Crypto researcher Ignas believes that there has been no real innovation in the market recently, and relying on memes and point airdrops cannot promote industry growth in the long term. He also pointed out several potential innovative projects and fields, including communities, prediction markets, games and other projects, and looks forward to them in the future. We see these projects driving market growth in the future.
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(This article is not investment advice)
Lack of innovation leads to stagnant growth
No more Layer2!
Ignas said he was tired of seeing another L2 launch and that upon launch its token had a fully diluted market capitalization (FDV) of $5 billion.
Recommended reading: New tokens this year generally have low circulation and high valuations, which may make it difficult to maintain long-term prices? Reason for recommendation: This article clearly explains the abnormal issuance phenomenon of new project tokens in this bull market (this year): high valuation and low circulation are very likely to lead to long-term price decline of tokens. The underlying reason is the lack of real innovation in the project , echoing this article.
Now that many people, including themselves, are bored with another Uniswap, Aave or Liquidity fork on these new L2s, users are no longer excited about buying another infrastructure protocol at a falsely high valuation because these protocols are not innovating , essentially providing zero value to the token.
What the market needs is innovation! But where?
The bull market in 2021 has the right time, right place and right people
Ignas said he really likes the positioning for the 2020-21 bull market. Because it was a perfect storm: governments had to print money due to COVID-19 (external catalyst), and people were bored speculating on NFTs at home, operating DeFi yield farms with up to 1000% returns, participating in the Metaverse, and trading in Axie Infinity or other Play on P2E games.
There were multiple innovations in the crypto space at the time that kept users engaged.
The 2024 bull market seems to be all about memes and points
But so far this year, this bull market has been boring. No real innovation was seen. In order for this bull market to transform into a super cycle, Ignas believes that strong internal innovation (at the macro level) must be needed to attract retail investors and keep the market entertaining and interesting.
At present, due to the lack of innovative investment targets, most market participants simply hold BTC, ETH, and SOL, and work hard to accumulate points or guess the next popular meme coin.
But without special advantages, the chances of making money through meme coins are slim. Most of them are KOLs, market makers and studios harvesting naive retail investors; and points are a downward trend, because rewards usually depend on deposited funds and trading volume, resulting in changes in the rules of the game where the rich get richer. A game that only belongs to whales.
BTCFi by Ordinals and Runes is indeed the innovation/narrative of this cycle, but even tech-savvy Ethereans, Solana degens are not very interested in it due to technical complexity and lack of clear value proposition .
(Franklin Rune Report: Rune issuance will become the Bitcoin ecological homogenization token standard)
Might we see real innovation next?
So, what innovations can bring back the retail craze this cycle?
It really needs something new to reinvigorate the market to attract a large number of new users and (unlike most meme coins) actually make users money. It’s difficult to predict what NFT/P2E will be in the current cycle, but Ignas believes it will be a new generation of consumer applications.
What are the current protocols that have more opportunities for innovation?
Let’s first see if there are any clues about the currently popular agreement. On May 7, four new social applications briefly entered the top 15 in terms of gas consumption:
Fantasy Top
Friend Tech
Pump Fun
YOLO Games
While the number of users of these protocols is still small, with none having more than 20,000 daily active users, from a monetization perspective, these protocols represent crypto-native business models that are establishing new entry points into the application layer. .
Ignas said he has no interest in Blast L2 because it is just another L2 that allows users to earn points. But Fantasy Top brought Ignas to Blast. Fantasy Top can predict Twitter KOL’s participation in the community through their card transactions.
(Detailed explanation of Blur’s income-based L2 network Blast: on-chain native interest rate, NFT perpetual contract, etc.)
The second protocol is Friend tech, which briefly achieved innovation: using the innovative design of social protocols to break the circle, but it did not last long. Friend Tech is currently at a crossroads in reinventing itself.
(Friend.tech token plummets more than 20%: co-founder hints at possible departure from Base)
Pump Fun is a great tool for creating meme coins. Pump Fun as a platform has found a great PMF in the market at this stage.
(Solana meme currency platform Pump Fun suffered private key theft + flash loan attack)
YOLO Games are primarily based on speculation.
Are there any innovative protocols that have some outlines?
In addition to the current top fifteen protocols, Ignas also pointed out several protocols that he is optimistic about have the opportunity to drive market growth through innovation in the future.
First up is Polymarket which is a prediction betting market. Vitalik has repeatedly praised Polymarket for allowing users to focus on specific issues and current events. In fact, Polymarket just raised $70 million from Vitalik and Peter Thiel. Ignas wouldn’t be surprised if it launches airdrops soon.
During the speculative boom surrounding the ETH ETF approval, Polymarket had around 2,000 daily users. Although the number is still too small, the potential for growth is high.
Polymarket daily active users
Another potentially innovative protocol is Farcaster, a true scratch-to-one creation that combines the best features provided by social media (Twitter) with cryptocurrency. Among them, social interaction, payment, etc. are combined with financial transactions, which may become super encryption applications in the future.
This is good enough that if Twitter were to suddenly disappear, all crypto users could be immediately moved to Farcaster. On the other hand, Farcaster also experienced huge user growth in February when DEGEN tokens were airdropped to early adopters, reaching 59,000 daily active users.
Farcaster daily active users
Lens Protocol is also a very promising social protocol, with more than 19,000 users using it every day. Although there are fewer users, Lens is actually the only social protocol that stores user content and identities on the chain. Lens announced one of the hyperlinks migrating from Polygon PoS to zkSync, which will be a huge loss for Polygon.
Recommended reading: Lens Protocol launches hybrid network Lens Network to improve efficiency while maintaining social decentralization Recommended reason: This article clearly explains Lens Protocol’s development roadmap in recent years, including Lens Network, adopting Volition hybrid architecture, and transferring Rollup architecture to ZK Stack, you can understand the content of this article more clearly.
Lens has its own meme coin, but Ignas said he is very confident that Lens will launch a LENS token airdrop at some point in the future; he is less sure about Farcaster.
In addition to the above three major protocols, Ignas also pointed out that Telegram’s integration with Ton and new crypto games may also have opportunities, and of course not forgetting Gamefi’s possible future innovations.
Now we need a super app to attract new users
Nowadays, the market growth is stagnant, and there seem to be no more new topics. Even the author feels this when writing articles. It seems like there’s nothing else to write about these days besides hype points, new Layer 2 networks, Ethereum spot ETFs, meme coins, and more! I feel very strongly that the encryption market does lack innovation, and this will not allow the market to continue to grow or even face recession.
This cycle calls for more successful new consumer-facing apps
Ignas believes that the real innovation in the next round of cycles is very likely to come from consumer applications. Only by attracting mainstream users outside the crypto community can they have the opportunity to drive new applications at the macro level. He pointed out several potential projects and whether the market will eventually be as it is. The development mentioned is indeed worth exploring and looking forward to.
This article Ignas: Today’s market lacks real innovation, naming communities, prediction markets, and game projects as potential future innovation momentum. First appeared on Chain News ABMedia.
