Finding Bull Market Catalysts: Crypto Consumer Applications

I'm tired of seeing yet another L2 come to market with a $5 billion FDV.

I’m more annoyed by seeing another Uniswap, Aave, or Liquity fork on these new L2s.

And I am no longer keen on buying yet another infrastructure protocol (data availability, oracle, blockchain as a service, etc.) at a high valuation because these protocols do not accrue any value to the token.

What I want is innovation! Where is the innovation?

Finding internal catalysts for a bull market

In my last blog post, I covered the dull state of the market and shared potential external catalysts to drive the market higher.

An ETH ETF and a change in the U.S. government’s stance on cryptocurrencies will play a role, but more external catalysts such as rate cuts will drive the bull run in the later stages.

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

Ignace | DeFi Research · May 15 Read the full article

However, I really like the positioning for the 2020-21 bull market.

It’s a perfect storm: governments have to print money due to Covid (external catalyst), and people are bored at home speculating on NFTs, farming 1000% DeFi yield farms, the Metaverse, and working on games on Axie Infinity or other P2E games.

We have several innovations in the crypto space that keep us engaged.

But so far, this bull run has been pretty boring.

I believe that for this bull market to turn into a super cycle, we need strong internal innovation (on top of the macro) to attract retail investors and keep them interested while we all see paper earnings inflate.

If we fail to stimulate the vitality of the internal crypto casino, even crypto natives will choose to simply hold BTC, ETH, SOL because the risk/reward ratio makes no sense for trading in the PvP market.

Currently we are just farming points or speculating on memecoin.

Memecoin is interesting, and there are signs that some new retail users have joined the market.

But if you don’t have a special edge, your chances of making money with memecoin are slim. Influencers, market makers, and pump-and-dump groups take advantage of naive traders.

Points are a dwindling airdrop trend where the rich get richer, as rewards are usually based on 1) deposited funds and 2) trading volume. You can at least earn more airdrops by creating multiple wallets and performing manual trades.

But most airdrops are linear right now, and LayerZero’s anti-sybil efforts could be a game changer. Oh, Ruslan…

So, what innovations in this cycle can reignite retail enthusiasm?

You know I am bullish on the re-staking narrative as it is a playground for printing new tokens and re-staking can increase yields and demand for ETH.

But re-staking is not an attractive story for the retail sector. Few people actually understand or care what a “universal inter-subject work token” is.

No, re-staking is a whale’s game. Although innovative AVS may attract more tech-savvy retail investors.

Re-staking Navigation: A Guide to Eigenlayer Active Validation Services

Ignace | DeFi Research · January 30 Read the full article

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

Rune Protocol launch guide: Beyond the initial hype

Ignace | DeFi Research · April 16 Read the full article

But due to technical complexity and lack of clear value proposition, even tech-savvy Ethereum/Solana supporters are not very interested. Although there are some interesting videos of Chinese grandmas trading BRC20.

No.

We need something that will reinvigorate our own animal-degenerate spirits and attract a whole host of new retail users, and (unlike most memecoins) actually make money for them.

It’s hard to predict what the current cycle of NFT/P2E will look like, but I’m betting on a new generation of consumer applications.

There are already signs of this happening.

Popular Consumer Applications

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

• Fantasy Top

• AUO Technology

• Pump up some fun

• YOLO Game

“User numbers remain small (none exceeds 20,000 DAUs), but from a monetization perspective their success represents a shift in crypto-native business models toward proprietary distribution built at the application layer.” - Excerpt from the Consumer Ecosystems report of Our Network newsletter.

To be honest, I was very skeptical about Blast L2 (powered by Paradigm) because it’s just another L2 that lets you earn points. And I don’t plan on depositing any ETH to earn points.

But Fantasy Top got me into Blast. It turns out I don't care that much about another L2. I care about the applications on L2.

Fantasy Top estimates the engagement of Twitter influencers. You can earn Blast Gold + FAN Points, or you can trade your hero cards.

