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 text | Neican Jun At the beginning of the new year, the price of digital currencies began to soar, and the market truly entered a bull market. BTC has raced upwards and firmly settled above the $57,000 mark. And for five consecutive days, it set new price highs; at the time of writing this article, BTC had risen as high as $57,000. According to QKL123 market data, the total market value of Bitcoin has also exceeded $1 trillion, setting a new historical record. People have long become accustomed to such results. In fact, many industry insiders have even predicted higher prices. The world’s second-largest cryptocurrency, ETH, also reached a record high on February 20 at noon, breaking through the $2,000 mark for the first time. This means that ETH has appreciated by 168% since the beginning of this year. The most stunning one is undoubtedly DOT’s BNB. The DOT has continuously set new highs in recent days. It has increased by 192% in the past month and by 17 times in the past year, rising to become the fifth-largest cryptocurrency by market value. BNB has also been on an unstoppable rise recently, continuously breaking new record highs. On February 20th, it reached a record high of $346. In the past week alone, its value has increased by 127%, and in the past month, it has risen by a staggering 572%. This also enabled BNB to leap to become the third-largest digital currency by market value. And led by BNB, the platform tokens saw a collective surge in value, with each one setting new all-time highs. This has also become the hottest sector in the digital currency market recently. It can be said that in 2021, the digital currency market shifted from a Bitcoin-driven bull market to an overall bull market. Perhaps the skyrocketing prices of ETH, DOT, and BNB also reflect the investment logic behind blockchain in 2021.  The investment logic behind this surge 2021 was a very favorable year for the blockchain development industry. The results of the past year show that now is certainly the best time to launch blockchain-based projects. Many recently implemented technical approaches and upcoming blockchain solutions provide insights into the trends that will dominate the blockchain industry in 2021. The sharp rises in ETH, DOT, and BNB are precisely based on this logic. The Expectations for Ethereum 2.0 There seem to be at least two reasons behind Ethereum's rise this year. On one hand, the dramatic rise in the value of Bitcoin has attracted significant interest in cryptocurrencies from both institutional and individual investors. On the other hand, decentralized finance (DeFi) is experiencing rapid growth. Regarding ETH breaking through the $2,000 mark, Paul Veradittakit, a partner at the crypto investment firm Pantera Capital, told Decrypt…: “ETH reaching $2,000 demonstrates that applications built around DeFi and NFTs are experiencing exponential growth. Ethereum is proving itself to be a leader in creating decentralized applications, and all of this has ultimately led to the emergence of an institutional-grade asset class. ” In fact, for institutional-grade assets, there are an increasingly wide range of Ethereum financial instruments available to investors, ranging from the Greystone Ethereum Trust in the United States to the ETH fund offered by 3iQ on the Toronto Stock Exchange. For several years now, questions regarding the enhancements to Ethereum have been bothering people in the cryptocurrency community. Comments and concerns mainly revolve around scalability, slow TPS speeds, and the amount of transactions that a single block can accommodate. 12 is really too little for today’s blockchain technology. The core concepts behind the new Ethereum 2.0 version can be found here. The main focus in the fourth quarter of 2020 was the launch of Phase 0. It represents the adoption of the beacon chain and the integration of the new Ethereum PoS system that was launched on December 1, 2020. By 2021, the largest and most anticipated update will involve the introduction of Phase 1, as well as the integration of PoS and sharded chains (expected to take place in the fourth quarter of 2021). The world has never seen such a massive transformation of an ecosystem. Therefore, it seems quite reasonable that there are many questions and uncertainties arising. With the future implementation of sharding, this will significantly improve the speed of network operability and increase transaction throughput. This is precisely why the transition to Ethereum will rightfully become one of the biggest blockchain trends of 2021. The reverse movement of Polkadot While everyone’s attention was focused on Bitcoin, Polkadot quietly began to make its way into the market. According to data from non-small-cap sources, DOT’s current market value has surpassed $35.665 billion, placing it ahead of ADA, XRP, and LTC and ranking it within the top 4 of the market. Since its inception, Polka has been