On January 11, the U.S. SEC announced the approval of 11 Bitcoin ETFs. This milestone event opened a new chapter in the crypto industry. The crypto market will usher in more funds entering the market. As the "biggest shoe" of the Bitcoin ecosystem lands, the market will turn its expectations to the ETH ecosystem. Today, ETH has risen by 7%. BlockBeats has sorted out the positive factors and key targets of the ETH ecosystem in the coming months.

Positive factors for the ETH ecosystem in the coming months

Cancun upgrade

In order to achieve the positioning of "world computer", Vitalik planned an upgrade roadmap for Ethereum at the beginning of its birth, which are: Frontier, Homestead, Metropolis, Serenity 4 stages. At present, Ethereum is in the Metropolis stage and is facing performance problems and high gas fee problems.

The Cancun upgrade, also known as the Cancun-Deneb upgrade, is another upgrade of the Ethereum main chain after the Ethereum Shanghai upgrade. It will effectively enhance the scalability, security and availability of the Ethereum network, increase the TPS of the main chain and reduce the gas fee, and achieve the expansion of the Ethereum main chain.

After the Cancun upgrade is completed, the network utility of Ethereum will be significantly improved, the infrastructure on it will be more complete, and its status as the "king of public chains" will be consolidated. In addition to Ethereum itself, the Layer2 sector will also usher in unprecedented development and prosperity.

On January 5, lightclients, a developer of the Geth team, posted that the 178th Ethereum Core Developer Executive Meeting (ACDE) has ended. This meeting reconfirmed the Cancun upgrade time on the Goerli test network as January 17, and January 30 and February 7 were used as the upgrade dates for the Sepolia test network and the Holesky test network, respectively. If all goes well, the developers will release the Goerli client next week, and the Sepolia/Holesky client the week of January 22.

Ethereum ETF

The Bitcoin ETF has been approved, and the application for the Ethereum ETF, which has been postponed several times by the SEC, has become the focus of the community's attention.

On December 19, the U.S. SEC has postponed its decision on ARK/21Shares and VanEck's Ethereum spot ETF applications, with the new deadline being late May 2024. According to The Block on the same day, the SEC has also postponed its decision on the Hashdex Nasdaq Ethereum ETF and Grayscale Ethereum Trust conversion applications.

Bloomberg analyst James Seyffart hinted on the Unchained podcast that the U.S. SEC may change its stance on Ethereum. Seyffart pointed out that the SEC's recent approval of the Ethereum futures ETF indicates that the SEC may be subtly acknowledging that Ethereum is a commodity, not a security.

On January 11, Cointelegraph reported that Eric Balchunas, an ETF analyst at Bloomberg, said that there was a 70% chance that the spot Ethereum ETF would be approved in May, while hinting that "I heard in the back channels that the spot Ethereum ETF would be good."

However, digital asset lawyer Joe Carlasare believes that the approval of the spot Ethereum ETF may take longer than expected, and the U.S. Securities and Exchange Commission is also working hard to carefully create a precedent that allows them to retain a certain degree of discretion in deciding which digital asset ETFs to allow to enter the market.

Layer2 expansion narrative

On the one hand, the landing of the Ethereum Cancun upgrade EIP4844 Proto-Danksharding proposal will bring more possibilities to the Layer2 Rollup project. On the other hand, in the direction of exploring the scalability of Ethereum, Layer2 has developed a prosperous market. In addition to the Cancun upgrade, in the "scaling war" that started in the summer of 2023, Layer2 also launched their own expansion plans.

To date, the community has witnessed the various possibilities of the Layer2 ecosystem, taking the Layer2 leaders Optimistic and Arbitrum, as well as the new popular Layer2 Metis as examples. It can be foreseen that in 2024, Layer2 will continue to bring more imagination to the Ethereum ecosystem.

Related reading: "How will the market landscape of Layer2 evolve after the Cancun upgrade? "

Optimistic: OP stack opens the "super chain universe"

Currently, Optimistic and Arbitrum occupy the vast majority of the capital share in the Layer2 market.

