In the ETH ecosystem, Layer2, LSD, DeFi, ETH-backed stablecoins, and restaking are the key areas and projects of industry focus. This article is sourced from an article by 日月小楚, compiled, translated, and written by PANews.
(Teaser:
ETH Volatility Warning: Multiple fund companies predict that “Ethereum Spot ETF” will be rejected by the SEC next week. What will the issuer do next?)
(Background:
Financial lawyers predict that Ethereum Spot ETF will be rejected by the SEC next month! ETH/BTC ratio hits a 3-year low.)
Table of Contents:
Layer2
LSD
DeFi
ETH-backed stablecoins
Restaking
The bullish market trend of BTC and ETH has brought hope to the market. Some information from the SEC has significantly increased the probability of ETF approval, triggering a sharp rise in ETH.
If ETH’s ETF gets approved, projects in the ETH ecosystem will also benefit, and their gains may exceed that of ETH. Therefore, we should focus on the following key areas and projects in the ETH ecosystem:
Major projects: arb, op, strk, metis, manta.
As ETH aims to become the world’s computer, Layer2 is responsible for supporting the prosperity of the ETH ecosystem with high TPS and low GAS. Its importance and value are self-evident. At the same time, Layer2 has the highest market value in the ETH ecosystem.
However, most projects are typical institutional coins with low circulation and high FDV that have recently been criticized. As three of the “Four Heavenly Kings,” arb, op, and strk all have FDVs exceeding 10 billion USD.
Arb has the highest TVL and the largest number of DApps among all projects. However, arb’s price performance has been weak, and there have been a large number of unlocks recently.
Op’s advantage lies in the ecosystem formed by Op Stack, which has attracted many excellent projects and capital. Historically, Op’s price performance has been more aggressive than arb, which may be due to the preference of funds.
Strk is a zk-core Layer2 with less ecosystem adoption and users compared to the first two. However, its circulating market value is lower than arb and op, and it has been declining since listing without a decent rebound.
Metis was a hotspot for a period of time, with the launch on Binance causing a significant pullback.
Manta is a representative of modular Layer2 construction, with a hardworking team and rapid development of ecological projects. Its circulating market value is only 400 million USD, the lowest among them.
Major projects: LDO, SSV, PRL.
The LSD protocol mainly refers to the node-related staking services that appeared after the upgrade of Ethereum from POW to POS. LDO is the largest service provider with the highest TVL in the network and a circulating market value of 2 billion USD.
SSV is the infrastructure setting for decentralized nodes and has performed well recently.
Major projects: Pendle, uni, aave, comp, crv, mkr.
DeFi is probably the most familiar to everyone. As the largest innovative sector in the previous bull market, DeFi applications have been widely adopted in various aspects of on-chain daily life. Core players include uni, aave, comp, crv, mkr, representing DEX, lending, stablecoin trading, stablecoin issuance, etc.
Due to the maturity of DeFi, most projects in this cycle are based on previous upgrades and lack novelty. Pendle, on the other hand, is relatively innovative as it separates tokens into principal and interest for future revenue trading. Pendle has also experienced significant growth in TVL and token price recently.
Major projects: ENA, LBR.
There are various ways to issue stablecoins, one of which is asset-backed issuance, with ETH being the largest collateral asset. With the introduction of LSD and restaking, project parties can use staked ETH to generate liquidity returns. Such stablecoins have a natural yield. At the same time, project parties can provide token incentives and dividends for coin minting and borrowing, resulting in substantial annual returns.
LBR, which became popular in 2023, is one such project. This year, Ena, launched by Binance’s Launchpool, also follows a similar concept, and Ena uses hedging derivatives to maintain the value of collateral assets.
Ena has a TVL of up to 2.5 billion USD, and its circulating market value has reached 1.3 billion USD.
Major projects: REZ, ETHFI.
Restaking is the most valued aspect of the current ETH market trend for me, and there are three reasons for this:
It is a new sector, and market funds often prefer to speculate on new sectors.
It has a small circulating market value, with ETHFI having a circulating market value of 460 million USD and Rezon having a circulating market value of 150 million USD.
Eigenlayer, as the leader, has already confirmed the airdrop quantity, and the trading time on the exchange is not far away.
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