GMGM, Happy Monday Friend!

Okok so this is a long one today looking at blocmates Top 5 2023 Narratives, VC Top 5 2023 Narratives and a few bonus ideas to keep an eye on.

Impactful week this week with J Powell speaking on Tuesday, followed by CPI numbers on Thursday.

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The TLDR of what’s inside

🔥 The Big Topic: blocmates vs VC top 5 2023 Narratives.🗞 Hot Crypto News: Ethereum Devs eye up Feb for Shanghai test net, Coffeezilla lands a KO blow to Logan Paul and FTX spends $40m on food, flights and frollicks.👀 Updates Across the Block: FactorDAO public sale on CamelotDEX, OpenSea supports Arbitrum Nova, NFTPerp 10x leverage on BAYC, TapiocaDao alpha drop info on $USD0 stable coin and MORE.🛡 Chart of the day: $ETH, Will she? Won’t She? $1600?

🔥 The Big Topic

blocmates vs VC top 5 2023 Narratives

2022 sucked. Crypto is dead (viva la crypto!) and TradiFi fell off a cliff.

We all got rugged more than ever, including the $3.5bn lost through hacks and exploits, with insider politicians trading their way to 10-figure bags.

But if you are still here, reading this…well done because we’re still here too.

It’s time to forget about the fraudsters, the liquidators and that unseen DVD featuring SBF and sweet Caroline by jumping into the blocmates Top 5 Narratives of 2023 as well as a look inside Venture Capitals Top 5.

Top 5 2023 Narratives

1. Memeable microcap memecoins

Okay, Okay… before you judge hear me out first!

And this NFA, DYOR this is a boom or bust kinda narrative that happens every year that turns $69 bags into 6 figures.

We will see another run in new memeable microcap memecoins that have a disproportionate amount of gains in comparison to the well-established, well branded and well-funded tech teams that are curating innovation for mass adoption.

But right now, no worries about that because we’re here for the X’s right?!

Bullish on microcaps, as always as played smart they can literally change your life in 24 hours.

Wallet tracking is vital to get ahead of the market so feel free to check out our Wallet Tracking guide here on how to find, assess and monitor the best whales in crypto.

2. Arbitrum

Wen wen wen air drop?!

It has to be some time right?!

Despite 2023 potentially being the year of ZK, this optimistic role has played the game very well.

Arbitrum was arguably the best play of 2022 and it doesn’t appear to be slowing down any time soon with its phat massive 52% TVL market share of the entire Layer 2 ecosystem and relentless marketing team.

There are a lot of strong projects in the various sub-ecosystems, including GameFi, NFT, DeFi and Dexes (Arbi Dex Wars 2023 LFGGG!) that are building on Arbitrum that either has a Q1 launch, upcoming catalyst OR strong teams behind them.

Some projects to that might be worth keeping an eye on are: HandleFi, Vertex Protocol, NFTPerp, GMX, DPX, FactorDao, Lyra Finance, CamelotDex and Umami (NFA and DYOR these are just ideas!)

3. Decentralised Stablecoins

There's going to be a battle in 2023.

One you probably won’t hear much of on crypto Twitter because it's not sexy like “The Curve wars” or “The Arbi Dex wars.”

But this one will probably be one of the most important because it could shape the way we position ourselves in DeFi and how we interact with CeFi.

The battle of the decentralised stablecoin.

Here are 4 potential players to keep an eye out on:

1. Redacted Cartels $DINERO - white paper coming Jan ‘23 but this thread by MrStiive gives a good speculative look.

2. AAVE’s $GHO - will be an overcollateralized dollar-backed stablecoin.

3. Curves $crvUSD - will be an overcollateralized stablecoin backed by crypto assets.

4. TapiocaDao’s $USD0 - the first omnichain stablecoin allowing for lending and borrowing across 12 chains.

Winner takes all or will each of these become its own ecosystem winners? I’m thinking the latter at this stage but it’s a battle we’ll be watching closely.

