Moving beyond our traditional finance, we’ve seen the new age of decentralized finance (DeFi) rise from the ashes, bringing with it the promise of financial freedom and autonomy. But what does 2023 hold for DeFi?
Hold on to your digital wallets because we’re delving deep into the top 4 DeFi narratives of 2023. Equipped with actionable insights, you’ll be ready to navigate the thrilling turbulence of the Web3 space.
What are DeFi Narratives?
DeFi narratives refer to the key themes and stories that guide the development, adoption, and perception of decentralized finance technologies. In simple terms, they are the “stories” we tell about DeFi that help us understand its potential and implications.
In 2023, one of the most prevailing narratives revolves around the interplay between DeFi, Gambling, Artificial Intelligence, and staking, among others. DeFi narratives help investors to know where to invest their money (early on) before the narratives become popular.
Here are the top 4 DeFi narratives of 2023, with actionable projects to invest in:
GambleFi refers to the intersection of DeFi and online gambling platforms. It’s an exciting new frontier that utilizes blockchain technology to offer decentralized gambling experiences. GambleFi projects are gaining traction due to their transparency, fairness, and potential for high returns. Traditional online gambling platforms often face challenges such as lack of trust, hidden fees, and regulatory constraints. GambleFi offers a solution to these issues by leveraging smart contracts and decentralization.
A prominent project to consider in the GambleFi sphere is Rollbit.
Rollbit is generating nearly as much revenue as Uniswap. Yet RLB is trading at less than 1/10th of UNI’s market cap. Daily and cumulative deposits into Rollbit across Solana and Ethereum since the start of the year have crossed $815M, putting them on track for >$1.6B deposits in 2023.
Rollbit’s average daily deposits have grown at 16% MoM this year, growing from $2.7M in January to $6.2M in July. Applying a more conservative trend of +5% MoM growth rate, by the end of 2023 Rollbit could have attracted nearly $2B in deposits.
Rollbit has 3 main business lines, a Casino, a Sportsbook, and a Futures trading platform. These business lines are extremely profitable given fees and the house edge and not unreasonable that RLB could be generating between 10-30% of deposits in Revenue.
De-AI represents the melding of decentralized finance and artificial intelligence. This innovative blend is anticipated to revolutionize the future of finance by providing data-driven, autonomous, and efficient solutions. By integrating AI with DeFi, the financial ecosystem can expect enhanced predictive modeling, improved risk assessment, and sophisticated trading strategies.
In the realm of De-AI, SingularityNet, Bittensor, and Gensyn stand out. You can participate in these projects or begin accumulating their tokens when the market goes down again:
Bittensor is an L1 POW network on Polkadot that serves as a P2P market for training Machine Learning models. You can earn $TAO tokens for collaborative training based on informational value, or spend TAO to purchase their ML services.
Backed by a16z, Gensyn is another L1 that addresses hardware limitations in AI. It does so by uniting all of the world’s idle GPUs into a global Machine Learning supercluster, which can be rented and used by anyone at any time. Gensys hasn’t issued any tokens yet.
As one of the OG in the De-AI space, SinguarityNET operates as a marketplace for buying and selling AI solutions in a p2p fashion. You can farm $AGIX by staking $AGIX on their staking page, or simply trade when the momentum about AI is here.
Since the Shanghai upgrade, liquid staking has experienced exponential growth, becoming the largest category in the landscape with a TVL of nearly $20B. Restaking allows stakers to deposit liquid staked tokens (LST) and opt-in to earn an additional layer of yield using the same underlying asset .
A prominent project to consider here is Eigenlayer.
Eigenlayer has taken full advantage of this trend by introducing restaking. So far, Eigenlayer has successfully bootstrapped a TVL of $232M in ETH with a hard cap. Looking ahead, the TVL of Eigenlayer will continue to go up as more innovative protocols join the ecosystem, attracting further volume and liquidity from the market.
While stakers can benefit from the capital efficiency of staking, protocols can also enjoy a safer environment by leveraging eigenlayer’s pooled security.
Layer 2’s like Arbitrum, Optimism, and Zksync currently run centralized sequencers. While this offers faster confirmation times and better efficiency, it also comes at a cost of censorship risk and a single point of failure.
The solution to this is decentralization (aka shared sequencer). With a shared sequencer, every rollup can use it as “decentralization as a Service” by sacrificing profit from MEV. Not only does it resolve censorship issues and ensure liveness, but also reduces the cost of batch submission.
The emerging DeFi trends signify the dynamism and potential for growth within the DeFi ecosystem. While the above projects are prominent examples, they are merely the tip of a rapidly growing iceberg. As the industry moves forward, the synergy of these innovative mechanisms will continue to attract further capital, bolstering the overall security, decentralization, and efficiency of the ecosystem.
Vincent Munene is a freelance writer and a great blockchain enthusiast. Blockchain has changed his life in terms of financial freedom and in return, he likes to educate people and keep them up to date on everything blockchain. He is a Biochemist by profession and also loves to play the piano.