with ETH and reduce liquidation penalties to 0.1%
Partial liquidation only liquidates the amount needed to return to a healthy state
The liquidity layer consolidates liquidity across all protocols so users do not need to remove liquidity with every upgrade
Smart Debt and Smart Collateral, profit from your collateral or reduce debt from transaction fees incurred. So instead of adding to your debt through fees, traders can now trade on top of your debt, which is reduced.
DeFi Made HereAnother blog postHe explained why he believes that Fluid is the biggest innovation in the DeFi field since the transition from Uni v2 to Uni v3.
Why am I optimistic about this project?
Obviously, as an ambassador for Instadapp, I have a personal bias. But we cant ignore Fluids major innovations. With Fluid (and Avocado), Instadapp will transform from a “middleware” protocol (an aggregator of other DeFi protocols), and the role of the INST token will be enhanced.
INST will manage Fluid in a manner similar to other lending protocols such as Aave.
Fluid is expected to launch in mid-December, with a 500,000 bounty available to hackers, and will be available to the public in mid-January.
4.Eigenlayer + LRT
If youre a regular reader of mine, youll know why Im bullish on Eigenlayer, but now we have a more detailed timeline.
Eigenlayer has launched the second phase of its test network, giving Restakers like you the opportunity to license to the operator.
These operators will validate Actively Validated Services (AVS), which is why I am bullish on LRT (liquid re-staking) tokens.
At this stage, EigenDA is the first and only AVS. Rollups can be integrated with EigenDA to increase throughput.
With the emergence of new AVS, we will witness the expansion of shared security use cases on Ethereum. Here are a few examples:
Ethos: Ethereum is the hub for restarting the universe
Witness Chain: Diligence-proof defense and proof-of-position physical decentralization
Hyperlane: Interchain messaging (bridging) for Rollups distribution
Espresso Systems: Decentralized sorter for Rollups transactions
Blockless: Infrastructure for network neutral applications (nnApps) that can run in any L1/L2 blockchain network and is not restricted to a specific blockchain.
Multiple AVS will launch their own tokens to incentivize operators and Restakers to delegate ETH to them.
However, things get complicated when deciding which AVS to support. As a Restaker, you need to choose the carrier that authenticates AVS.
Currently, there are 107 operators on the testnet, with more expected to join. So, how do you choose the operator with the highest risk-reward ratio?
This is where Liquid Recollateralized Tokens (LRT) come into play. Instead of betting directly through Eigenlayer, you can deposit your funds into the LRT protocol. However, LRT still requires a governing body to select operators and manage risks. This means new protocol tokens will be airdropped and earn higher yields.
With LRT, we are expected to receive Ethereum fixed deposit income (5% income), AVSs Eigenlayer re-deposit rewards (10% income) and LRT protocol token emissions (10% + income). Without taking into account the initial airdrop, ETH’s annual return is approximately 25%.
Its still too early to see which LRT protocol will prevail, but it seems that Ether.fi is the leading protocol.
Why am I optimistic about this project?
Re-staking + LRT narrative because it has 3 key elements I look for in an exploration project: 1) Innovative technology 2) Opportunity to mint tokens 3) Engaging narrative.
I believe that restaking and implementing LRT will make ETH an attractive asset to buy and hold. This in turn will allow ETH to catch up with BTC and altcoins. However, this is not a risk-free return!
Unfortunately, we still have to wait. Phase 2 mainnet will launch in the first half of 2024, and phase 3 will launch later in 2024 with more AVS (where the real fun begins).
5.Uniswap V4
Uniswap V4 introduces the singleton contract, which merges all pools into one framework, thereby reducing the gas cost of creating a pool by 99% and making multi-pool exchanges cheaper.
In fact, you can already try out the benefits of singleton contracts through Ambient Finance. Im always surprised at how cheap gas rates are.
The reason Uniswap v4 is on the list is Hooks, which makes Uniswap v4 more like a platform.
Hooks in Uniswap V4 are essentially programmable contracts that can function at different stages of the liquidity pool life cycle. These Hooks can be considered plug-ins, allowing custom code to be executed when key events occur in the pool. This may include events such as on-chain price cap orders, time-weighted average market making, depositing out-of-range liquidity into lending protocols, automatic compounding of LP fees to LP positions, etc.
In fact, Instadapp has already previewed a liquidation-free lending protocol using v4 Hooks with a liquidation penalty of 0%.
Why am I optimistic about this project?
Uniswap using V4 peg will become the liquidity center of DeFi, even stronger than it is now. You know, protocols will face liquidity issues when they are launched, but with Hooks, developers can use Uniswap as liquidity to try and launch their own protocols + new tokens.
