BANKLESS is focusing on key cryptocurrency themes this year: LRT, DA Wars, and parallel EVM. It's time to pay attention to some key investment themes that will shape the new year. BANKLESS co-owner DAVID HOFFMAN has outlined six key themes worth watching in the 2024 bull market, including Liquidity Rehypothecation Tokens (LRT), SOLANA development, the game ecosystem IMMUTABLE and its IMX token, DA Wars, MONAD's commitment to parallelizing EVM, and retroactive airdrops.

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It's time to focus on some key investment themes that will shape the new year.

Written by: David Hoffman
Translated by: Luccy, BlockBeats

At the beginning of 2023, our industry experienced some of the most pessimistic sentiments in history, but by the end, it presented one of the most optimistic scenarios we have seen so far.

As we enter the bull market of 2024 with renewed vigor, it's time to focus on some key investment themes that will shape the new year. By understanding these six dominant narrative themes that will take center stage in the coming months, stay ahead!

### Liquidity Re-Mortgaging and Liquidity Re-Mortgaging Tokens (LRT)

The theme of re-mortgaging has gained momentum, and EigenLayer has not even officially launched yet. Today, there are over $1 billion deposited into EigenLayer contracts, and the competition to become a significant participant in the EigenLayer ecosystem is fierce.

Therefore, the war of liquidity re-mortgaging tokens (LST) is about to reignite, but this time, it will be the LRT war. Liquidity re-mortgaging tokens will have all the benefits of native ETH mortgages, as well as additional earnings generated by adding re-mortgaging networks. When people can earn more through LRT, why would they settle for a 5% LST return?

What are LRTs? They are like LSTs, but their earnings include those from EigenLayer. EigenLayer supports AVS (Active Verification Services, i.e., the EigenLayer network), which will generate some earnings or fees for those re-mortgaging ETH. Re-mortgagers may re-mortgage to multiple AVS to maximize the productivity of their mortgaged ETH and increase earnings.

In addition to their practicality, I believe one of the reasons for the prosperity of LRT in 2024 is the recent surge in airdrops. In this wave of immense interest and activity, LRT projects have become opportunities for "double strikes" and airdrop hunting. For example, Swell is currently offering their "Pearls," which I believe are placeholders for the eventual Swell token, positioned above EigenLayer points, which I also believe are placeholders.

Indeed, I am not familiar with all the LRT strategies of all LRT teams at present. Here, I will let you do your own due diligence. However, there are two projects I am watching closely due to my close relationships with teams I have invested in as an angel investor or through Bankless Ventures, and these two projects are Puffer and Swell.

Puffer has a unique advantage in its collaboration with SGX, namely additional slashing protection, serving as an additional defense layer against capital loss. This mechanism, combined with Puffer's collaboration with Justin Drake on smooth commitments and with Flashbots' Andrew Miller on remote attestation, enables the project to unleash efficiency and opportunities that other LRTs may have to catch up with.

As for Swell, it is an LST project that, when they saw the signs, turned to Liquidity Restake. When EigenLayer opened the doors to deposits, Swell was already leading the competition. Now, Swell ranks first in the LRT deposits of EigenLayer and second in LST deposits, second only to Lido.

However, there are some projects worth noting in this scenario, including Rio Network, EtherFi, Renzo Protocol, and Kelp DAO.

### Solana

Is the current theme "Bitcoin, Ethereum... and Solana"? Solana is currently making a big splash. This happens when a token rises by 900% in a year. It has re-attracted capital and attention from venture capitalists and emboldened the community that previously believed in it.

It is certain that the launch of Jito has just sparked a version of the DeFi summer of 2020 on Solana. It is now clear that the application layer of the network has risen from the ashes of the bear market from 2022 to 2023.

With Solana's SOL just entering the top 5 crypto assets, everyone is watching to see if Solana can achieve what its biggest supporters believe it can: become the most likely place to host breakthrough consumer crypto applications in the upcoming bull market.

Assuming Solana will realize its potential here, it will need to attract more innovative founders who build more novel applications, rather than just shinier versions of the same things Ethereum already has. Solana will need to develop new types of applications for cryptocurrencies that are uniquely enabled by the properties provided by the network.

DePIN seems to be an early standout competitor here. However, I believe there is no definitive conclusion as to whether there is any substance here. Nevertheless, we will see that this industry is worth closely tracking in any case.

