Nothing in cryptocurrency is permanent.
The sources of bubbles in the financial sector are always the same. Many developments in cryptocurrencies have planted the seeds for a historic bull run from 2020, aided by loose monetary conditions. However, many things in cryptocurrencies are facilitated by bull markets, and here are some of them.
The first thing is Defi earnings. Defi is growing rapidly in 2020 and is a literal money printing spree. Much of the use of Defi revolves around leverage – which has grown in demand due to the bull market. Of course, as with all financial markets, now is the time to pay for overused leverage.
In fact, it does not take a bear market to find out that there are not enough buyers to take over these inflationary air coins minted out of thin air to finance high yields. IMHO, the benefits Defi will need in the future are not self-questioning Ponzi schemes, but real-world needs. Such yields will be lower than some Defi speculators demand, but they are more sustainable and higher than what you can get from a bank, somewhere between 5%-20%. Currently, projects that are moving in this direction are Maplefinance $MPL and Goldfinch_fi $GFI. Of course, more such Defi projects will appear in the future.
The next thing to talk about is unsustainable P2E economies. The bull market has boosted demand for NFTs and in-game tokens. This created lucrative opportunities for players and spawned a new economy – the economy of guilds and trainees.
The most well-known in this regard is AxieInfinity. Many who missed Axie early on saw SLP’s price crash in today’s bear market, and AXS’s stagnant user base gloated. But I personally don’t see where AxieInfinity will fall. They have $150 million in funding, and as a leading company in the space, I believe AxieInfinity will surprise us in the next bull run. But I’m not optimistic about the dozens of Axie replicas that have popped up in the past 6 months.
Without a bull market boost, P2E games would be far less profitable than they are today. In particular, the number of players in P2E games began to decrease, and players began to understand that this “mining game” economy was unsustainable and that it had to be combined with the fun brought by popular Web 2 games, especially if they wanted to gain uniqueness. Corner valuation words.
We’ve seen examples of this with VCs – Decimated_game $DIO, illuviumio $ILV. More people realize that the myth of Axie cannot be replicated, so they choose to put gameplay first and economy second.
Despite the token price of the token, I think games that focus on gameplay will drive user growth more long-term than games that just copy Axie. But it’s not easy, many people underestimate the budget for making a AAA game ($100 million for GTA V alone), and I think it’s going to be a huge challenge.
The topic is getting longer, but I’ll leave some things I don’t think will last for you to ponder.
- Current Guild Scholarship Model
- Passion for DAO tools
- Current version of Defi
- Underfunded L1
To add to that, I think the more relevant question right now for aspiring founders and investors is , what won’t change in cryptocurrencies in 12-24 months? Which projects or businesses are not entirely dependent on the continued upward state of the market?
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/spartan-partner-reflections-on-the-crypto-bear-market-which-narratives-will-be-eliminated/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.