Cryptocurrency researcher Ignas believes that there is a lack of true innovation in the market recently. He points out that relying on memes and airdrops cannot drive long-term industry growth. He highlights several potential innovative projects and areas, including community, prediction markets, and gaming projects, and hopes to see these projects drive market growth in the future.
This article is compiled and translated by Chain News. If you have any doubts, please refer to the original article. (This article is not investment advice)
Lack of Innovation Leads to Stagnant Growth
Don’t Bring More Layer 2!
The Bull Market in 2021 Seems to Only Have Memes and Airdrops
Will We See True Innovation Next?
Which Protocols Currently Have a Chance for Innovation?
Are There Any Protocols That Already Have Some Outlines?
There is a Need for Super Applications to Attract New Users Now
Ignas expressed his exhaustion at seeing another Layer 2 launch, where the token’s fully diluted value (FDV) reaches up to $5 billion.
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Many people, including himself, are already bored with another Uniswap, Aave, or Liquity fork on these new Layer 2s. Users are no longer excited about buying another infrastructure protocol with false high valuations because these protocols lack innovation and essentially provide zero value to the tokens.
What the market needs is innovation! But where is it?
Ignas stated that he really liked the positioning of the bull market in 2020-21 because it was a perfect storm: due to the COVID-19 pandemic, governments had to print money (external catalyst), and people were speculating on NFTs, earning high returns from DeFi yield farming (up to 1000%), participating in the Metaverse, and playing Axie Infinity or other play-to-earn games.
At that time, there were several innovations in the crypto field that kept users engaged.
But this bull market has been boring so far this year. There is no real innovation to be seen. In order to turn this bull market into a super cycle, Ignas believes that strong internal innovation (macro level) is necessary to attract retail investors and maintain market entertainment and attention.
Currently, due to the lack of innovative investment targets, most market participants simply hold BTC, ETH, SOL, and try to accumulate points or speculate on the next popular meme coin.
However, without special advantages, the opportunity to make money through meme coins is not great. Most of the time, it is the KOLs, market makers, and studios who are profiting from naive retail investors. Points are a downward trend because rewards usually depend on deposited funds and trading volume, resulting in a game rule of the rich getting richer, which only belongs to whales.
The BTCFi of Ordinals and Runes is indeed an innovation/narrative in this cycle, but due to technical complexity and a lack of clear value proposition, even Ethereum and Solana experts are not very interested in it.
(Franklin Runes Report: Runes issuance will become the Bitcoin ecosystem’s homogeneous token standard)
So, what innovations can bring back the retail frenzy in this cycle?
Now there is a real need for something new to revive the market and attract a large number of new users, and (unlike most meme coins) actually make users money. It’s hard to predict what the current cycle’s NFT/P2E will be, but Ignas believes it will be the next generation of consumer applications.
Let’s take a look at some of the currently popular protocols to see if there are any clues. On May 7th, four new social applications briefly entered the top 15 in gas consumption:
Fantasy Top
Friend Tech
Pump Fun
YOLO Games
Although the number of users for these protocols is still small, with none of them having daily active users exceeding 20,000, from a monetization perspective, these protocols represent new entry points for building native crypto business models at the application layer.
Ignas said he has no interest in Blast L2 because it’s just another L2 that allows users to accumulate points. However, Fantasy Top made Ignas join Blast. Fantasy Top allows users to predict the engagement of Twitter KOLs through card trading in the community.
(Explaining the yield-based L2 network Blast: on-chain native interest rates, perpetual NFT contracts, etc.)
The second protocol is Friend Tech, which briefly achieved innovation through its innovative design of small exclusive communities, but it did not last long. Friend Tech is currently at a crossroads of reshaping itself.
(Friend.tech token plunges more than 20%: Co-founder hints at possible departure from Base)
Pump Fun is a great tool for creating meme coins. Pump Fun has found a great product-market fit in the current market as a platform.
(Pump Fun, a Solana meme coin platform, suffers private key theft and flash loan attacks)
YOLO Games is mainly based on speculation.
In addition to the above protocols currently in the top 15, Ignas also pointed out several protocols that he sees as having the potential to drive market growth through innovation.
First is Polymarket, a prediction betting market. Vitalik has praised Polymarket multiple times for allowing users to focus on specific issues and current events. In fact, Polymarket just raised $70 million from Vitalik and Peter Thiel. Ignas would not be surprised if they soon launch an airdrop.
During the speculation hype of the ETH ETF approval, Polymarket had about 2,000 daily users. Although the number is still too small, the growth potential is significant.
Another protocol with potential innovation is Farcaster, which is a true zero-to-one startup that combines the best of what social media (Twitter) offers with cryptocurrencies. It combines social interactions, payments, and financial transactions, and could potentially become a super crypto application in the future. It’s good enough that if Twitter suddenly disappears, all crypto users can immediately switch to Farcaster. On the other hand, in February, when DEGEN tokens were airdropped to early users, Farcaster also experienced significant user growth, reaching 59,000 daily active users.
Lens Protocol is also a very promising community protocol, with over 19,000 users using it daily. Although the user base is smaller, Lens is actually the only social protocol that stores user content and identity on-chain. Lens announced a move from Polygon PoS to zkSync, which will be a huge loss for Polygon.
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Lens has its own meme coin, but Ignas expressed confidence that Lens will eventually launch the LENS token airdrop, while he is less certain about Farcaster.
In addition to the above three protocols, Ignas also mentioned the integration of Telegram and Ton and new crypto games as potential opportunities, not to mention the potential innovation in GameFi in the future.
The market is currently stagnant, and it seems that there are no more new topics. Even the author of this article feels it. It seems that recently, apart from speculating on points, new Layer 2 networks, Ethereum spot ETFs, and meme coins, there is nothing else to write about! It is indeed felt that the crypto market lacks innovation, which will not sustain market growth and may even face decline.
This cycle needs more successful consumer-oriented new applications.
And Ignas believes that the real innovation of the next cycle is likely to come from consumer applications, which will attract mainstream users outside the crypto community and have the opportunity to drive new applications at the macro level. He pointed out several potential projects, and it is indeed worth exploring and looking forward to whether the market will eventually develop as he described.
Fantasy Top
Farcaster
Friend.tech
Lens Protocol
Polymarket
Pump Fun