The most criticized thing about the crypto industry is that it has limited large-scale application scenarios. Currently, there are only three uses for crypto that may be widely accepted by the market: value storage (Bitcoin), stablecoins, and transactions (speculation). Since there are no application scenarios, many investors can only invest in infrastructure.
Therefore, the returns of infrastructure projects are also quite good, and the long-term holding returns of top projects are quite impressive. However, the ultimate goal of infrastructure is to support user application scenarios. If there are no terminal application scenarios, these infrastructures are like building a castle in the air.
1. Infrastructure is no longer to blame
In the early days of crypto, those who were developing practical applications all complained about the poor crypto infrastructure: slow transactions, high costs, and cross-chain problems.
For the infrastructure developers, there is a clear direction for development: increase speed, reduce costs, and propose various cross-chain solutions.
With the development of public chain technology, the number of concurrent transactions per second of many chains can reach more than tens of thousands, and the settlement time is only a few seconds.
In terms of cross-chain, Chainlink's CCIP directly handles cross-chain interactions, and various re-pledge projects can realize cross-chain asset interest.
It can be said that the performance of the infrastructure has been greatly improved by now. If killer application scenarios do not appear again, then the relationship with the infrastructure will probably not be that big.
In theory, encryption can only be used in two ways:
The first category is to upgrade encryption in traditional Internet authentication scenarios
The second category is new scenarios that can only be achieved through encryption
2. Three traditional scenarios most likely to be successfully upgraded
The currently popular social/game/payment apps all belong to the first category.
Two months ago, Farcaster, known as the encrypted Twitter, completed a financing of 150 million US dollars and its valuation reached 1 billion US dollars!
However, the total number of users of the Farcaster project is currently less than 600,000. The number of daily active users has increased 28 times from 2,000 at the beginning of the year to the current number of 56,000.
As a social platform, this daily activity has almost no competitiveness.
Relatively speaking, payment and gaming scenarios are more likely to achieve breakthroughs:
Recently, Uber and Ferrari have announced that they will accept cryptocurrencies as payment.
Tesla, Apple, Coca-Cola, Pizza Hut, Gucci, etc. have actually supported cryptocurrency payments for a long time.
Another scenario that has the potential to make a breakthrough is gaming. Currently, the total valuation of all Gamefi projects is $17.8 billion, which is similar to the market value of Dogecoin.
Currently, there are a lot of popular super casual games in the Telegram ecosystem, from NOT to Hamster Strike, and last week's Pixeltap, which are all phenomenal products that have reached a million daily active users in just one month.
However, the current users of these hyper-casual games are mainly looking for the money-making effect of airdrops. After the airdrops, I am afraid that the life cycle of the game will be almost over.
However, there are still several big-budget crypto games worth looking forward to in the second half of this year. For example, Shrapnel is a 3A masterpiece that will also be unveiled at this year's ChinaJoy.
3. Explore encryption scenarios
Exploring new encryption scenarios may be the most difficult than upgrading traditional scenarios.
The difficulty lies in the uncertainty of demand.
Depin (distributed device) may be one of the scenarios. Before the emergence of the encryption industry, the "sharing economy" actually appeared in the traditional Internet.
The "sharing economy" is a centralized company providing basic services for multiple users. For example, in the case of shared bicycles/shared power banks, the provision and maintenance of the infrastructure is provided by a centralized company.
The opposite is true for "distributed devices". Ordinary users provide equipment and maintenance, while the platform looks for paying customers.
This cycle is that Render, which provides computing power for rendering scenes, became an Apple supplier, and Aethir found leading game manufacturers as customers.
These platforms allow users to make money by utilizing the idle GPU devices on their home computers.
Another new scenario that has received recognition from capital is the prediction market. The Polymarket project has raised a total of US$74 million, and the latest round of lead investment is from the famous Founders Fund of the Paypal gang, followed by Vitalik Buterin.
It is said that Polymarket's predictions are more reliable than polls because polls are filled out randomly, while Polymarket's winning rate is the result of real money spent by retail investors.
Polymarket platform's transaction volume in June reached US$109 million, a record high; at the same time, the platform's monthly active users reached 29,200, also setting a historical record.
However, the new scenarios, whether Depin or other innovative scenarios on the chain, are still some distance away from the emergence of "killer" large-scale application scenarios from the data point of view. In the short term, games or payments are more likely.
However, once "killer" large-scale application scenarios emerge, investors who can identify these opportunities will most likely be able to achieve financial freedom.
