The Landscape and Trends of the Crypto Assets Industry After Token2049

After the conclusion of Token2049 held in Singapore, practitioners and entrepreneurs in the global Crypto Assets industry gradually left, and the city's Crypto Assets atmosphere returned to calm. Through the intensive discussions and exchanges during this period, I have gained some new insights into the narratives of the new cycle.

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

1. Omnichain remains the most关注的方向 of Layer0

A certain cross-chain project not only defines the full-chain interoperability of the ultra-light node model but also defines the 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, with v2 supporting non-EVM chains. In addition, there are OFNT721 and OFNT1155 standards that support Omnichain NFT.

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

2. Layer1 is no longer the narrative of the first tier.

There are differences regarding Layer 1 track projects in this cycle. The new Move-based public chain has received some attention, but other new public chains, whether focused on DeFi or the NFT direction, or public chains supporting multiple programming languages, seem to have not gained widespread consensus.

Many people no longer believe that a new public chain can surpass Ethereum, and even if they think that Ethereum may not be the ultimate solution, they are unwilling to heavily invest in new Layer 1 directions. Of course, there are still many institutions investing in new Layer 1 projects.

3. The Layer 2 landscape is basically determined, and the middleware is ready.

Optimistic Rollup mainly consists of two strong players: Optimism and Arbitrum. The first tier of ZK Rollup/zkEVM mainly includes StarkNet, zkSync, Polygon, Scroll, and Taiko.

The middleware accompanying 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, Altlayer, Radius, Madara, Fairblock, etc.

• Prover: There are already quite a few projects focused on ZK Proof, such as Nil Foundation, which focuses on Layer2 ZK Proof, Axiom, which targets applications, and Risczero, which does both Layer2 and application ZK Proof.

• Hardware Accelerators: To address the slow generation speed of zkp, hardware acceleration projects for zkp generation have emerged, such as Ingonyama, Cysic, Accseal, etc.

4. There are plenty of cash cow projects in middleware.

After ETH 2.0, the LSD 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(, exceeding 1 billion USD). Among them are several high-quality projects, such as the project with the highest market share, a project aimed at B-end users, and a project that can prevent slashing, etc.

The MEV track began rehearsing the future profit distribution mechanism before the implementation of Danksharding. For MEV value capture agents, sufficient Orderflow is required; for users, it seems that joining is the only option. Currently, a more reasonable approach is to return MEV profits to users' wallets, DEXs, or other dapps.

5. High Starting Point "Risk-Free Returns" Stimulates LSDFi and RWA Application Opportunities

ETH Staking returns have become the "Treasury yield" of the Crypto Assets industry, and LSDFi further enhances the yield for ETH holders. Currently, the annualized yield for Ethereum PoS is about 3.6%, similar to the position of Treasury bonds in the industry. After the Shanghai upgrade, ETH Staking can be exited at any time, with sufficient liquidity for exchange with ETH.

LSDFi applications have derived more opportunities, such as LSD-backed stablecoins, interest rate swap protocols, etc. Some DeFi protocols have emerged by capturing more LSD Tokens, such as a certain emerging AMM project.

ETH Staking combined with the additional yields from LSDFi can indeed provide long-term holders of ETH with more returns. Correspondingly, the high yield of U.S. Treasury bonds has made RWA a hot topic, but this primarily allows existing users of Crypto Assets to enjoy high returns, which may not necessarily attract new users.

6. Lowering the user experience threshold is a fundamental requirement for achieving mass adoption.

In this cycle, the User Service Layer has many innovations, with the common goal of lowering the user experience barrier and promoting large-scale adoption.

Intent Centric has become a recent hot topic. Several leading projects have slightly different entry points, but they are all addressing the issues of "difficult-to-use protocols, even more difficult protocol combinations" or "maximizing user benefits."

TGBot is another hot topic, as one of the practical applications of Web3+AI. Users can monitor Token information and conduct on-chain transactions in Telegram through simple commands. TGBot has rapidly developed various products such as trading, analysis, and airdrop mining, essentially lowering the user experience threshold.

7. The increase of projects combining Crypto Assets and AI

In this event, the number of entrepreneurial projects combining Crypto Assets and AI has significantly increased, mainly including the following categories:

• On-chain interaction automation: represented by TGBot, lowering the usage threshold of Web3 products.

• To Earn empowers AI business: such as a project focused on medical field labeling.

• Web3 version of ChatGPT: a project resembling an on-chain data natural language search engine.

• ZKML: Zero-knowledge proof for the inference steps of ML models, such as the application being built by certain Labs.

As an important hub connecting the East and West, the Token2049 event in Singapore attracted over 10,000 attendees, making it the largest industry event of the year so far. Most major projects participated, with service projects mostly involved in the main venue's booths and narrative projects often hosting surrounding activities.

Despite the ongoing challenges in the market environment, the industry continues to innovate and develop. We need to keep focusing on building and improving, preparing for future growth and adoption.