Preface:

#Web3 The way the economy works is actually very simple: it is driven by four main factors.

●First, there are use cases, that is, cryptocurrencies and blockchain technology are used to solve practical problems, such as financial services, data security, etc.

●The second is innovation. New ideas and technologies are constantly emerging to promote the development of this field.

●The third is market hype. Sometimes people pay too much attention to a project, causing its value to soar, although this situation may only be temporary.

●Finally, there are industry trends. Over time, people’s views and demands for cryptocurrencies and blockchain technology will change, and these changes will have an impact on the market.

Therefore, the Web3 economy is actually a combination of these factors, which together drive the development of this field.

User participation and activity are the cornerstones of these driving forces and are key factors in evaluating the growth potential of crypto projects or sectors. Market trends often lead to hot spots in the crypto market, while also driving price changes and the evolution of market cycles.

In the last bull market cycle, we witnessed the explosion of metaverse and NFT projects. For example, at the peak of the bull market in 2021, mainstream game projects such as Sandbox and Axie Infinity brought investors up to 160 times returns. Therefore, keeping up with industry trends is one of the best ways for investors to expand their returns during the bull market cycle.

This article briefly explores 5 new trends that may emerge in this market cycle, which are expected to replicate the prosperity of P2E (Play to Earn) or the Metaverse. 👇

1️⃣#Layer3 ：

Layer3 (third layer solution) is an advanced protocol built on top of existing Layer2 solutions. In the blockchain world, there is a challenge: to achieve a perfect balance between decentralization, security, and scalability. Some existing Layer2 solutions, such as Arbitrum and Polygon, aim to improve scalability to improve the overall performance of Ethereum.

As blockchain technology is widely used around the world, we need a more flexible blockchain architecture, which is where Layer3 solutions come in. Layer3 can not only interoperate with existing Layer2 protocols, but also provide various specific functions, such as solving privacy issues or supporting a large number of transactions, while also inheriting the security of Layer1 blockchains.

The goal of Layer 3 is to facilitate the deployment of decentralized applications (dApps) by introducing custom functionality and greater interoperability, bringing scalability to a new level, enabling the network to process more transactions and support more complex applications simultaneously.

For example, some emerging decentralized exchange (DEX) projects, such as Syndr, are developing their own Layer3 blockchains. Their goal is to promote institutional-level derivatives trading and achieve a user experience similar to Web2. As Layer2 projects continue to mature, Layer3 blockchains may receive more attention and hype in the future, just like Layer2.

2️⃣ZK Rollup：

ZK Rollup is a promising Ethereum technology that can improve efficiency while ensuring security.

Vitalik is very optimistic about this technology and has expressed his support many times in his articles and speeches. However, due to technical limitations, the current implementation is still subject to certain challenges. Zero-knowledge proof requires a lot of computing resources and takes a long time, which leads to some gaps between it and another technology, OP.

This gap is particularly evident in ecological construction. Current data shows that some ZK Rollup projects lag behind another technology OP in terms of total value. Despite this, investors continue to be enthusiastic about ZK Rollup. Recently, A16Z released its own open source platform ZKVM.

It should be noted that ZKVM is a broader virtual machine platform, different from the ZKEVM we often hear about. This shows the broad application prospects of ZK Rollup technology. Although some of the leading ZK Rollup projects are not developing well, the emerging project Metis has great potential in some aspects.

Metis uses a hybrid system that combines the advantages of both OP and ZK processing methods. Although this advantage is not yet obvious due to technical limitations, Metis has taken an innovative approach to the sorter, trying to achieve decentralization. This approach can solve some problems and give the token more value.

More importantly, if the sorter of ZK Rollup is decentralized, new mining methods may emerge in the future, which may change the entire ecological landscape. These new trends are worthy of our attention as investors, but in addition to technology, project parties also need to pay attention to ecological construction, otherwise the prospects may not be optimistic.

3️⃣$AI ：

AI (artificial intelligence) is a machine learning technology that uses computer computing power and big data to simulate human problem-solving abilities. It simplifies the decision-making process, making it more rational and taking the actions most likely to achieve a specific outcome. AI can continuously evolve by learning from the data provided, becoming more intelligent.

In the blockchain world, we have a distributed ledger that can store data securely, which is the blockchain. The data in the blockchain cannot be tampered with, so it can ensure the security of the data and does not need to rely on a third party. The combination of AI and blockchain can bring out the advantages of both parties.

First, blockchain can help explain AI’s behavior. Through blockchain technology, we can obtain an immutable record of the data and processes used by AI in its decision-making process, making it easier for humans to understand and audit how AI algorithms make decisions, thereby establishing a deeper level of trust.

Secondly, AI can improve the efficiency of blockchain. In future Web3 application scenarios, data processed by AI algorithms can provide users with a better experience and make applications smarter.

As AI algorithms continue to advance, the next generation of decentralized applications (dApps) and non-fungible tokens (NFTs) may benefit from AI technology and become smarter. Currently, some blockchain projects dedicated to utilizing AI technology include Render Network (distributed GPU rendering and AI computing), Fetch.ai (AI autonomous agent), SingularityNET (artificial intelligence service market), etc.

4️⃣Restaking:

Restaking, also known as re-staking, is a derivative behavior of liquidity staking. Simply put, it is to pledge again on the basis of the original liquidity pledge. This means re-staking the tokens to earn additional income. Re-staking on the same protocol means continuing to stake the tokens and their staking rewards in the original protocol to increase future staking income.

For example, EigenLayer is an Ethereum-based middleware protocol that introduces the concept of Restaking. This allows Ethereum nodes to stake their already staked ETH or LSD tokens again to other protocols or services that require security and trust, in order to obtain double benefits and governance rights. At the same time, this can also extend the utility of Ethereum's consensus layer to various middleware, data availability layers, side chains and other protocols, allowing them to enjoy Ethereum-level security at a lower cost.

Through EigenLayer, Ethereum stakers can re-stake their already staked ETH and choose multiple services to provide collective security, thereby reducing the capital cost of participation and significantly improving the trust guarantee of individual services.

The biggest advantage of Restaking is that it creates a win-win opportunity for cryptocurrency holders and protocols, unlocking additional earnings opportunities for them. This means that billions of dollars worth of ETH can re-enter the market circulation.

As more projects follow EigenLayer’s lead, Restaking is likely to become one of the main trends in this bull cycle.

5️⃣DePin：

DePin (Decentralized Physical Infrastructure Network) is a novel concept that aims to incentivize people to participate in blockchain networks or contribute resources to them. It leverages IoT technology to encourage users to deploy, maintain, and operate hardware devices, and rewards these behaviors by issuing tokens. Just as social finance rewards users for sharing data, DePin rewards users for sharing unused hardware to support the network.

DePin can be divided into two types:

The first is the Physical Resource Network (PRN), which incentivizes participants to use location-based hardware to provide actual goods and services such as WIFI, 5G, VPN, energy information sharing, and geospatial data. Representative projects include Helium (decentralized wireless network protocol).

The second is the Digital Resource Network (DRN), which incentivizes participants to use hardware to provide real-world physical infrastructure networks of digital resources, such as broadband networks, storage networks, and computing power networks. Representative projects include Meson Network (decentralized bandwidth market), Render Network (decentralized GPU rendering platform), and Livepeer (decentralized live video broadcasting platform).

DePin has great potential because it can bring together different services, manufacturers, and the entire device ecosystem on a neutral platform. This provides new options for integration across industries and markets and helps blockchain projects break through industrial boundaries.