Apart from the Bitcoin halving, the upcoming Ethereum Dencun upgrade will be one of the most anticipated events in the cryptocurrency world. As we all know, the Dencun upgrade is a major upgrade for Ethereum, aimed at increasing data storage and reducing costs. The upgrade includes five EIPs, with the most market attention being on EIP-4844, which aims to address Ethereum's scalability issues, help reduce transaction costs for Ethereum Layer2 solutions, and directly benefit Layer2 and related ecosystems.
As the Dencun upgrade is aimed at improving the security, scalability, and functionality of the Ethereum network, this means that some tokens may have more opportunities for development after the upgrade. The following will explore which types of tokens may have development opportunities in the context of the Ethereum Dencun upgrade. (This article is for reference only and does not constitute investment advice.)
1.Layer 2
The core of the Dencun upgrade is EIP-4844, which will directly increase the throughput of Layer2 while reducing overall transaction fees through the introduction of Blob. This will undoubtedly enhance the competitiveness of Layer2 in the Ethereum system compared to other Alt Layer1 projects. However, competition between different Layer 2 solutions will continue to intensify. Below, we will outline several promising Layer2 projects.
(1) Metis (METIS)
Metis is an Ethereum Layer2 Rollup platform, developing an Optimistic Rollup solution to package and order transactions at the Ethereum Layer1, and then send this data back to the Ethereum main chain as a single transaction. As a result, Metis can provide extremely fast transactions, only taking a few seconds. Meanwhile, it still maintains the security of the Ethereum Layer1.
The second layer network of Metis uses fraud proofs, assuming that all transactions are valid unless proven otherwise. If a transaction is deemed invalid, a fraud-proof must be submitted. Validators post collateral, which will be reduced for invalid transactions. This is closely verified by Rangers. For Optimistic Rollup, the withdrawal time from the second layer to Ethereum is 7 days. Once the Metis network is fully deployed, the withdrawal time through the Rangers network validating transactions will be reduced to a few hours or even minutes. This is one of Metis' key advantages over other solutions.
It is worth mentioning that Vitalik Buterin's mother is also involved in the project, and the team's recent focus is on a decentralized sorter, which is also a promising direction for Layer 2.
(2)Loopring (LRC)
Loopring is a decentralized exchange based onup. It contains both automated market maker (AMM) based exchanges and order book-based exchanges. The Loopring protocol only uses the Ethereum blockchain as the data layer and verification layer. The performance of Loopring is sufficient for professional traders and market makers to deploy algorithmic strategies and other automated trading robots. This was not feasible on previous DEXs due to slow speed and high costs. The order book-based DEX, built on Loopring 3.0, has achieved commercial viability for the first time. Loopring expects non-custodial exchanges to gradually win in the competition and replace many centralized exchanges.
Loopring has been deeply involved in zkRollup for many years and is a veteran project in the industry. Recently, the team plans to develop the ZKEVM product Taiko. Compared to OP and ARB, the market value is not high, but there may be surprises in the future.
(3)Manta (MANTA)
Manta Pacific is a unique Layer2 ecosystem for EVM-native ZK applications on Ethereum, providing a scalable and low-cost gas fee environment for ZK applications to be deployed using Solidity only.
Key features of Manta Pacific include:
- Manta Pacific provides programmable ZK as an EVM-native Layer2
- Manta's general circuit can easily develop ZK applications using only Solidity.
- By using Celestia to achieve data availability and ZKEVM to achieve scalability, Manta Pacific provides high scalability and low transaction costs for ZK applications.
- Manta has recently gained high popularity, with relatively good trading volume and market value. There is still potential to look forward to in the future.
(4)AltLayer (ALT)
AltLayer is an open and decentralized Rollup protocol that introduces the new concept of Restaked Rollups. This concept separates existing Rollups from any Rollup stack (such as OP Stack, Arbitrum Orbit, ZKStack, Polygon CDK, etc.) and provides them with enhanced security, decentralization, interoperability, and rapid finality for the cryptographic economy.
