New Insights After Token2049: Structural Changes in the encryption Industry

Recently, the Token2049 event held in Singapore came to a close, and cryptocurrency entrepreneurs and professionals from around the world gradually left. Through this period of intensive communication and discussion, there have been some new reflections on the narrative of the new round of encryption cycle.

The overall structure of the current encryption industry has improved compared to before:

1. Omnichain is still the most关注ed direction of Layer0.

A certain cross-chain interoperability project not only defines the full-chain interoperability of ultra-light node mode, but also proposes a new standard for Omnichain Fungible Token(OFT). OFT provides a more user-friendly and efficient solution for cross-chain transfers, including two versions: v1 and v2, where v2 supports non-EVM chains. In addition, there are standards OFNT721 and OFNT1155 that support Omnichain NFT.

Multiple projects have adopted the OFT standard, such as a certain Layer 2 project, a certain stablecoin project, and a certain CDP protocol.

2. Layer1 is no longer the focus of market attention

There is a divergence in the market regarding Layer 1 projects during this cycle. The Move-based new public chain has garnered some attention, but other new public chains focused on DeFi or NFTs, or those supporting multiple programming languages, seem to have not gained widespread consensus.

Many people no longer believe that a new public chain can emerge that surpasses Ethereum. Even if they think that Ethereum may not be the ultimate solution, they are unwilling to invest too much in new Layer 1 directions. Of course, there are still some institutions investing in new Layer 1 projects.

3. The Layer2 landscape is basically determined, and the related middleware is ready.

Optimistic Rollup mainly has two major projects, with the first tier being ZK Rollup/zkEVM which includes several well-known projects.

The middleware supporting ZK Rollup/zkVM is also complete, mainly including:

• Sequencer: There is a common call in the industry for a decentralized Sequencer network, with multiple leading projects already in place.
• Prover: Multiple projects have focused on different directions of ZK Proof.
• Hardware accelerators: Some projects focus on enhancing the speed of zkp generation through hardware acceleration.

4. The middleware sector is not short of cash cow projects

After ETH2.0, LSD 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.

The MEV field has also begun to preview future profit distribution mechanisms. Currently, a more reasonable approach is to return MEV earnings to users' wallets, DEXs, or other dapps.

5. Gao Qi's "Risk-Free Returns" Give Rise to LSDFi and RWA Application Opportunities

ETH Staking yield has become the "government bond yield" in the encryption industry, and LSDFi further enhances the yield for ETH holders. Some projects utilize LSD to derive more financial applications, such as "automated interest-bearing stablecoins," interest rate swap agreements, and more.

The higher yields on U.S. Treasury bonds have also driven the development of the RWA sector, providing new investment options for encryption users.

6. Lowering the threshold for user experience has become a fundamental requirement

To achieve large-scale adoption, many projects are focused on lowering the barriers to user experience. Intent Centric and TGBot are two hot directions; the former aims to address the issues of protocol difficulty and optimize user benefits, while the latter, as a Web3+AI application, enables on-chain operations through simple commands.

7. Encryption and AI Integration Become New Trends

This event has seen the emergence of many projects combining encryption and AI, mainly focused on the following directions:

• On-chain interaction automation
• To Empower AI Business
• Web3 version of ChatGPT
• ZKML

Encryption technology provides a better infrastructure for AI, and AI also brings new development opportunities to the encryption industry. This combination may lead to more innovative applications in the future.

Despite the many challenges facing the industry, innovation and development have never stopped. Continuing to build and explore remains the main theme of the encryption industry.