Continuing the tradition of the oldest publications on cryptocurrencies, the research team of Kyros Ventures and Coin68 would like to share interesting insights found in this report, featuring Animoca Brands for the first time:

• Investor confidence has rebounded, with 70% believing that the downtrend cycle has ended or is about to end.
• Investing based on peer recommendations is a popular trend in Vietnam, with this ratio being 2.5 times higher than in the United States.
• Tether is still leading in the stablecoins, while BNB Chain has lost its throne as the most popular ecosystem.
• Participation rates in GameFi & NFT have risen. Meantime, SocialFi shows a lot of room for development.

Above are just a few valuable insights from the official report. The editorial board hopes that the report will become an essential guidance for those who have experienced, are already involved, or are about to participate in the Vietnam crypto journey.

Dive into our detailed report via the official link here Vietnam Cryptocurrency Market Report H1/2023

The end of the third quarter of 2022 left mixed emotions. Ethereum the Merge couldn’t carry the market going through a gray clouded macro environment. The summer rain LUNA has stopped. Green sprouts from The Merge, ZK-EVM or the reception of NFT and new cash flow bring hope for the last months of 2022.

Kyros Ventures and Coin68 would like to present to fellow readers and investors the Q3 2022 Cryptocurrency Market Report. Our Research team has compiled and analyzed the market fluctuations in parallel with the release of in-depth commentary on prominent topics.

Impact from Macroeconomics

In March of this year, the FED officially announced the first interest rate increase in more than 3 years and offered a prospect of the next 6 increases. Since then, the risk-off sentiment has enveloped the entire financial market with worries about high inflation, which can lead to many consequences that may result in an economic recession.

With 5 times the FED raised interest rates in the fiscal year 2022, the market reacted negatively when Global stocks were simultaneously down bad. For the crypto market, those actions from the US Federal Reserve always bring downward pressure, except for the only increase in July.

However, we can observe a decrease in the price movement of cryptocurrencies which often comes before the official news from the Fed is released. When the news was officially announced, the price did not fluctuate as expected. This shows that the crypto community sentiment has long been shaped by the predicted macro changes of the world’s largest economy.

Specifically, the big caps in crypto all hit bottom in 2022 in the last days of the second quarter when a series of bad macro news from the US inflation situation, the Ukraine war or the black swan UST-LUNA were all priced in. Entering Q3, Bitcoin only dropped slightly by 3.12% and fluctuated in the $18,000-$25,000 price range, even though the hashrate – a measure of network strength – continuously broke the old all-time highs (According to Blockchain.com). Meanwhile, Ethereum is up 25% with the impetus from the historic event, The Merge, and has saved the gloomy crypto market.

The Merge

Ethereum the Merge marks the first time in history that a major blockchain like Ethereum has officially changed its consensus protocol after 8 years of operation. Although it is just one of the important milestones on the road to scaling the Ethereum blockchain, the crypto community in particular and the finance community, in general, reacted quite positively to this event.

The total staking value in the world’s largest smart contract blockchain network has reached nearly 20 billion USD. However, the amount of staked ETH only accounts for about 12% of the current total supply of Ethereum (according to Staking Rewards). Ethereum’s POS is just the beginning of the next generation of disruptive infrastructure, geared toward scalability and cheaper transaction costs. All contribute to bringing blockchain closer to mass application.

According to data from Coin68.com, Ethereum the Merge is the leading topic among Vietnamese readers, accounting for 3.2% of the total views. Right after that with 2.4% can not be any other name – Ethereum Proof of Work, hereafter referred to as ETHW. Promised to inherit the power from the Ethereum POS senior chain, however, projects built on ETHW did not attract the support of OG builders like Aave, Compound, Curve, or Yuga Labs (the company behind BAYC). Support for ETHW mainly comes from exchanges, speculators and airdrop-hunting groups.

ZK-EVM Race

Following Polygon’s announcement of the deployment of ZK-EVM, the popularity of other rollup projects like zkSync and zkScroll also skyrocketed. In fact, there were many comparisons between the solutions of these three platforms. However, because the majority of the plans are still under development and have not yet been implemented on the mainnet, evaluation of the benefits and drawbacks of each solution seem vague.

What sparked the interest in ZK-EVM and fueled fierce competition among projects based on this technology?

First, we must comprehend ZK’s role in reducing the amount of data that must be stored on the blockchain (because the validation of transactions now only needs to rely on the validity proof generated by ZK, not all data related to the transaction). Unfortunately, the Ethereum virtual machine was not designed to optimize the implementation of ZK technology, resulting in ZK-rollups (one of the Ethereum network scaling solutions) being unable to directly support smart contracts. However, with zkEVM, smart contracts running on Ethereum’s virtual machine can now be deployed on ZK-rollups, saving data storage costs while improving transaction validation speed over ZK-rollups. Rollups that are optimistic, allowing workload offload solutions on the Ethereum network to work more efficiently.

Further, ZK technology can assist in balancing user privacy with system security. Although anonymous, blockchain today does not guarantee user privacy because anyone can trace transactions and link them together to determine the user’s identity. Indeed, this is how hackers frequently exploit to carry out dusting attacks and steal cryptocurrency holders’ information in order to impersonate them and perform transactions that drain money from the victim’s wallet. On the other hand, users benefit from the transparency provided by blockchain, which makes data more secure because it is stored on a decentralized network and is difficult to edit. With ZK technology, the blockchain will continue to be secure and decentralized, and users won’t ever have to be concerned about privacy invasions again. This opens up a whole new Layer 3 layer for development projects and provides more advanced financial and social solutions.

Layer 2 projects: wen token?

The rumors about Ethereum Layer 2 projects launching tokens are increasing day by day. In mid-July, StarkNet accidentally leaked its token through an email exchange with Zhu Su when he was trying to prove his innocence to the crypto community. Basically, StarkNet’s token also focuses on three main uses, which are (i) governance, (ii) payment of transaction fees, and (iii) participation in the consensus mechanism on this Layer 2 platform. Noted that, after the first airdrop of Optimism, no Layer 2 project has made an official announcement about the foundation token for its project so far.

The fact that a Layer 2 project has launched a foundation token has so far caused quite a bit of controversy because firstly, it can cause a loss of value for the Layer 1 blockchain token (ETH) when users use the tokens of other blockchains. This Layer 2 platform to pay transaction fees and secondly, the token launch seems to only act as a method of promoting the project, not bringing more practical value to users. The lesson of tokenomics of DeFi projects is still there: if the use of the token is only “Governance,” it is easy to be dumped to the market, thereby also creating a bad reputation.

Even so, we still have names we need to pay attention to in this Layer 2 array. Alpha corner: Aptos, Arbitrum, Aztec Network, Berachain, Sei Network, Shardeum, Sui Network, and zkSync.

Funding landscape

Fundraising in the third quarter was as bleak as the market value in general, when both the Funding value and the Number of Deals fell by 67% and 40%, respectively. However, we can identify a prominent trend in the money flow during this time.

Infrastructure, especially Layer 1, is getting more attention than other segments. In the top 10 biggest deals last quarter, there were 6 deals in the Infrastructure segment, 2/3 of which were Layer 1.

The wave of industry-leading crypto VCs moving to raise capital from institutional investors is becoming increasingly apparent. Recently, one of the largest funds, Pantera Capital, announced it will launch the second Blockchain fund worth $1.25B, continuing to invest in equities and tokens. Before that, the web3 game giant, Animoca Brands, also raised $185 million from two consecutive funding rounds just a month apart.

Large funds are accumulating assets through raising capital or using existing capital to continue to buy shares in crypto companies in their portfolio. For them, belief and vision in a growing crypto market in the long term is a priority over the short and medium-term fluctuations. According to the statements of the heads of Pantera or Animoca Brands, they share the view that the crypto market or web3 games in particular will gradually separate from the traditional financial/game market. Thereby, they expect to earn the advantage of being the first to explore the technology application gap – the Chasm, before the Web3 world goes mainstream (Figure 6).

One of the Web3 niches that utilizes “the Chasm” most actively is NFT.

NFT welcomes leading brands

MetaMask recently added an NFT margin feature for institutional investors; and luxury brands such as Gucci, Burberry, Tiffany & Co., and Walmart have announced plans to enter the NFT market in the third quarter.  Why is the NFT market so attractive to these giants?

Leaving aside the debate over the true benefits that blockchain and NFT can bring to brands, it is undeniable that the heat in this market is tremendous, so it is understandable that brands want to capitalize on the community sentiment to promote their image. In fact, we have a variety of less expensive, easier-to-use technologies to assist brands in engaging with their audiences. However, we do not have a wide range of technologies that are as appealing to retailers as blockchain and NFT.

With respect to the NFT market, top-notch NFT collections such as Moonbirds, Dust Labs (the company behind the blue-chip project DeGods on Solana), and Doodles have also announced fundraising for their projects recently. On the one hand, the participation of venture capital funds can trigger a question about the ownership and control between equity holders and NFT holders. On the other hand, this will also be a great foundation for NFT projects to expand their network to companies in traditional business industries to explore new development approach that is more well-suited to real-world demand.

The crisis has come to an end

The liquidity spiral associated with Terra-LUNA’s collapse in May peaked last quarter. A series of large funds were seriously affected by this shocking event, leading to the decision to file for mass bankruptcy in the third quarter. Three Arrow Capital posted on July 2, the heel note was followed by Voyager (July 5) and Celsius (July 14).

It can be seen that this domino collapse is quite similar to financial crises in the traditional market, where financial institutions operate by leveraging each other’s financial leverage and liquidity to make a profit. Once there is a black swan event or liquidity crisis, institutions with weak fundamentals will quickly be blown away by the market. In other words, the way 3AC, Voyager or Celsius collapses comes with the CeFi model.

Meanwhile, DeFi projects and protocols have weathered the stETH-ETH depeg with careful preparation in advance. Even so, the total value locked in DeFi protocols has plummeted to this year’s low, returning to the $50 billion mark before the DeFi summer 2021 takes place (Figure 8). After each purge, we can expect more stable and sustainable DeFi models.

