Can a name change lead to a rise? The hype around narrative upgrades
The narrative upgrade track is an emerging concept that is no longer limited to a single project transformation, but encompasses a broader scope.Author: Frontier Lab
Introduction
The cryptocurrency market entered a bull market phase after 2024, with investment opportunities continuously emerging. Historical data shows that the cryptocurrency market exhibits alternating upward trends, where BTC typically leads the overall industry upward, followed by other tokens.
However, unlike previous bull markets, most Altcoins have shown relatively weak performance in this cycle.
Although BTC has risen by 70.86% in 2024, most Altcoins have not surpassed BTC's gains and some have even declined. For example, the performance of major leading projects in their respective sectors is as follows:
ETH (the leader of public chains) has increased by 55.65% from the beginning of 2024 to now;
ARB (the leader of the ETH-L2 sector) has decreased by -37.81% from the beginning of 2024 to now;
LDO (the leader of the LSD sector) has decreased by -34.84% from the beginning of 2024 to now;
STX (the leader of the BTC-L2 sector) has increased by 30.46% from the beginning of 2024 to now;
This rare phenomenon can be explained from both macroeconomic and cryptocurrency market perspectives:
Macroeconomic perspective: The Federal Reserve has maintained a high interest rate environment of 5.25%, creating uncertainty in the expected returns of risk capital, leading to fewer new investors compared to previous bull markets.
Cryptocurrency industry perspective: A significant increase in supply, with the market value of tokens being unlocked each month remaining high, has left investors hesitant.
While the overall cryptocurrency market has performed modestly, there are still some standout sectors. For instance, Meme tokens and AI tokens have achieved gains surpassing Bitcoin this year, attracting widespread attention from investors. Additionally, some tokens focusing on the "narrative upgrade" of crypto assets have been overlooked by most investors, and these narrative upgrade tokens are expected to become a new focal point for market speculation this year.
Definition of the Narrative Upgrade Sector
The narrative upgrade sector is an emerging concept that is no longer limited to a single project transformation but encompasses a broader scope.
The core of this concept lies in comprehensively upgrading and reforming projects to rejuvenate them and regain competitiveness. Specifically, the narrative upgrade sector can be realized through changing the narrative approach of a project, adjusting the project's fundamental logic, upgrading business models, launching innovative products, adjusting token mechanisms, merging with other projects, or even undergoing brand upgrades.
In summary, as long as a project can reshape its image through transformative measures, it can be classified as part of the narrative upgrade sector. The introduction of this concept injects new vitality into project development and opens new avenues for industry advancement. Therefore, the narrative upgrade sector will become one of the important directions for future project development and will play a significant role in future growth.
Advantages of the Narrative Upgrade Sector
User base: Most projects within the narrative upgrade sector have typically experienced at least one bull and bear market, possessing stable communities and user bases. In contrast, new projects often require time to establish their own communities and cultivate loyal users. The consensus gained by narrative upgrade sector projects makes it easier for them to be accepted by the market for their new transformations.
High market trust: In narrative upgrade sector projects, the teams are generally more stable. After long-term operations, the teams have a deeper understanding of user preferences and market characteristics. Compared to new projects, the teams of older projects find it easier to gain market and user trust. New project teams need time to establish themselves and gain recognition in the market.
Strong resource integration: After long-term operation in the cryptocurrency market, these projects have accumulated various resources, including capital recognition, familiarity with more market-making teams, and exposure to more operational strategies, which is an advantage that new projects cannot match.
Richer experience: In the cryptocurrency market, projects not only need to have advantages in their own business and operations but also need to understand the operational rules of the entire market. Experienced teams can seize opportunities at different time points in the market as much as possible.
Although the saying "invest in new, not old" is widely circulated in the cryptocurrency market, the reason older projects can survive in the market for a long time, especially those that have experienced bull and bear markets, is that they continue to actively promote project transformations. This is precisely because they possess various advantages that new projects do not have, providing momentum for token price increases.
Classic Cases
Vanar Chain
Before the Narrative Upgrade
Vanar Chain's predecessor, Terra Virtua, was founded by Gary Bracey and Jawad Ashraf. The Terra Virtua mainnet launched in 2018, primarily focusing on establishing a public chain project based on the metaverse, initially as a subscription-based VR (Virtual Reality) and AR (Augmented Reality) content platform supporting cryptocurrency payments, falling under the categories of public chains and the metaverse.
After the Narrative Upgrade
First narrative upgrade: In 2020, Terra Virtua underwent its first narrative upgrade as the entire cryptocurrency market began a surge in NFT issuance. Terra Virtua followed industry trends by adding an NFT service platform on top of its metaverse business, transforming itself into a digital collectibles (NFT) platform project.
