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Bankless: 5 areas to watch in a bear market

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What's the next technology or application in cryptocurrencies that will drive progress?

Bankless: 5 Areas to Watch in a Bear Market

Original article by Ben Giove, Bankless

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Markets are in turmoil, the chains of regulation are tightening, demand for block space is at its lowest point since 2019, and the biggest event of the year, the merger, is over.

Is it just me, or does cryptocurrency feel like it's going nowhere right now?

We know this delusion won't last forever. The fact that anyone can build and innovate on blockchain, and the potential for knowledge capital in this area, means that some application or technology will get people excited again, bringing demand for block space and driving the next wave of user adoption.

The problem is... What's the next technology or application in cryptocurrencies that will drive progress?

Let's talk about a few exciting areas in infrastructure and applications and see what to focus on.

1. Layer 2

In the coming months, Layer 2 is expected to continue to grow.

While there is currently little demand for block space, the increased trading capacity provided by these networks is already starting to unlock new use cases and will reap long-term dividends in the next bull market by allowing more users to join the on-chain economy.

While still in a bear market, by the end of the day. ETH Calculate that the value locked at Layer 2 is still hitting new highs.

Arbiturm and & have spent Optimism Optimistic Rollups take up all of L2. DeFi 96.6% of the TVL.

Each of these networks has several catalysts on the horizon.

For example, Arbitrum Expected to grow with the restoration of Arbitrum Odyssey, a program designed to encourage users to try different protocols by rewarding NFTs.

The network may also benefit from the rollout of their (still unconfirmed) native Token, which is expected to take place after Odyssey is completed. In the meantime, L2 will continue to benefit from numerous upcoming protocols.

Modernism also has several exciting catalysts, including Quests, an Odyssey like activity where users can earn NFTS by interacting with protocols, and Bedrock network upgrades.

尽管它们的生命周期还比较早，但 Zk-rollups 在不久的将来也会产生一些动作。几个 ZK-EVM，如 zkSync 、Polygon 和 Scroll 正在开发的那些，将在年底推出主网或测试网，而 StarkWare 的治理 Token STARK，计划在本月底前上线。

2. Cosmos

L2 isn't the only infrastructure to focus on. The Cosmos ecosystem has also seen many exciting developments. Cosmos enables developers to create highly customizable, application-specific blockchains that can leverage interoperability through interblockchain communication (IBC), and looks set to grow in terms of both user and developer activity with key network upgrades and chain roll-outs.

Interchain security is one such upgrade. Inter-chain security, which will be launched in January 2023, will enable Cosmos chains to leverage Cosmos Hub, the network with the most value, to guarantee their security, meaning they do not need to start their own set of validators.

There are also some exciting Cosmos chains that look set to gain traction in the coming months.

Such as:

Canto, a provider of native & NBSP; DEX, stablecoin and lending markets as public goods L1.

Berachain, a forthcoming L1 for DeFi, also has a strong following while leveraging its unique fluidity to prove consensus mechanisms.

3. The resurgence of DeFi

DeFi may experience a recovery between 4Q22 and 1Q23, driven by the above L2 and application chains.

One area that seems to be gaining considerable momentum is options. The agreement. Benefit from more capacity provided by L2, like &NBSP; Dopex, Lyra and Premia Such deals look set to grow in the near future.

Because options have become a more important part of the cryptocurrency market structure, and mature DeFi users can manage their risk on the chain.

Another sub-industry that looks poised for explosive growth is. NFTFi, or DeFi of NFT.

Like it or not, NFTs are not going away and the JPEG market will become more fluid and mature as trading, lending and derivatives continue to be established.

There are a number of exciting NFTFi projects running and due to be launched in the coming months.

This includes things like &NBsp; Amms like SudoSwap, lending like NFT-FI, JPEG'D, and MetaStreet, appraisal protocols like Abacus and Perpetual DEX like NFT Perp.

4. Web3 social

Between DeFi, NFTS, and purely speculative trading, the use of many of the most popular cryptocurrencies to date has been entirely financial in nature.

While almost all Dapps touch money in some way, there are many that are primarily in non-financial applications. And these seem to be gaining traction in the near future.

One exciting area is decentralized media platforms. These networks set themselves apart from the Web2 incumbents by providing strong anti-censorship safeguards for users and enhanced ability for creators to port their audiences.

The applications and protocols to watch in the coming months are. Gm.xyz, Lens, and DeSo, an L1 dedicated to hosting blockchain-based social applications.

5. GameFi

Another area of potential growth is the cryptocurrency game (GameFi). In the past year, with the growth of Axie Infinity The success of games such as StepN and Sweatcoin has seen hundreds of millions of dollars pour into the sector.

While many gamers today seem to hate cryptocurrencies and NFTS, GameFi has the potential to become a major channel that brings hundreds of millions or even billions of users onto the chain. Will we see a breakthrough AAA-quality cryptocurrency game?

Hope is at hand

While cryptocurrency feels lethargic, there are many network upgrades and innovative applications all poised to help drive the next wave of adoption and make cryptocurrency exciting again.

The macro clouds will eventually lift and the insatiable demand for block space will return. But in the meantime, the seeds of the next bull market will continue to be planted.