Image source: fox index
Since the beginning of 2020, the market value of the entire market (USDT+USDC+BUSD) has soared from 4.6B to 139.6B, an increase of 30 times .
The overall market value of cryptocurrencies has increased from 191B to 950B, an increase of 5 times .
The peak time point appeared on November 9, 2021, and the market value was 2937B.
Behind every surge, there is an inherent logic. It must be that a certain or a certain type of needs has been met, and thus the positive feedback of the funds has been obtained.
This article hopes to review the historical development and find the inner logic, so as to provide more ideas for the development of the next cycle.
At the end, it may provide some new ideas for your investment and entrepreneurship. Investors and entrepreneurs are also welcome to contact me.
If you have a foreign media submission channel, please contact me. I hope to translate the manuscript into English and submit it to foreign media.
1. The market value of USD mentioned later refers to the market value of USDT+USDC+BUSD. The combination of these three covers more than 95% of the market value in the market, and approximate statistics are made here. 2. The deadline for statistics is June 28, 2022. 3.312 refers to the crash event on March 12, 2020, due to the liquidity crisis in the US stock market.
Liquidity shortages & surges from January 2020 to June 2020
After the global epidemic, the liquidity crisis of US stocks, and the March 12 explosion, countries around the world have implemented policies to print money to stimulate the economy.
Against this background, global funds are looking for value depressions. At the time, the blockchain industry was the choice of a few smart funds.
From the figure, we can see that from March to November, the funds in the blockchain industry have skyrocketed, and the market value of USD has skyrocketed from 5B to 20B .
At this stage, lending protocols represented by AAVE began to explode, and at the same time, decentralized trading platforms represented by Uniswap began to explode.
When Uniswap is not widely recognized, if the project party wants to provide liquidity, it needs to pay a high listing fee to the centralized trading platform.
The emergence and widespread use of Dex directly killed CEX at that time. During that time, all the trading platforms were blinded by the market and launched their own public chains and corresponding dex protocols.
When Uniswap was recognized by everyone, fork inevitably appeared, thus creating 20 years of DEFI Summer.
Among the fork products, Sushi proposed a one-click transfer of liquidity, and was the first to issue coins, thus being the first to stand out among imitators.
According to the characteristics of Uniswap, Curve proposed a new idea for large-scale transactions, solved the additional demand, and consolidated its position.
A good project is definitely not chasing hot spots and trends with the trend. It is necessary to select a good track early and continue to work hard.
Maybe if it is made, it will not be accepted by the market, and it needs to be able to endure loneliness.
On March 13, 2020, AXS opened the trailer , and after 8 months of development, began to operate.
From the issuance of coins in November 2020 to the outbreak in June 2021. In the past half a year, in the case of weak market hot spots, it was finally recognized by the market and ushered in its own highlight moment.
AAVE (ETHLend) & MANA
AAVE ‘s loan has gone through a period of dormancy (4 years), and it has ushered in its own highlight moment under the changing market environment.
Decentraland , a project that was born in the same cycle , also ushered in the big wave of the Metaverse along the way.
The last wave of so-called star projects slowly came to an end in the tide of the times.
From December 2020 to May 2021, the entry of musk & the outbreak of SHIB
The continuous surge in the blockchain industry because of DEFI has attracted more and more capital’s attention. Among them, musk, as the new richest man in the world, is undoubtedly the most dazzling.
Through twitter, Musk let more people know about the blockchain and BTC & Doge. At this stage, the market value of USD has changed from 20B to 30B.
It is no exaggeration to say that he alone allowed the market capital of 10 billion US dollars to enter the blockchain. Compared to Musk, who is worth hundreds of billions of dollars, it can only be said that his personal influence is enough to drive the capital market crazy.
Musk publicly shouted at Doge, which is equivalent to mapping his influence to Doge. And he built a position early at the bottom, and realized the realization of his influence in the blockchain industry through Doge.
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At this time, SHIB, with the help of some blockchain users, frantically rubbed off Musk’s popularity and shouted out the remarks of feeding dog shit.
SHIB, shit coin, this air coin is driven by the community, and under the background that retail investors are fed up with capital and the project party jointly cut leeks, they use their funds to buy SHIB frantically.
From January 2021 to May 2021, the entire market is shrouded in a skyrocketing SHIB environment, and the increase in demand allows more funds to be injected into the blockchain market from outside.
