Author: @ruiixyz; Translator: Vernacular Blockchain
Macro policies determine capital allocation in the long term, while liquidity in the crypto market circulates between casino-style trading, yield farming, and emerging value-oriented investments, despite market volatility.
1. Tired of market volatility, what should you focus on?
1) Policy: Affected by short-term impulses, but still bullish in the long term
2) Market trends: Swinging back and forth between casino-style trading, yield and value investing
3) Blockchain: When high TPS (transaction processing speed) becomes standard, where is the focus of competition?
4) Project selection: only look at new and interesting projects
Internet infrastructure innovation
Bridging Web2 and Web3
Really make BTC work
Serving traditional finance (TradFi)
Acting like a "non-crypto" enterprise
2. Policy: Affected by short-term impulses, but still bullish in the long run
1) The impact of BTC national reserves? Trump's proposed BTC national reserve plan lacks congressional approval and may be overturned by the next administration. Since the United States already holds BTC assets, the direct market impact of this policy is limited, as the government is more likely to allocate BTC from existing assets rather than purchase it directly from the market. However, this move may have far-reaching implications for businesses and international strategies.
2) Cryptocurrency reserves may dilute the value of BTC? If BTC is mixed into other crypto asset reserves, it may weaken its market position. If crypto reserves are positioned as an endorsement of the US dollar (hopefully not), it will raise concerns about the stability of the US dollar and further push up interest rates. At present, Trump's policy seems to be more based on personal interests.
3) A broader ETF market with more types of products
stETH ETF is under development, which will boost the ETH staking market if approved
$SOL ETF is very likely to be launched this year, and more and more "Solana version of MicroStrategy" are emerging, driving interest in staking
Chinese investors are paying more attention to BTC ETFs (but there is still great uncertainty). Although the regulation is still unclear, compliant custodians have begun to deploy
Despite short-term market volatility, funds and talent will gradually flow into the market with the development of macro policies.
3. Market: Swinging between casino, income and value
There are two main types of dominant traders in the current market:
Casino gamblers - chasing the extreme income of 1000 times leverage in PvP games.
Yield farmers - seeking stable, low-risk returns. In addition, traders in between contribute less trading volume, but this situation may change over time.
1) Category 1: Gamblers - "Give me back a fair casino!"
Solana's memecoins once had a strong market fit (PMF), but a series of "rug pulls" including Trump, Melania and Libra, coupled with insider trading, severely damaged market liquidity and, more importantly, the fairness of the casino. Now, decentralized exchanges (DEX) are trying to restore trust through sniper sorting, Dutch auctions, and forced community airdrops, hoping to re-attract trading volume when the macro environment changes.
2) Category 2: Big players - "Win our trust with security and time"
Low-risk yield farmers will not risk going to zero for an extra 10% APY (annualized return).
Currently, Ethereum still leads in TVL (total locked value) and security history, while other chains are trying to catch up. The sources of income include DEX Token incentives, borrowing fees, hedging, short-term treasury bonds (T-bills), etc. Each income model is accompanied by different risk levels. The best projects are working hard to find a delicate balance between income and risk and convince LPs (liquidity providers) of this.
3) The third category: value investors - "emerging under a clearer regulatory framework"
Whether legal on-chain assets (such as Web2 enterprise on-chain listings and RWA real-world assets) can flourish depends on the clarity of regulation. Once clear regulatory rules are introduced, value investing will truly take shape - when revenue repurchases are no longer insignificant, match market value, and tokens have actual utility, the chain can attract real value investors.
4. Blockchain: When high TPS becomes standard
1) Solana: From perfect PMF to broader political and market moats
@solana’s biggest moat is its excellent market fit (PMF), which is now expanding to politics and broader competitive advantages.
Price determines market perception - SIMD-0228 proposal aims to support SOL prices in the long term by linking staking rates to token issuance. Imagine: 2) SOL ETF → More staking → Lower token issuance → Stronger price stability.
DEXs in the Solana ecosystem are solving liquidity exhaustion and trust issues, while perpetual contract platforms use Rollup/temporary Rollup to improve performance (such as @ZetaMarkets, @magicblock). Meanwhile, @ranger_finance is also integrating perpetual contract trading.
Banking, payment, and stablecoin ecosystems are accelerating:
@meow provides a US business checking account that generates income.
@sphere_labs provides a lower-cost fiat withdrawal solution than Coinbase .
@Perena__ is building top stablecoin infrastructure.
Challenges
Maintain a fair trading environment (casino-style ecology)
Enhance DeFi liquidity and stability
Ensure network security and stability to attract institutional adoption
3) Hyperliquid: The core moat is its killer application
@HyperliquidX's biggest moat is its powerful core application (killer app).
Currently, HyperEVM has been officially launched, and network revenue comes not only from platform fees and auction fees, but also from EVM transaction Gas fees. Although this change has not yet been fully reflected in the token price, it has unlocked new uses for $HYPE (gas fees, borrowing, staking and revenue mechanisms). In addition, high-market-cap native assets (such as spot BTC) have finally joined the ecosystem.
Challenges faced:
Open ecology is difficult to maintain - its native DEX directly competes with the perpetual contract platform, affecting the interoperability of the ecosystem.
Security risks - Bybit's multisig mechanism has 4 signatories and is still Rug, while Hyperliquid has only 2 signatories, which poses potential security risks.
4) Monad: Super EVM + Open Ecosystem Moat
@monad_xyz's moat lies in Hyper-EVM combined with an open ecosystem.
Monad's testnet has shown steady growth, with TPS up to 120, and no significant performance degradation. Although the current ecosystem is still in its early stages, it is critical to maintain openness to avoid the over-centralized "kingmaker effect" in other ecosystems. Currently, the community is achieving organic growth through projects such as Molandak NFTs.
Future Outlook: Pay attention to the development potential of killer applications in DeFi, consumer applications, AI, payments and other fields.
5. Project screening: only look at novel and interesting ones
1) Internet infrastructure innovation
The scalability of blockchain often requires sacrificing decentralization and security, and @doublezero is developing a basic connection framework compatible with all blockchains to optimize the flow of data on the chain.
Its solution can pre-filter inbound transactions before the transaction reaches the validator, improving blockchain processing efficiency.
At the same time, it optimizes outbound message routing and improves cross-chain communication and data transmission.
2) Bridge between Web2 and Web3
Currently, PoW (proof of work) companies have successfully listed, but PoS (proof of stake) companies have not yet followed up. Blockchains need compliant validators with good reputations and track records.
3) Make BTC really work
BTC on the chain is either idle and useless, or earns very low returns in the lending market, or obtains alternative asset rewards through inflationary incentives.
4) Serving the upcoming TradFi (traditional finance)
Stablecoins remain the most profitable business in the crypto industry, but compliance barriers for Web2 companies remain high, including regulation, on/off-ramps, and security issues.
5) Acting like a "non-crypto" business
One of the biggest advantages of the crypto industry is liquidity.
Hui Xin
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