Restaked Rollups combine the convenience of using Rollup stacks such as OP Stack, Arbitrum Orbit, ZKSync, ZKStack, Polygon CDK, and the powerful functionality of the EigenLayer restacking mechanism to guide network security and build a decentralized network. The founding team includes former Coinbase CTO and former a16z Global Partner Balaji Srinivasan, as well as Ethereum and Parity co-founder Gavin Wood.
ALT is the native utility token of AltLayer, used for economic bonding, governance, protocol incentives, and protocol fees.
This project is also a highly popular rollup-as-a-service solution in the recent period and can be considered a leader in this niche market.
2.Restaking (RSTK)
Restaking is one of the few coin projects in the Ethereum restaking track that can accommodate a large amount of track heat. Restaking allows LST (EigenLayer token) to be used as an encrypted economic security for active verification services in the EigenLayer network. Restake Finance proposes a decentralized approach to yield restaking.
Users can reintroduce their LST to EigenLayer by introducing the protocol's restaking ETH tokens (rstETH). The user's LST will be stored in EL by a DAO-controlled smart contract and will receive Ethereum staking rewards, as well as EigenLayer native rewards. rstETH is decentralized and fully supported by stETH in a one-to-one ratio.
Restake Finance will be supported by the Restake Finance DAO, which will ensure that the project maintains its decentralized nature and aligns its development with the interests of stakeholders. The DAO will govern the project through its utility and governance token RSTK. Its core objective is to accumulate value for token holders through governance and revenue generation. The system will levy fees on all EigenLayer restaking rewards and share these fees with RSTK token holders.
3.LSD
(1) PRISMA
Prisma is a decentralized lending protocol that allows users to mint the stablecoin mkUSD, which is fully collateralized by liquidity staking tokens.
Prisma enables users to mint the stablecoin mkUSD, which is fully collateralized by liquidity staking tokens. This stablecoin will be incentivized on Curve and Convex Finance to create a high capital efficiency flywheel, whereby users can earn Ethereum staking rewards as well as trading fees, CRV, CVX, and PRISMA.
Overall, Prisma is one of the most stable projects in the Ethereum liquidity staking derivatives track, and its overall performance is quite impressive.
(2) Stader (SD)
Stader is taking a modular approach to building smart contracts so that third parties can use their components to build different key solutions.
In the short term, Stader is building a smart contract for native staking across multiple chains including Terra and Solana, and establishing an economic ecosystem for the development and implementation of solutions. This includes YFI-style mining rewards, launchpads, game incentives, liquidity staking solutions, and more. In the long term, Stader focuses on unlocking platform methods and nurturing third-party development of multiple staking-related applications on the Stader infrastructure. Its investors include Pantera Capital, Coinbase Ventures, Three Arrows Capital, True Ventures, Jump Capital, Accomplice, and Blokchain.com, among others.
SD is the native governance token of the Stader protocol. The SD token will have 4 use cases: governance, priority authorization and insurance reduction, liquidity pools, and Stader infrastructure. The token allocation is as follows: 36% for rewards and mining, 4% for public sale, 17% for the team and advisors, 11% for the ecosystem fund, 17% for private sale, and 15% for the DAO fund.
Overall business data for SD saw a significant increase in the fourth quarter of 2023, and the token price also had a decent upward trend. The development in 2024 is also worth looking forward to.
(3)RPL（Rocket Pool）
Rocket Pool is a decentralized staking pool for Ethereum 2.0, aiming to reduce the hardware and capital requirements for ETH 2.0 staking. It aims to make Ethereum staking more accessible and decentralized, allowing users, DApps, and businesses to profit by staking their ETH on the beacon chain.
The RPL token has the following primary use cases:
Node deposits: Operating Rocket Pool nodes requires a deposit, and a portion of this deposit must be collateralized with RPL tokens. This ensures that node operators are linked to the fate of RPL and Rocket Pool, thereby enhancing security.
