In Search of Internal Catalysts for the Bull Run

In my last blog post, I covered the boring state of the market, sharing potential external catalysts for the market to pump.

An ETH ETF and a change in the US government’s stance on crypto will do the trick, but more external catalysts like interest rate cuts will fuel the bull run later on.

The Boring State of the Market & What’s Next #2

IGNAS | DEFI RESEARCH

Yet I really liked the positioning of 2020-21 bull run.

It was a perfect storm: due to Covid governments had to print money (external catalyst) while people were bored at home speculating on NFTs, farming 1000% DeFi yield farms, Metaverse, and game-working on Axie Infinity or other P2E games.

We had multiple innovations in crypto that kept us engaged.

But this bull run is boring so far.

I believe that for this bull market to turn into a super-cycle, we need strong internal innovations (on top of macro) to attract retail and maintain them entertained while we all see our paper gains inflate.

If we fail to invigorate the internal crypto casino, even crypto natives will choose to simply hold BTC, ETH, SOL as risk/reward ratio won’t make sense to trade in the PvP market.

Currently, we just farm points or speculate on memecoins.

Memecoins are fun, and there are signs indicating that some new retail users have joined the market.

But if you don’t have a special edge, chances of earning money on memecoins aren’t great. Influencers, market makers, and pump-and-dump groups feast on naive traders.

Points is a declining airdrop trend where the rich get richer, as rewards typically depend on 1) deposited funds and 2) trading volume. You could at least earn more airdrops by creating multiple wallets and executing manual transactions.

But most airdrops are now linear, and LayerZero anti-sybil efforts could is changing the game. Oh Ruslan…

So, what innovations of this cycle can bring retail fervor back?

You know that I’m bullish on restaking narrative as it’s a playground to print new tokens and restaking boosts yields and demand for ETH.

But restaking isn’t a sexy story for retail. Few will actually understand or care to read what “Universal Intersubjective Work Token” is.

Nah, restaking is a game for whales. Although innovative AVSs could be more tech-savvy retail.

BTCFi with Ordinals and Runes is my second most favorite innovation/narrative of this cycle. I explained why in my previous posts:

Navigating Runes Protocol Launch: Beyond the Initial Hype

IGNAS | DEFI RESEARCH

But due to technical complexities and lack of a clear value proposition even tech-savvy Ethereans/Solana degens aren’t too interested in it. Although there were some funny videos of Chinese grandmas trading BRC20s.

Nope.

We need something that will revive our own animal degen spirits and will attract masses of new retail users AND (unlike most memecoins) actually make money for them.

Hard to predict what it could be the NFTs/P2Es of the current cycle, but my bet goes to new-generation consumer apps.

There are already signs of it happening.

Top Consumer Applications

On May 7, four new social apps briefly entered the Top 15 protocols by fees generated

• Fantasy Top
• Friend Tech
• Pumpdotfun
• YOLO Games

“User numbers are still small (none have over ~20,000 DAUs), but their success from a monetization perspective represents a shift in crypto-native business models towards building proprietary distribution at the app layer.” - From Consumer Ecosystem report by Our Network newsletter.

Honestly, I was very sceptical of Blast L2 (backed by Paradigm) as it’s just another L2 with points to farm you. And was not planning to deposit any ETH to farm points.

But Fantasy Top onboarded me to Blast. It turns out, I don’t care that much for another L2. I care about the Apps on that L2.

Fantasy Top enables speculating on Twitter influencers’ engagement. And you earn Blast Gold + FAN points or can trade your Hero’s cards.

It’s a niche protocol that merges speculation with Crypto Twitter. But just like Facebook began as a platform for Harvard students to connect and later expanded to other Ivy League universities, Fantasy Top could potentially broaden its reach to include prominent Twitter or Instagram influencers.

Elon Musk’s card would be in high demand.

This growth outside of the crypto circle are my hopes for this cycle. Which app has the highest chance of achieving it?

