Summary: The market has changed drastically since the last cryptocurrency bull market ended in 2021. Not only have there been several black swan events like the collapse of Terra or the revelation of FTX’s fraud, but also new projects have been released, old projects have become irrelevant, and others are continuing to develop and innovate. Let’s ...
The market has changed drastically since the last cryptocurrency bull market ended in 2021. Not only have there been several black swan events like the collapse of Terra or the revelation of FTX’s fraud, but also new projects have been released, old projects have become irrelevant, and others are continuing to develop and innovate. Let’s look at Web3 projects, some of which do not yet have a token, and why they could be poised to become valuable in the future.
First, let’s quickly address two of the most obvious candidates before moving into the more exciting projects. Like in any bull market, Bitcoin and Ethereum will lead the rally. Bitcoin is seen as the market leader in market capitalization and recognition, and its status as a digital gold is unlikely to be challenged soon. Similarly, Ethereum is the leading smart contract platform and hub of DeFi and will benefit from any popular tokens built on top of its chain. Additionally, with the rise in Layer 2s, the adoption of EIP-1559, and the success of the Merge, Ethereum has never been in a better position. This next bull market could be the one that sees Ethereum take Bitcoin’s spot as the most valuable digital asset.
In the next bull market, smart contracts and other more advanced blockchain capabilities will likely be popularized and widely utilized. On most blockchains, smart contracts can only natively access data related to the blockchain, but the possibilities for smart contracts that can access real-world data are endless. Some examples include more secure and efficient decentralized finance, insurance, gambling, and more. Chainlink and its LINK token provide decentralized oracle services allowing smart contracts to use this data type. Almost every major smart contract blockchain uses Chainlink for data, which is a chain-agnostic bet on smart contract adoption. Earlier this past year, LINK staking enabled token holders to use their LINK to help secure and verify the off-chain data sent to smart contracts. This creates a stronger value proposition for the token and results in a decreased circulating supply, leading to a potential future price increase.
Ethereum was criticized for its slow and expensive transactions in the previous bull market. At peak times, executing a simple transaction on a decentralized exchange cost over one hundred dollars. As a result, rival smart contract blockchains like Solana, Avalanche, and Aptos were created, focusing on speed and low fees. Since then, Ethereum’s layer 2 infrastructure has drastically improved, and now it is possible to achieve low fees and near-instant transaction times while still having the security of Ethereum. The two most significant Layer 2s are Arbitrum and Optimism, and Optimism has the OP governance token. Arbitrum has yet to release a token, yet it is expected relatively soon and will immediately be a top project. Additionally, two other rollups, ZkSync and StarkNet, are releasing new rollups using zero-knowledge technology, which promises to be even more efficient than currently-existing solutions. The future Arbitrum, ZkSync, and StarkNet tokens are a somewhat more risky bet on the Ethereum ecosystem due to their infancy but are also incredibly likely to be a popular hold in the next bull market. As a bonus, a higher risk-reward play could be the tokens built on these layer 2s, such as Camelot or GMX on Arbitrum.
For a less risky bet on the Ethereum ecosystem, Polygon and the MATIC token could be a good choice. Their goal is to build “Ethereum’s Internet of Blockchains,” and they are currently building several different scalability and enterprise solutions. Furthermore, their business development team is considered the best in the industry, as they have secured partnerships and adoption from companies like Starbucks, Disney, and Meta.
With the number of different blockchains and DeFi hubs, there is a need for secure interoperability and bridging between chains. There were billions of dollars in bridge hacks over the past year, and this trend needs to stop if blockchain is ever to achieve mass adoption. There are three solutions to this problem: create a fully secure bridge, utilize an interoperable layer 0 chain, or introduce the concept of shared security. Projects tackling this tricky problem include Cosmos and Polkadot, the most established interoperability protocols. Celestia and Eigenlayer are two recently-established solutions still in the early stages of development, yet they introduce the exciting concept of shared security and modularity that can be learned about here. While several bridges have yet to be hacked, it is hard to recommend which one is most primed to succeed.
Even though we do not know when the next bull market will happen, we can begin to make informed predictions about which sub-industries and areas will see the most remarkable growth. Though nothing is guaranteed, and this is not financial advice, the aforementioned cryptocurrencies and tokens show promise and potential to be significant players in the future.
By Lincoln Murr
Link: What Cryptocurrencies are Most Likely to Succeed in the Next Bull Market? [Copy]