Author: Riyue Xiaochu, member of Huzi Guanbi Source: X, @riyuexiaochu
The big green candle of BTC and ETH illuminated the market and brought hope to the crypto.
Last night, some news from the SEC greatly increased the market's probability of passing the ETF, triggering a surge in ETH.
If the ETH ETF is successfully approved, the projects in the ETH ecosystem will also benefit, and the increase may exceed that of ETH. Therefore, we should focus on it.
In the ETH ecosystem, there are several major sectors and projects.
1. Layer2
Main projects: arb, op, strk, metis, manta
As ETH aims to become a global computer, Layer2 is responsible for the prosperity of the ETH ecosystem with high TPS and low GAS. Its importance and value are self-evident. At the same time, Layer2 is the sector with the highest market value in the ETH ecosystem.
However, most of the projects are also typical of the recently criticized institutional coins with low circulation and high FDV. As three of the four kings, arb, op, and strk all have FDVs exceeding 10 billion US dollars.
arb has the highest TVL and the largest number of Dapps among all projects. However, arb's pull is relatively weak, and there have been a lot of unlocking recently.
The advantage of OP lies in the super chain ecosystem formed by OP stack, which gathers a large number of excellent projects and capital. Historically, OP's pull is more aggressive than ARB, which may be the preference of funds.
strk is the layer 2 of zk core, and its ecological suggestions and users are not as good as the first two. However, its circulating market value is lower than arb and op, and it has been falling since its listing, and has not had a decent rebound.
Metis was a hot topic for some time. It started out as a decentralized sorter and experienced a huge pullback after being listed on Binance.
Manta is a representative of modularly created layer2. The team is very hard-working, the ecological projects are developing very rapidly, and the circulating market value is only 400 million US dollars, which is the lowest among them.
2. LSD
Main projects: LDO, SSV, PRL
The LSD protocol is mainly a node-related staking service that emerged after the ETH Shanghai upgrade from POW to POS. LDO is the largest service provider, with the highest TVL in the entire network and a circulating market value of 2 billion.
SSV is an infrastructure setting for distributed nodes and has performed well recently.
3. Defi
Main projects: Pendle, uni, aave, comp, crv, mkr
Defi should be the most familiar to everyone. As the largest innovation sector in the last bull market, the application of Defi has been popularized to all aspects of daily life on the chain. The core players include uni, aave, comp, crv, mkr, etc., representing dex, lending, stablecoin trading, stablecoin issuance, etc.
Due to the maturity of Defi, this cycle is basically based on previous upgrades, and the degree of innovation is not enough. Relatively innovative is Pendle, which separates tokens into principal and interest for trading future income. Pendle was also affected by the double rise of TVL and coin price some time ago.
4. Stablecoins based on ETH collateral
Main projects: ENA, LBR
There are many ways to issue stablecoins. One of them is to issue with collateral assets, and the largest collateral asset is undoubtedly ETH. After LSD and Restaking, the project party will use the collateralized ETH to obtain liquidity income. Such stablecoins have a natural rate of return. At the same time, the project party will carry out some token incentives, as well as dividends from minting and borrowing, etc., so the annual income will be very considerable.
The popular LBR in 2023 is one of them. The same is true for Binance's launchpool project Ena this year, and Ena uses hedging derivatives positions to maintain the value of collateral assets.
Ena's TVL is as high as 2.5 billion US dollars, and its current market value is 1.3 billion US dollars.
5. Restaking
Main projects: REZ, ETHFI
Restaking is what I value most in this round of ETH market for two reasons:
1) New sectors. Market funds tend to speculate on new sectors. 2) Small market capitalization. Ethfi’s market capitalization is 460 million USD and rezon’s market capitalization is 150 million USD. 3) Eigenlayer is the leader. The number of airdrops has been determined and the time for listing is not far away.
