Introduction

Since 2024, the cryptocurrency market has entered a bullish phase, with numerous investment opportunities emerging. Historical data indicates that the cryptocurrency market typically sees alternating upward trends, with BTC usually leading the industry’s upward momentum, followed by other tokens. However, unlike previous bull markets, most Altcoins have underperformed in this cycle. Despite BTC’s 70.86% increase in 2024, most Altcoins failed to surpass BTC’s gains, and some even declined. For example:

• ETH (leader in public chains) has increased by 55.65% since the beginning of 2024.

• ARB (leader in the ETH-L2 track) has decreased by 37.81% since the beginning of 2024.

• LDO (leader in the LSD track) has decreased by 34.84% since the beginning of 2024.

• STX (leader in the BTC-L2 track) has increased by 30.46% since the beginning of 2024.

This unusual 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 on risky investments, leading to fewer new investors compared to previous bull markets.

• Cryptocurrency Industry Perspective: There has been a significant increase in supply, with the market value of tokens released each month remaining high, causing investors to be extremely cautious.

Although the overall cryptocurrency market performance has been mediocre, there are still some standout segments. For instance, Meme tokens and AI tokens have achieved gains surpassing Bitcoin within the year, attracting widespread investor attention. Additionally, some tokens focusing on “narrative upgrades” have been largely overlooked by most investors, yet these tokens with the narrative upgrade concept are likely to become new focal points for market speculation this year.

Definition of the Narrative Upgrade Track

The narrative upgrade track is an emerging concept that goes beyond single project transformations to encompass a broader scope. The core of this concept lies in comprehensive upgrades and reforms to projects, making them revitalized and competitive again. Specifically, the narrative upgrade track can be achieved through changing the project’s narrative, adjusting its basic logic, upgrading its business model, launching innovative products, adjusting its token mechanism, merging with other projects, and even brand upgrades.

In short, any project that can reshape its image through transformative measures can be classified as part of the narrative upgrade track. This concept injects new vitality into project development and opens new paths for industry progress. Thus, the narrative upgrade track will become an important direction for future project development and will play a significant role in future growth.

Advantages of the Narrative Upgrade Track

• Established User Base: Most projects in the narrative upgrade track have typically experienced at least one bull and bear market, possessing a stable community and user base. In contrast, new projects usually require time to build their community and cultivate loyal users. The consensus gained by narrative upgrade track projects makes it easier for them to gain market acceptance for their new changes.

• High Market Trust: Teams in the narrative upgrade track are more stable. Having operated for a long time, these teams have a deeper understanding of user preferences and market characteristics. Compared to new projects, older projects’ teams are more likely to gain market and user trust. New project teams need time to establish themselves in the market and gain recognition.

• 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 access to more operational strategies, which new projects cannot compare with.

• Richer Experience: In the cryptocurrency market, besides having advantages in their own business and operations, projects also need to be familiar with the market’s overall operations. Experienced teams can seize opportunities at different market phases as much as possible.

Despite the widespread notion of “favoring the new over the old” in the cryptocurrency market, the reason older projects can survive in the market for the long term, especially those teams that have experienced both bull and bear markets, is that they continue to actively promote project changes. This is because they possess various advantages that new projects do not have, which also provides momentum for token price increases.

Classic Case - Vanar Chain

Before the Narrative Upgrade

Vanar Chain, formerly known as Terra Virtua, was founded by Gary Bracey and Jawad Ashraf. In 2018, the Terra Virtua mainnet went live, focusing on establishing a metaverse-based public chain project. Initially, Terra Virtua operated as a subscription-based VR (Virtual Reality) and AR (Augmented Reality) content platform that supported cryptocurrency payments, positioning itself within the public chain and metaverse tracks.

After the Narrative Upgrade

First Narrative Upgrade: In 2020, Terra Virtua underwent its first narrative upgrade. During this period, the cryptocurrency market witnessed a surge in NFT issuance. Following the industry trend, Terra Virtua expanded its metaverse business to include an NFT service platform, transforming itself into a digital collectibles (NFT) platform project.

Second Narrative Upgrade: In 2023, Terra Virtua executed its second narrative upgrade by changing its name to Vanar Chain and replacing its original project token TVK with VANRY. TVK holders could exchange their tokens for VANRY at a 1:1 ratio. This upgrade not only involved changing the project name and token but also introduced changes to the main business operations. The upgrade added a GameFi narrative to the existing metaverse and NFT public chain, allowing users to experience and unlock games in an interactive metaverse lounge while earning Virtua XP and free collectibles as rewards.

