The copycat season is coming. Is there any hope for these tracks?

Author: WOO

1. Background: After leverage cleanup, the alt season continues

On December 10, the crypto market crashed, with Bitcoin falling 5%. Excluding Bitcoin and Ethereum, altcoins (Total 3) faced a more serious decline of up to 14%.

At that time, WOO X Research published an article on this situation, defining the decline as "long leverage liquidation, bull market structure unchanged", and the market also showed strong resilience, with Bitcoin rebounding to $100,000 and Ethereum challenging the $4,000 mark again.

At the same time, the alt season that we are most concerned about can be judged by BTC.D. When the market fell on 12/10, BTC.D rose to 58%, and after the decline was repaired, BTC.D also fell to 56%. It can be judged that the alt season is still established and continues.

The logic of the rise of altcoins is: when external funds enter the crypto market, such as investors who have never been exposed, traditional financial institutions, Web 2 companies, national pensions, etc., the first choice must be Bitcoin, and then some funds will flow into the altcoin sector with a lower market value.

Now, in addition to the recently popular AI Agent track, which continues to grow, other sectors including Meme, DeFi, RWA, and L1/2 have also shown strong upward momentum in currency prices. The overall altcoin seems to have a bright future.

However, some sectors seem to be forgotten by the market. Other sectors have risen sharply, but BTC ecosystem-related, NFT and GameFi are indifferent. Do these sectors still have a future? What are the recent developments? Let WOO X Research show you.

Reference: coingecko

2. BTC Ecology Related

BTC ecology generally refers to The core narrative point of BTCFi and related protocols and assets such as inscriptions and runes is:

Liberate Bitcoin liquidity: The DeFi market is dominated by Ethereum, and Bitcoin is mostly idle. It does not pursue the efficiency of capital use. Compared with the requirements of ecological applications and transaction speed, the Bitcoin ecosystem has far better security requirements than other public chains. Therefore, the user profile of Bitcoin is different from other public chains. Most of them are institutions and large users who have higher requirements for security and hold huge amounts of Bitcoin. Therefore, they focus on long-term, stable and deterministic passive income.

During the period from April to July this year, the protocol that triggered the Bitcoin pledge boom was Merlin Chain, with the highest total locked volume of the protocol reaching 2.64 billion US dollars. In addition to Bitcoin, the assets accepted also support head inscriptions and NFT projects such as ORDI and RATS. However, after Merlin issued the coin, the price was not as good as expected, and there were many controversies at the time. Currently, the TVL of the entire chain has dropped sharply, and the market attention is no longer there. It has become clear that the EVM cross-chain mapping technology has been falsified.

Reference: DefiLlama

The relevant agreement that can be expected at present is the Bitcoin re-pledge agreement Babylon, which has completed three rounds of public financing, totaling 9600 10,000 US dollars, the current TVL is 5 billion US dollars, ranking first in the Bitcoin ecosystem, and the overall protocol ranks 12th. It can be seen that the market still expects the "Bitcoin interest collection" model to operate successfully. The focus of observation is whether Babylon can safely and continuously generate income after it officially generates interest, further boosting TVL, and then driving the overall ecological outbreak.

Bitcoin native meme assets: The emergence of Bitcoin inscriptions in May 2023, due to its own technical characteristics, makes asset issuance have the attributes of openness and transparency. At that time, the market hated VC coins. Inscription assets undoubtedly launched a "grassroots" revolution from the bottom up, allowing retail investors to trade in a fair environment. Whether the asset price can maintain momentum depends on the consensus and cohesion of the community. It is a natural meme coin issuance place. Among them, ORDI, SATS, RATS and other inscription assets have increased by hundreds of times.

However, inscriptions have also been criticized for wasting Bitcoin block space and creating on-chain garbage. Runes can be seen as an evolved version of inscriptions, allowing more efficient transfers, bundling multiple token transfers in a single transaction, and setting multiple transfer destinations (BRC-20 can only transfer one token at a time), alleviating Bitcoin UTXO expansion and network congestion caused by the use of BRC-20 and other token standards.