Still, some big hacks

The Nomad cross-chain bridge is the biggest case with a total amount of up to 180 million USD (according to REKT Database). The cause comes from Nomad’s smart contract error, although previously pointed out by the auditing unit Quantstamp, negligence in the patching process led to the unfortunate incident. More importantly, the stolen money not only flowed to the hacker group’s pocket but also to a group of individual users when they just copied the transaction of the person who first discovered the vulnerability.

Next is the Wintermute hack that caused $160 million in damage. This bug was also warned by the 1inch team earlier, after discovering the vulnerability of the Profanity wallets. Although the Wintermute team blacklisted all affected accounts, they missed one wallet which was exploited by the hacker. Fortunately, this was a wallet that was only exposed to Wintermute’s DeFi transaction, so the company could still operate normally.

The most notable is the scandalous hack of the Slope wallet, although the total damage is not as much as the two projects above. There are more than 9,000 wallets affected by this hack, and the loss is about 5.2 million USD. The cause of this problem was that Slope had accidentally sent the user’s seed phrases passwords to their server, and Slope’s mistake was not encrypting these seed phrases but storing them as readable text, so anyone with access to this server could get the user’s seed phrases. However, Slope still denied that the fault of this hack was entirely his own. Also because it did not make an official conclusion about the hack, Slope also did not have any compensation for users and has been silent throughout the period from mid-August until now.

Thus, it can be seen that although operating on the blockchain platform to ensure transparency, there are many parts of the infrastructure of cryptocurrency projects that depend on centralized devices and infrastructure, in a closed environment where users cannot fully check the risks that may happen to them. On top of that, the absence of a legal framework to penalize cases like this has created conditions for projects that do not take proper responsibility, quietly disappear, and leave all the damage on the user’s side.

Regulation

On DeFi and CeFi

One of the most remarkable events in the previous quarter on the cryptocurrency market was the US Treasury Department’s decision to sanction Tornado Cash for aiding in money laundering activities. The crypto community on Twitter has reacted against this action by the US government, assuming that they have overstepped their bounds and obligations. However, it should be reconsidered that while they advocate for the decentralization of Ethereum specifically and blockchains in general, who will speak up for those hurt by cyberattacks that result in losses of billions of dollars in this wild west market? Who will be held accountable for the global economy’s impact from billions of dollars worth of money laundering? In this case, government intervention is required to make sure that the market is run in the most effective and equitable manner for all participants.

A decentralized culture does not imply a fair one.

Also related to the legal issue, a relative of a former Coinbase executive recently pled guilty to insider trading in a US court in order to recover more than $1.5 million for others involved in the case. Ironically, while blockchain is frequently praised for the “transparency” it provides to its users, there are still flaws in the market. Without the intervention of law enforcement, it appears that the most vulnerable will continue to be retail investors.

Stablecoin

It is impossible to ignore the US government’s efforts to impose “martial law” for stablecoins, especially after the disastrous collapse of LUNA and UST in May 2022. Recently, the US introduced legislation to prohibit stablecoins backed by the same asset class as the issuer, and the US may force stablecoins in circulation to be backed by highly liquid assets such as cash or US Treasuries, reducing the decentralization of these stablecoins.

In a related move, MakerDAO founder Rune Christensen has proposed “floating” DAIs so that they are no longer tied to a $1 value and are completely decentralized. In fact, Rune’s strategy is risky because DAI, in comparison to other centralized stablecoins such as USDT and USDC, has not been widely adopted. Furthermore, Rune’s proposal’s supply-demand adjustment for DAI is heavily reliant on demand for yield farming with DAI – a lesser demand in daily life and is merely market speculation.

From the writer’s point of view, a stablecoin cannot be fully “decentralized” in order to perform its function of being “stable” and pegged to $1.

This is a trade-off between decentralization and sustainability of the cryptocurrency economy that the community must learn to accept in order for the market to develop in a more healthy manner in the future.

Commodities or securities?

The regulation of the cryptocurrency market as securities is also a serious discussion. The authority to regulate cryptocurrencies (except stablecoins) is more or less related to the CFTC and the SEC. 

As for cryptocurrencies like BTC or ETH, they are defined as commodities because their prices are determined entirely by market supply and demand, not by “the efforts of a third party”, which is a vital element of the Howey test — a test used to decide whether an asset class is securities. 

Thus, tokens of some Defi protocols with the primary use of governance and staking will be quickly considered securities because they satisfy almost all the factors in the Howey test. Because purchasing these tokens is a monetary investment in a business with the expectation of benefit and profit from the efforts of a promoter or another third party. However, in the future, projects may add some utilities to “circumvent the law” to be regulated by the CFTC, not by the SEC, because securities laws will require the company to make more reports to prove its transparency when entering the market.

Epilogue

The cryptocurrency market is gradually gaining more and more attention from the masses, starting from lawmakers, to public companies, and ordinary users will be the final destination. Hacks, model collapses, and major network upgrades all add to the crypto landscape with more contrasts in the already bleak macroeconomic and geopolitical landscape. Our focus should be on building and supporting infrastructure platforms that develop a strong foundation. Let’s finish the year 2022 strongly with Kyros Ventures & Coin68!

Dear readers of Kyros Ventures,

After preparing and conducting research about cryptocurrency investments in Vietnam, the Kyros Ventures, Coin68 together with Ancient8 and GameMarketCap teams are honored to launch the official version of “Vietnam Cryptocurrency Market Report 2021” to all you readers, to those who are interested and would like to dive deeper into this emerging yet dynamic financial market.

Prior to getting down to the detailed content, let’s first warm-up with some fascinating highlights our teams have collected from the “Vietnam Cryptocurrency Market Report 2021”!

The number of newbies starting to join the market keeps rising

While in the H/ 2021 Report, just nearly 40% of survey respondents said that they participated in the cryptocurrency market recently, up to now this number has reached approximately 60%. 

The trend of mid-term investment is getting stronger, but the heat of this market has not yet to be cooled down

Different from the inclination to HODL which pervaded in the former half of 2021, other investment styles with shorter time horizons – based on day/hour or based on week/month have become more popular recently. Nevertheless, those who say that they will keep raising the allocation to cryptocurrency in 2022 still account for more than half of the total surveyees, not to mention that the number of these people has risen from which of the last 6 months.

Defeating Smart Contract platforms & DeFi, NFT & GameFi become the most anticipated trends from investors in 2022

The captivation of smart contract platforms and DeFi cannot be denied as they are among the major “concrete skeleton” of this cryptocurrency market. Nonetheless, NFT and GameFi have risen to receive the highest expectation from investors with well north of 50% of votes when being asked about the dominant trend in 2022, an impressive boom compared to the humble figure of 18% in the survey from the former half of 2021.

The large expectation in GameFi can be explained by the huge returns that investors have realized since more than 40% of GameFi investors in our survey claim that their capital has increased by two to five times when pouring their money into this sector. Notably, even when these investors suffer losses from GameFi, they do not intend to reduce their allocation to this cryptocurrency sub-field.

These are just a few noteworthy pieces of information gathered from the Vietnam Cryptocurrency Market Report 2021. Please download the Report here to read more of other amazing highlights!

Q4 is undoubtedly the most volatile period of the crypto market in 2021. Such events of BTC hitting new ATH in early November and then suddenly dropping below $50,000 in early December; notable technological changes of the blue-chips as well as new trends coming up are gradually shaping the way investors allocate their assets in this emerging and lucrative financial market.

Through the Q4/2021 Cryptocurrency Market Report, the Kyros Ventures Research Team hopes to give you an overview of remarkable highlights of the past 3 months so that you can make the best investments and projections for 2022!

BITCOIN Q4/2021

After the recovery period in Q3, at the beginning of Q4, the $BTC price, as well as the entire crypto market, has seen improvement. Numerous news about regulation benefiting $BTC along with new trends and products launched have driven more capital flow into the crypto market, thereby making $BTC reach its ATH at nearly $69.000 (according to Binance). The market capitalization has reached 3 thousand billion USD for the first time on November 10 (according to CoinGecko).

$BTC PRICE AND MAJOR EVENTS

Below are some significant events in Q4:

• 1/10: the situation was more optimistic for $BTC when rumors about an ETF launch spread
• 20/10/2021: when ProShares Bitcoin Strategy officially traded Bitcoin Futures ETF, $BTC price has continuously reached ATH until 11/11, for the first time in the history, $BTC price was set at roughly $69,000
• 12/11/2021: Miami became the first city paying dividends for its citizens by $BTC when they buy its cryptocurrency 
• 15/11/2021: Taproot, the first upgrade for $BTC since 2017, was officially live, helping the development of smart contracts on Bitcoin blockchain more convenient
• 16/11/2021: $BTC started its “red fire” days when CFO of Twitter, Ned Segal, said that investment in $BTC just “doesn’t make sense right now”. Afterward, India became the next country banning $BTC while Biden’s administration, step-by-step, was completing their $BTC tax regulations. Even the information about establishing a “Bitcoin City” of El Salvador could not help the bear market 
• 12/2021: News about the new COVID-19 variant, Omicron, once again threatened the global financial markets. Meanwhile, investors were getting impatient with the SEC when they kept postponing the approval for the $BTC ETF. Perhaps such delay has made Fidelity, a financial company headquartered in Boston, the US, quietly launch a spot ETF in Canada, not the country of origin

SUPPLY SHOCK CARRIES ON

At the end of Q4/2021, on-chain data still shows that Bitcoin’s circulating supply is contracting.

The total supply of Bitcoin on exchanges keeps declining tangibly and reaches its all-time low for the last 3 years despite positive price movement in Q4/2021. Particularly, at the end of Q3/2021, the amount of Bitcoin on exchanges was recorded low at 2.457.417, at the end of October and the beginning of November, when the $BTC price continuously reached new ATHs, there was no sign that Bitcoin was pumped to exchanges and reversed the trend. In contrast, the total supply of bitcoin keeps reducing considerably and went to a new all-time low on December 22, 2021 at 2.303.241 Bitcoin.

In the meantime, $BTC supply which is low in liquidity and does not circulate on exchanges keeps rising remarkably and currently stays at 76.13%, while nearly reaching 76.26% in May. As seen on the chart, the relationship between these 2 metrics (price and low-liquidity $BTC supply) has been relatively positive within the past 18 months.

