2023 has been a year of the narrative. So far, we’ve had stories proliferate throughout crypto Twitter (CT) such as the following (in no particular order):
-
Arbitrum airdrop
-
DEXes or on-chain casinos
-
ZK or Zero Knowledge e.g. Polygon’s ZK-eVM
-
AI
-
LSD or Liquid Staking Derivatives
-
NFT-Fi
These narratives, whether organic or manufactured, have fuelled the prices of their related coins to x heights, all the more impressive in the midst of a bear market and a so-called recession.
For example, there is the ETH Shanghai update on the near horizon in March, where a significant amount of supply will be unstaked. Speculators either speculate that there will be a magnificent dump (as if stakers waited for so long to sell their ETH at a price < $10k) or, that the released supply would then flow to other liquid staking derivatives, namely, Lido Finance (LDO), Rocket Pool (RPL), Frax (FXS) or lesser known projects such as Stader (SD).
LSDs have always been an innovative lego piece in the world of DeFi. LSDs allow stakers to have their cake and eat it too, by accruing staking rewards AND getting back a derivative token that lets them play around and take advantage of other opportunities such as in LP farms.
Sometimes, a hot narrative will enthral CT like a flash in a pan, and you had better be quick, because they usually don’t last for every long. Narratives such as $ROSE for Valentine’s Day or $MASK to stand in for Elon Musk. Lord only knows what can possibly be meme’ed into existence next.
It is much better to stay away and stay focused on identifying what the potentially lasting narratives will be; those that can endure beyond a day or week, and well into the next bull run.
Unfortunately, I have no alpha to give you on what these future narratives will be. Crypto is a fickle space and right now still a highly PvP environment. Without an edge, you are prone to becoming exit liquidity, akin to arriving at a party too late.
What I have been thinking about and intrigued by are the following niche use-cases of crypto that have yet to gain mainstream mindshare, probably due to not having a breakthrough protocol:
-
Bitcoin DeFi
-
Web3 social and messaging apps
-
Money streaming
-
Solana MEV
-
Insurance
Will the above ever take off in a meaningful way? Nobody knows.
But it is certainly better to be early and wait, than to be late and dumped on. And it is often preferable to think of a thesis first, gain conviction, and then wait for the crowd to come around.
I’ve been caught wavering between shock, speechlessness and a kind of smirking watching these narratives, dipping my feet in some, and also getting burnt for being generally bad at trading.
But no matter my risk inclinations, I’m taking note of the stronger narratives -- the ones that can capture imaginations in a single word or image -- and getting myself ready for beyond an echo bubble.