Following the Crypto Narrative: Understanding 5 Protocols Set to Receive Major Updates

Understanding 5 Protocols Receiving Major Updates in Crypto

These catalysts will change the fundamentals of protocols and tokens.

By Thor Hartvigsen

Translated by Luffy, Foresight News

Catalysts create narratives, and narratives are an important factor driving crypto price increases. So how do you trade along with the crypto narrative? This article introduces five upcoming catalysts.

• Analysis of Contango, the expiring contract platform: What are its advantages compared to perpetual contract platforms?
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• Reviewing the history of stablecoin crashes: An analysis of the potential risks of USDT

Catalysts

On January 1 of this year, Gains Network launched on the Arbitrum network; subsequently, gTrade’s daily trading volume, fees, and users all increased by more than 2x.

Arbitrum’s launch improved GNS’s fundamentals, triggering a sharp rebound in the token, and reaching its peak on the day it was listed on Binance (a common top signal).

This is a catalyst that will eventually improve the fundamentals of underlying protocols and tokens. Conversely, the opposite is often referred to as “buy the rumor, sell the news.”

For example, the ADA price rose sharply before its smart contract was launched (people have long anticipated the launch of ADA’s smart contract). However, after the actual launch, the expected large DApp ecosystem did not appear, and the price reached its highest point on the day of the launch, because investors’ frenzy led to an overvalued actual product.

Similar examples include Polkadot and the launch of parallel chains.

But the impact of a catalyst depends not only on whether it improves the fundamentals, but also to a large extent on the overall market sentiment. When Gains Network launched on Arbitrum:

• the overall market began to rise by more than 80%

• the Arbitrum narrative began to spread

ADA and DOT both reached their peaks in the previous crypto bull market. Timing is crucial, and the influence of a catalyst is much greater in a bullish environment. “Buy the rumor, sell the news” is more common when there is no new capital entering.

Another type of catalyst is the release of important version upgrades.

• Matic was renamed Polygon and launched an Ethereum sidechain

• Gambit was renamed GMX and launched on Arbitrum and Avalanche

• Pendle released V2 with a new set of features

In these cases, the protocols have been thoroughly revised and prices have risen sharply. These protocols manage to make products adapt to the market, and if these can be discovered early on, you may reap a decent profit.

Now let’s take a look at the five protocols that are about to welcome catalysts

GMX

It is rumored that GMX V2 will be launched in June and will include the following updates:

• Add a large number of new trading assets

• Isolate liquidity markets to reduce the risk faced by liquidity providers

This makes it easier to add new assets to the protocol.

Other features include a custom low-latency oracle integrated with Chainlink, a separate fee structure for trading pairs, and automatic de-leveraging.

Competition in the decentralized perpetual contract field is fierce, but GMX V2 looks unique and promising. Learn more here.

EIP-4844

EIP-4844 (proto-danksharding) introduces several features to Ethereum, including the introduction of a data layer via transaction blobs. EIP-4844 prepares Ethereum for true Danksharding.

Although Ethereum mainnet fees will not be reduced before Danksharding, Rollup fees will be significantly reduced.

I expect the biggest beneficiaries of this narrative will be Rollup tokens (ARB, OP, etc.) and their native ecosystem project tokens.

EIP-4844 is scheduled to go live in Q3 or Q4.

dYdX

Whenever I talk about dYdX, I get criticized. It is indeed one of the most controversial protocols, due to its unfriendly token economics and previous protocol centralization issues.

However, dYdX is building one of the most innovative products in DeFi.

dYdX will release version V4 later this year on their own Cosmos application chain.

Some of the new features include: decentralized order book, validators that confirm on-chain transactions, and DYDX fee sharing.

For more information, please refer to.

Frax Finance

Frax Finance is transitioning to a more secure V3 model.

The main updates in the new version include:

• FRAX full mortgage

• Borrow-AMM providing liquidity for FRAX

• Extension of frxETH through the frxETH basepool on Curve

frxETH is growing steadily and setting new all-time highs almost every day.

sfrxETH offers the highest staking yield, and protocols like Pendle can help users further increase their yield.

The native stablecoin crvUSD on Curve was recently launched, and sfrxETH is currently the only token that can be used as collateral.

Synthetix

In the past week, Synthetix had the highest trading volume among all on-chain perpetual contracts (except dYdX), almost twice that of GMX.

Although the growth in trading volume was driven by the OP and KWENTA incentive schemes, it is also worth noting.

Synthetix serves as a liquidity layer, and protocols like Kwenta, Lyra, and Polynomial use this liquidity for their own protocols.

The main updates in Synthetix V3 are:

• Multi-asset mortgage (not just SNX, but also ETH, etc.)

• Unlicensed pool (isolated risk)

We will continue to update Blocking; if you have any questions or suggestions, please contact us!