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13 crypto narratives to watch in 2023

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A bear market is a psychological war of attrition, and surviving and staying involved may be the best strategy.

Original author:Edgy - The DeFi Edge(Encryption KOL)

czgsws, BlockBeats

In crypto markets, if you get the right narrative early, you can create wealth. Here are 13 narratives you should check out in 2023 (and a few to avoid) :

Tokenized real world assets

DeFi needs more sustainable revenue. Tokenizing real-world assets unlocks cash flows that aren't subject to cryptocurrency volatility. This can improve the transparency, capital efficiency and liquidity of assets. Think real estate, art, etc.

The RWA agreement (Real World Assets) is making progress, and some highlights include:

• Maker Protocol has $600 million in real-world asset collateral.

• GoldFinch/Maple Finance is processing loans.

• Tinlake in Centrifuge has some diversified real-world assets.

Financialization of NFT

The largest NFT projects have value -- for example, BAYC has a base price of around 73 ETH.

DeFi x NFT aims to free up liquidity in NFT and turn it into a profit-generating asset.

The first wave of projects allows you to use your NFT as collateral, such as NFTfi and BendDao.

In the future, we will begin to see the next generation of NFT financialization.

1) nftperp - short or long NFT/w leverage. It was in beta and attracted more than $21 million in transactions.

2) insrt finance - Shard Vault. They break down the NFT, and then you can make money.

Cosmos

Cosmos is building a large number of new application chains. For example:

• Berachain - Liquidity consensus Proof.

• Kujira -- an ecosystem built around real revenue.

• Canto - EVM compatible with Cosmos.

Sei

Sei is a DEFI-specific Layer 1 chain for trade optimization.

Clobs (Central Limit Order books) are standard for TradFi. In the cryptocurrency space, only centralized exchanges can use CLOBs. Traders have been favoring CLOBs due to tighter spreads and lower slip points. And the Sei has figured out how to make it decentralized and fast (600 ms deterministic, 22,000 orders per second). There will be a new generation of DeFi products built on Sei technology.

zk-rollups

Ethereum relies on the Layer 2 solution to scale.

There are two types of Rollups:

· Optimistic Rollups, such as Arbitrum & Optimism

· zk-rollups

Optimistic Rollups have a first-mover advantage, but many consider the zk-rollups to be the more advanced technology. Also, due to technical complexity, zk-Rollups will take years to fully deploy.

Some items to focus on include:

• Scroll

• zkSync

• Starkware

• Aztec Network

• Polygon Miden & Hermez

Expect to see more new dApps using zk-rollups technology this year.

Arbitrum

Although the zk-rollups are the future, the Arbitrum (Optimistic rollup) is now crushing the future in its cradle.

Every new DeFi innovation I see is happening here, and the OG protocol is expanding to Arbitrum.

Many TVLS from Layer 1 are constantly migrating to Arbitrum.

There are two ways to participate in Arbitrum ecology.

· Use top dapps and hope to get airdrops one day.

· Keep an eye out for new and interesting protocol releases.

Like monitoring DeFiLlama to find TVL's fast-growing dApp.

Celestia

The first blockchain is monomer design -- a single blockchain requires consensus, execution, and data availability, which leads to scaling and decentralization issues. Modular blockchains take a different approach.

Think of Celestia as the Amazon Web Services of blockchain. It could reduce security costs and make launching blockchains, which would be customizable, as simple as deploying smart contracts.

Perp war

Decentralized perps found a product and market fit last year, and the FTX crash has given it new life. Although it feels pretty saturated as a DeFi degen, there is believed to be plenty of room for growth as they continue to innovate.

Mainstream Perps protocols include:

• Perp

• GMX

• dYdX

• Gains Network

• Synthetix's Kwenta

• Several GMX forks

Keep an eye on how much attention and money GNS can attract on Arbitrum (GMX's territory) and how dydx integrates with its own Cosmos app chain.

Decentralized sports betting

Cryptocurrencies and sports betting are a natural fit. But it's still early, because there aren't that many agreements online yet.

Some items to look out for include:

• Betswap

• Frontrunner

• RektBets

Decentralized social media protocols

Lens Protocol (the Aave team) is getting the most attention in the decentralized social media space right now. Some other interesting projects include:

• Farcaster

• Orbis

• DeSo

The main problem facing the field is how to generate network effects - after all, people only want to post on sites that already have a large audience.

Decentralized Stablecoin

Stablecoin is the largest use case for DeFi, but there are still some issues surrounding centralization.

· OFAC sanctions against Tornado Cash led Circle to freeze USDC in the TC agreement.

· USDT froze $435 million.

Suffice it to say, the demand for decentralized Stablecoin is growing. Already on the scene: Dai, LUSD and Frax.

Upcoming Stablecoins include:

• GHO (Aave)

• crvUSD (Curve)

It's worth noting that the crypto industry has revolted against algorithmStablecoin since the UST debacle.

Big brands join Web 3

Thanks to Polygon, 2022 is a big year for big brands to join Web 3.

Some developments to look forward to in 2023 include:

· How did Starbucks' Odyssey and Nike's Swoosh NFT perform

· Momentum -- You can expect more big brands to join Web 3

Ethereum liquidity pledge

Ethereum's Shanghai upgrade will take place in March -- it will slowly unlock pledged ETH.

(About 15.9 million ETH is now pledged)

Once more ETH is unlocked, this will increase the demand for ETH liquidity pledge.

Lidos now dominate the market, but there could be a shift in market share. You can pay attention to:

• RocketPool -- Focus on decentralization

• FraxETH -- Frax has a whole DeFi ecosystem to tap into, and it's gaining traction.

Some of the bigger themes

· Decentralize everything

· Professional blockchain

· Tokenize the real world

· New ways to solve the blockchain puzzle

other

· GameFi -- It's inevitable, but we're still a few years away from it. Good games take a while to develop.

· Crypto AI -- I'm bullish on AI in general, but anything to do with Crypto AI right now is a cash grab.

· Solana - I lost so much last year.

The author looks at 2023

This year remains bearish.

Macro is so bad, it will take time for the Luna/FTX hangover to fade from the public's mind. 2023 is all about staying engaged and planting the seeds for 2024 and 2025.

Strategy in a bear market

• 35% low risk Token; 50% Stablecoin; A real yield of 15%.

• Use dollar cost averaging (DCA) to hold assets for the long term (understood as fixed investments)

• Be prepared to deploy more capital if there is an echo bubble.

• Inactive trading - I can sit back and be patient.

A bear market is a psychological war of attrition. More than a year after BTC hit its all-time high, and after so many disasters, the hard times are over.

Stay alive and stay involved.