considered a competitor to Ethereum, as it enables smart contracts to operate within a parallel chain ecosystem. Through parallel chains and networks that connect various blockchains, Polka can process data more efficiently and address the scalability issues inherent in current blockchain networks. When Polka’s parallel chains are launched in the foreseeable future, they are expected to support a wide range of DeFi protocols and decentralized applications. The catalyst for this sudden surge in prices by DOT may be related to the opening of registration for parallel chain testing on Polkadot’s testnet, Rococo, on the 13th. On January 13th, the registration for Rococo V1, the test network of the Polka sidechain, was officially opened. Just 5 hours later, the first sidechain built on top of Rococo V1 was launched. The two-layer scaling protocol Plasm Network took the lead, becoming the first sidechain to be integrated into the Rococo V1 test network. Currently, 18 projects have submitted applications for registration on the Bockchain Rococo V1 sidechain. Polkadot is a sharded blockchain, which means it connects multiple chains within a single network, allowing them to process transactions in parallel and exchange data securely between each other. Polkadot consists of three components: a relay chain, parallel chains, and parallel threads. The relay chain provides slots that allow other chains to connect to it, but the number of these slots is limited and they must be obtained through bidding. The bidding process involves DOT holders pledging their DOTs to the relay chain in order to vote and assist various projects in competing for slots. In order to connect to the Polkadot ecosystem or build your own blockchain within it, users need to link up with the relay chain, which is Polkadot’s main blockchain. So far, it has been successful in connecting five of the 100 parallel chain slots. Although 100 was initially defined as the main target, there are some ideas regarding voting to expand the number of allowed slots. It is expected that the maximum number of slots will gradually increase over the next few years. In addition, a large number of projects that have previously been deployed on the Kusama testnet will begin transitioning to the Polkadot environment. This change will certainly have a significant impact on the crypto market, as the vast majority of projects built on Substrate—such as Acala, Moonbeam, Halva, Edgeware, Centrifuge, and others—will adopt Polkadot as one of their primary goals. The leadership of BinanceChain BNB was undoubtedly the leader in this collective surge of platform tokens, and its market cap breakthrough has brought it closely in line with Ethereum, sparking new discussions about whether Binance might surpass Ethereum in significance. The discussions about the competition between Binance and Ethereum are not merely driven by the sudden surge in their market values or the breakthroughs they have achieved. The real reason behind this is the expansion of the DeFi sector! The main reason why BNB was able to experience such a significant surge and drive a collective explosion in platform tokens is the explosive growth of the DeFi ecosystem built on its Binance Smart Chain, which has created a mutually reinforcing effect within the industry. On one hand, Ethereum-based DeFi systems continue to improve and innovate, providing more robust infrastructure and development tools for this sector and establishing themselves as a leading force in decentralized finance. On the other hand, the enhanced performance of other public blockchains has further improved the user experience and scalability of DeFi applications, opening up unprecedented opportunities for growth. BinanceChain launched its smart chain in the fourth quarter of 2020. This release has attracted considerable attention and positive feedback from the community. Therefore, thanks to the dedicated community environment and the launch of very promising projects such as PancakeSwap DEX, the development process was greatly accelerated. Furthermore, this chain is supported by Trust Wallet, a highly reliable participant in the blockchain industry. Not long ago, in order to support Binance and its Smart Chain, they carried out the largest airdrop to date. The prosperity of Binance Defi is not merely the result of Binance’s endorsement; although current market trends suggest a greater element of speculation, it also reflects the growing demand for Defi services in the market. What other investment opportunities are there? The sharp rises in ETH, DOT, and BNB have made many people feel that they missed out on investment opportunities. Are there really no new opportunities at all? Predictions for the blockchain DeFi market Multimillionaire venture capitalist and co-founder of Bloq, Matthew Roszak, said that the current $40 billion worth of decentralized finance (DeFi) could potentially “add another zero” within a year—meaning it could grow tenfold. He