Insights into the Crypto Assets Industry After Token2049: Shifts in Narrative Structure and Market Trends

As the Token2049 event comes to a close, cryptocurrency entrepreneurs and practitioners from around the world are leaving Singapore one after another. Through this period of intensive communication and discussion, I have gained some new insights into the industry narrative of the new cycle.

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

1. Layer0: Omnichain remains the hottest narrative

A certain cross-chain project not only defines the full-chain interoperability of ultra-light node modes but also proposes a new standard for Omnichain Fungible Token (OFT). OFT provides a more user-friendly and efficient cross-chain transfer solution, including two versions, v1 and v2, where v2 supports non-EVM chains. Additionally, there is a standard supporting Omnichain NFT.

Many projects have adopted the OFT standard, such as Ethereum layer2 Metis, multi-chain stablecoin MIM, CDP protocol TapiocaDAO, Wrapped Bitcoin protocol BTC.b, and multi-chain lending protocol Radiant.capital.

2. Layer1: No longer the dominant narrative of this cycle

During this cycle, there is a divergence within the industry regarding Layer 1 projects. The new Move-based public chain has garnered 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 broad consensus.

Many people no longer believe that a new public chain will emerge that surpasses Ethereum, even if they think that Ethereum may not be the ultimate solution, they are unwilling to make heavy investments in new Layer 1 directions. Nevertheless, some institutions continue to invest in new Layer 1 projects.

3. Layer2: The pattern is basically determined, middleware is ready.

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

The middleware for ZK Rollup/zkVM is also in place, mainly including:

• Sequencer: The industry widely calls for a decentralized Sequencer network, with leading projects including Espresso system, Astria, and others.
• Prover: Includes projects focused on Layer2 ZK Proof, as well as projects aimed at application layer ZK Proof.
• Hardware Accelerators: Projects aimed at improving the speed of zkp generation, such as Ingonyama, Cysic, etc.

4. There is no shortage of "cash cow" projects in middleware.

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

MEV (Miner Extractable Value) The track has begun to preview the future profit distribution mechanism before the implementation of Danksharding. Currently, a more reasonable approach is to return MEV earnings to users' wallets, DEX, or other dapps.

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

ETH Staking returns have become the "bond yield" of the Crypto Assets industry, and LSDFi further enhances the yield for ETH holders. Currently, the annualized yield for Ethereum's PoS is approximately 3.6%. After the Shanghai upgrade, ETH Staking can essentially be exited at any time.

LSDFi applications such as Lybra Finance, Pendle and other projects have emerged to provide users with additional yields. Meanwhile, the high yields of U.S. Treasury bonds have driven the development of RWA (Real World Assets) in the Crypto Assets sector.

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

The user service layer in this cycle has many innovations, with the common goal of lowering the threshold for user experience and ultimately achieving mass adoption.

Intent Centric has become a hot topic, with various projects approaching it from different angles, aiming to address the issues of "protocols being hard to use, and protocol combinations being even harder" or "maximizing user benefits."

TGBot, as one of the practical applications of Web3+AI, helps achieve large-scale adoption by simplifying user interaction methods.

7. The Combination of Crypto Assets and AI Becomes a New Trend

In this Token2049 event, several entrepreneurial projects that combine Crypto Assets and AI are noteworthy. The main methods of integration include:

• On-chain interaction automation: represented by TGBots.
• To Earn empowers AI business: such as focusing on annotation projects in the medical field.
• Web3 version of ChatGPT: A natural language search engine for on-chain data.
• ZKML: Zero-knowledge proof for creating ML model inference steps.

As an important hub connecting the East and West in the Web3 industry, the Token2049 event in Singapore attracted over 10,000 attendees. The exhibition was mainly comprised of public chains, Layer 2 projects, exchanges, and payment solution companies, while the Side Events were mostly hosted by leading infrastructure projects or VCs.

Despite the constantly changing landscape of the industry, continuous construction remains the core driving force of the Crypto Assets industry.