Third Narrative Upgrade: In 2024, Vanar Chain carried out its third narrative upgrade by announcing a partnership with AI giant NVIDIA. This collaboration introduced several AI solutions into their products, including AI-driven IP tracking for brands, AI analytics for creators, AI-enhanced identity verification, and AI-assisted DApp development and review. By integrating NVIDIA’s technology into the Vanar platform, Vanar provided developers with tools to create advanced AI solutions, adding an AI narrative to its story.

In summary, through three narrative upgrades, Vanar Chain has evolved from a metaverse public chain project into one that spans the metaverse, NFT, GameFi, and AI narratives. Vanar Chain has consistently aligned with the cryptocurrency market’s hottest trends, keeping itself at the forefront of market discussions.

The Effects of Narrative Upgrades

Although Vanar Chain encompasses the metaverse, NFTs, GameFi, AI, and public chain tracks, its current focus is more on the AI and public chain tracks. Therefore, we chose a project that also spans both AI and public chain tracks: FET.

Classic Case - Beam

Before the X Narrative Upgrade

Beam, previously known as Axie 420, was founded by Marco van den Heuvel, Tommy Quite, and Mark Borsten in July 2021. Its initial purpose was to enable players from low-income countries to play Axie Infinity. However, in September 2021, it was renamed Merit Circle, expanding its focus from just Axie Infinity to more popular games and the metaverse. Merit Circle’s main business was to establish a game guild similar to YGG, creating a scholarship system and SubDAO model. They funded players to engage in gold farming, with Merit Circle taking a share of the profits, effectively operating as a large-scale gold farming studio within the GameFi track’s guild category.

After the Narrative Upgrade

In 2022, the entire cryptocurrency market entered a bearish phase, causing the prices of various project tokens to plummet, and revenues from the GameFi track sharply declined. If Merit Circle had continued with its original scholarship system and SubDAO model, it would have struggled to generate profits and possibly could not have survived the crypto winter, especially since YGG surpassed it in every aspect. Thus, Merit Circle decisively transformed in 2022.

In 2022, Merit Circle began restructuring its DAO and redefining its position, aiming to become a game DAO. Merit Circle divided the DAO into multiple sections, with the main ones currently being investment, studio, games, and infrastructure (Beam game chain built on Avalanche), and converted the original MC tokens to BEAM tokens at a ratio of 1:100.

Investment: The project’s investment funds came from raising 100 million USDC on the Copper platform. An investment committee formed according to MIP-2 was responsible for investments, with members including Flow Ventures LP, Sergei Chan, CitizenX, and Maven 11. The invested projects are clearly marked on its website treasury, including holdings in USDC, blue-chip coins, NFT assets, and chain game track-related tokens/equity. Currently, the investment section is Merit Circle’s main revenue source.

Studio: The studio brings value to other sections of the DAO ecosystem and is the source of creative projects within the Merit Circle DAO, collaborating with existing projects and non-web3 companies. This includes:

Grants: Divided into research grants and development grants, provided to project researchers and developers respectively.

Edenhorde NFT Collection: Initially created by illustrator Andy Ristaino, with the IP story behind the NFTs written by historian Celia Blythe, the author of “Edenhorde.” Eight episodes have been released so far. This project focuses on releasing its own NFTs.

Merit Circle Tactile: A creative NFT project offering 650 product boxes to the community, each containing seven wearable items (T-shirt, hoodie, scarf, and hat). Holders of the Merit Circle Tactile NFT can receive these boxes. The NFT distribution occurred in two phases, targeting proposal creators, contributors, and Edenhorde NFT holders via lottery.

Games: Promotes partnered games to attract users; provides learning tutorials for popular chain games; offers early access to games for Merit Circle community users, with rewards (NFTs, lotteries, etc.) for completing tasks.

Infrastructure: The current infrastructure product is the Beam game chain built on Avalanche. According to MIP-28, the MC tokens were converted to BEAM tokens at a 1:100 ratio. The Merit Circle name continues as the overarching brand related to the Beam network and BEAM. BEAM serves as the gas and node staking token for the Beam chain, which has started releasing games.

In summary, Merit Circle has transformed from a game guild into a comprehensive gaming industry platform through investing in primary market chain games, co-developing games, building a game distribution platform, and developing infrastructure. This transformation has broadened Merit Circle’s business scope and enhanced its profitability.

The Effects of Narrative Upgrades

Merit Circle has now evolved into a comprehensive gaming industry chain, so we chose another gaming chain, XAI, for comparison.