Friend tech has briefly managed to do that: attracting Only Fan girls 😅 But they didn’t stay for long. Friend Tech is currently at the cross-roads of reinventing itself with yet another points program for their native L2.

Pumpdotfun is a great one. Yes, I don’t like speculating on memecoins, but Pumpdotfun as a platform found a great PMF at the current stage of the market.

YOLO games, too, are mostly based on speculation, but there’s one consumer app that blends speculation and social elements better than others: Polymarket.

Polymarket Predictions Market

Polymarket is a prediction market allowing to trade binary event-driven options that resolve to $1 or $0.

You have the option to exit positions before maturity.

For example, you can bet on who will win US presidential elections or if ETH flips BTC by 2025.

I like it as it uses the collective wisdom of the crowd for real-time sentiment analysis. It helps to understand the world events clearer.

Vitalik had praised Polymarket on several occasions:

During the ETH ETF approval speculation craze, Polymarket had ~2K daily users. Still too few, but potential to grow is big.

Polymarket just raised $70M from Vitalik Buterin and Founders Fund (Peter Thiel’s venture capital firm). I wouldn’t be surprised if they launched airdrop sometime soon.

There’s only one consumer app that I’m even more bullish: Farcaster

Farcaster - Decentralized Twitter

Farcaster raised crazy $150M at reportedly $1B valuation!

Comparing to other fundraises in 2024, Eigenlayer raised $100M, Optimism raised $89M, and Berachain raised $69M.

Farcaster is a 0-to-1 innovation of this cycle, combining what social media (Twitter) has to offer with the best of crypto. It could become the super-crypto app where social interactions are combined with financial transactions such as payments, trading, and much more.

It’s already good enough so if X suddenly disappeared, all Crypto Twitter users could move to Farcaster in no time.

Farcaster experienced a huge pump in users in February when $DEGEN community token was airdropped to early users. Surprisingly, the daily active users continued to grow, reaching 59k.

Lens Protocol is another layer for decentralized social media with 19k daily users.

While Lens has fewer users, Lens is actually the only network that stores user content and identities on chain. Farcaster’s posts and interactions are off-chain (while user profiles are on-chain).

In a surprising move, Lens announced migrating from Polygon PoS to one of zkSync’s ZK Stack hyperchains. A major win for zkSync and a loss for Polygon.

What other consumer apps are you bullish on? I asked on X and received quite a few interesting comments.

New Meta of Earning Money

I’m bullish about consumer applications because they innovative on user reward mechanisms and tokenomics, providing a way out from the low-float, high FDV issues plaguing this cycle.

The problem is: there are still too few consumer apps popular enough!

Plus, speculating on the growth of Farcaster or Lens might seem complex at the moment, but one thing I know about crypto is that it always finds unique ways to reward early users.

I got a few thousand USD in DEGEN airdrop for being an early Farcaster user. In fact, Farcaster has 47 more “Scenecoins” - social memecoins - that you’ve never heard of.

Lens has its own memecoins, but I’m quite confident that Lens will launch the $LENS airdrop sometime in the future. I’m not so sure about Farcaster.

Your airdrop will depend on your engagement so posting once or twice will not get you much, however, these platforms offer an exit from the current “rich-get-richer” point meta where your airdrop depends on your pocket size.

Even on Fantasy Top or Polymarket the rewards are more meritocratic: if you’re smart enough you can make outsized gains.

These consumer apps are likely to have different tokenomics and might escape the low-float, high FDV trap. Friend tech airdropped 100% to the community. I hope other consumer apps follow FT’s steps.

A fair and generous Polymarket would shake the market, potentially attracting more VC funding and user attention from infrastructure products to consumer apps.

Seriously, we really need more successful consumer apps this cycle! For the sake of our industry. I like the take by Picolas here that portrays we need something to lift crypto out of the current degeneracy.

There are other sectors that have potential to attract a large cohort of new users. Telegram <> Ton integration and new crypto games.