In October 2022, Optimism introduced the OP Stack, a "highly scalable, highly interoperable modular open source blueprint of various types". Optimistic proposed the Superchain strategy in February 2023, using the L2s of the OP stack. Due to the consistency of the technical architecture, they can achieve secure, efficient, atomic-level communication and interaction of information and assets with each other, similar to Cosmos' "interchain", which is called Superchain.

OP stack has been widely adopted after its launch. Many public chains such as Coinbase, opBNB, Zora, and Worldcoin have given OP Stack a good brand endorsement. In June 2023, the Optimism blockchain announced that it would be renamed OP Mainnet to distinguish OP Mainnet from the Optimism ecosystem built on OP Stack. It can be foreseen that the multi-chain universe of OP stack will be more prosperous in 2024.

Arbitrum: Orbit drives ecological Layer3 blowout

On January 3, Binance's new Launchpool project Xai (XAI) attracted the attention of the community. After falling for several consecutive days after the launch, XAI had a war suit of more than 25% on January 11. As the Oribit network customized by Arbitrum to meet the needs of large-scale Web3 games, Xai (XAI) and the Oribit network ecosystem it represents are of great strategic significance to Arbitrum.

Arbitrum Orbit Ecosystem

In June 2023, the Arbitrum development team Offchain Labs released the Arbitrum Orbit development tool, which aims to help developers develop more easily on the L3 blockchain Arbitrum Orbit and manage their own Arbitrum Rollup and AnyTrust chains.

Arbitrum Orbit has the same compatibility with EVM+ launched by Stylus. This means that developers do not need to abandon the language and tool chain they are using, and can directly use Solidity, C, C++ and Rust to deploy smart contracts compatible with EVM. In addition, the Arbitrum Orbit platform has added support for custom Gas tokens. These tokens are used to pay transaction fees. This development allows the Orbit blockchain to use specific ERC-20 tokens that meet technical standards to handle Gas or transaction fees on its network. Previously, the Orbit chain could only use Ethereum as a Gas token.

The community believes that Orbit will be able to drive more breakthroughs in the Arbitrum ecosystem. In December 2023, TreasureDAO on the Arbitrum ecosystem announced that it would build a game chain and planned to use MAGIC as a Gas token. In the future, the initiatives taken by Layer2 to attract developer resources will also bring more liquidity to the Ethereum ecosystem.

Metis: Decentralized Sorter

In addition to "old-fashioned projects" such as Optimistic and Arbitrum, the imagination space of Layer2 can also be seen in Metis, which has risen by more than 350% in two weeks. In December 2023, MetisO's TVL exceeded US$700 million, surpassing Base and zkSync to rank third.

Metis is an Ethereum Layer 2 expansion solution based on Optimistic Rollup. It is a Layer 2 expansion and general infrastructure project co-founded by Elena Sinelnikova, Kevin Liu and Yuan Su in 2018.

Layer2 is generally criticized for the problem of sorting centralization. Most project parties tend to centralize operation and maintenance in the early stage to ensure security and stability. After the Metis Foundation announced the establishment of an ecological development fund consisting of 4.6 million METIS tokens, Metis is expected to become the first Optimistic Rollup of a decentralized sorter early next year. The growth of Metis has also added positive factors to the update of the technical narrative of the sorter. The decentralized sorter is just the beginning of the potential of Rollup Layer2. The visions of Layer2 native DeFi and ecological explosion that the community is eager for must be based on this.

Related reading: "More than 190% increase in one week, what are the potential projects worth paying attention to in the Metis ecosystem"

ZK Rollup: Starknet airdrop is imminent, and the ecosystem is ready to go

On December 1, 2023, the Starknet Foundation stated that it had taken an airdrop snapshot and would distribute STRK tokens to certain past active users and contributors in the first quarter of 2024, while unlocking tokens issued in the past.

RabbitX is a derivatives platform built on Starknet. Its token RBX rose by more than 400% between October and November 2023, and has now fallen back. In addition to DEX, the chain game ecosystem Loot Realm on Starknet has also attracted market attention with the concept of "full-chain games". Loot Realm is driven by the Loot NFT community DAO and contains multiple sub-games. Its token LORDS has risen by nearly 90% in the past month.

