Top 10 Promising Crypto Narratives of 2023: ZK, ETH Validator Middleware, Liquid Staking Derivatives...

Written by: Minty

Compiled by: TechFlow

The cryptocurrency market often fluctuates with changing narratives. Below are the 10 potential narratives and catalysts I'm closely watching in 2023.

1. ETH Validator Middleware

Services like EigenLayer, which use staked ETH to secure other protocols, have significant growth potential as they open up new revenue streams for validators.

They offer higher capital efficiency and unlock numerous new opportunities for validators willing to take on additional risk and responsibility for greater returns. Protocols like Rocket Pool may benefit from middleware such as EigenLayer—validators might re-stake their ETH to EigenLayer in the future to earn extra yield.

2. Optimism Bedrock Upgrade

Bedrock is one of the most substantial updates to the Optimism ecosystem, improving performance and reducing fees.

Bedrock also enables the use of any proof system on Optimism, such as ZK proofs.

If Optimism rollups fall out of favor in the future, the ecosystem can seamlessly transition to better solutions instead of gradually becoming obsolete.

3. crvUSD

There's widespread speculation that CurveFinance’s stablecoin, crvUSD, will launch in 2023. This could bring new revenue streams to the Curve ecosystem, along with novel liquidation mechanisms and more.

Projects that stand to benefit the most are likely Curve, Convex, and Frax, all of which play key roles within the Curve ecosystem. One strategy I’m considering is locking $CVX in 0xCLever to gain auto-compounding rewards.

4. GHO

Alongside Curve, AAVE also plans to launch its stablecoin, $GHO, in 2023. There’s speculation about potential changes to tokenomics, but nothing has been confirmed yet.

Unless $GHO brings more value accrual to $AAVE token holders upon launch, any direct benefits appear limited in my view.

5. Fantom

With AC’s return, FVM, strong runway, and a high focus on user experience, Fantom may see a revival in 2023.

While there are solid projects on Fantom, many have inflationary tokenomics, making it difficult to hold long-term in this market.

If Fantom rebounds, the native token $FTM and SpookySwap will undoubtedly gain some traction.

6. Volatility Trading

One long-standing issue with AMMs is impermanent loss, which erodes LP positions when prices move away from their starting point.

Projects like GammaSwap and CVI are creating instruments that allow you to trade volatility. This could open up a new speculative channel and lead to methods for hedging impermanent loss or major price swings.

7. GameFi

I still believe GameFi projects represent one of the areas with the greatest growth potential in crypto, though the main challenges remain fragmented liquidity and the lack of a central marketplace.

In 2023, I’ll continue diving deeper into Treasure DAO and the $MAGIC ecosystem, as I believe it has a strong chance of becoming the go-to destination for new GameFi projects. Blockchains like ImmutableX are also worth watching.

8. Liquid Staking Derivatives (LSD)

With Ethereum’s upcoming Shanghai upgrade, liquid staking products have seen renewed hype. It’s speculated that once withdrawals are enabled, more users will be willing to stake their ETH.

That said, related projects have already rallied in recent days, so I personally won’t FOMO. Remember to do your own due diligence.

The liquid staking products I’m closely monitoring are Rocket Pool ($RPL), due to its synergy with EigenLayer, and frxETH from FraxFinance.

9. NFTFi

Contrary to what some may think, I believe NFTs are here to stay, and new products are being built to enable emerging economies around them. Examples already exist—some projects offer perpetual trading of NFTs, while others tokenize NFTs for speculation.

Right now, I’m researching GumBall Protocol further, but other new projects will likely emerge as well.

10. The Rise of ZK

Many ZK rollups are expected to reach full mainnet in 2023, such as zkSync and StarkWare, with many more entering the race.

As this technology matures, I believe many cutting-edge applications will emerge—products that wouldn't be possible on Optimistic Rollups.

The ZK projects I’m currently watching are Scroll and Polygon ZK.

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