4. TradFi, Regulations

TradFi…please come back! We need you!

That might be an unpopular opinion to die-hard decentralised blockchain maxis out there but it is undeniably true.

At the time of writing the total market cap of cryptocurrency right now is sitting at $859m which is smaller than Apple, Microsoft, Google and Amazon. But we are almost 3x the size of Twitter CEO Elon Musk’s now side project…Tesla…counts for something right?!

TradFi holds the keys to:

1. The money printing machine aka Liquidity

2. Bridge the TradFi whales into DeFi

3. Onboarding a mass market of normie investors once TradFi feels safe using DeFi

4. The handshake that allows partnerships like Reddit, Instagram and Twitter to happen

5. Controversially TradFi holds the hand to the key to regulation through political agendas

Regulation is coming and we get a head start. We’re in the trenches with 5 minutes left. on the clock to score the winning touchdown as Former Senator Toomey lobs the new Stablecoin Bill 2.0 into congress. Does it make it? That’s left to be decided.

But what it has done is spark a greater, wide discussion around the matter.

We don’t know what form of regulations are coming but we care to prepare ourselves before welcoming the next cycle of normies in with open arms (remember…frens don’t dump on frens!)

5. LSD aka Liquid Staking Derivatives

In last week’s Ape Enclosure, we looked at What are Liquid Staking Derivatives and how you can position yourself in the run-up into Ethereum’s Shanghai Upgrade.

This is a multi-month, possibly multi-year narrative that may come in cycles as we see Twitter chatter increases as well as seeing greater functionality of these liquid assets.

Staked Ethereum will be at the forefront with ATOM, KSM, DOT taking a small portion of its share for the ecosystem maxis. If you are looking to play the narrative then here are the top governance tokens as per CoinGecko.

What will be interesting is to what extent the above, decentralised stablecoins play in the next generation of liquid staking and which will form the strongest partnership to become one of the most commonly borrowed stablecoins.

VCs Top 5 2023 Narratives

Firstly a notable mention to CJCJCJCJ_ and 0xkyle for their TLDR threads.

Views expressed below are collated from the likes of CoinBase, a16z Capital, Pantera, HashKey Capital, Darma Capital, Messari, NewOrder and more.

Neutral bullish on Bitcoin and bullish AF on Ethereum as VC’s look to move blue-chip “safe” havens with institutional investors doing the same whilst ETH finally flips BTC

Sorry Saylor, Bitcoin’s narrative of inflation hedge and digital gold was false!

Top 5 Venture Capital 2023 Narratives.

1. Regulation and stablecoins

Regulation, regulation, and more regulation.

Every report brought up the topic of regulation and stablecoins. Regulation is coming to crypto, and this year we may see a framework and some regulatory clarity so that crypto number go up…again (please!)

For mass adoption to happen a framework needs to be set and TrasFi needs clarity so that this ecosystem of transparent trustless transactions can be trusted again.

This brings us to stablecoins. VC’s are bullish AF on stablecoins. Especially those that are depeggable as it is getting ever more likely that we will see more fiat-backed stablecoins with Hashkey Capital stating that in order for this to happen, and on a large scale, the regulations will need to be in place.

Paul Veradittakit from Pantera sees stablecoins as one of the most popular applications of a real-world asset being tokenised (proven by the total stablecoin market cap) and in 2023 he’s bullish on the rise of RWA’s coming on-chain.

It might not be time to ditch your stables just yet as the use case for them may increase as a framework is created which may be the trigger of the next cycle of generational wealth creation.

2. The Development of Zero-Knowledge Proof (ZKP)

Vitalik calls ZK the end game and VC’s can see the potential that zero-knowledge holds.

Privacy is a hot topic with ZKP potentially being the leader in the field. ZK essentially works by using a prover, a verifier, and a mathematical algorithm to prove something without revealing underlying information (hence the name zero knowledge). It’s lightweight and therefore has much better scalability than say an optimistic roll-up.