If you want to try Fantasy Top, please join through my referral link: DefiIgnas

It’s a niche protocol that combines speculation with crypto Twitter. But just as Facebook started as a platform for Harvard students to communicate and later expanded to other Ivy League schools, Fantasy Top could expand its reach to include famous Twitter or Instagram influencers.

Elon Musk cards will be in high demand.

Growth outside of crypto is what I expect from this cycle. Which application is most likely to achieve this?

Friend Tech briefly succeeded in doing just that: attracting Only Fan girls? But they didn't stay for long. Friend Tech is currently at the crossroads of reinventing itself, launching another points program for its homegrown L2.

Pumpdotfun is a great platform. Yes, I don't like speculating on memecoin, but Pumpdotfun as a platform has found a good PMF in the current market.

The game of YOLO is also largely based on guessing, but there’s one consumer app that blends guessing and social elements better than the others: Polymarket.

Polymarket Prediction Market

Polymarket is a prediction market that allows trading of binary event-driven options with a settlement price of either $1 or $0.

You can choose to exit your position before expiration.

For example, you can bet on who will win the US presidential election, or whether ETH will replace BTC in 2025.

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

Vitalik has praised Polymarket many times:

During the ETH ETF approval speculative boom, Polymarket had about 2,000 users per day. While still too few, the potential for growth is huge.

Polymarket just raised $70 million from Vitalik Buterin and Founders Fund (Peter Thiel’s VC firm). I wouldn’t be surprised if they launch an airdrop soon.

There is only one consumer app I am more optimistic about: Farcaster

Farcaster - Decentralized Twitter

Farcaster reportedly raised a crazy $150 million at a $1 billion valuation!

Compared to other funding rounds in 2024, Eigenlayer raised $100 million, Optimism raised $89 million, and Berachain raised $69 million.

Farcaster is the 0 to 1 innovation of this cycle, combining the features provided by social media (Twitter) with the best features of cryptocurrency. It could become a super cryptocurrency app, combining social interactions with financial transactions such as payments and trading.

This is good enough so that if X suddenly disappears, all Crypto Twitter users can instantly move to Farcaster.

Join Farcaster via my invite link and get 50 WARP tokens for free.

Farcaster saw a massive growth in users in February when $DEGEN community tokens were airdropped to early users. Amazingly, daily active users continued to grow, reaching 59k.

Lens Protocol is another layer of decentralized social media with 19,000 daily users.

Despite having 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).

Lens unexpectedly announced a migration from Polygon PoS to one of zkSync’s ZK Stack hyperchains. This is a major win for zkSync and a loss for Polygon.

What other consumer applications do you see emerging? I asked this question on X and received quite a few interesting comments.

New Ways to Make Money

I am bullish on consumer applications as they innovate in user reward mechanisms and token economics, providing a way out of the low float, high FDV problem that has plagued this cycle.

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

Furthermore, speculating on the growth of Farcaster or Lens may seem complicated at this point, but one thing I know about cryptocurrency is that it always finds unique ways to reward early users.

As an early user of Farcaster, I received a few thousand dollars in DEGEN airdrops. In fact, Farcaster also has 47 "Scenecoins" (social memecoins) that you have never heard of.

Lens has its own memecoin, but I'm sure Lens will launch a $LENS airdrop in the future. I'm not sure about Farcaster.

Your airdrop will depend on your engagement, so posting once or twice won’t earn you much, however, these platforms offer a way to exit the current “rich get richer” dot meta where your airdrop depends on the size of your pocket.

Even on Fantasy Top or Polymarket, the rewards are more elitist: if you are smart enough, you can get excess returns.

These consumer apps may have different token economics and may escape the low float, high FDV trap. Friend tech airdropped 100% to the community. I hope other consumer apps will follow FT's lead.

A fair and generous Polymarket will shake up the market, potentially attracting more venture capital funding and user attention from infrastructure products to consumer applications.

Seriously, we do need more successful consumer applications this cycle! For our industry. I like Picolas’ point here that we need something to get crypto out of its current slump.

