With each passing summer, the cryptocurrency world unveils new and exciting themes that captivate the attention of investors and enthusiasts. In recent years, we witnessed the rise of DeFi, the surge of Solana, and the fallout from the Terra Luna collapse. As we look ahead to the upcoming summer, several potential themes emerge, offering fresh opportunities and challenges for the crypto industry.
1. Bitcoin DeFi: Unleashing DeFi Potential on the Bitcoin Network
While Bitcoin is not typically associated with crypto experiments, it has been remarkably active as of late. The surge in average Bitcoin transaction fees, peaking at $19.20 per transfer, has raised eyebrows.
One notable development is the emergence of the Ordinals.
Ordinals are a new way of representing Bitcoin on the blockchain. They are essentially a way of assigning unique identifiers to individual Satoshis, the smallest unit of Bitcoin. This allows for more complex and sophisticated DeFi applications on the Bitcoin network.
For example, Ordinals could be used to create fractional ownership of Bitcoin or to create smart contracts that can only be executed by specific individuals.
Rumblings about “Bitcoin Layer 2s” have also made waves.
The introduction of BRC-20 tokens, built on Ordinals, aims to mimic the fungibility of ERC-20 tokens but with unique characteristics. Although BRC-20 tokens have predominantly been used for meme-coins thus far, there is growing interest in exploring smart-contract-like applications on the Bitcoin network.
The combination of Ordinals and BRC-20 opens up a world of possibilities for DeFi on the Bitcoin network. These new technologies could be used to create a wide range of new applications, including:
- Fractional ownership of Bitcoin
- Smart contracts that can only be executed by specific individuals
- Decentralized exchanges that trade Bitcoin-based tokens
- Decentralized lending and borrowing platforms
- Decentralized insurance platforms
The possibilities are endless, and it is only a matter of time before we see these new technologies being used to create innovative new DeFi applications on the Bitcoin network.
2. LSD-Fi: The Growing Ecosystem of Staked Asset Tokens
For quite some time, discussions around LSDs (fungible tokens representing staked assets) have been circulating within the crypto community. These tokens have become a dominant force in the DeFi sector, boasting a total value locked (TVL) of over $17.5 billion. Much of this growth can be attributed to Ethereum’s transition to Proof of Stake (PoS) consensus. The momentum shows no signs of abating.
To those not in the know, LSDs (Liquid Staking Derivatives) are a type of token that represents staked cryptocurrency. They are created by DeFi protocols that allow users to stake their cryptocurrency without having to lock it up. This gives users the ability to earn staking rewards while still being able to use their cryptocurrency for other purposes.
On the other hand, LSDfi refers to the protocols being built on top of LSDs, expanding the ecosystem further. Examples of such protocols include Lido Finance, Rocket Pool, Stakefish, and several other LSD Vaults, Upfront Yield platforms, Yield Marketplaces, LSD-backed stablecoins, and more. Ethereum’s staking rate serves as a foundation for this burgeoning ecosystem, attracting projects like Lybra Finance, Pendle Finance, unsheth, and others.
Some of the benefits of using LSDs and LSDfi:
- Earn staking rewards without locking up your cryptocurrency: LSDs allow you to earn staking rewards on your cryptocurrency without having to lock it up. This means that you can still use your cryptocurrency for other purposes, such as trading or making payments.
- Increased liquidity: LSDs increase the liquidity of the staked cryptocurrency. This makes it easier for people to buy and sell staked cryptocurrency, which can help to stabilize the price of the cryptocurrency.
- Reduced risk: LSDs can help to reduce the risk of staking cryptocurrency. If a validator fails, you will not lose your staked cryptocurrency. Instead, you will lose the LSDs that you used to represent your staked cryptocurrency.
However, there are also some risks associated with using LSDs and LSDfi:
- Counterparty risk: When you use an LSDfi protocol, you are trusting the protocol to hold your cryptocurrency and distribute your staking rewards. If the protocol fails, you could lose your cryptocurrency.
- Protocol risk: The LSDfi protocol could be hacked or could become insolvent. If this happens, you could lose your LSDs or your staking rewards.
- Volatility: The price of LSDs can be volatile. This means that you could lose money if you sell your LSDs before you have earned enough staking rewards to cover your initial investment.
3. Memecoin Season: A Speculative Frenzy Takes Hold
Memecoin season burst onto the scene with the rise of $PEPE a few weeks ago, swiftly dominating the crypto Twitterverse. With a current market cap exceeding $500 million, $PEPE set the stage for similar tokens like $BEN, $PSYOP, and $LOYAL etc. These tokens gained traction by capitalizing on the attention generated by influential figures like @eth_ben and @Bitboy_Crypto.
The current meme coin season is being driven by a number of factors, including:
- The rise of social media: Social media platforms like Twitter and Reddit have played a major role in the growth of meme coins. These platforms have made it easier for people to share information about meme coins and to get involved in the hype.
- The popularity of NFTs: The rise of non-fungible tokens (NFTs) has also contributed to the popularity of meme coins. NFTs are digital assets that are unique and cannot be replaced. This makes them similar to meme coins, which are also unique and cannot be replaced.
- The desire for quick profits: Many investors are looking for quick profits, and meme coins offer the potential for huge gains in a short period. This has led to a lot of speculation in the meme coin market, with many investors buying meme coins in the hope of selling them for a profit at a later date.
