Every cycle in the cryptocurrency market is characterized by new narratives that capture the attention and investment of individuals and companies. Understanding these trends is crucial for strategic decision-making.
Looking back at past bull cycles, it is evident that each year brings forth new narratives that shape the development of the crypto market. In 2017, the focus was on initial coin offerings (ICOs). In 2019, decentralized finance (DeFi) took center stage. And in 2021, nonfungible tokens (NFTs) and the metaverse emerged as significant trends.
So, what can we expect to be the main narratives in 2024? While social media provides some obvious trends like Ordinals, restaking, airdrops, real-world assets (RWAs), oracles, and GameFi, there are other trends that may not be on your favorite influencers’ radar. Here are three notable theses:
1. 2024 will witness intense competition among chain development kits (CDKs), superchains, layer-3s, and appchains. Platforms like Polygon, Optimism, and Arbitrum have learned from Ethereum’s success and are evolving beyond their current roles. They are building interconnected ecosystems of their own. A prime example is Flipkart, an Indian online store, which launched its own blockchain using Polygon’s CDK instead of being built on the Polygon network. Other companies like Immutable X and Libre have followed suit. This strategic move benefits the entire ecosystem by creating platforms for other companies to build upon and expanding Polygon’s role from a generalist blockchain to an ecosystem of specialized blockchains.
2. Bitcoin is undergoing an “Etherization” with Ordinals. The Ordinals protocol has brought attention to Bitcoin’s potential beyond being a store of value. It has popularized the use of the Bitcoin network for creating NFT collections and issuing fungible tokens. Solutions like BVM allow the creation of a Bitcoin L2 using networks such as Polygon and Celestia. Numerous testnets have already been created, and proposals for Bitcoin updates are being discussed to enhance programmability. This development is reminiscent of the DeFi wave on Ethereum in 2019, but now happening on the world’s leading blockchain.
3. Digital identities will gain prominence. The interest in digital identities stems from the crypto underground as well as governments’ focus on central bank digital currencies (CBDCs). Brazil’s Central Bank, for instance, has been conducting tests with major banks and companies, with the potential for CBDCs to serve as a foundation for digital identities. Airdrops also play a role in driving the adoption of digital identities. To create a sustainable method, future major airdrops may incorporate a validation layer based on digital identities, as seen with Linea.
In 2024, advancements in CBDCs and airdrops will likely bring the spotlight to discussions and solutions related to digital identities. Traders from both mainstream and “degen” communities will contribute to these discussions.
Lugui Tillier, the chief commercial officer of Lumx, a Web3 studio in Rio de Janeiro, holds investments related to Polygon, Optimism, and the Ordinals protocol. However, the opinions expressed in this article are his own and should not be taken as legal or investment advice.