Ending Q4, $BTC supply with low liquidity keeps hitting new ATH when long-term investors of Bitcoin continually buy more new $BTC when the market still witnesses low-volume selling sessions and liquidations of long positions.

ETHEREUM Q4/2021 OVERVIEW

In Q4/2021, we have witnessed a lot of “explosion” of new ecosystems: Solana, Avalanche, Fantom… There are many views that Ethereum is in danger of being surpassed. So, let’s take a look back at Q4/2021 to see what Ethereum is holding.

EIP – 1559

EIP – 1559 launched with upgrades that helped alleviate the problem of expensive fees on Ethereum with a “base fee” proposal.

Base Fee has remained relatively stable.

However, gas on Ethereum is still unstable and depends a lot on market circumstances. If there are times when the market is active or opposite (Panic Sell), gas fees on Ethereum still increase quite a lot compared to usual.

Up to this point, approximately 1.3M ETH has been burned, equivalent to a value of about $4.9B. This is a huge number.

Ethereum’s Total Revenue continues to outperform many other top blockchains.

ETH 2.0 BEACON PHASE

The number of people who believe in and support ETH 2.0 continues to increase, which is clearly shown by the amount of ETH participating in staking on the Beacon 2.0 chain. With the launch of ETH 2.0, many new projects to solve the staking problem on the ETH chain have been built and developed, of which the most successful is Lido Finance.

While not having a prominent boom like other small ecosystems, in general, Ethereum still has a certain growth with Total Value Locked continuing to reach All-time-high, over $155B. This number is about 9 times higher than the two following ecosystems, Terra ($18B) and Binance Smart Chain ($17B). It can be said that Ethereum still retains its certain values and maintains a stable position and growth momentum, despite the fact that there are many new competing ecosystems.

PROTOCOLS ON ETHEREUM

We will continue to understand deeper by looking at the evolution of protocols on Ethereum.

The top 10 protocols with Total Value Locked on Ethereum have seen a marked change, with Lending and AMM giving way to the Curve and Convex. Curve with its continuous integration, expansion, and increasingly streamlined tokenomics has attracted a large number of users, with Convex growing prominently in late 2021.

Lido Finance also entered the top 10 protocols with the highest Total Value Locked with the success of its Liquid Staking product. With gas costs still relatively high on Ethereum, Dex AMMs in general have difficulty maintaining their positions.

Regarding the number of users, in the last 3 months, Ethereum has continued to maintain a growth rate despite expensive gas fees. To explain this, we can find a number of reasons such as:

1. Crypto is increasingly mass-adoption, so the number of participants experiencing crypto-related products, including Ethereum, also increases.
2. Despite the expensive cost, Ethereum is still home to a large concentration of assets in the market with top projects.

In addition, there are quite a few protocols such as Curve, Sushi, and AAVE that are gradually expanding and developing on Layer-2 as well as other ecosystems. This both has the effect of reducing the load on Ethereum itself, but also creates the risk of liquidity and user fragmentation. If there is a truly more suitable and efficient ecosystem, Ethereum could lose a lot of market share.

THE BOOMING OF ETHEREUM LAYER 2

There are many solutions to approach scaling and gas problems on Ethereum, ETH 2.0 is an on-chain solution and Layer 2 is an off-chain solution.

In 2021, gas fee on Ethereum recorded the highest, this is a big challenge of Ethereum but a big opportunity for layer 2 solutions.

At the moment, Polygon is the most successful layer 2 solution, which completed the main legos in its ecosystem, total value locked got $5.5B at the end of 2021. However, other layer 2 solutions such as Arbitrum, Boba Network, Metis Dao also have solid growth recently.

New solutions like Starkware or zkSync are expected by the community. In Q4, Starkware successfully raised $50M in Series C round with the participation of Three Arrow Capital, a16z, Alameda Research,..; meanwhile zkSync closed the Series B round with $50M from a16z, Crypto.com, Bybit,….

BIG UPDATE IN NEAR FUTURE

In 2022, the most expected thing is the Merge phase of ETH 2.0 is the combination of Beacon and ETH 1.0. This means the whole status of Ethereum’s chain and smart contract will be deployed on Beacon’s chain using the PoS consensus. At the moment, the Merge phase is in testnet and if the combination is successful done, Ethereum network will come to the final phase – Shard Chain which help Ethereum scaling when assure the security of the network.

TOP 5 BREAKTHROUGH SMART CONTRACT PLATFORMS IN Q4

Not only in Q4/2021 but the entire 2021, fierce competition has been seen between different smart contract platforms to expand their market share as well as community trust. Besides those Layer 1 which have been exploding in 2021 and draw a lot of attention to themselves such as Solana, Avalanche, or Fantom, there are still many new ones worth anticipating with abundant prospects to grow in 2022. Let’s take a glance at these 5 smart contract platform tokens which have witnessed the strongest increase in price in Q4/2021 and demystify their ignition for the last 3 months!

KADENA

Kadena is a blockchain platform using PoW mechanism to enhance security for transactions but also ensure scalability and safety when deploying smart contracts. Different from other blockchains, Kadena uses its own programming language called Pact, designed to automatically detect bugs and help developers write smart contracts more securely.

In Q4/2021, Kadena has had many major events which help boost its Total value locked and attract more users to the ecosystem, remarkably:

• The launch of wrapped BTC on Kadena in mid-August 
• $wKDA – the wrapped version of $KDA to bridge to Ethereum is created, which also marks the initiation phase of Kadena to expand to other platforms such as Terra, Polkadot, Celo, Cosmos… 

• Liquidity is expanded with $KDA being listed on Crypto.com and Gate.io
• The NFT landscape on Kadena is gradually rising when UFO Gaming announced their plan to  build an NFT gaming platform on this blockchain and Marmalade, the first NFT platform on Kadena, is introduced in early December
• At the beginning of November, Kadena has launched the Chainweb-Mining-Client software allowing miners to build their own nodes without going through a mining pool

It should be mentioned that the ecosystem of Kadena has still been in its initiation phase so far with the absence of major fields to attract more capital flow. Two notable fields – AMM (KadenaSwap, Andedak & Kaddex) and NFT have yet to see impressive milestones. Nevertheless, it is this newness that makes $KDA a potential investment for those new participants joining this crypto market or for those who have missed the enormous deals of the blue-chips such as $SOL, $AVAX, or $ATOM.

DUSK NETWORK

Dusk Network is a blockchain platform aiming at users’ privacy and is designed for financial applications with Zero-knowledge Proof technology.

In Q4/2021, the growth of Dusk Network is mainly driven because of these events:

• The trading pairs of $DUSK are listed on Bittrex Global, Bitrue, Bybit, HitBTC, CoinEx, Bancor, and even the crypto-investment app ONUS Finance
• In the middle of November, Dusk Network announced the very first recipients of its 5 billion USD-worth grant introduced in June/2021 in an attempt to develop new technologies to build its blockchain platform

PHANTASMA

Phantasma is a blockchain platform specializing in NFT and gaming with neutral-carbon certification.^[1] Another special feature of Phantasma is its Smart NFT technology with outstanding attributes, such as:

• NFTs are easily programmable and adjusted/upgraded
• Many NFTs can be bundled together to create a new NFT
• Projects can create NFTs which limit the time of usage for users, thereby allowing them to try a new product before deciding to make their purchase decision
• NFTs are minted instantly, users don’t need to wait or pay substantially high fees to finalize the transaction
• NFTs can be embedded with other assets to create a minimum value for itself
• Creators can attach a secret link to another file which can only be opened by that NFT’s owner

A few catalysts for the rise of $SOUL in Q4 include:

• Save Planet Earth (TickerL $SPE), a British-headquartered company established in 2021 with a vision to solve environmental problems and climate change, officially chose Phantasma to be the blockchain platform to issue carbon credit at the end of October. The resonance of this partnership has even lasted to the end of November when the first NFT-based carbon of Save Planet Earth is sold on the NFT marketplace GhostMarket
• Facebook and other giant tech companies announce their plan to join the metaverse landscape. All NFT and gaming projects benefit from this hype, including Phantasma
• The famous American filmmaker Kevin Smith minted his NFT on Phantasma and claimed that he would hold $SOUL until it reaches $4.2

• New projects are built or expanded to Phantasma, namely Blood Rune, DeSpace, …
• At the start of December, Phantasma announced a partnership with Polinate, a crowdfunding platform, and Netvrk ($NTVRK), a metaverse project

TERRA

Some major events on Terra ecosystem in Quarter 4 are:

• Mainnet upgrade from Columbus-4 to Columbus-5 at the end of September. Main points in this upgrade include:
  • 100% income from UST issuance, the stablecoin of Terra, will be burnt to reduce $LUNA supply (for every $UST minted, 1 $LUNA will be burnt)
  • Prioritize mempool for oracle votes to help the price update when minting $UST more accurate
  • Transaction fees on Terra will be paid directly to validators or authorized entities instead of flowing to reward pools as previously, therefore increasing benefits for staking $LUNA
  • Functions of the Inter-blockchain Communication of Cosmos SDK will be integrated into Terra blockchain, helping $UST liquidity flow to other blockchain platforms on Cosmos such as ThorChain, Secret Network, … 
  • At the end of November, news about FED’s opinion on stablecoin regulation has driven the popularity of algorithmic stablecoin as $UST
  • Investors rushed into buying $LUNA to join the lockdrop event of Astroport on December 14. Particularly, this DEX has pulled more than 1 billion USD, half of which is $LUNA, to the Terra ecosystem

Hitherto, according to Defi Llama, the total value locked of Terra has even passed Binance Smart Chain to be in the top 2, right behind the most popular smart contract platform in the world Ethereum.

Nonetheless, tokens of DApps on Terra did not enjoy much of the rise of $LUNA. Only 5/13 tokens in this ecosystem (excluding stablecoins) saw positive price change ($ANC, $LUNI, $ORNE, $LOOP) since late September, based on the data on CoinGecko.

At the moment, nearly half of the TVL on Terra belongs to Anchor Protocol, the most used lending platform in the ecosystem.

