A Quick Overview of Current Popular Crypto Narratives: ZK, LSD, Chinese Coin...
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A Quick Overview of Current Popular Crypto Narratives: ZK, LSD, Chinese Coin...
To maximize returns in the cryptocurrency space, you need to target the most powerful narratives of the moment.
Navigating Web3 tides with focused insightsWritten by: Miles Deutscher
Translated by: TechFlow
To maximize returns in crypto, you need to target the strongest current narratives.
In this article by crypto researcher Miles Deutscher, we explore the hottest trends right now—including ZK, LSDs, derivatives DEXs, real yield, decentralized stablecoins, AI, GambleFi, and Chinese Coins (in no particular order).
1. ZK
ZK-related protocols have been performing strongly ahead of token launches from zkSync and StarkNet, as well as the upcoming Polygon zkEVM.
ZK-rollups help alleviate congestion by batching transactions for off-chain execution. Undeniably, ZK is the future of Ethereum scaling.
2. LSDs
Liquid staking derivatives allow you to earn yield on crypto assets like $ETH while maximizing capital efficiency. This trend is currently driven by two catalysts:
1. The upcoming Shanghai upgrade;
2. SEC regulatory crackdowns on centralized staking.
As the Shanghai upgrade approaches, LSDs such as $LDO, $FXS, and $RPL are gaining attention. The Shanghai upgrade will be a major driver of $ETH staking volume, as it will finally allow withdrawals of staked ETH from the Beacon Chain.
Additionally, on regulation, I believe the SEC's inclination to shut down centralized staking services (like Kraken) is a massive catalyst for adoption of decentralized staking.
3. Derivatives DEXs
This has been one of the strongest-performing sectors over the past six months.
$GMX leads the pack, followed by competitors like $GNS, with newer iterations such as VELA now emerging. Still, I believe there’s room for innovation in this space.
Long-term, other DEX models—such as AMMs and order books—are likely to play an increasingly important role here. But at least in the medium term, oracle-based DEXs like $GMX hold a clear edge in user experience.
I’m actively looking for new DEXs because I believe this will be one of the largest vertical growth areas in DeFi over the next few years.
4. Real Yield
There has been a significant and much-needed shift in how developers and investors view DeFi yield models.
Whenever you make a DeFi investment, ask yourself: where does the yield come from? If the answer is "from protocol fees," then you're on solid ground. But beware—some projects claim to offer "real yield" while using questionable mechanisms to manipulate metrics.
5. Decentralized Stablecoins
We’ve recently seen the SEC crack down on BUSD, and regulatory uncertainty still surrounds other centralized stablecoins like USDC and USDT. The demand for truly decentralized stablecoins is clear.
There are already several trusted players in this space, including CRV, FXS, and AAVE’s upcoming GHO. Protocols that master decentralized stablecoins and integrate them effectively will emerge as ultimate winners.
6. AI
After ChatGPT became the fastest app in history to reach 1 million users, companies like Microsoft and Google quickly invested in AI. With rampant speculation, this led to an explosion of AI-themed altcoins.
However, it's crucial to recognize that both AI and crypto are extremely early, and recent price movements have largely been driven by speculation rather than fundamentals.
This is an extremely rumor-driven narrative. As such, despite the bubble, shorting becomes very difficult because news tends to create short-term positive impacts on prices.
Keep in mind, strong narratives often perform exceptionally well during bull markets. So if Bitcoin shows bullish momentum, it’s hard to ignore explosive themes like AI.
7. GambleFi
The theory behind decentralized casinos is extremely similar to that of DEXs: people love gambling and need on-chain places to do so.
We haven’t really seen high-quality gambling projects yet, but I believe they’re coming.
8. Chinese Coin
The following factors have contributed to the recent surge in many of these tokens:
• Monetary stimulus in China;
• Hong Kong’s legalization of crypto;
• Rising Asian open interest.
Below is my watchlist of "Chinese coins." Note: This is purely from a trading perspective—any entry or exit will align with technicals.
Many of these tokens have questionable fundamentals, and most don’t fit my long-term position framework (screenshot taken on February 18th).
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Miles Deutscher