Classic Case - Fantom

Before the Narrative Upgrade

Fantom was established in December 2019, positioning itself as a public chain. At the time, the emergence of various projects on the Ethereum chain led to high gas fees and network congestion. Fantom aimed to address these issues of scalability and transaction limitations, positioning itself as a high-speed, low-cost alternative for developers building dApps and users interacting with DeFi protocols.

After the Narrative Upgrade

On May 18, 2024, Fantom community members initiated a series of governance proposals regarding the Sonic Network, which included the following key points: Sonic would be a new L1 chain, bridged natively to Ethereum and other chains, and this upgrade was referred to as the Sonic upgrade.

The Sonic upgrade mainly included:

Creation of a new L1 - Sonic Network: The upgraded network significantly increased the network’s TPS (transactions per second) by adopting parallel EVM, raising it from 30 to over 2000. This upgrade drastically improved the user and developer experience, making operations smooth and highly efficient.

Node Storage Design: The upgrade reduced node requirements by over 90%, greatly enhancing block synchronization speed.

Cross-Chain Bridging: To attract more liquidity, the new public chain allowed bridging to Ethereum’s L2.

New Native Token S: Users could exchange FTM tokens for S tokens at a 1:1 ratio.

In summary, although the FTM upgrade did not change its original narrative, it significantly improved the project’s performance and positioned it within the parallel EVM track.

Comparison with Projects in the Same Track

Post-upgrade, Fantom became a parallel EVM public chain. To compare, we look at SEI, another parallel EVM public chain:

Other Projects

Nervos Network

Nervos Network, as a public chain project, initially aimed to address the scalability limitations faced by traditional networks like Bitcoin and Ethereum. Nervos’ blockchain uses Proof of Work (PoW) consensus and supports the development of smart contracts as a layer-1 protocol, and it also includes a series of layer-2 scaling solutions to facilitate high-capacity use cases. The native token of Nervos (CKByte or CKB) allows users and developers to claim storage space on the Nervos blockchain in proportion to their holdings.

On February 13, 2024, Nervos Network announced the launch of a new product: RGB++, marking Nervos Network’s transition from a public chain similar to layer-1s like Bitcoin and Ethereum to a project specializing in Bitcoin layer-2 solutions. By leveraging its own advantages, Nervos aims to focus on Bitcoin’s layer-2 scaling.

In 2024, CKB performed remarkably well, rising from $0.00397 at the beginning of the year to a peak of $0.0379, an increase of over 900%.

Arweave

Arweave initially was 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, which has fundamentally changed the narrative of Arweave. The primary narrative shifted from decentralized storage to a public chain. Arweave AO offers low fees, high-speed computing capabilities, permanent data storage, and user-friendly contract deployment and state implementation, giving Arweave a significant advantage in the public chain competition.

In 2024, AR also performed outstandingly, increasing from $9.64 at the beginning of the year to a peak of $49.55, a rise of 414%.

Track Risks

During project development, many projects undertake improvements and narrative upgrades to address the challenges in their original tracks and regain competitiveness. While such projects may attract renewed market attention, they also face long-term development risks.

Narrative upgrade projects may only make surface-level improvements without truly resolving original issues. It remains uncertain whether the team can effectively overcome previous problems, leading to significant development risks for such projects.

Even if a project undergoes transformation and garners some market attention, it may not achieve the desired results and still face the risk of not being accepted post-market expansion, or even maintaining previous stagnation.

Therefore, when conducting investment research in the narrative upgrade sector, investors need to deeply consider and comprehensively evaluate whether the new changes genuinely solve original problems and can lead to long-term development. It is also important to recognize that market acceptance of new changes may not be high, necessitating thorough research.

Summary

Narrative upgrade track projects refer to those that quickly gain market attention and financial support by changing their original narrative, project logic, business model, launching revolutionary new products, reforming token structures, or merging with other similar projects, possibly even changing the project name. These projects typically have broad consensus, stable teams, abundant resources, and experience, enabling them to quickly boost token prices, brand influence, and re-enter the competitive stage. However, such projects often go through periods of failure or obscurity, leading to market skepticism about their prospects. Investors might be hesitant about their future development due to past poor performance, worrying whether the project can sustain growth and resolve previous issues. Consequently, narrative upgrade track projects are easily overlooked by investors. Nevertheless, these projects hold great potential, and upgraded old projects often demonstrate impressive token price performance, bringing a sense of revival to the market. Therefore, these projects deserve significant attention and are expected to see more narrative upgrade projects emerge in 2024.

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