The Ultimate Guide to Crypto Investing Narratives in Q3 2023

This article takes a look at what the numbers have looked like over the past few months, and 9 hot narratives that could emerge in the coming months. Excellent projects that appeared in the second quarter and innovative projects that may appear in the third quarter are also things that users need to pay close attention to.

The first is the data analysis of on-chain perpetual contracts in the second quarter, compared to the first quarter

• Trading volumes broadly down in second quarter
• Total transaction volume fell 8%.
• Level, Kwenta, Mux, and Vertex are the projects with the largest increase in transaction volume and increasing market share during this period

Next is the data analysis of the LSD track in the second quarter, compared with the TVL of ETH

• The entire track grew by over 2 million ETH ($3.9b)
• Rocket Pool, Frax Finance and Lido continue to grow significantly in market share
• Swell Network has also experienced substantial growth (due to strong airdrop activity and high yields)

Data analysis of L1 and L2 in the second quarter

• Ethereum posts best quarterly earnings ever
• L2 costs continue to grow *Solana, Polygon, and Optimism all saw massive negative returns due to excessive token releases

What follows are a few hot narratives that I think are likely to emerge in the coming months.

01****

Bitcoin ETF

• Both Ark and Blackrock Bitcoin ETFs have first cutoff dates of August 12th (but can be pushed back to February) *Blackrock is re-filing the ETF with Coinbase as the exchange to use
• If Bitcoin ETF is approved, it will be a major catalyst for the entire market

02****

EIP-4844（Proto-Danksharding）

• Data-blobs: allow cheaper transactions on Rollups (up to 20x cheaper)
• Cheaper transactions + higher profit margins → $ARB and $OP narrative
• After the Danksharding upgrade is completed, the mainnet fee will be cheaper (maybe in 2024)

(Translator's Note: Danksharding is an upgrade plan of Ethereum that aims to achieve cheaper transactions by reducing rollup fees. Data-blobs is a technology used to increase data storage capacity on the Ethereum blockchain. )

03****

LSD and LSDFI

• FrxETH V2 和 Frax-chain
• Startup of Eigenlayer
• As the pledge rate increases, more capital will flow to LSDFI to increase yield
• @Pendle_fi expands to a new chain with more pools and markets
• 10+ upcoming stablecoin protocols backed by LSD

04****

BASE (Coinbase L2)

• At present, the security audit has been completed, and only the testnet stability check is left
• It is of great significance for millions of retail investors to join DeFi
• There is also a potential narrative that may be: $OP is used as the Gas fee to become Base's basic income, and part of this income will flow to the Optimism treasury

05****

Frax chain

• L2 rollup with hybrid architecture, using mechanisms from Optimistic and zk-rollups
• FrxETH as a native Gas token
• The launch of FrxETH V2 makes $fxs have strong support, $FRAX is fully collateralized, and there is also the launch of the Frax chain (planned for Q3/Q4)

06****

Polygon 2.0

Polygon 2.0 unifies many disparate technological innovations into one scalable solution.

Recently, $MATIC has seen a sharp sell-off due to Celsius' balance sheet reduction. Given the recent 2.0 release, $MATIC seems like a good investment.

07****

dYdX V4 (appchain on Cosmos)

• Decentralized in-memory order book controlled by chain validators
• The current test processing capacity exceeds 500 transactions per second (TPS)
• Protocol revenue will no longer flow to centralized entities (fees may be shared with $DYDX holders)
• Testnet will be launched soon

08****

GMX V2

• Uses custom low-latency oracles from Chainlink
• Segregated pools make it easier to add many new trading pairs (including synthetic assets)
• Expectation of lower transaction fees could attract new users

09****

Synthetix V3

• Perps V3 - Multiple collateral liquidity (currently only compared to SNX)
• Permissionless pools - isolate risk (as opposed to the current shared risk model)
• Cross-chain liquidity - users on one chain can leverage liquidity on another chain