With the current number of DApps of only about 150, it can be seen that the Terra ecosystem is yet to enter its maturity state. However, investors can expect a strong explosion of $LUNA in a near future after the 150 million USD-worth incentive program introduced in July 2021 is activated gradually to support projects built on this platform.

SECRET NETWORK

Secret Network is a blockchain platform allowing developers to write smart contracts freely but still ensuring the privacy of user data.

Below are some crucial incidents happening on Secret Network for the last 3 months:

• Mainnet upgrade – Supernova – since the launch of Secret Contracts in September 2020. This is a big turning point for the ecosystem as it also includes the Inter-blockchain communication protocol of Cosmos to Secret Network blockchain
• Binance announced the re-opening of $SCRT withdrawal. This has helped the total value locked on SecretSwap, the first AMM of this ecosystem, soar by roughly 30 times

• Shade Protocol, an array of connected DeFi applications with the privacy-preserving feature, announced token airdrop for $SCRT, $LUNA, and $ATOM hodlers
• At the end of October, Secret Network announced a partnership with OpenSea to launch an NFT collection 
• In early November, Quentin Tarantino, a prominent American director said that he would publish his handwriting scripts as well as documentaries of the classic Pulp Fiction as NFTs on the Secret Network blockchain
• In the middle of December, StashhApp, was officially live on Mainnet, promising the development of NFT and gaming field on this extremely potential blockchain platform

GAMEFI: STRONG FUNDAMENTAL ATTRACTS BIG MONEY

One of the most explosive trends of 2021 that we cannot ignore is the GameFi trend. It all started in the summer of 2021 when Axie Infinity completed the transition to the Ronin sidechain and perfected its Play-to-Earn model. At the same time, when the Covid epidemic raged, hundreds of millions of people fell into unemployment. Axie Infinity “accidentally” became an effective solution to this difficult problem.

The phenomenon of Axie Infinity has brought a new breath to the cryptocurrency market and created the basis for a series of projects related to blockchain games to emerge and launch many new services, attracting an extremely large number of users for this market niche.

On-chain data from DappRadar show that the number of Unique Active Wallet – UAW (wallets) active on GameFi applications reached an all-time high of 1.5 million users on Nov. In addition, in 2021, the number of people active on GameFi applications accounts for 49% of the total number of people operating on decentralized applications.

As a matter of fact, when the attention and demand towards the GameFi market is too great, the supply will follow to catch up with this trend. A series of new GameFi applications were born and converted user bases from dozens of different blockchain platforms not only on Ethereum.

The need to build new game applications and game-related platforms and tools has driven money from top tier venture capitals to flow into this market niche when this is just the beginning, investors seem to see potential in every corner of this market. In addition to gaming units like Forte with a record investment of up to $725M, Solana Ventures and Meta (renamed from Facebook) are also watching and placing the first bricks enter the GameFi market.

NFT Q4/2021 OVERVIEW

NFT KEY EVENTS AND STATISTIC

It can be said that 2021 is a successful year for NFT, this technology is getting more and more attention with the participation of influential public figures, especially artists around the world.

“Think about it this way: The internet we have allows for the easy transfer of information. We costlessly swap copies of news articles, music files, video games, pornography, GIFs, tweets, and much more. The internet is, famously, good at making information nearly free. But for precisely that reason, it is terrible at making information expensive, which it sometimes needs to be. What the internet is missing, in particular, are ways to verify identity, ownership, and authenticity — the exact things that make it possible for creators to get paid for their work.” Ezra Klein

Let’s take a look back at some NFT market metrics for Q4 and 2021:

The floor price in Q4 is hovering around 1.05 ETH. The number of wallets holding NFTs also hit an all-time high on December 30 with 11.745 new wallets entering the market.

Compared to Q3, the trading volume on NFT exchange OpenSea in Q4 is not as impressive, but in terms of average price per NFT, we can see the growth of this particular token as collections NFTs have become a digital asset – a store of value that helps investors in their portfolio.

PUNKS & APES ARE TAKING OVER TWITTER

CryptoPunks and Apes (BAYC) are the 2 most famous PFPs (Profile Picture) collections in the crypto community. Following the trend developed by these 2 OG collections, there have been countless other collections of NFTs created for the purpose of placing user avatars.

NFT is a perfect piece for social networks. They can represent an individual’s digital identity and brand image, just like brands rely on brand identities, taglines, images, brand ambassadors, and more. As an intangible asset, the crypto community can also leverage NFTs in similar ways as NFTs can become part of a personal brand and cannot be sold or separated from the owner’s identity.

Imagine you live on the internet. The way the world primarily knows you is not through your face or your clothes—it’s through your digital avatar. Of course, you are willing to spend a lot of money on something like a CryptoPunk: It’s your face to the digital world. Plus, it’s the key to entering a small, unique internet club. Being a CryptoPunk owner as a crypto-native is the equivalent of being an Augusta National member as an old-school businessperson.

Ethereum co-founder, Taylor Gerring, purchased an NFT Bored Ape Mega Mutant Serum for 888 ETH ($3.6M). Regardless of whether you believe in NFTs or not, people are still spending millions on this asset class and no sign of stopping. They are not just JPEGs but also a way for people to assert themselves and identify their personal brand on social networks. In the hierarchy of needs of psychologist Maslow, this is the highest level of need that people want to be satisfied after other needs for physical, security, love, self-esteem have been satisfied..

Currently, the current floor price of BAYC has surpassed that of CryptoPunk, at 53.9 ETH ($215,350) compared to CryptoPunk’s floor price of 52.69 ETH ($210,515).

NFT ARE THE KEYS TO ACCESS METAVERSE

Emphatically attached to the achievement of NFTs and blockchain games, the viewpoint for the metaverse and virtual universes was at that point promising. In any case, later on Facebook’s rebranding event, the metaverse viewpoint detonated.

The NFTs and digital currencies connected with metaverse projects experience a genuine worth of examination, while the interest for this sort of dapps filled. In Q4, virtual world dapps have generated more than $402M in NFT trading volume, increasing 615% the numbers seen in Q3. Plus, the number of unique traders doubled quarter-over-quarter with more than 50.000 unique traders registered in Q4. 

Games like Roblox, or Minecraft, where the community can build on top of infinite virtual space, have been quite popular since the last decade. And Blockchain-based virtual worlds are starting to gain the same type of traction. 

The price on average for virtual lands in The Sandbox surged almost 500% from the end of October. In December, The Sandbox parcels were traded for $14.976 on average, a significant growth from October’s $2.500 average. Brands and celebrities like Adidas, Atari, The Walking Dead, Snoop Dogg, and Smurfs, have taken part in The Sandbox’s virtual world. (Dappradar)

The Fashion Street Estate in Decentraland sold for 618.000 MANA ( $2.42 million). In the same timeframe, digital lands inside CryptoVoxels, another blockchain virtual world are being sold for a price 25% higher than the ones registered in October. 

CELEBRITIES AND BRANDS GO NFT

Source: Dappradar

In the narrative for mass adoption, celebrities and brands have a solid voice. 

• Fashion giants Gucci, D&G, and Burberry make their appearance in the space after launching their respective collections. 
• Coca-Cola partnered with Decentraland to establish unique wearables, while Pepsi launched its first 1,893 NFT (The Mic Drop) pieces.

Source: Pepsi

• NIKE, Inc. Acquires RTFKT – A virtual shoes company that makes NFTs and sneakers ‘for the metaverse’
• Adidas reveals new NFT project with Bored Ape Yacht Club
• Katy Perry launched her first digital collectible NFT on Dec 14 with Theta Network

Let’s look back as we move forward to 🍄#PLAY🍄

My ✨FIRST EVER✨ digital collectible NFT drop w/ @Theta_Network & @ThetaDrop officially goes live tomorrow @ 1pm PT! Sign up @ https://t.co/prMi6m4E0s now to register and pre-fund so u can jump on some limited edition NFTs! 🦁👀 pic.twitter.com/yIS7GKBq4N

— KATY PERRY (@katyperry) December 14, 2021

• Legendary basketball player Michael Jordan launched NFT platform for athletes, HEIR

2022 is still going to be a sublime year for NFT

• NFT music will thrive with the participation of famous artists, especially as musical concerts are gradually allowed to reopen in some countries and more, specifically in the Metaverse.
• Large companies will start to accept NFT more, not only in JPEG but also as a social token that allows holders to have certain privileges, such as participation in events, meetings, networking, membership, …
• NFTs can be leveraged to tokenize both tangible and intangible assets. Each NFT can act as a publicly transparent, trackable certificated, for any given asset, recording its trading activities.
• NFT will gain more utility in the world of blockchain and cryptocurrency. With major brands like Visa joining the NFT, the NFT is likely to be applicable to a wide range of industries.

WEB 3

Worldwide interest in the term “Web3” also reached all-time high on Google in December, increasing about 400% since the beginning of October. 

“Web3” is a term that covers the entire Cryptocurrency market. Web3 has become a proxy for new economic ideas on how the Internet should be architected, and how individuals should share in this value creation. The Web3 ecosystem now represents an expansive ecosystem of new ways for creators and communities to monetize, and new models for internet-native communities to collaborate. 

Chris Dixon called it 

“The internet owned by the builders and users, orchestrated with tokens.” 

Eshita described the Web1 -> Web2 -> Web3 evolution as Read-Only -> Read-Write -> Read-Write-Own.

Not only are individual investors interested in Web3, but ventures capitals are also giving certain favors. In Q4/2021, the amount invested in Web3 projects reached $1.19B, an increase of 320% compared to Q3. The number of invested projects also increased from 50 projects (Q3/2021) to 62 projects in Q4/2021.

Tesla CEO Elon Musk and Twitter Co-Founder Jack Dorsey ⁠—Two of the most famous tech billionaires in the world ⁠— also recently tweeted about the keyword “Web3”.

You don’t own “web3.”

The VCs and their LPs do. It will never escape their incentives. It’s ultimately a centralized entity with a different label.

Know what you’re getting into…

— jack (@jack) December 21, 2021

Has anyone seen web3? I can’t find it.