You can read more about my bullish thesis on Ton ecosystem and dApps here:

Top 5 Under-the-Radar Layer 1s to Keep an Eye On

IGNAS | DEFI RESEARCH

Another sector is Gamefi.

For the latest in top GameFi games, along with their innovative tokenomics and incentive mechanisms, I worked with our Pink Brains researcher, Skipper.

GameFi: 3 Top Web3 Games ‘worth’ Playing for Early Adopters

Let’s face it. Most previous GameFi projects were missing the ‘play’ from ‘play-to-earn.’

Moreover, the ‘earn’ element was usually paying users with utility tokens that would generate zero value — due to the lack of traction in these unplayable games.

This changes in 2024.

For the first time, we’re seeing player-focused Web3 games that can attract mainstream traction.

Here are 3 top early-stage Web3 games worth your time:

1. Nyan Heroes

Nyan Heroes is a lot like Overwatch if you added cats piloting giant mech fighters. This Solana-based FPS is captivating gamers with an arsenal of weapons combined with dynamic movement like wall climbing.

Nyan Heroes is among the top 5 most wishlisted games on the Epic Games Store — after only 2 seasons of pre-alpha gameplay.

This F2P game just launched its $NYAN token on May 21, which still sits at a $25 million market cap, but was already listed on Bybit, Gate.io, HTX, MEXC, and Backpack Exchange — a promising sign for future price action, as long as the team continues to deliver.

The studio behind the game, 9 Lives Interactive, raised $3 million in a funding round earlier in March.

Bullish Catalysts for Nyan Heroes:

• Ranked in top 30 most-played games on Epic Games Store.
• Over 200,000 downloads within 2 weeks of pre-alpha.
• Full game release with integrated NFTs coming in early 2025.

How to gain rewards as an early player:

• Wait for the next pre-alpha season announcement.
• Play season 3 of the game.
• Earn CATNIP points by ranking your MMR higher.

Nyan Heroes twitter here.

2. Metalcore

Metalcore is like Battlefield combined with the Star Wars saga, all powered by a Web3 open economy with play-to-earn potential.

Metalcore is among the first Web3 games that can really compete with mainstream titles in terms of graphics and overall aesthetics, thanks to the Unreal Engine 5 — and the game is still in closed beta.

This 1st/3rd person territorial warfare shooter combines both PVP and PVE elements

Bullish Catalysts for Metalcore:

• Highest quality graphics in Web3 gaming thanks to UE5.
• Won the 2024 Best Blockchain Game award at the Global Blockchain Awards.
• Metalcore raised a total of $20 million and is backed by Delphi Digital, Arrington, and Spartan Group.

How to gain rewards as an early player:

• Start playing Metalcore when access is opened.
• Focus on quality cooperative gameplay, beyond just score.
• Players will earn $MCG tokens for strategic playing and tactical decisions as well.

Metalcore Twitter here.

3. Shrapnel

Shrapnel is a first-person extraction shooter with play-to-earn elements, built on Unreal Engine 5.

This Avalanche-based FPS is still in early development, but the play-to-airdrop events with +$100,000 prize pools are generating a lot of interest among Web3 creators and starting to attract the attention of Web2.

Bullish Catalysts on Shrapnel:

• Play-to-airdrop events with $100k prize pools.
• Emmy award-winning team members from titles like Halo, Call of Duty & Westworld.
• Shrapnel has one of the biggest creator communities in Web3 gaming.

How to gain rewards as an early player:

• Buy a Shrapnel Extraction Pack NFT to be able to play.
• Play during the next play-to-airdrop event (to be announced).
• Rank in the top 1,000 players on the leaderboard for a share of the prize pool.

Don’t Get Sucked in Being Too Bullish

Consumer apps need to appeal to mainstream users beyond the crypto community.

But Brave provides a valuable lesson: a protocol’s success doesn’t necessarily correlate with token performance.

Despite being one of the most successful consumer apps, the BAT token still trades at its 2017 price.

The likelihood of any dApp featured in this blog outperforming BAT in the long term is low.

So please study when to take profits.

Disclaimer：

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