Which narratives are worthy of attention in the second half of the year?

7 sectors that can still be paid attention to in the second half of the year: Cancun upgrade, LSD, Hong Kong, computing power & Metaverse & AI, games, competition between BRC-20 and derivative DEX.

Written by: Sleeping in the Rain

Hey, viewers, we meet again. Time is like a wild donkey, it keeps running, and it will be the middle of the year in a flash. The following is my outlook for June, there may be more things to talk about this time⬇️

1/ Cancun upgrade

The Ethereum Cancun upgrade is tentatively scheduled for October, but it may start to be hyped in advance in June. In my impression, an interesting phenomenon is that the hype for the upgrade of Ethereum 2.0 started two months in advance, and the hype for the Shanghai upgrade started three months in advance, so will the hype for the Cancun upgrade be four months in advance? I think it's more likely. Just like GameFi's lifespan is getting shorter and shorter, the hype for these big anticipated events will be brought forward, especially in the current market environment. The target is $ARB $OP these Layer 2 (there are many more, I will not list them one by one), Arbitrum’s current fundamentals are very good, and Optimism will experience two major events at the moment: the cliff unlock on May 31 and June 6th bedrock upgrade.

2/ LSD&LSDFi

Why focus on LSD? What I want to emphasize again is that LSD is a long-term business. With the end of the withdrawal pressure, ETH LSD is currently in a state of net inflow. Among them, the LSDFi track is ushering in a period of rapid development - we can also see that many LSDFi protocols have emerged in the previous days. It's just that most agreements are only short-term projects that attract liquidity through the release of high-value tokens. In my watchlist, the four projects PENDLE, AURA, Lybra, and Prisma are the ones I will keep paying attention to recently. I have already written the specific analysis, so I won’t say it in detail, all of them are retained in my Substack. I will actively follow up on Lybra's v2 testnet launched in mid-June, and pay attention to its token price. The logic of Prisma is more self-consistent and simpler, and I am more optimistic about it.

Let’s go back to the LSD track. In addition to Lido still occupying a dominant position on the LSD track, Frax’s growth rate is obvious. Its share has risen from 0.72% at the beginning of the year to 2.46% today. Rocket Pool's share rose from 5.24% at the beginning of the year to 7.7%. From the perspective of market share growth, Frax has delivered a very good result. It is also worth noting that the mortgage rate of FRAX (stable currency) will also reach 100% around mid-June, and Frax v3 will also be launched soon. At that time, Frax will launch a lending market for FRAX liquidity (this function may be part of v3 coverage, time is Q3/Q4).

Another point is that Lido's dominant position has also aroused some people's attention on the decentralization of pledges. In addition to efforts on the underlying architecture (DVT), unshETH is committed to balancing the relationship between various LSD protocols. But unshETH just had some security issues yesterday 😭. And the ssv network using DVT technology will also go online. Discord says it will be Soon, so I reasonably guess it will be June.

3/ Hong Kong

On June 1, that is, today, the "Guidelines for Operators of Virtual Asset Trading Platforms" came into effect. There will be some tokens that can use traffic, but I think in the current market environment, sell on news is still the choice of more people. For example, when CFX was the hottest, it was actually in April, but now it has stalled a bit. Even, after the CNHC incident happened yesterday, CFX began to fall. Therefore, from my personal point of view, the effectiveness of the "Guidelines" brings more selling behavior, and I will pay less attention to the Hong Kong concept token. In addition, I would like to mention the name change of Cocos. It will start at 8:00 (UTC) on June 2. I personally think it is difficult to make deterministic transactions through this event. It was growing exponentially before. If you really want to rush, it is no problem to rush to the opening, but you still need to be cautious in trading similar to chasing the high point of BNX.

4/ Computing Power & Metaverse & AI

In fact, $RNDR has already risen for a while. I mentioned it in my previous article. I think computing power will be a narrative theme in the future world. The surge of Nvidia is a good example. In fact, $RNDR has little to do with AI computing power in essence, but it can be used. Another catalyst for $RNDR is the Apple conference. Head-mounted display products are an important part of Apple's future, and the parent company of $RNDR is a partner of Apple. My attitude is that if there is no parent company involved in $RNDR when the 6.5 Apple product is released (for example, if one is marked as supported by the parent company), I will not buy $RNDR. If so, I would include $RNDR in my position.

