What are the most promising sectors in the blockchain industry in 2022?
In this article, we will predict the Alpha-level tracks. However, since the development of these tracks is determined by many factors, the predictions may not be accurate, but that does not prevent us from analyzing and organizing our thoughts.Original Title: "2022 Outlook (Part 2): What are the Most Promising Tracks in the Blockchain Industry for the Coming Year?"
Original Author: Master of Five Fireballs
In "2022 Outlook (Part 1): What are the Most Promising Tracks in the Blockchain Industry for the Coming Year?", we discussed the tracks that might yield Beta if the bull market continues in 2022. In this article, we will predict the Alpha-level tracks together. However, since the development of these tracks is determined by many factors, the predictions here may not be accurate, but that does not prevent us from analyzing and clarifying our thoughts.
1. Derivatives
Everyone thought Dydx would spark a wave of on-chain derivatives, but the reality has proven us wrong.
Just look at Dydx, the decentralized perpetual contract protocol PERP, and the decentralized perpetual contract and futures exchange MCB (short for MCDEX) based on the Mai protocol, and you will understand. The reason is that on-chain derivatives still have not found their "irreplaceable" application scenarios.
Of course, you could argue that on-chain assets are more decentralized, safer, and have advantages, but the reality is that most people are not enthusiastic about this. After all, DEX has never risen based on these so-called more Crypto Native concepts.
Uniswap can now compete with major centralized platforms because there are many Tokens available on it, and it can also provide liquidity (AMM).
On-chain Derivatives
Of course, derivatives are constantly exploring, and it is currently uncertain which type will ultimately come out on top. Currently, perpetual contracts are divided into three main categories:
The order book model represented by Dydx: An on-chain replica of CEX contracts.
The AMM (Automated Market Maker) model represented by PERP: An on-chain AMM version of contracts.
The LP (Liquidity Provider) shared liquidity model represented by MCDEX and GMX (GoldMaxCoin): A relatively innovative model where LPs and all long and short positions act as counterparties to each other.
In addition to perpetual contracts, interest rate derivatives in the traditional financial world are actually a very large market that has not yet spread to the DeFi world.
Swivel (a decentralized protocol that tokenizes fixed loan yields for circulation) and Voltz (a non-custodial automated market maker) have not officially launched, but both have potential and development space.
2. Cross-Chain Bridges, or Interoperability Between Chains
The multi-chain universe has become a foregone conclusion, and at least for the next few years, we are unlikely to see the "one chain to rule them all" scenario that some people advocate.
In the context of a multi-chain universe, cross-chain bridges, or interoperability between chains, will become a necessity. There will be three stages of inter-chain interoperability, and we are currently in the first stage.
Stage One: Asset Cross-Chain
Asset cross-chain refers to the various cross-chain bridges commonly used today, which can be divided into the following three categories:
Bridges secured by external nodes: Represented by CEX bridges, Anyswap, etc.
Light client types: Represented by Cosmos's IBC and Polkadot's XCMP.
Liquidity networks: Represented by Celer, HOP, Connext.
Among these, the first type is the most flexible, the third type is the safest, and the second type has the strongest functionality, and it is also the foundation for the third stage of cross-chain.
Stage Two: Self-Cross-Chain of Leading Applications
The self-cross-chain of leading applications is currently represented by Compound and AAVE. Compound plans to create its own chain and is likely to connect with several mainstream Layer 1 or Layer 2 chains, allowing users to directly collateralize, borrow, and repay on the Compound chain, saving them from running around.
AAVE's upcoming V3 will utilize Portal technology to connect several mainstream chains, allowing you to collateralize assets on ETH, borrow on Polygon, and finally repay on Optimism. Although this approach differs from Compound's plan to create its own chain, the effect is similar.
I believe that in the second stage, more and more leading DApps will be able to integrate cross-chain functionality themselves, rather than relying on external cross-chain bridges.
Stage Three: Protocol Cross-Chain
Protocol cross-chain has the potential to fully enable interoperability between various chains, facilitating the transmission of messages between chains, rather than just the transfer of assets. Currently, there are three tracks worth paying attention to that have the potential to achieve this:
1. Chainlink
The Chainlink 2.0 white paper discusses off-chain computation, and inter-chain interoperability protocols will be a key focus of version 2.0. As the leading oracle that naturally connects to all chains, it is hard to think of a project more suitable for creating inter-chain interoperability protocols than Chainlink, especially since its name is literally Chainlink.
2. IBC + LayerZero
IBC has long been touted as the TCP/IP (Transmission Control Protocol/Internet Protocol) of blockchain.