Related reading: "Starknet will issue airdrops and unlock tokens. Which ecological projects are worth paying attention to? "

In addition to Starknet, the airdrop expectations of zkSync are also gradually strong. At present, the DEXs worth paying attention to on zkSync include SyncSwap, Mute.io, etc. Syncswap's daily trading volume exceeds $9 million, and its total SYNC token is 100 million, of which 15% will be airdropped. Mute.io is the first batch of native DEXs on the zkSync Era. In addition to trading, it also provides various types of yield amplifiers. Users can purchase MUTE tokens with a 7-day lock-up period at a discount through bonds similar to the (3,3) model. As of the time of writing, MUTE has risen by more than 15% in the past 24 hours.

In addition, ConsenSys's Layer2 network Linea cannot be ignored. According to Dune Analytics data, as of December 24, 2023, the Linea mainnet has entered more than 290,000 ETH and the number of interactive addresses has exceeded 390,000. At present, there are more than 40 protocols on Linea, among which Mendi Finance is the native lending project on Linea, ranking second in the TVL ecosystem, and its token MENDI has risen by more than 48% in the past 24 hours.

Mantle The network is a unified ecosystem and EVM-compatible Layer2 network created after the merger of Mantle and BitDAO. It adopts a modular architecture and uses EigenLayer as a DA solution to provide new scalability possibilities for Ethereum. Recently, Trader Joe launched DEX Merchant Moe, which is dedicated to the Mantle ecosystem. JOE holders will receive 2.5% of the total project tokens in the TGE of the new token MOE, and another 5% will be distributed in the next 12 months.

Related reading: "Modular Layer2 Mantle Mainnet Alpha Ecosystem Overview"

The TVL of FusionX, the native DEX on the Mantle network, has tripled in the past two months, reaching $25 million at the time of writing. FusionX is the first community-driven AMM on the Mantle network, with a special feature that allows users to obtain preferential purchase qualifications for new tokens by staking specific tokens.

And on January 10, EigenLayer announced the launch of three new liquidity pledge tokens and provided restaking services for them, including Mantle LSP's receiving token mETH, with an annual interest rate of 7.2%.

Taiko, a Type 1 zkEVM network favored by star VCs and recognized by Vitalik, is worth paying attention to. In June 2023, Taiko announced that it had raised $22 million in two rounds of seed financing, the first round of which was $10 million led by Sequoia China, and the second round was $12 million led by Generative Ventures. Taiko is considered by the community to be one of the most promising projects in the current zkEVM field. It aims to become a fully decentralized, zero-knowledge extended zkEVM equivalent to Ethereum, which can enable developers and users to experience Ethereum safely, with lower transaction fees, and without making any changes to Ethereum.

At present, Taiko is still in the testnet stage. Taiko launched a developer incentive plan with a bonus of 30 million US dollars in December 2023, and launched a community education activity. Users who complete the task will receive loyalty points.

Related reading: "In-depth interpretation of Ethereum zkRollup head project Taiko proposes a new solution for expansion-Basic Disputable Rollup (BCR)"

Low market value L2 targets

Compared with Arbtrum and Optimism, which have a circulating market value of 3 billion US dollars, some Layer2s with a short development and low market value often have more novel narratives, and their value discovery is still in the early stages, and are expected to show greater investment space in the new round of bull market.

On December 7, 2023, ZK L2 community network ZKFair officially announced the launch of the test network and opened it to all community users. ZKFair is the first L2 network based on Polygon CDK, Celestia DA & Lumoz ZK-RaaS. Once launched, it has attracted great attention from the community with its innovative model of 100% community Fair Launch. On the day of the test network launch, more than 30,000 users flocked to the network to interact. Three days after the launch, ZKFair's TVL exceeded 12 million US dollars.