Second narrative upgrade: In 2023, Terra Virtua underwent a second narrative upgrade, changing its project name from Terra Virtua to Vanar Chain and replacing the original project token TVK with VANRY. Users holding TVK could exchange it for the new token VANRY at a 1:1 ratio. This project upgrade involved not only changes to the project name and token but also proposed changes to its main business, adding Gamefi narratives on top of the original metaverse and NFT public chain, allowing users to experience and unlock games in an interactive metaverse player lounge, earning rewards such as Virtua XP and free collectibles in the process.
Third narrative upgrade: In 2024, Vanar Chain underwent a third narrative upgrade, announcing a partnership with AI giant NVIDIA to introduce multiple AI solutions into its products, including AI-driven IP tracking for brands, AI analytics for creators, AI-enhanced identity verification, and building and reviewing DApps with AI. Vanar integrated NVIDIA technology into the Vanar platform, providing developers with tools to create advanced AI solutions, thus adding AI narrative to its offerings.
In summary, through three narrative upgrades, Vanar Chain has transformed from an initial metaverse public chain project into a public chain project that spans metaverse, NFT, Gamefi, and AI narratives. Vanar Chain occupies popular narratives across various periods in cryptocurrency, keeping it a hot topic in the market.
Narrative Upgrade Effect
Although Vanar Chain occupies the metaverse, NFT, Gamefi, AI, and public chain sectors, its current focus is more on AI and public chains, leading us to choose FET, which also spans AI and public chains, for comparison.
Beam
Before the Narrative Upgrade
Beam's predecessor, Axie 420, was founded by Marco van den Heuvel, Tommy Quite, and Mark Borsten in July 2021, initially aimed at enabling players from low-wage countries to play Axie Infinity. However, in September 2021, it was renamed Merit Circle, expanding its focus from solely Axie Infinity to more popular games and the metaverse. Merit Circle's main business was to establish a gaming guild similar to YGG, implementing a scholarship system and SubDao model, primarily providing funding to players to earn in-game currency, with Merit Circle receiving a share, effectively functioning as a large gold farming studio, falling under the guild category of the Gamefi sector.
After the Narrative Upgrade
In 2022, as the entire cryptocurrency market entered a bear market phase, the prices of various project tokens plummeted, and Gamefi sector revenues sharply declined. If Merit Circle had continued with its original scholarship system and SubDao model, it would have been outperformed by YGG across various businesses, and the existing structure and system would not have generated profits or supported Merit Circle through the cryptocurrency winter. Therefore, Merit Circle decisively transformed in 2022.
In 2022, Merit Circle began restructuring its DAO and repositioning itself as a gaming DAO. Merit Circle divided its DAO into multiple segments, with its main segments currently including investment, studios, games, and infrastructure (the Beam gaming chain built on Avalanche), and exchanged the original token MC for BEAM at a 1:100 ratio.
Investment: The funding for project investments comes from raising 100 million USDC on the Copper platform, with an investment committee formed according to the MIP-2 proposal, comprising members such as Flow Ventures LP, Sergei Chan, CitizenX, and Maven11. The invested projects are clearly marked on its official treasury, mainly including held USDC, blue-chip coins, NFT assets, and tokens/equities related to blockchain games. The investment segment is currently the main source of income for Merit Circle.
Studios: The studios bring value to other segments within the DAO ecosystem and serve as the birthplace of creative projects within Merit Circle DAO, collaborating with existing projects and projects from non-web3 companies. This mainly includes three aspects: Grants: divided into research grants and development grants, provided to researchers of specific projects and developers of projects. Edenhorde NFT collection: initially created by illustrator Andy Ristaino, with the IP story behind the NFT written by Celia Blythe, the author and historian of "Edenhorde," with a total of eight episodes released. This primarily involves releasing the project's own NFTs. Merit Circle Tactile: another NFT creative project, Merit Circle Tactile consists of 650 product boxes designed for the community, containing seven wearable items (T-shirts, hoodies, scarves, and hats). Holding a Merit Circle Tactile NFT grants access to these product boxes, distributed in two phases to proposal creators, contributors, and through lotteries for Edenhorde NFT holders.
Games: Promoting cooperative games to acquire game users; providing players with tutorials for popular blockchain games; offering early access to games for Merit Circle gaming community users, where players can earn rewards (NFTs, lotteries, etc.) by completing tasks.
Infrastructure: The currently released infrastructure product is the Beam gaming chain built on Avalanche. According to the MIP-28 proposal, the original token MC was converted to token BEAM at a 1:100 ratio, but the name Merit Circle will continue to serve as the overall brand associated with the Beam network and BEAM. Subsequently, BEAM will be used as the gas consumption and node staking token for the Beam chain, and games have already begun to be released on the Beam chain.
In summary, Merit Circle has transformed from a gaming guild into a comprehensive gaming industry platform that invests in the primary market of blockchain games, collaborates on game development, builds distribution channels for blockchain games, and constructs infrastructure. This business transformation has broadened Merit Circle's scope and enhanced its profitability.
