Four Investment Opportunities to Watch for in the Future

After reaching its bottom in 2022, the

cryptocurrency

market has started to rebound, accompanied by continuous updates in cryptocurrency-related policies. Different sectors within the industry have been rotating and experiencing growth.

The total market capitalization of the cryptocurrency market has increased from $800 billion to $1.2 trillion, with Bitcoin (BTC) witnessing an approximate 80% increase from its bottom at the beginning of the year.

Based on industry trends, concept popularity, and market potential, WikiBit has identified four concepts that are still worth paying attention to:

• RWA (Real-World Assets)

• Layer 2

• LSDFI

• SEC Concept Tokens/POW Concept Tokens

RWA (Real-World Assets)

RWA indeed stands for “Real-World Assets.” It refers to tangible assets with economic value that exist outside the realm of cryptocurrencies. These assets are often referred to as real-world assets. Examples include real estate, gold, stocks, bonds, and other physical assets.

The RWA concept is a sub-track within the DeFi space. It can be traced back to collaborations between projects like AAVE and RealT, where tokenized real estate is used as collateral to obtain loans. This allows investors to access liquidity and unlock the value of their real-world assets through decentralized finance protocols.

The RWA track represents an incremental market within the blockchain industry by tapping into existing markets outside of cryptocurrencies. In traditional finance, there are many high-quality assets that are subject to legal regulations. Blockchain offers a global and more open ecosystem. Many investors face restrictions when investing in assets such as stocks and real estate in other regions. The openness of blockchain technology enables them to overcome these limitations and access investment opportunities in different jurisdictions.

Since 2021, with the Federal Reserve's interest rate hikes, U.S. Treasury bonds have become attractive to investors as a risk-free asset. Within the RWA track, projects that tokenize U.S. bonds have seen a significant increase in Total Value Locked (TVL) since the beginning of 2023, indicating growing interest and adoption in this area.

Indeed, the development of RWA projects faces several challenges. These include:

• Selection and standardization of underlying real-world assets: Choosing suitable real-world assets to tokenize and establishing standardized practices across different assets can be complex.

• Compliance with legal and regulatory requirements: RWA projects must navigate various legal and regulatory frameworks, ensuring compliance with securities laws, property rights, and other applicable regulations.

• Token utility and value proposition: It is crucial for RWA projects to define the value proposition of their tokens and demonstrate how they empower holders with benefits or rights tied to the underlying assets.

Despite these challenges, the RWA track holds promising prospects. It may continue to evolve, with projects addressing the difficulties and unlocking the potential benefits of tokenizing real-world assets.

Layer2

Among all public blockchains capable of running virtual machines and enabling smart contract development, Ethereum has the most powerful ecosystem and user base. With a market capitalization of approximately $228.5 billion, ETH accounts for about 19% of the total industry market capitalization. Every step of Ethereum's development has had a significant impact on the industry.

According to the Ethereum development roadmap, it is currently progressing through the “The Surge” phase. The next step for Ethereum, the “Cancun Upgrade,” will introduce EIP-4844, which aims to reduce network fees and improve the speed of Layer 2 solutions.

It is foreseeable that as the speed of Layer 2 solutions increases and costs decrease, the barrier to entry for users will be lowered, and the performance of on-chain applications will be enhanced. All of these factors provide an optimistic outlook for the growth of the Layer 2 sector.

LSDFI

The emergence of the LSDFI (Liquidity Staking DeFi Infrastructure) sector is also related to the Ethereum upgrade. The Merge transition Ethereum from PoW to PoS. In order to unlock the liquidity of staked ETH, protocols such as Lido, Rocket Pool, and FXS have opened ETH staking markets and issued tokens like stETH and rETH that represent “principal + yield” for users.

Users can utilize other Lego-like protocols in the DeFi space to unlock liquidity or generate additional income.

As a new concept, LSDFI presents an incremental market with institutional investors entering to invest in new projects. When selecting investment targets in this sector, it is important to consider factors such as security, yield, and token utility from multiple perspectives.

SEC Concept Tokens/POW Concept Tokens

The regulatory oversight of the Securities and Exchange Commission (SEC) has a significant impact on the cryptocurrency market, both on exchanges and tokens. In a recent development, Ripple achieved partial victory in its legal battle with the SEC, leading to a significant surge in the price of XRP.

Important details include the fact that this ruling is a preliminary one, and the SEC has the right to appeal. Additionally, certain sales practices employed by Ripple over the past decade could result in XRP being classified as a security.

The progress of this case will affect not only XRP but also a range of tokens that the SEC considers securities. Meanwhile, market expectations are that Proof-of-Work (POW) tokens are unlikely to be deemed securities by the SEC.

As a result, with the passage of time, both types of tokens may experience significant price fluctuations.

Disclaimer: This article does not constitute investment advice. The information provided is for informational purposes only and should not be construed as financial or investment advice. Readers are advised to conduct their own research and consult with a qualified financial advisor before making any investment decisions.