2022 is slowly coming to an end and so are some crypto trends that should have died a long time ago. DeFi in 2023 will be completely different than what you are used to seeing and here are a few reasons why I think that...

Common Sense Rules Once More

After a few years of pure insanity, food farms are slowly coming to an end. Tokens that serve no purpose other than to incentivize liquidity are disappearing into obscurity which means that common sense is back on the menu. Either that or investors are running out of gambling funds but I sure am glad to see the scams die out while feeling sorry for those that lost money thinking that this is really the future of finance.

But, the sole fact that we convinced people that yield farming on random BSC farms is completely normal is an achievement in and of itself.

Say Goodbye To Volatility

It is now more than clear that "real yield" is the next big thing in DeFi. Just look at how GMX is performing these days and everything should be very clear. A simple protocol with about $500M in TVL is slowly grinding toward the top 50 cryptocurrencies but if you don't know what the hype is all about here is a quick rundown:

Real yield has emerged as the only viable DeFi narrative for now. The premise is very simple as well. GMX creates a perpetual exchange where traders can bet on moves the same way they do on centralized exchanges. These trades are executed using the liquidity that was provided by investors and any fees earned are then distributed to token holders.

To combat impermanent loss and volatile moves most of these Perpetual Dexes are creating multi-token pools that mostly consist of stablecoins. It is usually in the range of 75% stables and 25% volatile assets like BTC and ETH. When a new investor comes in they can simply specify how much money they want to put in the pool and it gets automatically converted proportionally into stables and other assets as designed by the protocol itself.

In the case of GMX these assets are represented with the GLP token. When you convert 0.85 USD into 1 GLP you are buying many different stablecoins and volatile assets that make up that 1 GLP token. The price of the token can fluctuate depending on the movements of assets such as BTC and ETH but the volatility is negligible considering how large the stablecoin ratio is.

What this means is that you can finally set and forget your crypto assets and make them work for you. Don't be surprised if this becomes the new norm for saving money in crypto.

Everything is Ve in 2023

I have more than enough reasons to hate the Ve tokenomics model as I outlined in this article but there is no doubt that 2023 will be the year of Ve. Every single chain I have my eye on has dapps that are pivoting toward locking tokens for up to 4 years (sometimes even longer) while giving users a nice APR boost for doing so.

There are many reasons why Ve is becoming more and more popular but we all know that the main goal is just to keep as many tokens out of the market as possible. On chains like Optimism and Metis you are paid to lock tokens through incentives provided by the chains themselves. For example, if you locked $100 worth of Hermes on Metis last week and voted for the right pools you would get about $50 in Metis back the next week but your tokens would remain locked for 4 years.

This trend is speeding up and no one will stop it so get accustomed to it. The good part is that we now have 4 years before the first unlocks start rolling out. In other words, expect circulating supplies to contract immensely in 2023 and consider holding liuid assets as we get closer to 2024 (if crypto is still around) because those will become more scarce than you think.

Most protocols that I follow have well over 50% of their tokens locked for 3+ years now and they are still going with incentivizing even more locks. Give this another 365 days and see where we end up.

The Great Cleansing

It seems to me that the crypto industry is finally ready to grow up and leave behind all of the shitty ideas we came up with. Nex year I only expect a few different niches to dominate the space while others slowly drown in their own incompetence.

Decentralized Perpetual Exchanges
Decentralized Options Trading Platforms
Dexes that share revenue with token holders
NFT marketplaces that share revenue with token holders
Lending protocols
Insurance protocols that share fees with token holders
SaaS DeFi platforms that simplify the process of something eg. Cub Kingdoms

These are the things I am 100% sure are here to stay. As more and more crypto investors get educated on estimating revenue and evaluating a fair market cap for a given project we will see a massive shift toward the "real yield" narrative and for good reasons. If you can make use of my money and earn some interest while doing so you will easily find investors and backers.

It will take some time for the market to wash out the parasites but once that is finally over we will be absolutely ready for a completely new narrative that will generate so much scams you won't be able to process them all...

AI Crypto Coins

Selling great products in crypto is not that hard but selling a pipe dream is the easiest way to turn your imaginary whitepaper into a money magnet. Just look at how people are reacting to GPT3 and other AI tools that can now generate content, images, music and videos from simple text input. Once people that aren't very tech-savvy realize the potential of artificial intelligence you know that con artists will step on the scene and promise all sorts of insane stuff. Here are my best guesses:

AI text generator that actually uses the OpenAI API but can only be used if you pay with [insert shitcoin name]
Any other content-generating platform with the same premise but a different shitcoin
AI concepts that don't exist yet but if you buy [insert shitcoin name] you will get early access. "Think to earn" will probably become a thing by that time.
AI meme tokens but the memes are generated by AI and token holders get exclusive rights to create their own. Expect projects to use phrases like "In-house trained AI model that is designed to do this one specific task no one needs".

Revenue is King

At the end of the day we will have to narrow things down to profitable and unprofitable protocols. If your Dapp can't generate revenue why would anyone even think about buying your token? This is a question you expect everyone to ask as soon as they consider investing but the average IQ of the crypto community isn't as large as many may believe.

If you are looking for investment opportunities look for platforms with revenue. Centralized exchanges are processing billions in perpetual trades every single day and most of that money will slowly trickle down into DeFi because the tech and ease-of-use are simply superior.

There is no KYC, there is no Sam Bankman Fried that will buy yachts and politicians with your money. It is always there and can be withdraw in seconds.

Is this not what everyone signed up for when they got into crypto? The future of finance is here, don't fade it.

Posted Using LeoFinance ^Beta