Against this backdrop, BTC, ETH, and the entire broader market have seen rapid price bubbles.
SHIB’s landing on Binance became the last glory of the blockchain token. After the market digested this hot spot, and the funds on the market had no new hot spots and stories to hype, the price quickly fell back.
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USD market cap from 23B to 93B
GameFI outbreak from June 2021 to September 2021
Under the background that the popularity of SHIB has faded and the whole market has been deserted, the funds of the market are spontaneously looking for new hot spots and value depressions.
At this time, Binance’s AXS will be launched in November 2021. Through stable data and a relatively reliable economic model, the market has ushered in the GameFi explosion.
Due to the outbreak of the game ecology, public chains such as Terra and Solana have simultaneously developed similar projects and absorbed a large amount of funds, resulting in rapid price inflation.
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USD market cap increased from 93B to 114B
October 2021 ~ November 2021 Meta Outbreak & SHIB on Robinhood
Because Facebook’s own business has reached a bottleneck, it hopes to use the concept of blockchain Metaverse to give new stories to the capital market.
Through Facebook’s renaming of Meta, a company with more than 400 billion US dollars, it has introduced another 10 billion US dollars to the blockchain market.
It has driven new high valuations of Metaverse companies such as MANA, SAND, and GALA.
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In addition to the Metaverse hotspot brought about by the renaming of Meta, the landing of SHIB on Robinhood is another new outbreak.
I originally thought that SHIB’s landing on Binance was already the highest land acquisition in the blockchain industry. Unexpectedly, the leeks of the WSB in the United States rushed SHIB to a new height.
At the same time, new funds have been added to the market. The important thing is that this type of funds is not the additional funds of USD, but the liquidity in the hands of real retail investors.
It was also during this time period that the market ushered in the highest peak of capital market value, 2937B.
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The market cap of USD increased from 113B to 126B
December 2021 ~ March 2022 NFT prosperity and ape universe blood sucking
After the concept of the Metaverse ended, NFT took over the market’s hot banner.
Since the NFT market is a peer-to-peer transaction, there is insufficient liquidity.
At the same time, in the NFT market, only the identity value of the avatar, and the community where people of the same type gather, cannot carry the imagination of the market, thus causing the market to fall.
Then, during the BYAC airdrop APE, it triggered a short-lived boom. Then dropped rapidly.
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After the APE airdrop, the land auction of Ape Universe further squeezed the liquidity of ETH.
Terra thunderstorm on May 9, 2022, liquidity dries up
Perhaps most people noticed that the terra thunderstorm happened at 21:00 on May 9, 2022, but the supply of USD in the market began to tighten as early as a few days ago.
From April 3, 2022, the market value of USD has gradually shown a downward trend.
The Fed announced in February that it would raise interest rates by a total of 150 basis points in March, May, June, July, September and December. It was previously expected to raise interest rates five times, with a cumulative rate hike of 125 basis points.
What is even more frightening is that since the Federal Reserve announced the rate hike, the USD market value of the entire cryptocurrency has never grown again. It remained at around 150B in February, March, and April, and began to gradually decline in May.
Refer to the Fed hikes rates in the correlation between money supply and market capitalization
Affected by the Fed’s interest rate hike, the USD liquidity was only drained by 2.7 billion US dollars, and then Terra collapsed under the joint strangulation of multiple forces.
The thunderstorm of UST accelerated the depletion of liquidity in the entire market, comparable to the 312 event.
In the chain reaction triggered by UST, the market value of USD was also reduced by $8.84 billion.
However, behind the reduction of these funds, the market value of BTC decreased by 247B, a decrease of 38%; the market value of ETH decreased by 158B, a decrease of 52%;
UST is because it involves various Defi protocols on the chain, as well as on-site and off-site financial management of institutions. In the context of deleveraging, financial institutions represented by 3AC, BlockFI, Celsius and other Defi project parties have been in a storm.
Summary of the beginning of 2020 to the present
Image source: fox index
Looking back at this picture again, maybe you will have a different feeling.
The development of the blockchain to the present, from the initial response to the global currency over-issuance, to how to use the funds remaining in the blockchain market.
Countless project parties, individuals, and investment institutions have given their answers or choices.
In the face of the remaining hundreds of billions of dollars and the entire cryptocurrency market of trillions of dollars, how to effectively solve user needs, create new needs, and transform the real world may be left to all of us to think about.