Other areas also have the potential to attract a large number of new users. Telegram <> Ton integration and new crypto games.

You can read more about my bullish arguments for the Ton ecosystem and dApps here:

5 low-key Layer 1 products worth paying attention to

Ignace | DeFi Research · May 1 Read the full article

Another division is Gamefi.

To learn about the latest hit GameFi games and their innovative token economics and incentives, I teamed up with our Pink Brains researcher Skipper.

Be sure to follow him on Twitter for more GameFi content.

GameFi: 3 Top Web3 Games Worth Playing for Early Adopters

Let's face it. Most previous GameFi programs lacked the "play" in "earn by playing."

Additionally, the “earning” element is often paid to users in utility tokens, but these tokens do not accrue any value — because these unplayable games lack appeal.

This will change in 2024.

For the first time, we’re seeing player-centric Web3 games gain mainstream attention.

Here are 3 early Web3 games worth your attention:

1. Rainbow Hero

Nyan Heroes is a lot like Overwatch, but with cats piloting giant mechs. This Solana-based first-person shooter entices players with its extensive arsenal of weapons and dynamic action like climbing.

After only 2 quarters of pre-alpha testing, Nyan Heroes has become one of the top 5 most popular games on the Epic Games Store.

The free-to-play game launched its $NYAN token on May 21 and still has a market cap of $25 million, but is already listed on Bybit, Gate.io, HTX, MEXC, and Backpack Exchange — a good sign for future price action as long as the team keeps working on it.

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

Bullish Catalysts for Nyan Heroes:

• Ranked among the top 30 most popular games on the Epic Games Store.

• The pre-alpha version was downloaded over 200,000 times within two weeks of its release.

• The full game with integrated NFTs will be released in early 2025.

How to get rewards as an early player:

• Waiting for the next pre-alpha season announcement.

• Play the third season of the game.

• Gain CATNIP points by improving your MMR ranking.

Nyan Heroes Twitter is here.

2. Metalcore

Metalcore is like Battlefield meets the Star Wars saga, all powered by a Web3 open economy with the potential to earn while playing.

Thanks to Unreal Engine 5, Metalcore is one of the first Web3 games that can truly rival mainstream games in terms of graphics and overall aesthetic — and the game is still in closed beta.

This first/third person territory war shooter combines PVP and PVE elements

Bullish Catalysts for Metalcore Music:

• Thanks to UE5, the graphics in Web3 games are of the highest quality.

• Won the Best Blockchain Game Award 2024 at the Global Blockchain Awards.

• Metalcore has raised a total of $20 million and is backed by Delphi Digital, Arrington and Spartan Group.

How to get rewards as an early player:

• Start playing Metalcore after turning on access.

• Focus on high-quality cooperative play, not just scoring.

• Players can also earn $MCG tokens through strategic gameplay and tactical decisions.

Metalcore Twitter is here.

3. Shrapnel

Shrapnel is a first-person shooter game developed on Unreal Engine 5 with earn-while-you-play elements.

This Avalanche-based FPS is still in early development, but the game’s airdrop event with a prize pool of over $100,000 has attracted a lot of interest from Web3 creators and is starting to attract attention from Web2.

Bullish Catalysts for Shrapnel:

• The prize pool for playing the airdrop event is up to $100,000.

• The Emmy-winning team includes members from productions such as Halo, Call of Duty and Westworld.

• Shrapnel has one of the largest communities of creators in the Web3 gaming space.

How to get rewards as an early player:

• Purchase the Shrapnel Extraction Pack NFT to play.

• Play during the next in-game airdrop event (to be announced soon).

• The top 1,000 players on the leaderboard share the prize pool.

Don’t get caught up in over-optimism

Consumer applications need to attract mainstream users beyond the crypto community.

But Brave offers a valuable lesson: protocol success does not necessarily correlate with token performance.

Despite BAT being one of the most successful consumer applications, its tokens are still trading at 2017 prices.

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

So research when to take profits.