DAO governance: Users holding RPL can participate in the decentralized governance of Rocket Pool DAO through proposals and voting, with the amount of RPL held determining the voting weight.
Node rewards: A portion of the node operators' earnings is distributed in the form of RPL tokens, incentivizing the establishment of more nodes and thereby increasing network decentralization.
Staker rewards: Stakers in Rocket Pool can receive RPL rewards rebates from commissions. Rocket Pool has made significant progress in development and commercialization processes over the past few years, successfully building a leading decentralized staking infrastructure.
Overall, Rocket Pool holds a leading position in the Ethereum space, and its performance in the market is widely recognized.
4. Derivatives
(1)GMX(GMX)
GMX is a decentralized AMM derivatives protocol on Arbitrum, supporting spot and perpetual cryptocurrency trading. Users benefit from very low spreads and zero price impact and can trade assets such as Bitcoin, Ethereum, and AVAX with up to 50x leverage. Its permissionless nature promotes inclusivity, allowing participants to engage without central authority approval while providing deep liquidity for efficient order execution.
The GMX token serves as a utility and governance tool, incentivizing holders to stake and share trading fees, driving ecosystem participation. As a lucrative protocol, GMX has evolved into GMX V2, expected to achieve significant growth and expand the range of tradable assets.
With the improvement of Ethereum and Layer 2 performance, it is believed that GMX's business will also receive substantial support in the future.
(2)Vertex (VRTX)
Vertex is an order book derivatives protocol on Arbitrum, supported by a hybrid Unified Central Limit Order Book (CLOB) and integrated Automated Market Maker (AMM), enhancing liquidity as LP markets fill order books.
Vertex offers low-latency trading and efficient liquidity utilization for a wider range of DeFi assets, a byproduct of its hybrid order book-AMM design. Its off-chain sorter architecture also helps minimize the Miner Extractable Value (MEV) characteristics on Ethereum L1, while achieving lightning-fast trading. Its token is used for staking in governance and receiving trading rewards.
Similarly, with the improvement of Layer2 performance, Vertex is expected to achieve a leap in its business in the future.
It is foreseeable that with the performance improvements brought about by this upgrade, more innovative applications within the Ethereum ecosystem will emerge, promoting further penetration of Ethereum in multiple tracks. Meanwhile, Ethereum will continue to advance its technological breakthroughs and achieve the ability to process hundreds of thousands of transactions per second in the more distant future.
The successful implementation of the Dencun upgrade marks the formal entry of Ethereum into the 2.0 era, once again demonstrating the Ethereum Foundation's outstanding technological vision and strong execution capabilities. As a leader in blockchain technology, Ethereum's influence will continue to expand, and its ecosystem will become increasingly enriched and perfected.
It is worth mentioning that the Dencun upgrade of Ethereum will bring new opportunities to the entire cryptocurrency market, driving further development in more tracks, and focusing on some high-quality and innovative currencies in these tracks will provide investors with more profit opportunities. Of course, investors should also closely monitor the impact of the Dencun upgrade on different tokens and make investment plans accordingly. However, it should be noted that all investment activities entail risks, and investors should make investment decisions based on a rational assessment of the market and their risk tolerance.
Disclaimer: This article does not constitute investment advice, and investors need to make their investment judgments.
About CoinEx
Established in 2017, CoinEx is a global cryptocurrency exchange committed to making trading easier. The platform provides a range of services, including spot and margin trading, futures, swaps, automated market maker (AMM), and financial management services for over 5 million users across 200+ countries and regions. Since its establishment, CoinEx has steadfastly adhered to a “user-first” service principle. With the sincere intention of nurturing an equitable, respectful and secure crypto trading environment, CoinEx enables individuals with varying levels of experience to effortlessly access the world of cryptocurrency by offering easy-to-use products.
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