It can be seen from the chart of fox index that every time a new demand is satisfied, a large amount of capital flows in and the entire market value increases.
USD can only be used as a lubricant and catalyst for demand, but not as a cause of demand.
Fork is difficult to create real value, because behind the project are people, and behind an excellent project is the contribution of excellent people.
The skyrocketing price and market value are positive feedback after excellent projects meet market demand, but these feedbacks are not timely, and the market always lags behind.
Due to the immaturity of the market and the hysteresis effect, investors who can discover these excellent projects in advance can profit from the time difference in the market.
When the entire cryptocurrency market has grown to a trillion-dollar market value, how to further achieve high growth?
If you find a new breakthrough in the incremental market, if you build your own project in the bear market stock market?
Humans are curious species, and every once in a while someone comes up with a great idea. Others build on this idea and refine their plans. Over time, many wonderful tools and systems have been developed. And some of these tools make it easier for people to generate new ideas. Although the giant wheel of invention ran very slowly in the early morning, it gradually began to accelerate, and human beings did things that used to look like magic.
In the blockchain market, Vitalik Buterin is always different. Although he is not the biggest beneficiary of Ethereum, he and the Ethereum Foundation behind him continue to make unimaginable contributions to the entire ecosystem.
The far-reaching impact of this pattern determines that the entire Ethereum ecosystem will come out of a completely different outcome from other so-called public chains.
In the paper on May 11, 2022, it is proposed to find the soul in the web3 era and build a decentralized society.
This direction may be the general direction of the next cycle. There is always a ceiling for innovation in the financial field.
The decentralized reconstruction of social, economic, cultural, and political fields can accommodate more funds.
From the perspective of the thesis, to interpret and think, maybe you can find a new direction. Next, I will mainly interpret the literary theory, and then give my own understanding.
Entrepreneurial direction for the next cycle
DeSociety, Web3, Soul
The goal of a decentralized society is too ambitious. This is not a project, but a problem that a public chain can solve.
Entrepreneurs need to think about how to start with subtleties to meet new market demands.
Web3 is a scope concept, while Soul is relatively specific, and in the 37-page paper of V God, it is still the core concept.
Next, we will focus on solving the problem of Soul as a breakthrough.
My chosen business direction
Our society operates with people as the main body, and the essence of all phenomena is the collective manifestation of people.
Each of us can be understood as a Soul, or Soul is our carrier in the blockchain industry.
Soul in my understanding contains the following information:
1. The blockchain address owned by each person, the assets on the address, and the operation track on the address
2. The information that everyone has in the real world and cannot be tampered with or modified that must be recorded
Soul is the link between the blockchain world and the real world, including block information and real identity information.
The activity trajectory of each of us on the chain, combined with the events in the corresponding time period, profoundly shows which group of people we are.
They are not only witnesses of asset changes, but also proofs that allow us to find people with similar ideas. After all, how much money is one thing, what kind of thinking logic is another.
Distinguishing groups of people through on-chain activity trajectories is far more meaningful than NFT avatars. After all, what everyone says is true and false; what everyone does is the most real.
Based on the real and credible historical data analysis, we can ensure that the personal brand created by each Soul, as well as the individuals behind it, is authentic and credible.
This is the basis for building a decentralized society. In Soul, more subdivided areas are included, such as privacy, diversity, group decision-making, and so on.
All of this requires real data as support. Real, valid, and immutable data is the metadata of a centralless society.
The entrepreneurial direction I chose is based on the underlying block data, using machine learning to analyze historical currency prices and corresponding online events.
Screen the real data needed to construct Soul, and strive to become an important reference source and evaluation standard for all project parties to evaluate Soul and distribute SBT.
In this direction, it takes a long time to filter, evaluate, and label basic data, and nansen.ai belongs to the same data analysis track.
This is a very hard work, and it needs to process the data of the entire chain, as well as the data of twitter, telegram, discord, website, and various dimensions.
Maybe some investors will feel that this project is too heavy and cannot be achieved by a small team. But some directions, some things, are destined to be done by someone.
In the entire blockchain world, the influence and status of the Chinese are gradually shrinking, and there is not a single project that can be taken out.
The path I have chosen is a project that is really laying the foundation for the Desociety, Soul in the Web3 era, which Vitalik Buterin envisions.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/looking-for-future-directions-from-web3-history/
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