This in turn will bring more liquidity to Uniswap, potentially attracting liquidity from other DEXs.
Since V4 will be launched under a commercial license, forks will not be allowed until 2027. As multiple dApps are launched on Uniswap, Uniswap may gain more market share. Hopefully the Uniswap DAO and builder community can find a way to distribute value to UNI token holders.
But we have to wait until the first quarter of 2025 when the Cancun Ethereum upgrade comes online (which includes EIP-1153): Transient storage, which is crucial for Uniswap v4 to reduce network costs.
Maybe betting on UNI during the Cancun upgrade is a good short-term strategy.
For more information, please clickhere。
6. Stacks Satoshi upgrade
My opinion on Stacks is simple, as I recently shared on X .
The Stacks ecosystem token has performed well, with three major innovations:
Stacks Nakamoto posted: Will reduce txs speed from current 10 m-30 m to ~ 5 s
sBTC: Non-custodial, trust-minimized BTC USD peg, allowing smart contracts to write back to Bitcoin
Growth of BTCfi: Ordinals, BRC 20 and more.
Stacks expects to launch an upgraded version in the first quarter of 2024.
The biggest beneficiary may be Alex Lab, Stacks DeFi’s liquidity center that provides BRC 20 order book trading, BTC and a bridge between BRC 20 and Bitcoin, and the EVM chain.
Why am I optimistic about this project?
If you read my last article on the top three factors for a thriving cryptocurrency ecosystem, you will see that Stacks meets all three criteria, as user attention and funds are focused on a handful of assets, and more Tokens will be launched soon.
Three major factors for a prosperous cryptocurrency ecosystem:
technological innovation
Token minting opportunities
engaging narrative
Reducing the transaction speed to 5 seconds and bringing BTC liquidity, coupled with the narrative of BTCfi, make me look forward to the future of Stacks.
Also, the price of Stacks MC is relatively low compared to the unique value proposition, but Alex Lab is like a leveraged bet on STX. Q1 2025 upgrades are also on the way.
7. Growth of monolithic L1: Fantom 2.0 upgraded version and SEI V2
Let me explain why FTM and SEI are put together. There are two reasons:
First, the modular versus monolithic approach to scaling is one of the most interesting narratives in this bull market. More and more people are frustrated with scaling Ethereum through L2 solutions.
Issues include compromises on decentralization, security and a worse user experience, as well as the method used by L2 (Blast) to issue airdrops.
Additionally, L2 tokens lack a value proposition for investors. The recent ARB “staking” from the Treasury Fund shows the limits of L2 DAO’s creativity when it comes to token economics.
Perhaps things will improve in the future as security and network obfuscation improve, as will token economics with truly natively decentralized L2 and hopefully revenue sharing.
But at this stage, even with L2, transaction fees are too expensive for lower transaction amounts. We need L3 or L4.
But these technological changes may not appear in this bull market. If we want maximum security, we will end up paying high gas fees on Ethereum, or we will rotate funds from one L2 to another through a third-party bridge to get airdrops, because no one Be willing to wait 7 days for withdrawal on Optimistic rollup.
Now, a single blockchain has its own problems. Compromises on decentralization through a limited number of nodes or high hardware costs are paramount.
But since Ethereum stopped paying attention to or slowed down the expansion of L1, can Ethereum’s modular design solve these problems before the current monolithic blockchain improves decentralization?
This is where the Fantom and Fantom Sonic upgrades come in. It brings 2 k+ txs per second and finalization time of 1.1 s without sharding or L2. The team is targeting a new generation of dApps such as GameFi.
Why am I optimistic about this project?
Im bullish on Ethereum and Im bullish on Solana because its the main competitor to Ethereum. However, Fantom is working on new innovations to benefit from the microcontrollers expanded narrative.
Next spring I hope to see dApps actually being built on Fantom, that will be the most important follow-on factor.
Then there is SEI V2
I know a lot of people hate it. Or some people cant even distinguish SEI from SUI or Aptos. But Im keeping an open mind about SEI (like FTM) because it fits perfectly with my views on modularity vs. monolithic development.
You can readAll upgrades to SEI v2, but the most important of them is
Supporting parallelized EVM will benefit the development of the dApp ecosystem because developers can redeploy smart contracts on the EVM blockchain to the SEI.
390 millisecond expiration time (already online on mainnet)
Theoretical TPS of 12.5k
Why am I optimistic about this project?
In the last bull market cycle, L1 speed was the most important, but I think this bull market will also have an L1 war like the previous one.
Like Fantom, Sei is built with the vision of expanding the technology ecosystem, but it currently has the lowest market capitalization of the three and will not begin unlocking tokens in large numbers until the third quarter of 2025.
IOS
Android