Observations on the Crypto Assets Industry After Token2049: Shift in Narrative Structure and Market Trends

With the conclusion of Token2049, cryptocurrency entrepreneurs and practitioners from around the world are gradually leaving Singapore, and the crypto atmosphere in this city is returning to calm. During this intensive period of exchanges and discussions, there have been some new thoughts on the narrative of the new cycle.

This year, the overall structure of the Crypto Assets industry has been further improved:

1. Omnichain remains the hottest narrative in Layer 0

The ultra-light node model of full chain interoperability and the definition of the new standard for Omnichain Fungible Token ( OFT ) make cross-chain transfer solutions more user-friendly and efficient. OFT has two versions, v1 and v2, with v2 supporting non-EVM chains. Additionally, OFNT721 and OFNT1155 support Omnichain NFT.

Currently, multiple projects have adopted the OFT standard, including Ethereum layer 2 Metis, multi-chain stablecoin MIM, CDP protocol TapiocaDAO, wrapped Bitcoin protocol BTC.b, multi-chain lending protocol Radiant.capital, etc.

2. Layer1 is no longer the narrative of the first tier

There are differences in this cycle regarding Layer 1 track projects. The new public chain of the Move system has attracted some attention, but whether it is a new public chain focused on DeFi or NFTs, or a public chain that supports multiple programming languages, it seems that none have gained widespread consensus.

Many people no longer believe that a new public chain can surpass Ethereum, and even if they think that Ethereum may not be the ultimate solution, they are unwilling to heavily invest in new Layer 1 directions. Of course, there are still some institutions investing in new Layer 1 projects.

3. The Layer2 landscape is basically determined, and the middleware is ready.

Optimistic Rollup mainly consists of the two strong players Optimism and Arbitrum, while the first tier of ZK Rollup/zkEVM includes StarkNet, zkSync, Polygon, Scroll, Taiko, etc.

The middleware supporting ZK Rollup/zkVM is also in place, including decentralized sorter networks, ZK proof generators, hardware accelerators, and other key components.

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

After ETH2.0, the LSD track has become the second "cash cow" business direction following Bitcoin PoW mining. Under the Ethereum PoS mechanism, the annual output value of Staking is approximately 680,000 ETH(, exceeding 1 billion USD).

The MEV track has begun to rehearse the future profit distribution mechanism before the implementation of Danksharding. Currently, a reasonable way to exist is to feed back MEV profits to users' wallets, DEX, or other decentralized applications.

5. Gao Qi's "Risk-Free Returns" Give Rise to LSDFi and RWA Application Opportunities

ETH Staking yields have become the "bond yields" of the Crypto Assets industry, and LSDFi further enhances the yield for ETH holders. Currently, the annualized yield of Ethereum's PoS is approximately 3.6%. With the additional earnings from LSDFi, long-term holders of ETH can enjoy greater returns.

Correspondingly, the annualized yield of about 5% on U.S. Treasury bonds has driven the development of RWA, but this mainly allows existing Crypto Assets users to benefit from the recent higher yields of U.S. Treasury bonds, rather than attracting new users.

6. Aiming for mass adoption, lowering the user experience threshold has become a fundamental requirement.

The user service layer in this round of cycles has multiple innovations, with the common goal of lowering the threshold for user experience and ultimately achieving large-scale adoption. Centralization intentions and TG bots are two hot topics, both dedicated to solving the issues of "difficult-to-use protocols and even harder protocol combinations," or the issue of "maximizing user profits."

7. The combination of Crypto Assets and AI has become a new trend

The Token2049 event showcased many entrepreneurial projects that combine Crypto Assets and AI, mainly including on-chain interaction automation, To Earn empowering AI businesses, Web3 version of ChatGPT, and ZKML, among other directions.

Overall, Singapore serves as an important hub connecting the East and West in the Web3 industry. The Token2049 event attracted over 10,000 participants, making it the largest industry event of the year so far. Most significant projects participated, with service-oriented projects mainly taking part in the main stage booths, while narrative projects often held side events.

No matter how the market environment changes, continuous construction and innovation remain key to the development of the industry.