Meanwhile, a large number of tokenless Solana protocols still need to airdrop tokens in 2024, which means that the hype and attention on Solana will continue until at least they do so. Whether Solana's version of DeFi Summer can continue to hold people's attention after the initial excitement remains to be seen.

Internally, Solana's attention has turned to its economy. With some of Solana's most challenging issues now in the past, it is time to focus on the next easiest target in the project, which is its native fee market and overall economic structure. Can Solana solve its economic issues? Only time will tell, but its community is more optimistic about its chances than ever before.

### Gaming

Gaming seems to be the most reliable category for breakthrough crypto applications in the near future. This is mainly because we know that many highly anticipated games are currently in development, with some of these games set to launch in 2024.

If games are fun, players will play. If game developers know what they are doing, they will cleverly introduce crypto elements as needed, rather than making them overwhelming elements in the game. The gaming content itself is a huge industry, and the distribution that cryptocurrencies can gain through the gaming space is also huge.

The best thing about the contemporary crypto gaming industry is that it is moving away from explicit focus on native crypto players. Many new games are being developed for those who are agnostic about cryptocurrencies.

This shift puts our space far from one of the most populous countries on Earth, as there are currently about 3.2 billion gamers worldwide. If we can build a game that appeals to crypto agnostics, it will be the first breakthrough example of cryptocurrencies offering something to those who do not care about cryptocurrencies.

Meanwhile, look at gaming ecosystems like Immutable and its IMX token as exciting representatives. Immutable is developing a game-specific zkEVM chain built on Polygon, currently valued higher than Arbitrum!

### DA War

The battle for data availability has already begun, and the start of this war can be traced back to the TIA airdrop, which started with a valuation of $20 billion, followed by a rise in the chart, with FDV climbing to $14 billion.

So why is everyone obsessed with data availability now?

That is to say, it is fair to assume that DA is like the bandwidth layer of Web3, and a cheap DA layer will transform cryptocurrencies from slow and expensive to fast, cheap, and rich, without sacrificing decentralization in the process. In fact, DA is the main bottleneck that prevents chains from braking in terms of resource costs and throughput levels. Therefore, any DA chain that can meet these demands can see long-term sustainable value flow in the crypto economy.

I am interested in the upcoming launch of EigenDA, which is the first AVS to go live on EigenLayer, and will be the first additional source of earnings for the LRT tokens I mentioned earlier.

EigenDA is built differently from Celestia and has some unique network properties. Because EigenDA is secured by staked ETH rather than an alternative L1, this makes EigenDA's DA properties closer to Ethereum, reducing some security assumptions and potentially making it an easier choice for Rollups that still need more DA than Ethereum L1 can provide.

Celestia and EigenDA are currently the two main competitors, but others have also joined the DA war. For example, NEAR has added DA functionality to its chain, which also has some unique properties due to the sharding research it has done over the past few years. I am sure there are more that I have not heard of, or are secret, that will launch in 2024, as the rewards for the DA race are now so great.

### Parallel EVM

Solana has sparked the urgency to build optimized virtual machines for Web3. In a recent episode, I asked Solana founder Anatoly Yakovenko, "What is the most critical component of Solana?" and he replied, "Parallelizing the SVM." This unique feature that Solana brings to the market is the ability to process multiple transactions simultaneously, as long as these transactions do not touch the same state.

This is a major advantage of SVM and a major weakness of EVM. Now, the war of parallel virtual machines is taking place on Ethereum L2 and new L1s. For example, the Eclipse project is adopting SVM and building an aggregation based on Ethereum (using Celestia for DA), and it is not the only project doing so.

Monad is another project that has been committed to parallelizing EVM for some time. Rebuilding EVM from single-threaded to multi-threaded is not an easy task, but the rewards of successful execution are huge. Imagine the scale, speed, and affordability of Solana, but with the Ethereum ecosystem. Monad is committed to achieving EVM bytecode equivalence, which means that any code written in the EVM environment can be ported to Monad immediately, without any cost.

The "speed of Solana and the distribution of Ethereum" strategy is not only recognized by Monad and Eclipse. Sei has also accepted this strategy, as they recently announced their proof of being a parallel EVM chain.

Please note that as I started writing this

Key Cryptocurrency Themes to Watch in 2024: LRT, DA War, Parallel EVM