As we enter the new year, it's important to keep an eye on the latest developments. In particular, there are several "layer 1-2" platforms that are worth paying attention to in 2023.
First, let's start with Solidity, the dominant smart contract language on the Ethereum platform. While there are newer languages like Vyper, Solidity remains the go-to choice for many developers. And with the integration of trustworthy oracles like Chainlink, it's becoming easier for battle-tested protocols to launch on multiple chains. This trend is likely to continue in 2023, as more efficient blockchains (like Solana and Cosmos) adopt Solidity and Chainlink.
Even though I'm bearish on Solana and Cosmos, these two platforms are worth keeping an eye on in the coming year. On Solana, we have Neon and Nitro, while Cosmos boasts Canto, Monad, and Berachain. Of these, Berachain is generating a lot of buzz due to its innovative liquid staking and delta-neutral perps machine.
But it's not just about the VC-backed projects. In 2023, we should also be keeping an eye on organic, builder-focused communities that don't rely on VC funding. This includes Ethereum and its layer 2 solutions (Arbitrum and Optimism), as well as Fantom and Canto.
Here are the ones that have strong fundamentals.
Binance Smart Chain: BSC has a lot going for it, with the Wombat ecosystem (incentivized stablecoin swaps), Thena (a Solidly-style DEX), and Level (Perps). The recent addition of OpenSea support may also lead to more NFT activity on the platform. While CZ is committed to supporting the BSC ecosystem, it's important to remember that centralization can be dangerous, so I would always limit my funds on chain.
Osmosis: This platform has recently added new applications like stableswaps and liquid staking (with Stride and Quicksilver on the way). The upcoming Mars Protocol should also increase capital efficiency and serve as a $OSMO token sink.
Synapse (Synchain): This trusted bridge has gone broad, introducing $nUSD for value transfer across chains. Synchain, an optimistic rollup, is expected to launch soon with several partner protocols. Berachain has also expressed interest in using Synapse as its canonical bridge, which could lead to additional volume. However, there are still questions around Synchain's progress, tokenomics, and delivery that need to be answered before making a significant investment.
Cosmos Hub: This platform has strong technology, but the ATOM 2.0 tokenomics and governance issues need to be addressed in order to make it a viable investment. Retail investors have been hurt by the fact that the platform has only seemed profitable for early insiders.
I am also closely watching two other Cosmos chains that have the potential to be monsters if they deliver: Sei (with the shortest block times in Cosmos) and Celestia (which separates the transaction and data availability layers). Celestia has raised a lot of VC funding, which is a concern for retail investors.
Ethereum
The next and final hard fork for Ethereum 2.0 is the Shanghai upgrade. This will enable $ETH unlocks from the Beacon, Proof of Stake, chain. This is scheduled for March and should lead to a big increase in the staked supply as it gives investors assurance they can get their ETH back.
In the mean time, we’ve seen liquid staking derivatives (LSDs) grow rapidly in 2022, and I predict they will grow faster than new $ETH inflationary supply in 2023.
However, the lack of on-chain activity will lead to an inflationary ETH supply next year.
Derivatives
Derivatives: On-chain perpetual contracts (perps) exploded in popularity in 2022, thanks to platforms like GMX, Perpetual Protocol, and Gains Network. I expect on-chain options to see significant improvement in 2023, as protocols like Dopex, Buffer, and Premia go live on Arbitrum and Aevo is built on top of Ribbon. These platforms should see their total value locked (TVL) double in 2023, despite the decreased liquidity. Structured products and vaults will also grow exponentially in 2023 with the combination of perps and options. Delta-neutral vaults like Rage Trade and Umami are likely to attract both crypto-native and institutional capital due to their superior risk-adjusted yields.
DEXes: In 2023, Solidly-style DEXes like Velodrome ($VELO), Equalizer ($EQUAL), Thena ($THE), and Camelot ($GRAIL) will outperform Uni v2-style DEXes ($SUSHI, $QUICK, $BOO, etc.) and $UNI. Tokens with real yield, sustainable emissions, and built-in bribe mechanisms should be less volatile and generate income in a sideways market.
The shift from centralized exchanges (CEXs) to decentralized exchanges (DEXs). I think it's clear that there will continue to be a mass exodus from CEXs to DEXs as more and more users seek out decentralized and transparent trading options.
In order for CEXs to stay relevant, they'll need to focus on improving their custody and transparency practices. Coinbase and Binance are currently the largest survivors in this space, but even they will need to come up with a DeFi strategy or some other technological innovation if they want to continue to grow. Without such a strategy, I worry that they may struggle to compete due to public mistrust.
All in all, I think DEXs are poised to become more popular in 2023. If you're a trader, it's definitely worth keeping an eye on this trend as we move into the new year
Well, that's it for this overview of the trends to watch. I hope you found it useful and that it gave you a better sense of what to expect in the coming year.
As we move forward, I'll be sure to keep sharing new protocols and providing regular updates on the latest industry developments. If you enjoyed this article and want to stay in the loop, be sure to subscribe to my newsletter.
Thanks for reading, and I'm looking forward to seeing what the new year brings!