It has recently seen increasing application within the Cosmos ecosystem, but due to compatibility and cost issues, it has not yet been adopted by the currently mainstream EVM-compatible chains.
Recently, LayerZero has positioned itself as an auxiliary to IBC, theoretically allowing all EVM chains to connect to IBC by redeploying the transmission layer and ultra-light clients of IBC. If achieved, it could become the strongest competitor to CCIP.
3. XCMP + Polkadot
The XCMP message-passing protocol between Polkadot's parachains is functionally powerful, but its future development will depend entirely on how much market share Polkadot can capture in the public chain market and how many public chains it can connect to.
3. Web 3.0
Web 3.0 is very grand, and theoretically, almost all areas of Crypto can relate to Web 3.0.
Web 3.0 is also the infrastructure for the future "metaverse" in our view. With the Read, Write, Own permissions of Web 3.0, a truly meaningful metaverse can emerge.
Web 3.0 encompasses many aspects, and almost all activities within the ecosystem can be related to Web 3.0. However, there are always some that are more suitable or have more obvious functionalities related to Web 3.0.
Here are a few major categories that come to mind:
1. Public Chains: The foundation of foundations. As mentioned in the Beta outlook, it is worth noting that Difinity is particularly suitable for becoming the front end of Web 3.0, but in the next 1-2 years, depending on the development of Web 3.0, it may take a different independent route compared to other public chains.
2. Storage: Currently, blockchain focuses on popular technological applications like DeFi, GameFi, and NFTs, characterized by heavy computation and light storage.
But what happens when the truly "state-unlimited" Web 3.0 is applied? Where will your posts, uploaded images, and videos be stored? On ETH or Solana nodes? Clearly not.
At that time, storage solutions like Arweave and Filecoin will definitely rise to prominence. It is worth mentioning that many NFT projects are already using it (Arweave) as their default storage, and Mirror.xyz, which stores articles on Arweave, has demonstrated what a decentralized Medium should look like for the entire Web 3.0 ecosystem.
In terms of storage, Arweave is undoubtedly leading in adoption, but in terms of market capitalization, Filecoin remains first.
3. DID: This is a track that has been making noise since 2017 but has not made much progress until now.
The most frightening thing is that back then, with only one ETH chain, DID did not emerge, and now with nearly twenty different chains, DID will become more complex and harder to understand.
The only certainty is that if we are to enter the Web 3.0 era, a DID system will definitely be a necessity. Personally, I feel that the most suitable projects for DID may not be those that exist solely for DID (like Civic), but rather ENS is more appropriate.
Just as during the pandemic, health codes were essentially managed through WeChat, which became the nominal DID. In the blockchain world, the only projects that have demonstrated this cross-border capability while solving technical challenges are Chainlink for inter-chain interoperability and ENS for DID.
From a technical perspective, the cryptographic abstraction Nervos is working on DAS is actually more suitable for a multi-chain environment, but technology vs. "habits + ecosystem" often leads to the latter being more favored.
4. Wallet Entry: The world of Web 3.0 will definitely need an entry point, just as in the early internet era, where the entry points were Sina and Yahoo, later becoming Baidu and Google. The nominal entry point in the Web 3.0 era is currently MetaMask + various wallets, such as Solana's Phantom and Cosmos's Keplr.
For DeFi veterans, just the wallet plugins alone require a bunch to install, and mnemonic phrases and private keys must also be kept safe, which is quite inconvenient. Therefore, it can be speculated that the future will not look like this. Is it possible for one wallet to support all chains? For example, using a single set of mnemonic phrases to manage everything?
Many companies are already exploring this track, with established players like imToken, MaiZi, and Cobo; and young newcomers like C98, SafePal, and XDeFi. Of course, if one day MetaMask launches its own economic model and supports non-EVM compatible chains to dominate the market, that would be what I most hope to see.
4. Zero Knowledge Proof
ZKP (Zero Knowledge Proof) is a technology and does not refer to any specific company. However, we need to clearly recognize that ZKP will receive increasing attention and adoption in the coming years. All projects that promote ZKP as their main selling point are worth your attention.
For example, the earliest Zcash and the fork coin Horizen, which is backed by Grayscale and follows a different route.
ETH Layer 2: StarkWare and ZK-Sync.
The domestic star Loopring protocol.
The ultra-light Mina.
The privacy protocol Manta on Polkadot (formerly known as Coda Protocol), etc.
In the coming years, you should see more projects adopting ZKP, or even focusing on ZKP technology, which may hold Alpha opportunities. Whether you can seize them will depend on the availability of information and personal decision-making.