— Elon Musk (@elonmusk) December 21, 2021

Currently, decentralization is not really clear. However, Web3 is still a huge technological leap forward from the current centralized platforms. The future will tell how the new web quality delivered by the Web3 infrastructure will accumulate value and meet user needs for decentralization, ownership, verifiability, and enforcement.

As we move to a decentralized data-driven web, one of the key challenges will be how users and developers can efficiently and cost-effectively bring blockchain data into applications. If Web3 is to be decentralized, then a robust, secure, and economical network infrastructure is essential.

DAO

DAO stands for Decentralized Autonomous Organization. DAO is an organization model but has distinct features compared to conventional models:

• Autonomous: This is one of the most basic factors that distinguish a DAO from a traditional organization. DAO is independent of any government, organization, or individual. A DAO like MakerDAO, can completely allow users to access and interact with its protocol from anywhere in the world, as long as they have a computer, smartphone, and Internet connection.
• Decentralized: Currently, DAO protocols such as Uniswap, MakerDAO, FWB, UniWhale … are all accessed through the Internet, but hidden behind that is that it is built on Blockchain platforms like Ethereum. Based on blockchain technology and cryptocurrency (coin/token), DAO can become decentralized.

The decentralization of the DAO is evident in many aspects such as:

• Infrastructure: a DAO can be accessed on any computer, phone, but if it is built on blockchains like Ethereum, Avalanche, Solana… then it is completely decentralized in terms of infrastructure. No one can fake transactions on the DAO, because then the transaction will be rejected. Infrastructure decentralization is also reflected in the fact that crypto DAO, even if banned in one place, can still launch normally in all the rest.
• Payment, transactions: DAO still using tokens and built on blockchains like Ethereum, so as long as Ethereum is active, DAO built on it can freely interact and transact with any individual or organization, just have ETH as a fee.
• Governance: different from traditional organizations, most of them operate in a hierarchical model (for example, the Company will have a Board of Directors, Supervisory Board, General Director, departments/departments…), DAO operates in a simpler way, any member of the DAO is welcome to propose ideas and vote. Many DAO also has a reward system for members with effective suggestions and ideas.

Because of its autonomous and decentralized feature, DAO becomes a model that is very suitable for the goal that Crypto projects aim for. It can be said that DAO has become an inevitable trend in building the management model for Crypto projects.

THE DEVELOPMENT OF DAO

In Q4/2021, DAO has grown in both size and quality. Let’s take a look at the outstanding DAO in its field right below:

According to DeepDAO’s statistics, there are currently 188 officially active DAO, managing assets up to $12.1B. Most of the big-name and market-leading projects are operating under the DAO model such as UniSwap, AAVE, MakerDAO, Olympus, BitDAO, Lido…

The benefits of using the DAO as a governance model

• Take advantage of the great human resources. Instead of having just a few people voiced, the DAO allows the whole community to participate.
• Avoid waste, efficiency and sensory decision making.
• Create democracy, fairness in participating in the project.
• Remove barriers of geography, time, skin color, ethnicity…

For Example:

The Olympus DAO model that has exploded since October is a new model for DAO funding:

• Giving opportunities to small investors to invest in the project early
• The project has the opportunity to build a strong community foundation right from the start

The shift in fundraising for many projects: No more Seed, Private rounds with a large number of tokens. Fundraising projects through the community itself (Wonderland, Jade Protocol, Magnet DAO, …)

DAO IN 2022

With its advantages, DAO will continue to be a popular governance model in the Crypto world. This will be a motivation for infrastructure and service projects for DAO to have the opportunity to explode and develop faster. Besides, with more and more money pouring into the market, Investment DAO, Protocol DAO will continue to be the growth trend.

^[1] Neutral-carbon certification is a certification for corporations whose net carbon emission reaches approximately zero. For Phantasma, this platform commits to keep its carbon emission to zero by reducing energy consumption when users mint NFT and purchasing carbon offset contracts to compensate for this carbon emission.

EPILOGUE

Q4 has concluded an exciting and challenging journey with the Cryptocurrency Market in 2021. $BTC has proved its position as a king when trust of long-term hodlers in this coin did not show signs of shrinking. About $ETH, this number one smart contract platform is still on its way of executing important improvements to solve the scalability issue without compromising security or decentralization of blockchain.

2022 is coming, and it is safe for us to expect a brighter 2022 with the crypto market with huge potential of NFT, Web3, DAO and new smart contract platforms. 2022 will be the year that witnesses more blockchain adoption throughout many fields of life including enterprise management, finance, art…

Lastly, our Research team would like to thank you for taking your precious time to read this report. Please stay tuned for further reports to be released in the coming quarters!

The third quarter of 2021 marks a number of significant changes compared to previous ones. Not just with global regulation over Bitcoin or Ethereum upgrades, but many trends have become new use cases, improving market dynamics and as catalysts for future sustainable growth. Let’s rewind the time capsule to understand how far the crypto market has grown in the last three months in this Kyros Ventures Q3 2021 report.

Bitcoin overview

Q3 Price Outlook

After a 3-month long bearish market in Q2, Bitcoin and the cryptocurrency market bounced back during the third quarter in correlation with the many pieces of exciting news regarding cryptocurrency legislation around the globe.

According to Coinbase, after the 55% sharp decline from all-time highs at $64,800 USD in the second quarter, Bitcoin price in July sustained the bearish trend until it reached a $28,800 low and began a trend reversal. From there, Bitcoin price recovered strongly by 81.11% and closed 8 consecutive weekly candlesticks in a row before correcting from a local high of 53,000 USD in September. Ending Q3, Bitcoin stabilized at above 43,000 USD, which is an increase of 25.03% this quarter.

Historical Milestones in Q3

Quarter 3 remarked significant milestones in the development history of Bitcoin and the cryptocurrency market

• July – The U.S Securities and Exchange Commission (SEC) continues to constantly call for Bitcoin and cryptocurrency regulation.
• Aug 2 – Germany’s new law changes now allow “Spezialfonds” to store crypto assets
• Aug 8 – Infrastructure Bill Amendment regarding unclear definition of “Broker”  is shutdown 
• Sep 7 – Bitcoin officially becomes legal tender in El Salvador
• Sep 8 – El Salvador Government buys “the dip” is now holding 350 bitcoins
• Sep 24 – China’s regulators release a blanket ban on all crypto transactions and mining

Institutional Bitcoin Adoption

Large capital allocators continue to show interest towards Bitcoin and Bitcoin products.

No new Bitcoin was added to the Grayscale Bitcoin Trust during the third quarter and this entity is still holding 654,855 bitcoins, accounting for 3.12% of max supply.

MicroStrategy and its CEO, Michael Saylor continue to bet big on Bitcoin and added 8,957 Bitcoins (5,050 Bitcoins recorded in September and 3,907 Bitcoins recorded in August) to their balance sheet. At the end of quarter 3, MicroStrategy held a total of 114,041 Bitcoins.

No new Bitcoin was purchased by CoinShares, Tesla and Square during the third quarter.

Moreover, many major service providers and institutions caught up quickly to the rising demand of cryptocurrency products and have been adapting lately.

• Vast Bank became the first chartered US bank to offer Bitcoin services
• JPMorgan Chase submitted a Bitcoin ETF application with the SEC; Bank of America approved Futures Trading; Wells Fargo unveiled a private Bitcoin Fund
• Twitter added Bitcoin integration to the new Tip Jar feature on IOS.
• PayPal launched a cryptocurrency service, allowing British customers to buy, hold, and sell digital currencies.
• U.S. Global Investors bought 566,389 USD worth of GBTC

Bitcoin Supply Squeeze

On-chain metrics at the end of the third quarter suggest that a bitcoin supply squeeze is under way.

Over-three-month HODL waves reached an all time high of 84.87%, meaning only 15.13% of Bitcoin circulating supply was moved in the last quarter.

Total Bitcoin balance on exchanges also confirmed this phenomenon, where total supply on exchanges witnessed a trend reversal around March, 2020 and until September 29, 2021 has reached the lowest amount of Bitcoin available in over three years with 2,457,417 Bitcoin.

Additionally, Bitcoin illiquid and non-exchange supply percentages increased sharply during the last three months. As observed from the figure above, these two metrics have shown a striking correlation with Bitcoin price for the last 18 months.

Ethereum Overview in Quarter 3

Hard fork London and EIP-1559

Q3 marked an important milestone in Ethereum’s evolution with the London Hard-Fork and numerous proposed updates. Among them, EIP-1559 is the most notable update with a proposal to improve transaction savings based on the network density and another proposal to burn a portion of Ethereum’s transaction to mitigate the impact of inflation on ETH price. As of October 1st, the record has witnessed a total of 409,669 ETH being burnt.

Ethereum price has had a strong recovery right before the London Hard Fork event and quickly rebounded to the 4,000 USD level. In addition, various indexes of the Ethereum network also experienced significant changes in Q3 such as Total Locked Value, Number of Individual Wallets, Amount of ETH 2.0 Staked and Average Gas Fees.

Layer 2 Overview and Arbitrum’s hype

The Layer 2 Scaling Solution on the Ethereum network in Phase 3 experienced a tremendous explosion of Arbitrum when the Arbitrum mainnet was completed and officially launched in early September. During this quarter, Arbitrum raised a total amount of 120M USD from a list of many well-known Cryptocurrency Venture Capitalists and the Total Value Locked on Arbitrum has reached 1.8B USD just 4 days after the mainnet.

Prominent Market Trends in Quarter 3

The GameFi Boom

GameFi (abbreviation of Game Finance which is a combination of Gaming and DeFi) has recently become one of the most prominent trends in the crypto market in Q3 and has risen to be a new craze that’s making games built on the blockchain to become popular. These games have attracted a lot of investors and players from even the traditional gaming market.

Axie Infinity has been the project to trigger this boom – the most popular crypto-based game and blockchain-using metaverse project. In July alone, Axie Infinity recorded nearly 200M USD in revenue, 16 times higher than the revenue in June thus pushing the cumulative revenue to grow 1,050%. Other than that, Axie’s capitalization also witnessed an increase from 315M USD to nearly 2.4B USD in just one month. The rise of Axie has helped a series of other blockchain games in the market to surge in capitalization during the July period.

