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Delphi Digital researches and judges nine major trends in the encryption field in 2022

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The expansion battle between public chains will continue to heat up before L2 solutions are available; more creators and brands will enter the Web 3 field.

Original title: "Delphi Digital Report Quick Read: 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 War: The expansion war between public chains will continue to heat up before 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 US dollars, becoming the largest application of DeFi;

Decentralized derivatives: The decentralized derivatives trading platform will Various expansion solutions have been launched;

Metaverse, GameFi and P2E: the concept of earning money has opened up the era of chain games, and game chains have competed one after another;

DAO: The increase in the number of DAOs will drive increased demand for governance and coordination tools;

NFT: 2022 The year ushered in a hot start, NFT tools and infrastructure came to the front;

Creators and brands enter the field of Web 3: more influential people through NFT and Token establish connections with fans, and music NFT will explode in the next few years;

The "homogenization" of the encryption market will change: mainstream encryption such as BTC Currencies will gradually exhibit the characteristics of traditional large asset classes, while the broader cryptocurrency market depends on the successful use of assets or protocols.

Expansion war

In 2021, the rise of major public chains, names such as LUNA, SOL and AVAX It has 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 transaction fees. In 2022, the "expansion war" will continue to heat up. A method to expand throughput, reduce transaction costs, attract excellent developers to join, and compete 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 Blockchain and Data Availability: The Rise of Rollups Brings Concept of modular blockchain. 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.

ETH merger can be said to be the most important milestone in the history of Ethereum, marking the transformation of Ethereum from PoW to PoS, but since there is no hard deadline, so it keeps getting pushed back. 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 portion 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.

It is worth noting that institutional capital flows have begun to expand beyond BTC and ETH as more traditional institutional investors enter the cryptocurrency rabbit hole, Possibly good for more liquid L1 assets in the top 10-20 coins.

Cross-chain DeFi / Interoperability / Bridge

Interoperability and the Rise of the Cosmos Ecosystem

As Delphi Digital mentioned in an in-depth research report on Cosmos that in an interoperable IBC world, once isolated 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: Cosmos Hub will have many competing Hubs, such as Evmos, Archway, and Juno, which offer a different value proposition than the Cosmos Hub, could further stimulate Cosmos DeFi. In fact, Osmosis already competes with Cosmos Hub, facilitating more than 2x the number of IBC transfers than Cosmos Hub in the past 30 days. Delphi Digital believes that Season of the Universe will make the market large enough for players to coexist. Osmosis is tackling 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 guide: IBC native like Osmosis The emergence of DEX 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 receive more airdrops this year.

The dominant position of IBC: Although the fundamentals of ATOM are improving, the Token economy will gradually improve in the future, but It is expected that it will be difficult for IBC to maintain the dominance of the ecosystem due to 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. As more and more L1 and L2 solutions continue to emerge, it is too early to pick a specific asset, or even a group of assets, that will ultimately win 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, 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 the return rate of ETH is -1%, marking the take-off of replacing L1 in the second half of last year , and the performance is quite strong.

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 yet launched Token. Hop Bridge will become a Rollup centered on Ethereum a basic component of .

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 L1 and L2, SYN has outperformed most other L1 since its launch in September, but outperformed SOL, LUNA, AVAX et al are riskier.

Cosmos (ATOM): In 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 war

Stablecoin in 2021 Explosive growth in 2019, with a total market capitalization of more than $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 Stablecoin< /h4>

If regulators start cracking down on Stablecoin, it may push users and builders to use decentralized Stablecoin as an alternative, click Check out Delphi Digital's article on LUNA and UST here.

Delphi Digital also predicts that the symbiotic relationship between Curve (CRV) and Convex, the decentralized Stablecoin's minting king, will make it the number one application of TVL, reaching $23 billion (the current TVL is closer to $19 billion at the time of publication), surpassing 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 overtakes 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 in addition to its governance capabilities. After the launch of dYdX V4, this May be subject to change, here 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 also serves as a spot and leveraged trading platform.

Furthermore, emerging options and structured products have increased viability in various L1 and L2 developments, Ribbon and Opyn April 2021 Decentralized option products were launched in 2019. 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 options projects:

Zeta Markets: an options trading platform that uses the base Serum order book and has a native Zeta AMM plugged into it, Coupled with Solana's high-throughput, low-latency, and low-fee environment, this may be a project that can motivate institutional participants to seriously trade DeFi options.

Dopex: Using a covered call strategy, the call option is not sold to the market maker (the market maker charges the price difference), but Sell back directly to call option buyers on the platform. Dopex is also developing a Deribit-like option chain with pricing based on IV multipliers represented by market makers.

Metaverse, GameFi and Play-to-Earn

Last year, Axie Infinity exploded and proved the concept of making money from games, There is now a flurry 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, with Immutable X, Ronin Chain, Solana, and Polygon currently prominent.

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along the way DAO

2021 is the year when DAO became famous, and its definition has also changed during this year. In the past, DAO was used by protocols like Uniswap to exchange Appropriate funds and vote on the allocation of the 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 a certain amount of secondary assets to build a viable treasury, otherwise they risk losing their native 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, and there will also be smaller sub-DAO units in DAOs , expect smaller autonomous organizational units to proliferate and execute on top of tools like 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

NFT will take off in 2021. Although NFT has existed for a long time, 2021 is The year they entered the mainstream conversation, marketplace platforms like OpenSea ushered in explosive growth. The NFT market has attracted many traditional companies and celebrities. NFT also ushered 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 It is also gradually coming to the front of the screen, so that artists do not need technical knowledge, and can customize and deploy smart contracts to start NFT projects with a few clicks.

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Creators and brands enter the Web 3 space

Web 2 platforms like Patreon and Substack are game-changing for creators and brands, Enabling them to own their own distribution and generate revenue. However, this is being taken to another level with the emergence 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 models like Royal and Sound also have a lot of potential.

Encryption Market "homogeneity" will improve

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.

However, just like mature financial markets, the performance of similar assets will not always maintain a high degree of synchronization, and the cryptocurrency market will go further Mature, the "homogenization" situation that has been criticized for a long time is expected to change, and the performance of BTC, ETH, DeFi, NFT, L1/L2 and other subdivision tracks will become more independent. 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.

It's not that macro factors won't affect the broader cryptocurrency market, specific industries and their associated assets will benefit from strong fundamentals if users know how to spot them early Trend, will be able to better manage assets.