stated that the innovation cycle in DeFi occurs in real time. Perhaps most noteworthy are the yield opportunities presented within the DeFi ecosystem. Although financial institutions have not yet invested funds in liquidity mining. However, there is a “macro-demand” for the rate of return on capital. Currently, early adopters are accumulating this value. The emergence of decentralized financial markets represents one of the greatest advancements and holds the potential for continued development throughout 2021. However, such a promising market will undoubtedly attract many unstable projects and scams. We expect that the hype around DeFi will gradually subside over the next year, as real-world projects that have broad community support and the backing of major governments begin to emerge. Since last year, a series of irresistible factors have had a significant impact on today's crypto market. Firstly, due to the continuous accumulation of capital, markets have become increasingly strained, with liquidity reaching a level of substantial saturation. Therefore, we will bring tremendous prosperity to projects based on small and medium-sized blockchains. On the other hand, the prevalence of the COVID-19 pandemic has placed cybersecurity issues at the highest priority. Therefore, another focus of the DeFi community will be on addressing security concerns. Blockchain Technology Trends for 2021 Based on ongoing market research and analysis of upcoming changes, we are able to make some predictions regarding the trends in blockchain technology. (1) Strengthen a solid foundation in language skills The latest version of Solidity 0.8 introduces several significant changes to the language’s structure, providing developers with additional conveniences. Additionally, OpenZeppelin released Defender in the last quarter of last year and renewed its contract. The adoption of these new implementations and more convenient toolsets has further contributed to the stability of blockchain development. (2) The growth of the Brownie development platform On the other hand, Brownie is strengthening its position in trade. It turns out that Viper is becoming increasingly popular—for example, Yearn Finance, the largest DeFi platform after several mergers, chose Brownie to host all its development processes. From this perspective, we can expect that an increasing number of projects will choose Brownie as their primary smart contract development framework, or will switch to it. (3) Higher requirements for Rust programmers As previously mentioned, the upcoming Polkadot parallel chains will have a significant impact on the market. The Polkadot relay chain is built upon the Substrate framework, which includes Rust. Furthermore, Rust is the programming language used by Parity, one of the main nodes of Ethereum. Therefore, the project will be connected to multiple chains in the near future, and numerous additional benefits and protocol enhancements will be implemented. This will further increase the demand for developers with extensive expertise in Rust. (4) Decentralized identity management The current issues surrounding KYC and identity management, particularly in the DeFi sector, have laid a solid foundation for future developments. Blaize’s CEO, Sergey Onyshchenko, shares the same view on this matter. “In the KYC market, there are gaps that represent opportunities for development. For decentralized exchanges, this is a very sensitive topic ； So, sooner or later, a large company will come here and offer a completely new approach to identity management. Another thing that is about to happen is the tokenization of assets in real-world business sectors such as real estate or art. Projects such as Centrifuge have already begun to move in this direction, introducing tokenized invoices that allow you to borrow money secured by these invoices. ” Conclusion During the global influenza pandemic, drastic market changes created many new opportunities and facilitated the development of alternative technologies. Last year was quite favorable for the blockchain market, which saw significant progress in emerging technologies and highly promising projects. However, the recent growth of major cryptocurrencies such as Bitcoin and Ethereum indicates that they have not yet reached their limits. text | Neican Jun Disclaimer: This material should not be used as a basis for making investment decisions, nor should it be interpreted as advice regarding the undertaking of any investment transactions. Trading digital assets involves significant risks and may result in the loss of your investment capital. Therefore, you should make sure that you fully understand the risks involved and invest carefully. “Chain Inside Reference” is solely intended for sharing information and does not constitute any investment advice. Any investment decisions made by users are entirely their own and have no relation to this website.      |
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