The crypto market is full of sectors and narratives that are popping and will pop up left and right. You cannot keep up with everything.
The year 2022 was full of downs for the crypto community, recording a record loss across the industry. Some sectors like CeFi were in the deep end, with hacks and scams affecting investors. However, 2023 looks like a year to look ahead to. Different narratives are developing each day.
Disclaimer: The following sectors are mainly based on our research and offer different perspectives. They are not at all financial advice.
1. CeFi- An Industry that Needs to Resurrect
2022 was a horrible year for centralized finance and overall exchanges. Greed has corroded many platforms that exploited the bull market wave, chased gains offering insane rewards, and got into debt, thus collapsing.
FTX and BlockFi are linked to bad money management that damaged the trust in crypto and ruined many users. The overall awareness has grown a lot, with a predominant move toward DeFi and self-custody, as people still fear platforms.
But ask yourself: "will the next wave of buyers pass ONLY through DeFi?" The average person doesn't know how a blockchain works; imagine using DeFi.
CEX platforms still play a key role in allowing new users into crypto.
People will look around at the players that show transparency and security. I believe there is a big prize for the platforms that can restore faith in CEX. There is much hard work, but the potential reward is huge.
2. Ethereum: The Cauldron is Full
There are a lot of things going on on Ethereum, and the narrative is so massive. The Merge technical update would be enough to justify the interest, even because people are giving it so much importance, perhaps overestimating it.
Shanghai Update- Approximately during March, the Shanghai update will take place, allowing people to unstake their $ETH at any time. A low percentage of $ETH staked is less than 15%. What if people deposit more than $ETH as they can unstake any time?
EIP-4844 (Proto-Danksharding)- This update will be a fundamental part of "The Surge," improving network scalability. L2s play a massive role in this purpose, both Rollups and ZK. The Surge goal is to reach 100k TPS on rollups, making $ETH ultra-competitive.
Furthermore, in due time, there will be a huge fee reduction. Additionally, all of the main things happen on Ethereum, from smart contracts to DeFi, from NFTs to Metaverse. Ethereum will be one of the hottest trends once again.
3. NFTs: It is Time to Grow
Gone are the times when JPEG rocks were sold for millions. That was the speculative phase. However, NFTs are much more and could open a new way to ownership of goods and services.
Many brands are exploring this world.
Fashion- Plenty of luxury brands launched NFT collections, most of the time linked to physical items. The trend is hot and will likely continue.
Real World Assets- This is the concept that I like the most. Tokenizing real-world assets unlock cash flow that is not affected by crypto volatility. Real estate, art, lands, and cars mean endless possibilities. This will bring a massive amount of money inflow.
Gaming and Music- NFTs use cases could also be expanded to these two sectors. Gaming: in-game NFTs items that could be sold, increasing user experience and fun and giving value to the hours spent on a videogame. No more frustrating copies of the same "sword." In music, artists are exploring new ways of monetization instead of relying only on labels. NFTs can solve this issue and create more connections between artists and fans/communities. The NFT world is going toward an evolution process. And it will be worth a lot.
4. Decentralized Stablecoins: A Huge Opportunity
Stablecoins are a vital part of DeFi and the crypto market. But the majority of the market is dominated by centralized ones. Big entities can freeze your stables if they want to. The urgency for decentralized solutions is growing fast.
Some examples include:
$DAI- One of the largest decentralized stablecoins. The outstanding aspect of stablecoins is that one can mint them against many blue-chip crypto assets, including ETH, BTC, and yield-bearing assets. $DAI acts as an ERC-720 token, which one can purchase from centralized and decentralized exchanges.
$FRAX- It comes as the first fractional decentralized stablecoin. The coin is partially backed (mainly by USDC) and stabilized algorithmically, maintaining its peg to the US dollar.
$LUSD- It is the most resilient decentralized stablecoin. Liquity USD (LUSD) is a USD-pegged stablecoin that pays out loans on the Liquity Protocol. At any moment, one can redeem it against the underlying collateral at face value.
$agEUR is one of the most prominent decentralized stablecoins pegged to the EUR. The majority of options in the crypto market are pegged to the USD. The Euro is also a great choice. The rise of the US dollar recently led to a decrease in the interest of EUR-pegged stablecoins. However, the EUR started appreciating against the dollar, which means the trend may change.
5. DEX: Perp Wars
If, on one side, the FTX saga has injected the need for more CEX transparency. On the other, it has given a massive boost to DEX. I am sure you heard a lot about $dYdX or $GNS, for example, but the overall DEX perp world is still relatively small compared to CEX.
While Perp DEXs lag behind CEXs by a considerable amount, the collapse of FTX, along with regulatory pressures, is turning the tide in favor of DEXs.
Additionally, the real-yield narrative is taking the DEX scene by storm after having so many projects fail in the past through unsustainable emission-funded yield.
Final Thoughts
Position yourself early by studying and focusing on 1 or 2 potential narratives. Less stress, more results. Some will pump harder than others, that is for sure. However, remember that you do not have to chase perfection—Chase profitability.
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