On January 10, ZKFair announced the launch of the ZKF staking mechanism. Users who stake ZKF can obtain 75% of the Gas Fee of the ZKFair chain. The calculation and distribution of income will start from January 15. At the same time, from January 14 to January 20, users who pledge ZKF will also receive airdrops from Sideswap (SIDE), the first fair launch of the ecological project on ZKFair.

Related reading: "Understand the ZKFair economic model in one article"

In the crypto space, there is still room for imagination in blockchain games. Hypr Network is a layer 2 blockchain built on Ethereum that aims to enhance its capabilities and address its limitations. Hypr specializes in providing a fast and cost-effective platform for zero-knowledge on-chain games. By leveraging zero-knowledge proofs, Hypr ensures enhanced data privacy and security for gaming applications, enabling players to trade and interact without leaking sensitive data. According to Coingecko data, its token HYPR has risen by 25% in the past week.

EigenLayer Activates Restaking Economy

The concept of restaking (Restaking), introduced by EigenLayer to Ethereum in June 2023, has become a hot topic of discussion. Restaking allows users to restake already staked Ethereum or Liquidity Staking Tokens (LST) to provide additional security for various decentralized services on Ethereum and earn additional rewards for themselves.

However, the Restaking model has limited the liquidity of capital to a certain extent, so the LST token came into being. BlockBeats has sorted out the LST sector projects that are worth paying attention to.

Restake Finance is the first protocol to launch modular liquidity re-staking for EigenLayer. After users deposit the LST generated by liquidity staking into Restake Finance, they can deposit it into EigenLayer through the project, and allow users to generate reaked ETH (rstETH) as a re-staking certificate. Users can participate in various DeFi protocols and earn income through rstETH, and also obtain points for EigenLayer rewards.

Restake Finance has recently ushered in a highlight moment, and its token RSTK has risen by more than 200% in the past two weeks. In addition, as one of the entrances to the EigenLayer ecosystem, EigenLayer's LRT and strategy management platform Renzo Protocol was officially launched on the Ethereum mainnet on December 19, and on January 4, it announced the launch of the points program Renzo ezPoints, which aims to reward users who contribute to the protocol. Users can earn points by minting ezETH.

In the re-staking track, many projects have transformed from LSD business to enter the market. KelpDAO is an organization supported by the LSD protocol Stader Labs that focuses on the field of liquidity re-staking, and its business model is similar to Restake Finance. It is worth noting that Kelp DAO currently has no tokens, while Stader Labs' token SD has achieved an increase of more than 100% in the past month.

On October 18, the DeFi protocol ether.fi announced the launch of eETH, a Liquid Staking Token (LST), which allows users to generate rewards by staking Ether (ETH). As of the time of writing, ether.fi TVL has exceeded $150 million, and according to the roadmap published by the team, ether.fi will issue tokens in April.

The Ethereum staking infrastructure SSV Network announced on January 4 that it had begun its re-staking business, allowing the responsibilities of EigenLayer's validators to be decentralized to SSV, leveraging SSV's distributed and non-custodial features to enhance the performance and security of its validators. It is worth mentioning that SSV's re-staking nodes are very distributed, and currently it can be combined with ANKR/Forbole/Dragon Stake/Shard Labs for re-staking services. In the past week, SSV has risen by more than 30%.

Swell, which was originally positioned as an Ethereum staking protocol, is now gradually moving towards Restaking. By combining token distribution with Restaking, its derivative LST token swETH is the third largest TVL token on EigenLayer after stETH (Lido) and ETH, with a pledge volume of over 110,000 tokens. The Restake version of swETH is called rswETH, which focuses on the Restaking track. The Liquid Restaking Committee it established has been joined by projects such as AltLayer and InfStones.

On January 11, Pendle, a yield strategy protocol positioned as LSD+RWA, stated on the social platform that it would launch ether.fi's liquid staking token (LST) eETH, officially entering the Restaking/LRTfi field, and users can get more benefits through its Liquid Restaking Tokens (LRT). On the same day, PENDLE rose by more than 30%.

