Categories Overview For The Next Bull Run

March 6th, 2023

Hi everyone,

As you know, the market has experienced a downfall for nearly 500 days. Many empires have fallen, a lot of individuals left, and thousand of billion had been drained. However, the market has been recovering step by step. Then in this article, we will have a prediction of which category will be the next trend in the upcoming bull season.

Real Yield

In the beginning, DeFi Protocols’ return was mostly derived through token inflation, which is another way of saying that the project created extra tokens and put them into circulation to reward investors. Everything is good if the user base is growing, but when new users stop joining, the liquidity pool will be eliminated, which will cause the price line to fall suddenly.

=> This model is not sustainable.

However, the problem was solved with the term “Real yield” which the projects must thus figure out how to create long-term income from their own operations rather than through token inflation. In general, transaction fees, trading fees, loan borrowing fees, and investment yield make up the majority of a project’s revenue.

Source: Twitter @yourfaveD

In addition, it appears like Arbitrum is aiming to concentrate more on the real yield segment while preparing to issue tokens, airdrops, and restart the Arbitrum Odyssey project.

Real Yield, however, is not a market segment because the projects connected to this trend are in other fields like derivatives and yield farming, so think of it as an evaluation criterion for a project that resembles a crypto portfolio.

Watchlist: GMX, Unami

Liquid Staking Derivatives ( LSD)

What is LSD?

LSD are protocols that enable you to leverage the value of assets that are immobile in the staking pool to perform other activities like trading, mortgage, farming, etc. to generate earnings.

For example, you stake ETH on LIDO with the APY= 5% and receive the corresponding sETH token. Then you take sETH to other platforms such as Curve, and Balancer for staking and farming, etc.

LSD as far as I can see is still in the beginning stages. The reason LSD emerged in early 2023 is due to the Shanghai upgrade effect of Ethereum plus the Binance list RPL.

Source: Cool Wallet

In my opinion, cross-chain LSD, NFT LSD, LSD anything, and then Synthetic LSD may be available in the future. This bubble will be softly inflated to a higher volume.

The Shanghai upgrade of Ethereum, which will take place soon, will be a significant event for LSD since it aims to boost user acceptance of staking over time. Because Shanghai is a well-known pre-planned event, its influence has already permeated the price line months in advance. As a result, it’s possible that the market won’t behave as expected. The market’s trembling is mostly caused by the MM team and short-term traders.

Watchlist: Lido, SSV

Layer 2

The two most frequently discussed Layer 2 on Ethereum solutions are Optimistic Rollup and Zk Rollup. The year 2022 had seen Optimism dominate in Layer 2.

Optimism has its advantage when releasing tokens early, although Arbitrum has not yet released its token, the project’s accomplishment shows enormous strength ( TVL peak was $3.13B, at the time of writing is $2.6B)

Despite the fact that Optimism is growing steadily, Zk Rollup ( Zero-knowledge Rollup) is the perfect Layer 2 solution, this statement has been proven by the experts and major ventures ( a16z, Pantera) even Vitalik also supports the Zk Rollup approach.

Moreover, the recent move from Polygon — the largest scaling solution on Ethereum also shows that they will move to Zk Rollup, by acquiring Hermez Network ( a Zk project) and launching Polygon Zero- Zk Rollup solution using Plonky 2 Proof.

In my opinion, Layer 2 will attract more cash flow and be the next big trend in the future. Yet, I continue to have reservations about whether it can gain enough traction to push the overall cryptocurrency market past its top since the cash flow in Layer 2 right now seems to be from sharks most likely.

Watchlist: Starknet, Optimism, Arbitrum, Polygon.

NFT

Nike, Amazon, Shopify, and many other global brands have entered the NFT market. However, the market cap of the NFT market does not reflex exactly these events since the market cap of the NFT only has $23B, approximately 1.5% of the total value in the blockchain industry.

Unlike other categories, NFT seems to be more accessible for newbies. First, NFT is a result of hardworking, creativity of artists and collectors, therefore, it will be no illegal problems in achieving and creating an NFT.

Secondly, each set of NFTs has its unique story and culture. The users collect and hold themselves when this narrative appeals to their understanding rather than just trading and profiting as with cryptocurrency. Moreover, social networks are also adept at making their users happy by allowing users to set NFT as an avatar to display personalities.

Most global brands are currently accustomed to visiting Polygon, but Ethereum is dominant in NFT right now. As for the BNB chain, there is no growth in GameFi, Metaverse, and NFT ecosystem. In the next bull run, NFTs will be a very powerful trend, thus “trend-setting business leaders” like CZ shouldn’t ignore it and will take action to develop their NFT ecosystem. Better watch out for NFT on the BNB ecosystem.

Source: Coin98 Insight

Yet, NFTs typically move slower or faster than cryptocurrencies, not in synch with Bitcoin. For example, when the market peaked in October and November of 2021, the NFT ecosystem reached its peak in January and February of 2022.

Web3 & SocialFi

What is Web3?

Web 3 is the third generation of internet services that bring data together in a decentralized manner. In short, Web 3 uses blockchains, cryptocurrencies, and NFTs to give power back to the users in the form of ownership.

However, Web3 is very large on its own and is used by practically the entire blockchain industry, so it is impossible to tell that web3 will lead the trend. Therefore, we will dig into some components of web3 first and analyze them.

SocialFi

SocialFi was born to help users control their personal information, maintain their anonymity, exercise their right to free speech, have their content’s intellectual property rights upheld, and make money from their own work. Leading SocialFi, we have Lens Protocol and Hook Protocol.

However, SocialFi’s largest issue is scalability. The ability to manage a social network with hundreds of millions or perhaps billions of users is severely hampered by speed and data storage limitations. To accommodate this demand, the present blockchain infrastructure still requires more time.

What if SocialFi is a leading trend? then what other categories will benefit from it?

If SocialFi is leading the trend, then L1/L2 will benefit from it. Moreover, in my opinion, there will be more such as: