Although blockchain technology has developed rapidly since the birth of BitcoinBTC, the adoption of blockchain and crypto remains low due to the immaturity of the technology, products and regulations in the blockchain space. As of 2023, the estimated global crypto ownership rate averages 4.2%, with more than 420 million crypto users worldwide, according to Singapore-based fintech company Triple A. However, these statistics indicate a potentially large market. In what follows, we aim to identify blockchain projects and tools that want to onboard the next billion users. The best discussion for this topic falls into three categories: decentralized applications, protocols, and infrastructure. We present the detailed discussions in Part I and Part II articles. Part I article presents evolving decentralized finance (Defi) and evolving non-fungible tokens (NFTs). Part II article presents account abstraction, blockchain scalability and decentralized infrastructure.
Developing DeFi
DeFi is an umbrella term for peer-to-peer financial services that use blockchain. DeFi allows users to perform most banking functions, such as earning interest, borrowing, lending, buying insurance, trading derivatives and assets, and more. The process is faster and does not require paperwork or intermediaries.
As DeFi continues to grow and improve liquidity, capital efficiency and other aspects, more users will switch from centralized financial systems to decentralized solutions. Decentralized exchanges (DEX) are a cornerstone of DeFi. Due to compliance issues with centralized crypto exchanges and the decentralized nature of blockchain, people are increasingly turning to DEX for trading. Of course, compliance with DEX will also age over time.
Furthermore, DeFi derivatives, which include cryptocurrencies and other assets on the blockchain, are gaining significant interest and becoming equally important in the world of crypto-finance. In traditional finance, a derivative is a contract whose value is derived from the performance of an underlying entity, such as an asset, commodity, index, interest rate, or other derivative instrument. Given the importance of derivative contracts in mature traditional financial systems, it is no surprise that derivatives are emerging in crypto-financial markets.
Projects to watch include synthetix.io, dYdXDYDX, Curve Finance, Trader Joe’s, and Maverick Protocol.
Developing NFTs
NFTs are clear cryptographic tokens that exist on a blockchain and cannot be duplicated. These tokens can represent both digital and real items, such as artwork and real estate. While the NFT market has experienced a downturn in recent years, it cannot be denied that NFTs have contributed significantly to raising awareness and attracting the general public to the blockchain industry. The advances in the following two NFT technologies will play a significant role in the future adoption of NFTs by billions of users. On the one hand, ERC-6551 is the new token standard for the EthereumETH network, raising the capabilities of ERC-721 NFTs to a new level, and unlocking new use cases for NFTs.
Currently, NFTs are primarily static assets with limited functionality beyond ownership transfer. They lack transaction history, signature control and linked ownership of all benefits received, such as tokens thrown into the air. By using ERC-6551, all relevant benefits associated with an NFT, including airdropped tokens, will be recorded within the NFT itself. When an NFT is sold, buyers will also see these records, and all associated tokens will be transferred to the buyer. With ERC-6551, we can seamlessly add new layers of ownership to all existing and new NFTs, opening up use cases that project creators have long desired but not yet found simple solutions for.
On the other hand, dynamic NFTs, called dNFTs, are NFTs with encoded smart contract logic that automatically change their metadata based on external conditions. This makes it possible to create digital items that can evolve and change over time, providing a more engaging experience for buyers and fans in various domains such as games, music, art and more. For example, imagine a digital weapon in a game that gains new abilities or properties as the player progresses. With dNFTs, these advances can be seamlessly reflected in the corresponding NFT, creating an immersive and dynamic gaming experience. This innovative use of blockchain technology adds a new layer of depth and customization to games, enhancing player engagement and opening up exciting possibilities for interactive storytelling within virtual worlds.
Projects to check out include Rarible and Art Blocks.
We will continue the discussion in the Part II article.
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Disclaimer for Uncirculars, with a Touch of Personality:
While we love diving into the exciting world of crypto here at Uncirculars, remember that this post, and all our content, is purely for your information and exploration. Think of it as your crypto compass, pointing you in the right direction to do your own research and make informed decisions.
No legal, tax, investment, or financial advice should be inferred from these pixels. We’re not fortune tellers or stockbrokers, just passionate crypto enthusiasts sharing our knowledge.
And just like that rollercoaster ride in your favorite DeFi protocol, past performance isn’t a guarantee of future thrills. The value of crypto assets can be as unpredictable as a moon landing, so buckle up and do your due diligence before taking the plunge.
Ultimately, any crypto adventure you embark on is yours alone. We’re just happy to be your crypto companion, cheering you on from the sidelines (and maybe sharing some snacks along the way). So research, explore, and remember, with a little knowledge and a lot of curiosity, you can navigate the crypto cosmos like a pro!
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