While many of these meme-coins can be considered borderline scams, the allure of excitement and potential gains has enticed investors. For instance, during the $PSYOP presale, individuals were asked to send funds to a personal wallet, ben.eth, yet the project managed to raise around $7 million. This thirst for action and willingness to take risks on speculative meme-coins can be attributed to investors seeking excitement after a period of market stagnation.
Yes, while we agree that meme coins have the potential to generate huge profits, they also carry a high degree of risk. Meme coins are often very volatile, and their prices can fluctuate wildly. This means that investors could lose a lot of money if they buy meme coins at the wrong time.
Remember that meme coins are not investments. They are more like gambling, and you should only put money into meme coins that they can afford to lose.
4. AI Coins: Riding the Wave of Artificial Intelligence Hype
Artificial intelligence (AI) has become a pervasive force capturing the public imagination. Twitter timelines are filled with discussions about AI, venture capitalists are enthusiastic about AI-focused projects, and founders are incorporating AI into their pitches. The frenzy surrounding AI even led to Nvidia briefly becoming a trillion-dollar company.
There are a number of reasons for the current AI hype. First, AI has made significant progress in recent years. Deep learning algorithms have achieved superhuman performance on a variety of tasks, including image recognition, natural language processing, and game playing.
Second, AI has the potential to revolutionize a wide range of industries, from healthcare to manufacturing to finance. Third, the cost of developing and deploying AI has fallen dramatically in recent years, making it more accessible to a wider range of businesses.
The AI narrative is expected to spill over into the world of crypto. There are a number of AI-related crypto tokens that could benefit from the current AI hype. Some of these tokens include:
- The Graph (GRT): The Graph is a decentralized protocol for indexing and querying data on the blockchain. It is used by a number of AI-related projects, including DeepMind and BigChainDB.
- SingularityNET (AGI): SingularityNET is a decentralized marketplace for AI agents. It allows users to buy and sell AI services, such as image recognition and natural language processing.
- Chainlink (LINK): Chain Link is a decentralized oracle network. It allows smart contracts to access data from off-chain sources, such as weather data and stock prices. This data can be used to train AI models.
- AIOZ (AIOZ): AIOZ is a decentralized video streaming platform. It uses AI to optimize video delivery and reduce costs.
- DeepBrain Chain: DeepBrain Chain is a blockchain platform that is designed to power AI applications. The platform’s native token, DBC, is used to pay for gas fees and to participate in the network’s consensus mechanism.
- Fetch.ai (FET): Fetch.ai is a decentralized platform for AI applications. FET tokens are used to power the platform and reward users for their contributions.
However, caution is necessary as many AI coins are highly speculative. You must exercise diligence to differentiate between genuine AI projects and those that have simply rebranded for the purpose of riding the AI hype wave.
5. Metaverse Coins: Embracing the Virtual Reality Revolution
Rumors abound regarding Apple’s headset. Code-named “N301”, The headset is rumored to surpass any competing product in quality and features and is expected to be released in 2023. Should these rumors prove true, it is anticipated to ignite massive interest in virtual reality, commonly called the Metaverse.
This concept gained significant attention when Facebook rebranded as Meta a couple of years ago and announced its strategic shift towards the metaverse. Consequently, several metaverse coins experienced tremendous growth, despite having no direct association with Facebook.
The metaverse is still in its early stages, but it is growing. In 2020, the metaverse market was worth 27.21 billion. By 2022, it was worth $39.9 billion, and it is expected to reach $824.53 billion by 2030, growing at a CAGR of 39.1% from 2022 to 2030.
There are a number of tokens that stand to benefit from the metaverse. Some of the most popular metaverse coins include:
- Decentraland (MANA): Decentraland is a virtual world that is powered by the Ethereum blockchain. It allows users to buy, sell, and build virtual land.
- The Sandbox (SAND): The Sandbox is another virtual world that is powered by the Ethereum blockchain. It allows users to create and monetize their games and experiences.
- Axie Infinity (AXS): Axie Infinity is a blockchain-based game that allows players to earn cryptocurrency by breeding, battling, and trading digital pets.
But most especially, new market players like RNDR could become the next $MANA or $SAND with a newer and fresher token narrative.
RNDR is a token that is used to power the Render Network. The Render Network is a decentralized platform that allows users to rent out their computing power to render 3D graphics. It is a good example of a metaverse coin that could benefit from the growth of the metaverse because as the metaverse becomes more popular, there will be greater demand for 3D graphics. This could lead to an increase in the demand for RNDR tokens, as people use them to rent out computing power to render 3D graphics.
These are just a few of the many tokens that stand to benefit from the metaverse.
The potential for virtual reality to reshape various industries, including gaming, entertainment, and social interactions, makes metaverse coins an intriguing theme to watch during the summer.
However, as the metaverse market continues to grow, more and more tokens will likely emerge that are specifically designed for the metaverse.
While these themes/narratives capture the imagination and drive excitement within the crypto community, and have the potential narratives that could shape the cryptocurrency landscape this summer, it is critical to approach them with caution. The cryptocurrency market can be highly volatile, and distinguishing genuine projects from scams or hyped rebrands is essential.
As we delve into the summer narratives, it’s important to recognize that the market is currently experiencing fluctuations and uncertainty. Therefore, it is perfectly acceptable to adopt a more conservative approach and wait for clearer trends to emerge. The market is currently experiencing choppy sideways movements, and maybe sitting out the summer’s frenetic activity can also be a valid strategy.
As the summer unfolds, new developments may arise, and additional themes may come to the forefront. If you have any suggestions or insights regarding potential narratives, feel free to contribute and share your thoughts.