Research Summary
The report discusses three key narratives to watch in the crypto market for Q4. These include the potential of Liquid Restaking, the growth of Real-World Assets (RWA) in the DeFi sector, and the expected performance of Bitcoin. The report also mentions other narratives such as Arbitrum Season, perpetual DEXs, and SocialFi.
Key Takeaways
Liquid Restaking
- Emergence of Liquid Restaking: The report highlights the rise of Liquid Restaking, a process that allows ETH holders to secure multiple protocols simultaneously, thereby earning rewards from different protocols with the same capital. This process is seen as a solution for earning a higher yield on ETH without having to lock coins.
- Projects Building on EigenLayer: EigenLayer, the protocol that pioneered the concept of restaking, has four projects building liquid restaked tokens on top of it. These include Stader Labs, Restake Finance, Astrid Finance, and InceptionLRT. Most of these projects have already released their liquid restaked tokens on testnet, with Restake Finance and Astrin Finance planning to launch on mainnet by the end of the year.
Real-World Assets (RWA)
- Growth of RWA: The report notes the significant growth of the RWA sector in DeFi, with its Total Value Locked (TVL) increasing from below $120M at the beginning of the year to $2.16B. This growth is attributed to the launch of new protocols that make it easy to get exposure to RWAs and the embrace of RWAs by decentralized stablecoin protocols.
- Attractive Yields from RWA: The report suggests that the RWA sector will continue to grow due to the attractive yields it offers compared to the median yield rate in DeFi. Protocols like MakerDAO, Ondo Finance, and Frax Finance have released products that enable anyone to easily buy US T-bills, which are considered risk-free in traditional finance.
Bitcoin
- Bitcoin’s Performance: The report suggests that Bitcoin (BTC) has outperformed most of the top 100 coins over the past year and is expected to continue this trend in Q4. This is due to factors such as the upcoming BTC Halving, BTC’s perception as the safest crypto asset, and the potential approval of Grayscale’s BTC ETF application by the SEC.
Actionable Insights
- Investigate the Potential of Liquid Restaking: Given the growth potential of liquid restaking, it may be worth exploring the projects building on EigenLayer and their plans for launching on mainnet.
- Monitor the Growth of RWA: With the significant growth of the RWA sector in DeFi and the attractive yields it offers, it may be beneficial to keep an eye on this sector and the products being released by protocols like MakerDAO, Ondo Finance, and Frax Finance.
- Consider the Performance of Bitcoin: Given the report’s prediction of Bitcoin’s continued outperformance in Q4, it may be worth considering the factors contributing to this performance and their potential impact on investment decisions.
