Time to gather? 5 sectors to see during the crypto winter

by · July 15, 2022

It is strange to think that anyone can look forward to downturns in the crypto market, but it is precisely the position held by many developers and project creators who enjoy the low pressure environment that exists under a bear market.

As it is said, bear markets are under construction, and now is one of the best times to map the landscape to see which sectors of the market are most active in designing the platforms that will rise to new heights in the next bull cycle.

Here’s a look at five sectors of the blockchain ecosystem that may present some of the best opportunities for accumulation while prices are low and demand non-existent.

Layer-1 protocols

Layer-1 (L1) protocols such as Bitcoin (BTC) and Ethereum (ETH) form the basis on which much of the cryptocurrency ecosystem is built and allow most other sectors of the market to exist.

That said, there are not currently many options available to launch other protocols on the Bitcoin network, and Ethereum has well-known limitations in terms of scalability, which can lead to high transaction costs and slow processing times.

Due to these factors, there is still a significant opportunity for other L1 protocols to establish themselves and take a good share of the market share. The total revenue generated by a protocol is one calculation that can be used to determine which networks see the most use.

Accumulated total income for the best L1 chains in the last 180 days. Source: Token Terminal

According to data from Token Terminal, the top five L1 protocols in terms of total turnover in the last 180 days are, except Bitcoin and Ethereum, BNB Smart Chain (BNB), Avalanche (AVAX), Helium (HNT), Fantom (FTM) and Solana (SOL).

Layer-2 protocols

As mentioned above, the Ethereum network has limitations in terms of scalability that will not be resolved during the upcoming merger, leaving an opening for Layer 2 protocols to fill the need by helping reduce activity that occurs directly on the Ethereum blockchain. .

According to L2Beat, which tracks the statistics on the best Ethereum L2s, Arbitrum is ranked number one in terms of total value locked (TVL), followed by Optimism and dYdX.

Top 8 L2 networks by total value locked. Source: L2Beat

A network that was strangely omitted from the list provided by L2Beat, but which is still the most adopted L2 in terms of active wallets and protocols launched, is Polygon (MATIC), which currently has a $ 1.59 billion TVL , according to data from DefiLlama.

When it comes to the Bitcoin network, the most important L2 solution that is currently seeing increased influx is the Lightning network, but there is no token involved in the protocol. Instead, users can choose to run a node if they want to support the network in addition to earning passive income.

Gaming

The gaming sector in the cryptocurrency ecosystem has proven to be one of the more robust in terms of keeping users engaged during the current cryptocurrency winter.

The emergence of money-making games such as Axie Infinity (AXS) helped shed light on the possibilities of blockchain-based gaming during the bull cycle in 2021, and has led to a spin-off of a number of “-to-earn” protocols, such as .ex. such as move-to-earn and learn-to-earn.

Data from DappRadar shows that some of the best games for active users include Alien Worlds, Splinterlands and Farmers World, all of which operate on the WAX ​​network while Axie Infinity is the best game in terms of the value of assets held in its smart contract.

Top six games in the form of active users. Source: DappRadar

There are also a number of other games that are still under development, but which still attract a lot of attention, including Illuvium and Aavegotchi, as well as tokens that represent gaming ecosystems such as Enjin Coin (ENJ), Gala (GALA) and Ultra (UOS)).

Social platforms

One sector of the cryptocurrency landscape that has not yet been established in a remarkable way, but which represents a good opportunity to increase adoption, is platforms for social engagement similar to Twitter, Facebook or Reddit.

Former frontrunners in the social media landscape include Steem and its community-driven offshoot Hive, but none of the protocols have really achieved widespread use to date.

Although no other protocols currently in operation have managed to crack the code that attracts many users who stay engaged in the long run, events in the wider world, including the ongoing drama surrounding Elon Musk’s acquisition of Twitter, show that social media remains needs an openly accessible community-focused platform.

Related: 34% of players want to use crypto in Metaverse, despite the setback

Metaverse and NFT launch ramps

One last sector that is worth keeping an eye on because of its widespread appeal to ordinary society, including efforts already underway to integrate it into daily life, is Metaverse.

To help simplify matters, Metaverse is a virtual reality representation of all data and interactions that take place on the Internet, built on top of blockchain technology.

While the concept of Metaverse is still in its infancy, it is a popular topic of conversation around the cryptosphere and is already attracting large investments from some of the most well-known and recognizable brands in the world.

In addition to Metaverse, platforms specializing in the creation and launch of non-fungible tokens (NFT) are also worth considering as the NFT sector has proven to be popular with the general public.

Some of the most developed and adopted Metaverse and NFT platforms currently in operation include The Sandbox (SAND), which recently partnered with Playboy to launch a MetaMansion social game on the platform, as well as Decentraland (MANA) and ApeCoin ( MONKEY).

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