ArkStream Capital: 9 Major Tracks for Web3 to Explode in 2024

Written by: ArkStream Capital

1. ETH L2 Summer Has Arrived

ETH+L2 has essentially become the largest isomorphic cross-chain ecosystem. With the launch of Starknet/zkSync/Scroll/Blast, the competition in the L2 market will intensify through a showdown between technical and market-driven approaches.

Focus Targets: Starknet / zkSync / Scroll / Blast / Manta

2. Modularity is Inevitable for the Iteration of Public Chain Technology

With the launch of Celestia, there are signs that the DA layer's market share is breaking away from Ethereum's exclusive monopoly. Currently, OP Stack, Polygon CDK, and others provide mature smart contract architectures, and the industry is exploring Bitcoin DA through cutting-edge BitVM papers. For example, the flourishing of niche areas such as shared/decentralized sequencers and RaaS services marks the rapid iteration of blockchain towards modularity.

Focus Targets: Celestia / Altlayer / Dymension / Avail / Fuel / Espresso

3. BTCfi Explosion Reaches 10% Liquidity Release for Bitcoin

Fundamentalism + market hotspots will unleash energy beyond the imagination of technical purists. The value of BTC liquidity release is an untapped gold mine. Following the narrative of inscriptions, there will be a wave of BTC's L2 and BTC applications, with Bitcoin's liquidity expected to be released by over 10%, and BTCfi will support a market exceeding $10 billion.

Focus Targets: Stacks / Merlin / B² Network / Chainway

4. Restaking's Consensus Layer Cake

In the narrative of modular blockchains, there are very few projects exploring the consensus layer, among which Bitcoin and Ethereum provide the two most recognized consensus securities in the network. The introduction of Restaking can effectively help emerging blockchain projects achieve appropriate security during the launch phase, thus avoiding unhealthy token mechanisms with excessively high inflation. In this context, the Bitcoin ecosystem is primarily represented by Babylon, and BTC-related ecosystems are gradually adopting Babylon, while Ethereum is led by EigenLayer, which has already derived the narrative of LRD (Liquidity Restaking Derivatives?) from LSD. On top of the LSD/LRD narrative, Pendle, as a unique positioning project in the ecosystem, continues to perform well in TVL, user data, and token prices.

Focus Targets: Eigenlayer / Babylon / Renzo / Puffer / Pendle

5. The Second Cycle of Gamefi

The widespread adoption of MPC wallets has expanded user technology. Games that have undergone three years of iteration and possess more playability will have stronger user capture capabilities than their predecessors. Richer game content will increase the complexity of the economic system, gradually moving away from the pure Ponzi attributes of the last cycle.

Focus Targets: Illuvium / Space Nation / Lumiterra / Matr1x

6. AI + Web3: A Long-term Narrative in Algorithms, Computing Power, and Verifiability

AI is the main narrative in the tech field, and its iteration will continuously inject vitality into Crypto. On-chain AI can utilize smart contracts to achieve automation and dynamism in machine learning and artificial intelligence. Meanwhile, blockchain technology provides transparency and verifiability solutions for various aspects of AI (such as zkML/opML). Additionally, key elements like AI models, GPU computing power, data feeding, and data labeling can all be integrated into the blockchain.

Focus Targets: TAO / OLAS / JANCTION

7. Depin - The Physical Flywheel of DeFi, Exponential Growth

It is a new phenomenon of online + offline token distribution and service provision model. As infrastructure gradually improves, the application of Crypto will lead to exponential growth of the Depin network.

Focus Targets: Mobile / Io.net / Meson / POKT

8. Social Currency Monetization Experiments Underway

Although Friend.tech's attempt failed, the explosive potential of social monetization has been demonstrated, while censorship resistance and security are the calls of social for Web3. Social protocols like Lens/Farcaster still carry hope.

Focus Targets: Farcaster / Lens / Nostr

9. DeFi Derivatives, Ready to Take Off

Financial scenarios are always the most compatible high-value and real yield applications for blockchain. GMX's globally shared liquidity pool and Gains' efficient synthetic solutions continue to lead the market. In this bull market, futures agreements from Aevo and Whales have also sparked a pre-market explosion. We believe that derivatives are one of the best long-term fundamental narratives.

Focus Targets: GMX / Gains / Drift / Apex / Aevo / Whales