Related reading: RSTK doubled in one day, a look at the Restaking track ecological projects

Since EigenLayer ignited the Ethereum re-staking track, other EVM and non-EVM ecosystems have also begun to have their own re-staking concept projects. Picasso is a network that supports cross-ecosystem IBC. Its native token PICA is designed and deployed as a unified network token that supports multiple L1 blockchains such as Polkadot, Kusama, and Cosmos. Recently, Picasso brought the concept of re-staking to the Solana network, where users can stake SOL, mSOL, jitoSOL, and other LP tokens to support Solana's cross-chain IBC validators.

The Omnichain Liquid Restake protocol Layerless , which is supported by EigenLayer and LayerZero, is also creating the Omnichain Re-staking Token (ORT). When a user deposits LST (such as stETH, cbETH or rETH) into EigenLayer, they will receive an ORT (Omnichain Restaked Token), which represents the user's share of EigenLayer, making it liquid, composable and usable in DeFi protocols. Currently, Layerless plans to launch a testnet in the first quarter.

Related reading: "Restaking narrative is hot, what are the re-staking projects outside the Ethereum ecosystem? "

Concepts such as LSDFi, RWA, DEX

The 2023 Shanghai upgrade has brought unprecedented prosperity to the LSD track and brought a lot of liquidity to the Ethereum ecosystem. According to DefiLlama data, a total of $32 billion in funds are staked, of which Lido has a total of more than $24 billion worth of ETH staked, accounting for 75% of the market share, far higher than other competitors. As more funds flow into Ethereum, it is foreseeable that the LSD market will continue to heat up. On January 10, LDO briefly broke through $3.8, up more than 18% in 24 hours.

In addition to releasing liquidity around EigenLayer, Prisma, which has a small market value and luxurious endorsements, is also worth paying attention to. Prisma has been jointly endorsed by the founders of multiple projects such as Curve Finance, Convex Finance, Swell Network and CoingeckoFinance, as well as first-line well-known project parties such as Frax Finance, Conic Finance, Tetranode, OK Venture, Llama Airforce, GBV, Agnostic Fund, Ankr Founders, MCEG, Eric Chen, etc.

At present, driven by RWA, the potential market value of RWA may reach tens of trillions of dollars in the next five years. MakerDAO, which provides stablecoins for Ethereum, has already made arrangements in the direction of RWA.

MakerDAO's first official RWA project, New Silver, was established in 2021 with a debt ceiling of 20 million US dollars. The underlying assets are mortgage assets (Mortgage Loan) initiated by New Silver, and raised funds on the Centrifuge tokenization platform through the issuer SPV under New Silver. In addition, BlockTower Andremeda, a US debt RWA project initiated by BlockTower Capital, is currently one of MakerDAO's largest RWA projects, with a debt ceiling of 1.28 billion US dollars and current assets exceeding 1 billion US dollars.

Related reading: "Inventory of MakerDAO RWA popular projects, analyzing the transaction architecture of DeFi capturing off-chain assets"

In addition, Uniswap v4, Uniswap X, and other intention-based DEXs are also becoming themes in 2024.

In June 2023, Uniswap released a draft of the Uniswap v4 code, with the vision of allowing anyone to make trade-off decisions by introducing "hooks". According to Uniswap Labs officials, Uniswap V4 will be launched after the Dencun upgrade. A month later, Uniswap announced the launch of the non-custodial, Dutch auction-based protocol UniswapX. According to the team, Uniswap v4 optimizes pool customizability to maximize expressiveness, while Uniswap X optimizes routing to maximize output tokens. Combined, the two protocols provide traders with the best trading experience while maintaining their commitment to decentralized, censorship-resistant, and permissionless markets.

Another project that also follows the narrative of intention is CowSwap, a DEX aggregator that integrates batch trading, intention and MEV protection. Using batch auctions as its core price discovery mechanism, CowSwap determines a unified settlement price for all transactions in a batch, eliminating problems such as front-running that are common in instant execution models. Batch auctions can also settle many transactions at the same time, thereby optimizing gas fees.

Related reading: "Delphi Digital 2024 DeFi Outlook, Interest Rate Derivatives Market Has Unlimited Potential"

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