In addition to being Bitcoin ecological assets, inscriptions and runes are also classified as meme coins, but the meme coin track is iterating very quickly. The current mainstream narrative is meme coins that cooperate with AI Agents. The trend of inscriptions and runes is no longer there. In addition, the head exchanges have cancelled support for the inscription asset format, which also means that if the related assets want to be revived, it will be very difficult.

Reference: Magic Eden

2021, in Web 3 games. Driven by DeFi Summer and the concept of the metaverse, GameFi, which combines finance with blockchain games, has become a major narrative in the industry and attracted a large number of traditional game companies to develop GameFi games. Until 2024, Web3 practitioners still pin their hopes for Massive Adoption on games. This is the biggest narrative in the game track and the biggest consensus that VCs and traditional game companies are always willing to invest in this field. Secondly, the blockchain technology behind chain games is around Massive Adoption, which can give players asset confirmation, which is also the main driving force for the X to Earn model to continue for most chain games.

But until 2024, Web 3 Gaming has not solved the death spiral caused by the overly Ponzi-like token economic model. When the room for profit-seeking becomes smaller, the incentive for users to play will also be reduced. This can also be seen from the following data:

• The transaction volume growth rate is negative: Compared with 2021 and 2022, the daily transaction volume of blockchain games this year has also dropped to between US$20 million and US$30 million, with a negative growth rate.

Reference: Footprints

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  Reference: Footprint

  Web 3 Gaming The current situation is: the old problems cannot be solved, and the overall use of the sector is poor. If this situation continues, it will be difficult to gain the favor of investors even if the crazy copycat season comes.

  The current key project that Web 3 Gaming can pay attention to is Xterio, which is incubated and invested by the well-known Web 2 game company FunPlus. It will soon issue a coin. This project is a game infrastructure platform that emphasizes the use of AI technology within the platform and wants to be linked to AI in narrative. If you expect Web 3 Gaming to be revived, you can first refer to the trend after Xterio issued a coin.

  4. NFT

  In fact, NFT has appeared as early as 2017, but it has not seen a full-scale outbreak until 2021. In addition to the release of the ERC-721 standard to improve the infrastructure, the market has also realized that NFT is unique compared to homogeneous tokens and can be applied in personal digital identity, artworks and other fields, but the main reason for the initial promotion is the celebrity effect.

  At that time, NBA Top Shot was launched as an NFT, allowing players to collect the wonderful moments of NBA stars on the court, which attracted the active participation of many crypto enthusiasts and fans. Among them, the famous star LeBron James' dunk in the 2020 Finals had a transaction volume of up to 230,000 US dollars.

  Then, blue-chip NFT projects such as BAYC, Azuki, Doodles, and Pudgy Penguins appeared, ushering in the NFT Summer of 2021

  Due to the low liquidity and small number of NFTs themselves, it is easy to increase prices, and it is easy to have a wealth effect in a bull market. The myth of Free Mint to wealth freedom is everywhere, but with the advent of the bear market in 2022, liquidity has been withdrawn from the currency circle, and NFT liquidity is more scarce than that of general currencies. Therefore, capital flight is obvious, and the overall liquidity of NFT has been withdrawn.

  From the figure below, we can also see that the overall number of transactions of Opensea has slowed down significantly in 2022. In addition to the lagging competitiveness of Opensea products, the main reason is still that the NFT market is not favored.

  

  Reference: Dune

  So is there hope for NFTs? What are the recent narratives and actions?

  • Opensea is about to launch new products

  • Magic Eden issues coins

  • Pudgy Penguins issues coins

  It can be seen that NFT platforms and blue-chip projects have been active recently. Both the Ethereum and Solana chain blue-chip NFT projects have shown obvious signs of recovery in coin prices. Is the NFT market really coming back?

  

  The above are just basic cases of collaboration between AI Agent and NFT. The characteristic of the currency circle has always been to speculate on new things rather than old ones. NFT is expected to pick up again with the help of AI Agent.