According to the leading explorer Token Terminal, the total protocol revenue of Axie Infinity in Q3 had reached 800M USD marking an increase of nearly 5,000% compared to the second quarter of 16M USD, and therefore became the first game or dapp with the largest revenue in the world. Axie Infinity’s NFT assets recorded 1.8B USD in trading volume in Q3, up more than 1,400% compared with Q2 with only 118M USD (data from DappRadar). With the success of Axie Infinity (AXS), gamers have now had a whole new look in the blockchain gaming industry, especially towards play-to-earn games.

At the initial stage, most P2E games were developed on the Ethereum blockchain. There are many successful projects that have attracted a huge amount of players such as Axie Infinity, Decentraland, The Sandbox, and Sorare.

However, in Q3, Binance Smart Chain (BSC) has had a strong performance as there are more and more gaming projects that continue to flourish on the chain. Names such as CryptoBlades, MyDefiPet, Faraland or Mobox have recently gained a lot of attention in the gaming community.

The end of July marked a typical event as daily trading volume in Binance Smart Chain had tripled the amount of the previous period. This was mainly triggered by the craze of GameFi projects, especially CryptoBlades. CryptoBlades had ranked on the top of all games with the highest 7-day transaction as it reached 9.23M transactions around mid-August. In addition, CryptoBlades was also ranked #2 in terms of 30-day users of all games that have released tokens according to Dapp.

Apart from Ethereum and BSC, Polygon is also a name that has been in the spotlight in the GameFi world after launching Polygon Studios to develop its own Game & NFT ecosystem in Q2. Many NFT gaming projects are deployed on the Polygon network. Additionally, WAX, Enjin or Flow are also the top blockchains that are attracting many gaming projects.

The NFT craze

NFTs have been widely predicted by the community to become a major trend in the crypto market, and it came to fruition in Q3. August reported a record NFT trading volume of 5.2B USD, followed by September, also reaching an impressive figure of 4B USD. As a result, the Q3 NFT trading volume reached over 10.6B USD, up 704% compared to the previous quarter (DappRadar).

Among the NFT trading platforms, Opensea is the most popular with 7.4B USD in Q3 trading volume, accounting for more than 70% of the total market share. The runner-up was Rarible, which recorded 73.3M USD, while SuperRare came in third with 66.6M USD.

GameFi Trends has contributed significantly to the overall growth of the NFT market, NFT in-game assets recorded a trading volume of 2.3B USD in Q3. 

Another major contributor is digital collections or NFT avatars, the most prominent names CryptoPunks. In Q3, CryptoPunsk’s trading volume reached approximately 360,000 ETH (equivalent to 1.3B USD), up nearly 400% from Q2’s 75,000 ETH. On peak days in early September, the floor price for an NFT CryptoPunk was almost half a million USD (Dune Analytics statistical data). We have also witnessed many Punks traded for millions USD in Q3.

Besides CryptoPunks, the BAYC “ape” collection has also become very popular in the NFT market. Peaking on August 28, BAYC’s daily trading volume reached 53M USD. In addition, many NFT collections also contributed to the craze of Q3, namely a few: Meebits, Pudgy Penguin, CyberKongz, Loot, etc. with daily trading volume of up to millions of USD. 

The explosion of new ecosystems

Regarding the development of top blockchain platforms besides Ethereum, Q1 witnessed the strong growth of Binance Smart Chain followed by Polygon in Q2. By Q3, many new ecosystems recorded outstanding performance and became the spotlight in the market.

During Q3, the price of blockchain platform tokens surged significantly such as LUNA, AVAX, FTM, SOL, NEAR and these tokens continuously reached new all-time highs.

After a long period of infrastructure building, new blockchain platforms are ready to receive the inflow of money. In Q3, the Defi space experienced the releasing of many incentive programs to support the development of the ecosystem from building better infrastructure to encouraging projects and users participating in. Celo started with 100M USD, after that Avalanche, Algorand, Harmony, Fantom, Hedera, Kava and Cardano also launched their own incentive programs to attract liquidity with great value of money.

Due to the incentive program, the total value locked also changed significantly, money continuously poured into new ecosystems in Q3.

Notable among these new ecosystems are Avalanche, Solana and Fantom with steady growth in both market capitalization as well as TVL. All of them have already completed their core products in the ecosystem:

• Bridge
• Exchange (AMM/DEX)
• Lending protocol
• Yield farming products

With the more mature ecosystems reinforced by incentive programs; Solana, Avalanche and Fantom had witnessed a great movement in Q3.

Solana (SOL)

The Solana ecosystem experienced an impressive quarter thanks to the “Solana Season” Hackathon which took place during May and June. After the Hackathon, a series of new projects gradually appeared on Solana and achieved a huge growth, typically Saber (SBR) and Sunny (SUNNY). Although both of them are newbies in the ecosystem, they rapidly achieved the highest total value locked on the Solana ecosystem.

At the peak in Q3, Saber achieved a record in TVL with over 4.15B USD. Sunny’s TVL also surpassed 3.4B USD from zero within 2 weeks. The TVL of the entire Solana ecosystem reached a record on September 12th with 12.2B USD, nearly 20 times higher than on July 1st, making Solana the 3rd largest blockchain platform by TVL, just behind Ethereum and BSC.

Additionally, the game sector on Solana also made a mark with the token launch of Star Atlas, a space war game. After listing, 2 tokens of this game which are ATLAS and POLIS, they achieved a ROI, at all-time high, of 194 times and 134 times, respectively.

Avalanche (AVAX)

The Avalanche ecosystem recorded a breakthrough when the Avalanche Foundation announced Avalanche Rush, a liquidity mining program to introduce more applications and assets to its growing DeFi ecosystem. Soon after that, the TVL on Avalanche ecosystem quickly reached more than 2B USD in just 10 days, which was an increase of 570% (data from DefiLlama).

Moreover, in September, the Avalanche ecosystem has gained outstanding growth momentum, when it successfully called for 230M USD in  investment, which included participation from many famous venture funds: Polychain Capital, Three Arrow Capital, R/Crypto Fund, Dragonfly, CMS Holdings, Collab+Currency and Lvna Capital. The TVL of Avalanche continuously grew and reached a height of nearly 4B USD at the end of Q3.

Many tokens on the Avalanche ecosystem made a record growth during Q3, notably TraderJoe (JOE) and Teddy Cash (TEDDY).

Fantom (FTM)

Fantom Foundation also launched an incentive program valued at 370 FTM to promote DeFi and GameFi development in the Fantom ecosystem. Due to the incentive program, TVL on Fantom witnessed huge growth reaching 2.07B USD at the end of Q3, increasing 984% since July 1st (data from DefiLlama).

Besides, projects in the Fantom ecosystems also had an outstanding surge in capitalization in Q3.

Furthermore, Fantom’s game and NFT sector also had a bright spot in Q3 when Andre Cronje, founder of Yearn Finance, was actively building 2 products: RarityGame (Game) and Artion (NFT marketplace) at Fantom and promises about NFT bridge between Fantom and Ethereum.

Vietnam solidifies its position in the crypto market

Vietnam became the brightest name in the global market in Q3. Many studies reflect that Vietnam is leading in the crypto and DeFi adoption. These impressive numbers are shown in the video below.

Vietnam 🇻🇳 is leading when it comes to #cryptocurrency adoption. Among the latest survey, Vietnam has shown to have the highest adoption and ownership rate of #crypto.

With this strong performance, Vietnam could be the potential global crypto hub. 💪

Happy Independence Day.🇻🇳🇻🇳 pic.twitter.com/yeBUfxWgpS

— Kyros Ventures (@KyrosVentures) September 2, 2021

In order to have an overview about the Vietnamese cryptocurrency market, let’s take a look at the Vietnam Blockchain & Crypto map in the infographic below.

Epilogue

The third quarter ended with strong growth of the entire market and opened up huge potential for GameFi, NFT, and new ecosystems. The crypto market was more refreshing and ready than ever for further growth in the last quarter of the year and beyond. Let’s embrace all challenges and opportunities ahead with Kyros Ventures.

Research Team

After comprehensive research conducted by the Coin68 and Kyros Ventures Team, the Vietnam Cryptocurrency Report H1 2021 is now published.

The team has collected a lot of interesting information and would like to share it with all of you in this report. Before going into the finer details, let’s take a look at some of the key points in the report!

Opinions on Vietnam market

Vietnam is on its way to becoming one of the biggest crypto markets in the world with favorable economics and environments, outstanding developers, and great innovators in technology.

Vietnam investors

The cryptocurrency market went through a major bull run in early 2021, bringing waves of newcomers into the market. Nearly 40% of survey respondents said that they have just entered the market in 2021. Yet this group of people expect very high returns from crypto, mostly to double/triple their initial investments or even higher.

Trading behavior

Long-term trading or “HODL” has become more and more popular among the Vietnamese crypto investor communities over time. 

The Vietnam Cryptocurrency Market Report 2020 showed that HODLing was the least chosen trading style, accounting for only 25%. The majority was for the short-term or mid-term. The latest data, however, shows that 50% of respondents are long-term investors.

Download the full report on the banner link below.

Perspective on Bitcoin

This is probably the part that many people are looking forward to. At the time of writing, Bitcoin keeps moving sideways around the 30,000 USD area. Many investors fear that the market will fall into a long-term downtrend. 

According to the report, the majority of respondents have had a positive view towards the Bitcoin price especially in the long term. Some even expect that the Bitcoin price would surpass 100,000 USD in the near future.

Future market trends

Most investors expect the Altcoins season would arrive in H2 2021.

The most promising trends voted by our community are Blockchain platforms, Ethereum and Layer 2, NFT and Blockchain games. Blockchain platform coins are expected to bring high profits to investors in H2 2021.

Perspectives on NFTs

NFTs, especially the blockchain gaming segment, are flourishing in just a short period of time. The survey demonstrates that more than half of the respondents are hesitant about participating in the NFT market because they don’t understand the value of NFT or how it works and the initial investment is just high. However, when being asked which segment of NFT to invest in, the majority chose Blockchain games.