Paul Veradittakitul from Pantera again sees a huge upside to ZK’s with application to TradFi systems like credit scores and taxes.

There were notable mentions of Succinct Labs, Risczero, Espresso Systems, o1 Labs and The Matter Labs.

3. Layer 2 and the FAT Protocol Thesis

Everyone wants faster, cheaper, smarter transactions and that’s what Layer 2s are designed for.

The general consensus is we’ll see the continued growth of the popular L2’s like Arbitrum, Polygon, and Optimism (I know…but it’s hard to fade the $1.2bn TVL).

But what isn’t clear yet is whether or not this will be a winner takes all market or have a fair distribution. Personally, given the aggressive PvP nature of crypto…I’d go as far as saying it is winner takes all…just look at Ethereum as the dominating L1.

We’ve already started to see a shift from FAT application to FAT protocol thesis where the focus moves to protocol growth vs network growth.

Finding a good investment might mean taking into account the growth of the dAPP rather than the network to find hidden gems.

Interestingly NewOrder sees App Specific blockchains built on Layer 2s (aka Layers 3) as compelling competitors to Cosmos. App Chains may see growth throughout 2023 with a move to a modular blockchain rather than a monolithic app-chain ecosystem, bringing a new wave of dApp innovation. dYdX’s migration could see some of the highest quality perps on the market.

4. DeFi’s Continued Growth and Development

This whole sweet Caroline and SBF romance tragedy highlighted the epic failure of centralisation and how so many lies, brides and 100x liquidations can be hidden until capitulation happens.

It feels like this area is a no-brainer because of the way DeFi works operating in a transparent, trustless on-chain manner that’s auditable for everyone to see…just how it should be.

All of the VC’s agree that DeFi’s potential is sitting there waiting to be unlocked but first:

1. UI/UX needs to feel CEXy with DeFi functionality aka CEXy DeFi

2. Institutes are needed for mass onboarding.

3. The exploits… need to stop… $3.5bn was rugged last year which set us back.

Hashkey Capital is extremely bullish as they highlighted the explosion of adoption into crypto wallets in 2022 with the likes of Reddit, Robinhood, Twitter and Instagram will create a seamless path from Web2 degens into Web3 degens with cool avatars.

Notable mentions were Lido and Rocketpool (Messari) as the next blue chips with LDO taking the top spot, GMX and 1Inch look strong with Pantera highlighting self-custody wallets, synthetic assets, and prediction markets to have a greater use case.

5. EigenLayer’s 2023 Potential

The EigenLayer threadooors have been out in full force on Twitter recently so it was interesting to see Coinbase and NewOrder being fundamentally bullish.

Essentially EigenLayer provides the opportunity for Ethereum Validator stakers to restake their earned Ethereum to help validate and secure other networks bringing greater flexibility and opportunity for staked your Ethereum rewards.

Developers can benefit massively from using the EigenLayer as they will have their middleware run and secured by Ethereum Validators without the worry of having to launch their own protocol thus saving time and improving efficiency, after all Ethereum is battle tested.

Ethereum is still the most popular network with bear market tings seeing “smart money” seeking safety in trusted areas on the marketing like BTC and ETH. More money = more opportunities = more devs doing what devs do best.

Conclusion

On the face of it, VC’s are still bearishly bullish and a lot has to happen in order for up only to begin. Will mass adoption happen this year? Probably not. as Web3 is still comparatively tiny but the potential is there.

The biggest takeaway is that there needs to be a real-world application for the technology in order for mass adoption to actually happen with regulations being the biggest road blocker.

Our Take

I hear ya.

How do I even position myself to make magical internet beans with all that jargon?! It’s true, you’d probably need a team of college degen dropout analysts to truly digest all of these narratives to ape accordingly and not get rugged.