2023 Blockchains: The Top Trends to Watch Out
2023 Blockchains: The Top Trends to Watch Out
2023 Blockchains: The Top Trends to Watch Out
Hey guys,
As we enter the new year, it's important to keep an eye on the latest developments. In particular, there are several "layer 1-2" platforms that are worth paying attention to in 2023.
First, let's start with Solidity, the dominant smart contract language on the Ethereum platform. While there are newer languages like Vyper, Solidity remains the go-to choice for many developers. And with the integration of trustworthy oracles like Chainlink, it's becoming easier for battle-tested protocols to launch on multiple chains. This trend is likely to continue in 2023, as more efficient blockchains (like Solana and Cosmos) adopt Solidity and Chainlink.
Even though I'm bearish on Solana and Cosmos, these two platforms are worth keeping an eye on in the coming year. On Solana, we have Neon and Nitro, while Cosmos boasts Canto, Monad, and Berachain. Of these, Berachain is generating a lot of buzz due to its innovative liquid staking and delta-neutral perps machine.
But it's not just about the VC-backed projects. In 2023, we should also be keeping an eye on organic, builder-focused communities that don't rely on VC funding. This includes Ethereum and its layer 2 solutions (Arbitrum and Optimism), as well as Fantom and Canto.
Here are the ones that have strong fundamentals.
Binance Smart Chain: BSC has a lot going for it, with the Wombat ecosystem (incentivized stablecoin swaps), Thena (a Solidly-style DEX), and Level (Perps). The recent addition of OpenSea support may also lead to more NFT activity on the platform. While CZ is committed to supporting the BSC ecosystem, it's important to remember that centralization can be dangerous, so I would always limit my funds on chain.
Osmosis: This platform has recently added new applications like stableswaps and liquid staking (with Stride and Quicksilver on the way). The upcoming Mars Protocol should also increase capital efficiency and serve as a $OSMO token sink.
Synapse (Synchain): This trusted bridge has gone broad, introducing $nUSD for value transfer across chains. Synchain, an optimistic rollup, is expected to launch soon with several partner protocols. Berachain has also expressed interest in using Synapse as its canonical bridge, which could lead to additional volume. However, there are still questions around Synchain's progress, tokenomics, and delivery that need to be answered before making a significant investment.
Cosmos Hub: This platform has strong technology, but the ATOM 2.0 tokenomics and governance issues need to be addressed in order to make it a viable investment. Retail investors have been hurt by the fact that the platform has only seemed profitable for early insiders.
I am also closely watching two other Cosmos chains that have the potential to be monsters if they deliver: Sei (with the shortest block times in Cosmos) and Celestia (which separates the transaction and data availability layers). Celestia has raised a lot of VC funding, which is a concern for retail investors.
Ethereum
The next and final hard fork for Ethereum 2.0 is the Shanghai upgrade. This will enable $ETH unlocks from the Beacon, Proof of Stake, chain. This is scheduled for March and should lead to a big increase in the staked supply as it gives investors assurance they can get their ETH back.
In the mean time, we’ve seen liquid staking derivatives (LSDs) grow rapidly in 2022, and I predict they will grow faster than new $ETH inflationary supply in 2023.
However, the lack of on-chain activity will lead to an inflationary ETH supply next year.
Derivatives
Derivatives: On-chain perpetual contracts (perps) exploded in popularity in 2022, thanks to platforms like GMX, Perpetual Protocol, and Gains Network. I expect on-chain options to see significant improvement in 2023, as protocols like Dopex, Buffer, and Premia go live on Arbitrum and Aevo is built on top of Ribbon. These platforms should see their total value locked (TVL) double in 2023, despite the decreased liquidity. Structured products and vaults will also grow exponentially in 2023 with the combination of perps and options. Delta-neutral vaults like Rage Trade and Umami are likely to attract both crypto-native and institutional capital due to their superior risk-adjusted yields.
DEXes: In 2023, Solidly-style DEXes like Velodrome ($VELO), Equalizer ($EQUAL), Thena ($THE), and Camelot ($GRAIL) will outperform Uni v2-style DEXes ($SUSHI, $QUICK, $BOO, etc.) and $UNI. Tokens with real yield, sustainable emissions, and built-in bribe mechanisms should be less volatile and generate income in a sideways market.
The shift from centralized exchanges (CEXs) to decentralized exchanges (DEXs). I think it's clear that there will continue to be a mass exodus from CEXs to DEXs as more and more users seek out decentralized and transparent trading options.
In order for CEXs to stay relevant, they'll need to focus on improving their custody and transparency practices. Coinbase and Binance are currently the largest survivors in this space, but even they will need to come up with a DeFi strategy or some other technological innovation if they want to continue to grow. Without such a strategy, I worry that they may struggle to compete due to public mistrust.
All in all, I think DEXs are poised to become more popular in 2023. If you're a trader, it's definitely worth keeping an eye on this trend as we move into the new year
Well, that's it for this overview of the trends to watch. I hope you found it useful and that it gave you a better sense of what to expect in the coming year.
As we move forward, I'll be sure to keep sharing new protocols and providing regular updates on the latest industry developments. If you enjoyed this article and want to stay in the loop, be sure to subscribe to my newsletter.
Thanks for reading, and I'm looking forward to seeing what the new year brings!
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