Blockchain gaming platform tokens are also the most bullish NFT tokens in the report.

This is just an overview of the report, there are still many other interesting insights waiting for you to discover. Download the “” now for more high quality information!

Kyros Ventures Team

The record was set

On March 11, 2021, a digital artwork named “Everydays – The First 5000 days” was sold for $69 million and made Beeple, the painting’s creator, own one of the top 3 most expensive auctioned artworks of any artist currently alive.

Within the past few months, the emerging world of NFTs has accelerated rapidly to reach new heights of success due to the increased uptake from the blockchain community, talented artists, celebrities, and athletes worldwide all hoping to make their mark on this digital frontier. Recently, the two most prominent crypto exchanges – Binance and FTX, have announced the launch of their NFT marketplaces. 

These findings show that NFTs are becoming widely acknowledged and are constantly growing. However, it must also be questioned whether NFTs are a  “here to stay” trend and will it become the breakthrough technology that brings crypto and blockchain to the masses? Let’s delve into the big picture of the current NFT ecosystem to get a better understanding as we enter a new era in NFT Blockchain Technology.

NFT market overview 

Figure 1: NFT Ecosystem

An NFT (Non-Fungible Token) is a unit of data held on certain blockchains like other tokens but is individually unique and not interchangeable. The original concept for NFTs dates back to 2015, but it wasn’t until 2017 when the first projects began to appear on the Ethereum blockchain under the ERC-721 standard. Over the next two years, more NFT standards were accepted and utilized. 

NFT can represent various physical assets such as photos, videos, audio, paintings, or any kind of digital data. Thus, NFTs help to transform data into verifiable assets that are easy to trade on the blockchain.

An NFT is dynamic as it is made up of various segments, as displayed in Figure 1.

• Infrastructure: blockchain protocols used to restore and transfer NFTs
• Gaming: Games using the NFT standard. These include role-playing strategy games, trading card games, or any fun-based gaming experience incorporating NFTs
• Metaverse: Parallel digital universes which offer a set of unique experiences to users
• Arts & music: Projects featuring famous artists or musicians to generate digital masterpieces
• Sports: This features personalities from the world of sport most often connected with real-world players and teams such as Formula 1 teams, football clubs, basketball teams, etc.
• Collectibles: Project whose primary function is to issue collectible items intended to be collected
• Marketplace: Platforms to buy, sell and auction NFT
• Domains: It consists of unique domain names created on the blockchain
• Others: NFT Wallet, NFT Defi, NFT-focused fund, and NFT News and Analytics.

Market capitalization

Market Capitalization represents the total value of assets present in a market. The NFT ecosystem has had an explosive development over the past year. The video below will show a visualization of this growth.

#NFT movements are constant & liberating, with a total MC of 17,472,632,131 as of June 4, 2021! 💪@Theta_Network is currently in the lead, but other gems like @enjin @Chiliz @decentraland @bakery_swap or @flow_blockchain are creeping in fast. pic.twitter.com/PWZzk7zCar

— Kyros Ventures (@KyrosVentures) June 10, 2021

NFT in details

Infrastructures and Game studios

Currently, Ethereum is still the leading blockchain protocol for NFTs as it hosts the highest number of projects, with over 50 currently running on top of it. WAX, a fork from the EOS blockchain, ranks second with more than 35 projects. New blockchains entering the space are BSC, Polygon, and Flow. It worths mentioning Chiliz, which is fully dedicated to the sports fan token segment.

Despite its dominance, Ethereum’s transaction fees remain a persistent problem as it tends to skyrocket far too regularly. Today, performing any transaction on the network can prove rather costly. Users will have to pay approximately $21 for each transaction which is much higher than other blockchains such as Binance which costs approximately $0.45, Flow $0.02, Polygon $0.0001, and WAX which has no gas fee.

Figure 3 also displays major NFT gaming studios and their products. They have more potential than other kinds of segments within the NFT ecosystem to engage with your everyday normal people. Thanks to the solid base of many blockchain protocols, game creators now have more opportunities to leverage their products through this technology. Recently there have been some big blockchain-focused game studios that have entered the current market including Dapper, Animoca Brands, LucidSight, and EverdreamSoft (Figure 2)

Figure 2: Top NFT Infrastructure and Game Studios

Games and Metaverses

From the gaming market’s standpoint, this market reflects a mature segment that is well developed yet still looks favorable with a high probability for significant growth in the coming years. In addition, this segment has rapidly driven the growth of the NFT ecosystem and now has very compelling liquidity of its assets. 

Currently, the most played game on Ethereum, Axie Infinity, is continuously evolving by adding new features and game modes. Developed by Sky Mavis – a Vietnamese game studio, Axie has attracted thousands of newcomers to blockchain technology from developing countries with nearly 90,000 active wallets and about 22,000 daily users. However, it is God Unchained that currently holds the highest sale value of $22 million while the number of sales reached 569,561 in total (figure 3).

Besides the gaming industry, the more established Metaverses focuses on virtual world-buildings and in-game experiences. Decentraland is currently leading this segment as its sale values account for $62.2 million, making up 58% within its whole market. Despite its dominant position, Decentraland is confronted with challenges by other players like The Sandbox and CryptoVoxels. They offer a vast array of supporting assets to the market including names, wearables, and various objects in the form of ERC-1155 tokens.

Figure 3: Top NFT Projects in Games and Metaverses

As reported by Newzoo’s global games market research, by the end of 2021 there will be approximately 2.9 billion gamers worldwide. Blockchain technology, via NFT’s, gives property rights to gamers. For the first time, gamers can now take ownership of the digital assets they acquire in games. This is enormous as it represents the final stage in the evolution of free-to-play gaming. As gaming is the largest entertainment medium globally with a consumer audience almost as big as the global population, NFTs can leverage this fertile land to bring mass adoption into the blockchain space. A few names to watch: My Neighbo Alice, Derace, X World Games, My Defi Pet, and Ethermon.

Collectibles, Art, and Sports

NFTs peaked in sales on May 3 when $102 million worth was sold in a single day. And the crypto-collectibles market made up $100 million of those sales. Figure 4 illustrates this exciting upshoot in the NFT ecosystem and presents a compelling argument for a very fruitful future for NFT Arts, Collectibles, and Sports.

NFT collectibles like CryptoPunks, Meebits, and CryptoKitties have so far proven to be the most resilient assets and are still the largest of the seven markets ranked by NonFungible.com. Data collected in Figure 5 shows that CryptoPunks still reigns in sales with a value of nearly $400 million and $25,532 in average transaction volume which is far ahead of the other two competitors.

Figure 4: Top NFT Projects in Collectibles, Sports, and Arts

The Sports segment has all the hallmarks of a growing platform in its infancy whose development looks very promising over the next few years, with buyers showing increasing interest. The total sales value of assets traded is exploding having almost reached $600 million, which is surprisingly exceeding the Collectibles segment. The top three contenders of the Sports segment are NBA Top Shot, Sorare, and Topps MLB.

From the NFT Arts perspective, the market still remains very limited. At the moment a common pattern amongst buyers is to build a collection and they are here for the long run. The most prominent in this segment is Hashmasks with the highest sales value of $50.4 million, followed by Art Blocks and KnownOrigin with $20.5 million and $6.4 million respectively.

According to the annual Art Market Report from Art Basel and UBS, the traditional art market is worth about $50 billion in 2020 and has reached new heights in 2021. Although the NFT art market volume is still relatively small compared to this, it has a lot of room to grow in the future.

Marketplaces

The marketplace is the backbone of every ecosystem, and its development explicitly reflects the general landscape of NFT ecosystems and the particular segments in it.

Figure 5 points out that at this moment, Ethereum is still the top NFT blockchain. In particular, OpenSea outperforms the rest of the market, capturing $48.5 million in sales volume with more than 22,000 users in the last 30 days. However, Binance Smart Chain with its minimal transaction fees and speed of transactions has allowed BakerySwap, AirNFTs, and Treasureland to push the limits of the NFTs capabilities so much better. It is also an omission not to mention WAX which is labeled the “King of NFTs brand.” It is now working towards a fairer and more equitable NFT ecosystem that can allow the general public to collect affordable NFTs. The users of WAX are giant compared to any other blockchains in the marketplaces accounting for nearly 420,000.

Figure 5: Top NFT Marketplaces

Domains

This segment presents a great diversity of projects and uses cases; however, one should notice that the segment is mainly driven by the Ethereum Name Service, Unstoppable Domains, and Handshake. 

The context of these projects and their markets, with the sheer numbers and remarkable names, can explain their constant growth and expansion through all the NFT ecosystems. As demonstrated in Figure 6, millions of domain names are registered on these platforms with more than $10 million in sales value. ENS takes first place with $7.01 million calculated at the beginning of June 2021. Nonetheless, Handshake has acquired more names registered than the rest of the market, gaining around 53.7% overall. 

The ecosystem of these domains is highly diverse, ranging from wallets and browsers to exchanges and other kinds of applications. However, ENS once again proves its dominance and popularity with 231 integrations, quadrupling Unstoppable and being nearly twelve times bigger than Handshake.

In line with ReportLinker, the global domain names market is forecasted to reach 512.3 million domain names registered by 2027. This number is tremendous and if NFT domain names can take only 5% to 10% of the market share, the whole NFT domains market will grow more than twenty times compared to today.

Figure 6: Top NFT Domains

Binance NFT

The NFT sector on Binance Smart Chain is still in its infancy with consistently increasing growth and adoption which is closely followed by global companies around the world. And recently, Binance, the world’s largest crypto exchange, has launched its own NFT marketplace on the 24th of June 2021. As stated, this marketplace “will bring together artists, creators and crypto enthusiasts from around the world,” and it will then “ become the premier destination for NFTs and digital collectibles across mediums, from visual arts and gaming to music and sports.” 

We had a sneak peek at the first iteration of the Binance NFT marketplace on launch day, displayed in Figure 7.

Figure 7: Lineups at Binance NFT Marketplace on launching day 

With the weight it possesses in the space, Binance is predicted to form a new trend in the market. And one day, when unique and irreplaceable assets are issued as NFTs on the blockchain and globally adopted, these names in Figure 8, with their partnerships and developments on BSC, could make several remarkable achievements.