I’d say pick 1-3 areas of interest, do some base-level research, ignore the boring and ride the fun stuff hard and fast as we don’t want another year of ramen!

All of these narratives and up only can only happen if we see an inflow of capital coming back into the market. After all we have dropped from $175bn down to sub $40bn in TVL across all chains.

I couldn’t fit it all in but here 5 other key points worth mentioning.

• Solana rebounds in 2023

• No such thing as a bullish unlock, watch out for dYdX, SAND, GMT, OP, 1INCH and APT.

• Data insights and analytics eg Nansen, NxyData and DefinitiveIo (makes sense as only smart degens are left)

• The death of JPEGS in NFTs

• Nori and FlowCarbon are interesting takes on carbon credits

🗞 Hot Crypto News

🐮 Bullish

Ethereum Devs eyeing up February for the Shanghai Upgrade public test net to go live ahead of March’s potential launch.

Solana handles RPC downtime, as another bug hits the blockchain taking out public RPC’s but remains functional. If the increase in user participation from the recent BONK launch can’t break Solana…we might be in for something!

Mt Gox Repayments have been pushed back 2 months with repayments set to begin March 10th.

Coffeezilla delivers the KO blow to YouTuber and viral social media personality Logan Paul after calling his CryptoZoo project a scam (with plenty of proof).

🐻 Bearish

FTX’s $40m food, flights and frollick. That’s how much SBF and his goon squad spent on expenses before claiming “liquidity issues” and bankruptcy.

DCG is under investigation by the SEC for internal transfers at its lending subsidiary Genesis whilst Genesis reduces its workforce by 30%.

SuperRare dumps 30% of it’s workforce in an attempt to “right size” the business to survive this ever-extending crypto winter.

Harrison to spill the beans. Former FTX US President Brett Harrison said in a tweet response that “I’ll share in time.” Could this be a catalyst for another bonk in the charts?

👀 Updates Across the Block

AUTOMATIC, choose to launch their perpetual exchange on Polygon vs Arbitrum

FACTORDAO, closed a seed round after hitting 2x their soft cap targets with public sales details on CamelotDEX set to go live in February.

FLARE, TDE on Jan 9th to XRP holders holding XRP at the time of snapshot 12/12/20 with Binance confirming distribution and Gate.Io listing Jan 10th.

GMD, release details of their second audit and reach $100,00 in distributed rewards.

OPENSEA, is now supporting Arbitrum Nova and will join the Data Availability Committee to help continue the growth of the data infrastructure.

NESTEDFI, portfolio management dAPP release their 2022 recap and roadmap of 2023 including limit orders, automatic DCA and Vault Uberization plus trading competition starting soon.

NEUTRAFINANCE, are launching a Delta Neutral GLP strategy and will be launching on CamelotDEX

NFTPERP, private beta trading competition season 2 goes live, retroactive airdrop campaign for $VNFTP tokens begins, plus we can now go 10x short (or long) on BAYC, MAYC and AZUKI.

TAPIOCADAO, mentioned their $USD0 stablecoin in the latest TapTalk. TapTalk #17 features SmokeyTheBera at 8pm UTC Jan 9th.

THEBEACON, Release Dec 2022 recap including NFT egg hatching on Jan 20

🛡 Chart of the day

$ETH, will she? Won’t She?

Is it time? Time for that melt up moment to the $1600 mark? Or will we top out at $1352 again before pushing back down to the low $1000’s capturing some of the liquidity that’s sitting sub $1100?

The daily chart is looking relatively strong on this leg up with plenty of room for the RSI to move upwards and reclaim the imbalance further up.

Bull case, we break through the $1352 mark making a sharp move to the upside and capture the liquidity that sits in that $1550-$1600 zone

Bear case, the market makers have e built this eir longs and J Powell’s speech this week crushes our current progress pushing back down to the $1050-$1150 zone.

🤝 A Final Word

and a quick word from our super awesome sponsors who help us make this all possible

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