Author: Lugui Tillier, Cointelegraph; Compiler: Songxue, Golden Finance
In every market cycle of cryptocurrency, new narratives emerge, attracting investor attention and funds. Understanding these dynamics is necessary for both individuals and companies.
Looking back at past bull cycles, it is clear that there are always new narratives that capture investor attention and resources, shaping the development of the cryptocurrency market in the coming years.
In 2017, the initial coin offering (ICO) narrative came to the fore. In 2019, the focus turned to decentralized finance (DeFi). In 2021, we witnessed the rise of non-fungible tokens (NFTs) and the Metaverse.
What will be the main narrative of 2024? On social media, it’s easy to identify some clear trends such as Ordinals, restaking, airdrops, and Real World Assets (RWAs).
However, there are some trends that may be overlooked by your favorite influencers. Here are three narratives that stand out.
2024 will usher in a battle between the chain development kit (CDK), super chain, Layer 3 and application chain< /h2>
It seems that projects such as Polygon, Optimism, Arbitrum and others have learned from Ethereum. This year will be a critical period for Layer 2 to mature.
A clear example is the launch of Indian online store Flipkart last year. Rather than launching a project on the Polygon network, they launched their own blockchain using Polygon’s CDK.
Similar to Flipkart, Immutable X and Libre have followed this strategy and launched blockchains focused on gaming and real-world assets (RWAs) using Polygon’s CDK.
This is very strategic for the entire ecosystem. These companies launch their own blockchains, creating a platform for other companies to benefit from. Other companies entering Web3 can now choose from various blockchains with specific characteristics to meet their needs, and Polygon has also evolved from a general blockchain to a diverse blockchain ecosystem with specific tasks and interconnections.
That being said, it is important to think of L2 not just as a blockchain, but as an ecosystem.
Polygon is evolving to Polygon 2.0, Optimism has its superchain, Arbitrum is expanding with its Layer 3, and so on.
May the best infrastructure, community and business development teams win.
Bitcoin is undergoing the "etherification" of Ordinals
Although Bitcoin NFT is very popular in the current market It’s interesting and generates a lot of transaction volume, but the main value that the Ordinals protocol brings to Bitcoin is that it opens Pandora’s box.
For the first time in history, discussion about other ways to leverage Bitcoin beyond its role as a store of value is gaining widespread attention.
In this context, there are solutions like BVM that already allow the creation of Layer 2 of Bitcoin using networks such as Polygon and Celestia for data availability and Polygon and Optimism for functionality execution .
BVM infrastructure has created about 200 test networks, and it is worth mentioning that other Bitcoin Layer 2, such as Stacks, have also made great progress since last year.
In addition to this, there are proposals that plan to introduce more programmability in upcoming Bitcoin updates, such as the OP_CAT proposal.
Therefore, in the short term, there are significant developments to introduce Layer 2 and smart contracts to Bitcoin, and discussions are already underway on how to drive this development in the longer term.
This is creating an atmosphere similar to the DeFi wave that happened on Ethereum in 2019, but now on the world's leading blockchain.
It is likely that in 2024 we will see some unimaginable things happen on Bitcoin, such as Circle or Tether issuing their stablecoins natively on Bitcoin through the Lightning Foundation’s Taproot Assets protocol.
Digital identity will take off
Digital identity is a topic that is of interest to both governments and the crypto underground community. Central bank digital currencies (CBDCs) are one of the major catalysts.
In Brazil, for example, the central bank has been actively testing it with the country’s largest banks and major companies, including Visa, Microsoft, Mastercard and AWS.
Although the initial application is in the financial sector, Brazil’s Central Bank Governor Roberto Campos said that Brazil’s CBDC (DREX) could eventually become the basis for creating digital identities. 130 other countries are also promoting plans for CBDC.
Beyond the institutional sector, a second trend that may further drive digital identity adoption is airdrops. Generally speaking, a project will use airdrops to decentralize its governance rights and reward users who are most committed to its product or protocol.
However, this leads to a problematic cycle. The project continues to lure users with upcoming airdrops and points systems, prompting some users to create multiple wallets to participate in mining the protocol. At the same time, the pressure users feel due to anxiety will cause them to constantly ask founders about the upcoming airdrop.
So, to solve this problem and create a sustainable approach, future major airdrops may introduce a digital identity-based verification layer, like we saw with Linea.
Although Linea has not confirmed any airdrops, it has recently made a series of "missions" available in its ecosystem. To continue participating, users need to link their wallets to digital identity tools such as Gitcoin Passport, Trusta, and others.
In a year characterized by central bank digital currencies (CBDCs) and airdrops, traders in two areas—the mainstream and “degens” (decentralized finance enthusiasts)—are likely to Focus on discussions and solutions around digital identity.
JinseFinance
Coindesk
Bitcoinist
Cointelegraph