As for the AI part, I personally feel that there is no satisfactory application for Crypto AI at the moment, and the promotion of the hype of Crypto AI by the AI wave will become weaker and weaker. However, I can see the trend of some AI applications—similar to Web2-based AI applications empowering some Crypto behaviors, such as helping you formulate trading strategies and so on. I will keep an eye on these trends, but will not invest in Crypto AI at this time.

5/ Games

Layer2 provides a good soil for games, but so far, few games can jump out of the previous Play2Earn framework and bring us a Web3 game experience of fun + economic incentives + ownership. Mobox has launched a dragon egg game, mining will start on June 1st, and the rewards are $MBOX and MEC gems. It has great art design and is built on top of Arbitrum. It is not yet known what the gem will be used for. This year, Mobox plans to burn 135 million tokens and add some application scenarios for tokens. Judging from Mobox's follow-up planning, the main goal is to increase the token price. We don't know the scene of $MBOX yet, but it should be related to the four games that Mobox plans to launch this year.

Another game I am following is Pixels, which currently ranks third in terms of activity, and has risen a lot in 30 days. The main driving force is the imminent release of its native token. The current market is essentially a heat game, and only by maintaining a high heat can we gain more people's attention. So, Narrative > Fundamentals. The higher the popularity, the better the token price will perform.

There is also $MAGIC, with the increase in Arbitrum TVL and transaction volume, more developers will consider deploying games on it, $MAGIC is obviously a beneficiary, but I have not seen obvious catalysts and new games yet launch. Abyss World on Sui/Polygon opened IDO, the game background is relatively good, and it has obtained financing and reached cooperation with some cloud service providers. I still expect it to drive the activity of Sui on the chain - after all, from my perspective, the advantages brought by Sui can better promote the construction and development of Web3 games. And the Zksync game platform BladeDAO I mentioned earlier, but I will not consider investing in its tokens—the investment needs to wait until the game is released. Spartadex will be released in the next few weeks, I own the NFT, so I will continue to pay attention.

By the way, BAYC may have some new moves in June. My suggestion is to keep an eye on it. After all, the token price of $APE has been in a state of constant decline.

It should be noted that if the Web3 game does not break out of the traditional Ponzi model, my suggestion is still based on short-term speculation-unless it is really fun, it is better to spend some money to play Tears of the Kingdom of Zelda.

6/ BRC20

Although the popularity of BRC20 has been reduced, it still has a certain space to be expected, such as Binance’s list of BRC20 tokens. I personally don’t have much interest in BRC20, and I haven’t participated in it much. In other words, it is essentially a heat game. Without heat, token price will of course be difficult. But the potential support of Binance may trigger a new wave of gains, which we cannot ignore.

7/ Competition of Derivatives DEX

According to a study by LD Capital, the trading volume of Kwenta and Level has surpassed that of GMX within a week, and the main driving force is still more incentive distribution. But my focus is still on GMX and dYdX. In the win-win cooperation between GMX v2 and Chainlink, ChainLink provides GMX with low-latency oracle service, and GMX will provide Chainlink with a 1.2% revenue dividend. GMX v2 improves existing products and provides derivatives transactions with less risk, greater transaction capacity and more assets. dYdX will release v4 later this year. Decentralized order books, DYDX verified income and fee distribution will be important updates brought by v4.

Finally, I will mark some high-quality content of the projects mentioned above for reference⬇️

Fundamentals of Arbitrum

$OP unlock analysis

OP Bedrock Upgrade Analysis

What kind of protocol is Prisma?

Understanding of Frax Finance and some sell on news logic

Is AI Bullish for Crypto?

$OXBT

Derivatives DEX competition: Kwenta and Level’s trading volume surpassed that of GMX within a week

Derivatives dex battle-kwenta-level trading volume surpassed gmx-729d7fb518d0 within a week

GMX and ChainLink

Interpretation of GMX v2