Observations on the Crypto Industry After Token2049: Shifts in Mainstream Narratives and New Market Trends

Recently, the Token2049 event concluded successfully in Singapore, and professionals and entrepreneurs from the Crypto industry around the world have left, returning the Crypto atmosphere in Singapore to calm. Through intensive communication and discussions during this period, I have gained some new insights into the narrative of the new cycle.

Evolution of the Crypto Industry Architecture

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

1. Layer0: Omnichain remains the most attention-grabbing narrative.

A certain cross-chain technology platform not only defines the full-chain interoperability of ultra-light node models but also introduces a new standard called Omnichain Fungible Token (OFT). OFT provides a more user-friendly and efficient solution for cross-chain transfers, including versions v1 and v2, with v2 also supporting non-EVM chains. Additionally, the OFNT721 and OFNT1155 standards support Omnichain NFTs.

Currently, multiple projects have adopted the OFT standard, including a certain layer 2 project, a certain multi-chain stablecoin, a certain CDP protocol, a certain Wrapped Bitcoin protocol, and a certain multi-chain lending protocol.

2. Layer1: No longer part of the first tier narrative

In this cycle, there is a divergence in the market regarding Layer 1 projects. The new public chain from the Move ecosystem has garnered some attention, but other new public chains, whether focusing on DeFi or NFTs, or supporting multiple programming languages, seem to have not achieved widespread consensus.

Many people no longer believe that a new public chain can emerge to surpass Ethereum. Even if they think Ethereum may not be the ultimate solution, they are reluctant to invest heavily in new Layer 1 directions.

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

Optimistic Rollup is mainly led by two major projects, while the first tier of ZK Rollup/zkEVM includes several well-known projects.

Middleware supporting ZK Rollup/zkVM is also in place, mainly including:

• Sequencer: There is a widespread call within the industry for a decentralized Sequencer network.
• Prover: Includes multiple projects focused on Layer2 ZK Proof and application-oriented ZK Proof.
• Hardware Accelerators: Hardware acceleration projects for zkp generation speed

4. Cash Cow Projects in Middleware

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

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

5. The application layer opportunities of LSDFi and RWA

ETH Staking returns have become the "government bond yields" of Crypto, and LSDFi further enhances the yield rate for ETH holders. Currently, the annualized yield rate for Ethereum's PoS is about 3.6%. After the Shanghai upgrade, ETH Staking can be exited at any time, and there is ample liquidity between stETH and ETH.

LSDFi has given rise to more applications, such as a stablecoin project supported by LSD, a certain interest rate swap agreement, etc. Meanwhile, the relatively high yield of U.S. Treasury bonds has also driven the development of RWA.

6. Lower the user experience threshold and promote Mass Adoption

This round of the User Service Layer has multiple innovations, with the common goal of lowering the user experience threshold and promoting large-scale adoption.

Intent Centric has become a hot topic, with multiple projects approaching it from different angles to address the issues of "protocol usability" and "maximizing user benefits."

As one of the practical applications of Web3+AI, TGBot supports users in monitoring Token information and conducting on-chain transactions through simple commands, which helps to lower the user experience threshold.

7. The combination of Crypto and AI

At this Token2049 event, several entrepreneurial projects combining Crypto and AI emerged, mainly including:

• On-chain interaction automation: represented by TGBots
• To Empower AI Business: For example, projects focused on medical field annotations.
• Web3 version of ChatGPT: Provides natural language search functionality for on-chain data.
• ZKML: Zero-knowledge proof for creating ML model inference steps

Summary

Singapore, as an important hub connecting the East and West in the Web3 industry, attracted over 10,000 participants to the Token2049 event. The main venue's exhibition booths were mainly occupied by 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 changing market environment, the industry continues to develop and innovate. We need to keep an eye on the emergence of new technologies and applications while also maintaining confidence in the long-term development of the industry.