We are all waiting to see the long-term evolution of this new ecosystem after this exciting start.

Figure 8: NFT Projects on top of Binance ecosystem

Where will it go and What awaits us?

The Non-Fungible Token industry is an extremely young sector rapidly expanding in trading volume, liquidity of assets, and the number of new users over time. Yet we are only at the very dawn of starting to explore how many industries can utilize NFTs. 

The massive acceleration during the second half of 2020 with the adoption of many mature use cases and structured projects indicates that its development is about to speed up dramatically. 2021 is poised to be an eventful year as several major realizations about the NFT ecosystem have enabled it to move on to the next level. 

NFTs have opened a new opportunity for the digital economy where virtual assets can be verified and traded in just one click. It is no longer just a speculative industry; it is now a value generation industry. When compared to the traditional market, NFTs market share is still negligible. Yet with the inevitability of the digital revolution, there is little doubt the world of NFTs may soon become mainstream and disruptive to both new and established industries. What remarkable milestones are awaiting the NFT ecosystem in the future? Only time can tell.

The Big Picture

• Bullish momentum continues to rule the market sentiment throughout the first quarter of 2021. The total market cap soars 144% from $787B to $1,919B in Q1, 2021, according to Coingecko.
• Institutional sector participation in the market marks all-time-high (ATH) with several public firms and investment funds that either announce Bitcoin investments or launch cryptocurrency products.

Institutional Investor

• Network effect has passed onto institutional investors on Bitcoin in 2021 with a large wave of adoption (Figure 1). Joining forces with Grayscale, Square and MicroStrategy, Tesla did not only add Bitcoin into its balance sheet but also allowed its users to purchase Tesla cars by Bitcoin. The institutional adoption continues to spread like wildfire, in the context of highly-concerned global economic status post-Covid-19.

Figure 1: Bitcoin Mass Adoption in QI/2021

• Grayscale, for the first time in the past 3 years, has added 5 new tokens into its investment product lines, providing indirect access to crypto for accredited US investors and institutions (Figure 2). The latest batch includes Basic Attention Token, Chainlink, Decentraland, Filecoin and Livepeer. In the meantime, the largest institutional Bitcoin-hodler also expands its current portfolio of existing crypto assets, accumulating a higher stake of those coins’ total supply.

Figure 2: Grayscale holding over coins’ supply

Bitcoin

Figure 3: Bitcoin Price Returns in Q1 & Q2

The Summer Time

• Figure 3 depicts that Quarter 1 2021 has seen the best return since 2017. The market size is double with bullish sentiment carried over from the second half of last year.
• Quarter 2 has been a pivotal period of the crypto cycle ever since 2017. Either carrying on the previous bullish momentum or cooling down the bear, crypto summer brings a fresh vibe for new trends. Q2 2017 was the start of the peak half a year later. Q2 2018 marked the market’s second rebound before the crypto winter. Q2 2019 was the best performed season for that year. Q2 2020 witnessed a great recovery from  Black Thursday. Forecasting Q2 2021 from a limited dataset would not be a piece of wise advice, yet a green quarter can be the modest expectation.

The Trillion-Cap Assets Universe

• Bitcoin market capitalization has surpassed the 1 trillion USD mark for the first time ever in the last quarter. The next milestone for Bitcoin is Silver before achieving its ultimate goal, e-Gold (Figure 4). 
• Needless to say, Bitcoin was the best-performer among the trillion cap asset universe in the first quarter of 2021. The cryptocurrency skyrocketed 102%, with the market cap finishing the first bullish round at 1.1 trillion USD.

Figure 4: Bitcoin among other trillion cap assets

Ethereum Challengers

• The second-largest cryptocurrency, Ethereum is on the right track for its potent network upgrade, the eth2.0 staking event. At the end of Q1 2021, the total staked Ether reached 3,611,147 ETH, equivalent to $6.7B or 3.13% of the total circulating supply.  

Polkadot

• Polkadot has risen as one of the most competent Ethereum challengers. Figure 5 depicts how the ecosystem’s public awareness has grown. The Google search trend for “Polkadot” keyword peaked twice in the first three months of 2021. Correspondingly, DOT price reached ATH in late February.

Figure 5: Polkadot Price vs. Google Search

• The Polkadot ecosystem has expanded rapidly in many aspects. More and more wallets now support Polkadot with respect to the rising demand from the users, which also explains why the quantity of multi-chain wallets already outnumbered that of Polkadot-only wallets in the ecosystem (Figure 6). That is not to mention the fact that the project is still under development for its fully functional mainnet.

Figure 6: Polkadot-supported wallets 

Binance Smart Chain 

• The next candidate for an Ethereum-challenger title is Binance Smart Chain (BSC). Daily transactions of BSC have surpassed Ethereum for the first time in Quarter 1, 2021 (Figure 7). Since then, it continued to perform well and ended up almost 3x over Ethereum on the metric.

Figure 7: Daily transaction on Ethereum and Binance Smart Chain

• BSC’s flagship, PancakeSwap, also surpassed Uniswap, SushiSwap, and Curve to be ranked as the top 1 Decentralized Exchange (DEX) by 24h volume. All of these achievements have contributed largely to upward demand pressure on the price of BNB, the utility token of the BSC ecosystem. As the result, BNB marketcap has passed Tether and Cardano to be the top 3 biggest altcoins, following Bitcoin and Ethereum, for the first time since the inception.

DeFi

• Following the trend of 2020, DeFi is still on fire. The Total Value Locked (TVL) in DeFi platforms has almost tripled since the beginning of the year, reaching nearly 65 billion dollars in both Ethereum and BSC. The pie is still growing; no one seems to be eating each other’s piece, just yet.

Figure 8: TVL on Ethereum and Binance Smart Chain

• As Figure 8 demonstrates, Ethereum is still the dominant player when it captures $51.5 billion in total economic value, quadrupling that of BSC at the end of March. Meanwhile, BSC has risen as an ideal protocol for DeFi projects, proved by its escalating TVL from just a few million to now $13 billion, and that seems to be just a start.
• According to the leading explorer DappRadar, there are 4764 Dapps in the crypto space, 46,5% of which are running on top of Ethereum, while BSC is a home for 276 dApps or 5,8% of the pool. However, BSC looks more ‘DeFi-focused’. Out of 503 DeFi projects, 33,2% is based on Ethereum while 41,4% uses BSC. In summary, despite Ethereum’s adoption being more impressive, BSC is still a redoubtable challenger in the DeFi corner.

DEXs

• Without DEX, the DeFi greenfield would never have taken the spotlight for 2020. Thus, the year of 2021 is undoubtedly the right time for DEX to mature and possibly become mainstream. With optimized usability, deeper liquidity, and emerging composability, the DEX ecosystem is as strong as ever.

Figure 9: Monthly DEX volume (source: Dune Analytics)

• Figure 9 points out that DEXs have already processed more transaction value in Q1 2021 than all previous periods combined. Notably, the volume hit ATH of nearly $77B in February, carrying on the exponential growth momentum. In the Ethereum-powered DEX sector, Uniswap represents more than double Sushi’s volume, gaining around 50% of the market share (Figure 10).

Figure 10: Top DEX volume in Q1 2021 (source: Dune Analytics)

• February also marks the highest-ever level of monthly revenue for Ethereum miners, roughly half of which has come in the form of transaction fees. The revenue numbers reflect the price of ETH, which exceeded the $2000 mark briefly this month. Data collected in Figure 11 shows that, for the first time, Ethereum miners have brought in more than $1 billion in revenue for the month of February.

Figure 11: Ethereum miner revenue in Q1 2021

Scaling Solutions

• Despite its burgeon, the DeFi ecosystem is in somewhat of a bottleneck crisis, as more and more projects are developed and launched on the Ethereum network with growing transactions’ volume, causing gas fees to skyrocket. The good news is that a group of layer-two (L2) scaling solutions has already bloomed around Ethereum. They are offering variable avenues to scale Ethereum for the mass. A variety of L2 models is displayed in Figure 12.

Figure 12: Ethereum scaling solution model

• Layer-2 protocols are perhaps the greatest hope for Ethereum devotees at the moment. In short, layer-2 chains operate on top of the Ethereum mainchain but function in a much more efficient way with drastically reduced transaction fees and a few-second transaction speed. One such Layer 2 technology is rollups, which take much of the burden of computation and storage out of the blockchain, utilizing it just for its security sake.
• Figure 13 mapped out many projects inheriting L2 technology in which the cutting-edge ZK-Rollup technology is well-positioned to be a leader. Overall, as long as Ethereum block space is expensive, scaling solution demand is still high.

Figure 13: Ethereum scaling solution map

NFT 

• Well-known since 2017 with the CryptoKitties phenomenon, NFT segment silently exists alongside other crypto major trends for years. Covid19 seems to be a catalyst for NFT frenzy in Q1 2021. From art, trading cards to music and other collectibles, things are now on a digitizing trend when offline exhibitions, concerts or auctions have found it hard  to cope with social distancing situations. 

Figure 14: Crypto art market share in Q1 2021

• Figure 14 shows how well Nifty Gateway is dominating the marketplace for the crypto art segment. Following up are SuperRare and Foundation. 
• Meanwhile from the  NFT sales from projects’ point of view, we have the major names including NBA Top Shot by Dapper Labs, CryptoPunks, Hashmasks, etc. (figure 15) The all-time sales boom matched with their impressive market cap growth up to 1800% in Q1 2021. The rise of these projects aligns closely with how well the relevant traditional market is transforming into digital. NBA Top Shot is an example. Partnership with NBA and NBA Players’ Association was a crucial milestone in the sport NFT field and blockchain industry as a whole. One successful case will lure a gigantic wave of adoption because nothing can bring people together better than sport.

Figure 15: NFT collectibles market share in QI/2021 

We hope you enjoyed a little journey back to the first start of 2021. A road is still long and time is all we’ve got. In an unpredictable world like crypto, nothing is certain. Trade responsibly, and we look forward to another lookback in the next quarters!