Narrative Upgrade Effect
Now that Merit Circle has become a comprehensive gaming industry chain, we choose XAI, which is also a gaming chain, for comparison.
Fantom
Before the Narrative Upgrade
Fantom was founded in December 2019, positioning itself as a public chain. At that time, with various projects emerging on the Ethereum chain, high gas fees and network congestion on Ethereum became prevalent. Fantom aimed to address scalability and transaction limitations, providing a high-speed, low-cost alternative for developers building dApps and users seeking to interact with DeFi protocols.
After the Narrative Upgrade
On May 18, 2024, members of the Fantom community initiated a series of governance proposals regarding the Sonic network, which primarily included: Sonic will be a new L1 chain and will bridge natively to Ethereum and other chains via an L2 cross-chain bridge. This was referred to in the market as the Sonic upgrade.
The Sonic upgrade mainly includes: the creation of a new L1—Sonic Network, which significantly improves network TPS by adopting a parallel EVM approach, increasing it from the original 30 to over 2000, enhancing the user experience several levels, making operations very smooth for developers and users; simultaneously, the design of node storage has reduced requirements for nodes by over 90%, greatly improving block synchronization speed; and to attract more liquidity on-chain, new public chains are allowed to bridge to Ethereum's L2; a new native token S will be issued, allowing users to exchange FTM tokens for S at a 1:1 ratio.
In summary, although the FTM upgrade did not change the original narrative, it qualitatively improved the project's performance and entered the parallel EVM sector.
Comparison with Similar Sector Projects
After the upgrade, Fantom became a parallel EVM public chain, and we compare it with SEI, which is also a parallel EVM public chain:
Other Projects
Nervos Network
Nervos Network, as a public chain project, was initially aimed at addressing the scalability limitations faced by traditional networks like Bitcoin and Ethereum. Nervos's blockchain uses a proof-of-work (PoW) consensus and supports smart contract development as a layer-1 protocol, also incorporating a series of layer-2 scaling solutions to facilitate high-capacity use cases. Nervos's native token (CKByte or CKB) allows users and developers to apply for storage space on the Nervos blockchain according to their holdings.
On February 13, 2024, Nervos Network announced the launch of a new product: RGB++, marking the beginning of its transformation from a public chain similar to Bitcoin and Ethereum to a project focused on Bitcoin layer-2, leveraging its advantages to concentrate on Bitcoin's second-layer scaling.
In 2024, CKB's performance was remarkable, rising from 0.00397U at the beginning of the year to a peak of 0.0379U, with an increase of over 900%.
Arweave
Arweave was initially a decentralized data storage protocol aimed at optimizing long-term permanent storage through its unique proof of access mechanism and token economic model. Since February 2024, Arweave has launched a new product, Arweave AO, changing the fundamental narrative of Arweave from decentralized storage to a public chain. Arweave AO features low fees, high-speed computing capabilities, permanent data storage, and a friendly environment for contract deployment and state management, giving Arweave a significant advantage in public chain competition.
In 2024, AR's performance was impressive, rising from 9.64U at the beginning of the year to a peak of 49.55U, with an increase of 414%.
Sector Risks
During the development of projects, improving existing projects and enhancing narrative levels is often a response to the challenges faced in their original sectors, as they lose competitiveness and undergo new transformations. Although projects may attract renewed market attention, they also face long-term development risks.
Projects in the narrative upgrade sector may only superficially improve without truly addressing existing issues. It remains uncertain whether the team has performed well in overcoming previous problems. Therefore, such projects carry significant development risks.
Even if a project undergoes transformation and attracts some market attention, it may not achieve the expected results and still face the risk of not being accepted in the market, potentially remaining indifferent as before.
Thus, when conducting investment research in the narrative upgrade sector, investors need to engage in deep thinking and comprehensive evaluation to ensure that new transformations genuinely address existing issues and can lead to long-term development. They should also recognize that market acceptance of new transformations may not be high, necessitating thorough research.
Conclusion
Narrative upgrade sector projects refer to those that quickly gain market attention and funding by changing their original narratives, project logic, business models, launching revolutionary new products, reforming token structures, or merging with other similar projects, potentially changing project names. These projects typically possess advantages such as broad consensus, stable teams, rich resources, and experience, enabling them to rapidly enhance token prices and brand influence, and re-enter the competitive stage.
However, these projects often experience failures or lackluster phases, leading to market skepticism about their prospects. Investors may have concerns about their future development due to past poor performance, worrying about whether the project can sustain growth and resolve previous issues.
As a result, narrative upgrade sector projects can easily be overlooked by investors. Nevertheless, the potential of these projects remains immense, as upgraded older projects often exhibit remarkable token price performance, bringing a sense of rebirth to the market. Therefore, these projects still deserve significant attention from the market and are expected to see more narrative upgrade projects emerge in 2024.
