Thoughts on the New Cycle of Crypto After Token2049

With the conclusion of the Token2049 event, the cryptocurrency atmosphere in Singapore has returned to calm. After this period of intensive communication, I have gained some new insights into the narrative of the new cycle.

The overall structure of the current cryptocurrency industry has been improved.

1. Omnichain is still the star narrative of Layer0

A certain cross-chain interoperability project not only defines the full chain interoperability of the ultra-light node model but also proposes a new standard for Omnichain Fungible Token(OFT). OFT provides a more user-friendly and efficient cross-chain transfer solution, including two versions: v1 and v2, with v2 supporting non-EVM chains. Additionally, there is a standard that supports Omnichain NFT.

Multiple projects have adopted the OFT standard, such as a certain Layer 2 project, a certain stablecoin project, a certain CDP protocol, a certain Bitcoin protocol, and a certain multi-chain lending protocol.

2. Layer1 is no longer the first-tier narrative

There are differences regarding Layer 1 track projects in this round. The Move-based new public chain has attracted some attention, but other new public chains, whether focused on DeFi or NFTs, or those supporting multiple programming languages, seem to have not gained widespread consensus.

Many people no longer believe that a new public chain will emerge that surpasses Ethereum. Even if they think that Ethereum may not be the endgame, they are unwilling to heavily invest in new Layer 1 directions. Of course, there are still institutions investing in new Layer 1 projects, such as some well-known venture capital firms.

3. The Layer 2 landscape is basically determined, and the middleware is also ready.

Optimistic Rollup mainly has two leading projects, while the first tier of ZK Rollup/zkEVM includes several major projects.

The middleware for ZK Rollup/zkVM is also in place, mainly including:

• Sequencer: There is a widespread call in the industry for a decentralized Sequencer network, with multiple leading projects.
• Prover: There are already multiple projects focusing on Layer2 ZK Proof or Applications ZK Proof
• Hardware Accelerator: Hardware acceleration projects aimed at the speed of zkp generation, including GPU, FPGA, and ASIC acceleration, etc.

4. There are plenty of cash cow projects in middleware.

After ETH2.0, the LSD track has become the second "cash cow" business following Bitcoin PoW mining. Under the Ethereum PoS mechanism, the annual output value of Staking is about 680,000 ETH. Among them, there are some high-quality projects, such as a project with the highest market share, a project targeting B-end users, and a project that can prevent Slashing, etc.

The MEV track began to simulate future profit distribution mechanisms before the implementation of Danksharding. MEV seems impossible to completely eliminate; currently, a more reasonable approach is to return MEV earnings to users' wallets, DEXs, or other dapps.

5. Gao Qi's "Risk-Free Returns" Generate Opportunities for LSDFi and RWA Applications

ETH Staking returns have become the "bond yields" of the cryptocurrency industry, and LSDFi further enhances the yield for ETH holders. Currently, the annualized yield for Ethereum's PoS is about 3.6%. After the Shanghai upgrade, ETH Staking can basically be exited at any time, which increases the confidence of long-term holders to participate in Staking.

LSDFi has given rise to more applications, such as a stablecoin project supported by LSD and a certain interest rate swap protocol. The earnings from ETH Staking combined with the additional earnings from LSDFi can indeed provide long-term holders of ETH with greater returns.

Correspondingly, the high yield of U.S. Treasury bonds has propelled RWA into the spotlight. Overall, the current stage's "risk-free rate of return" is high, providing a glimmer of hope for long-term cryptocurrency holders in this bear market.

6. Aiming for large-scale adoption, lowering the user experience threshold is a fundamental requirement.

The user service layer in this cycle has many innovations, with a shared narrative to lower the user experience threshold, and the ultimate goal is to achieve mass adoption.

Intent Centric( is a recent hot topic. Several leading projects have slightly different entry points; some focus on attracting more users, some aim to lower the barriers to use, some are dedicated to helping users better express their needs, and others focus on helping users reduce MEV extraction. Overall, these projects either address the "difficulties in using protocols and the even greater difficulties in combining protocols" issue or tackle the "maximizing user benefits" problem.

TG Bot is another hot topic, as one of the practical applications of Web3+AI. Users can interact with the bot in the chat window to monitor token information, conduct on-chain transactions, and more. The TG Bot has rapidly developed products in trading, analysis, and airdrop mining, essentially lowering the user experience threshold.

7. The Increase of Projects Combining Cryptocurrency and AI

This event features many entrepreneurial projects that combine cryptocurrency and AI, mainly including:

• On-chain interaction automation: represented by a certain TG bot project
• To empower AI business: for example, a project focused on annotation in the medical field.
• Web3 version of ChatGPT: a natural language search engine for on-chain data
• ZKML: Projects such as someone building RockyBot, a financial project, self-improving blockchain, etc.

Cryptocurrency technology creates a trustless environment, with non-sovereign currencies and smart contracts being more suitable for intelligent robots. In the future, there may be more applications combining cryptocurrencies with AI.

Conclusion

Singapore is an important hub connecting the East and West in the Web3 industry. This event is large in scale, gathering many important projects. The main venue's booths focus on service-oriented projects, while narrative projects often host surrounding activities. Whether at the main venue or surrounding events, both reflect the vitality and innovation of the industry.

Despite the challenging market environment, the cryptocurrency industry continues to move forward. We need to remain focused on building and innovating to drive the industry forward.

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