Looking back at the crypto application data in 2022, we can see a distinctive feature: the number of users and popularity of NFT is growing significantly faster than that of DeFi, and the same is true for GameFi. The upsurge of NFT has brought the expansion of the crypto field to a broader digital economy ，and make it popular out of crypto filed

The short-lived GameFi in the first half of 2022 shows that the game still has a strong appeal and market driving force, but GameFi only brings short-term joy. The absence of a new generation of heavyweight unicorns like UniSwap in the DeFi industry shows that the new Lianyou did not find the correct posture to deeply plow the Web3 market.

In the following, YieldDAO Labs makes a sharp forward-looking analysis and research prediction on the new X2E narrative cycle through the insights and practice of the Web3 industry and the introduction of some concepts in the FORJ Web3 research report "Digital Renaissance and Cycle".

Innovation cycle:

The innovation cycle of the encrypted world and the metaverse is measured in years. Looking back on the past two years, the theme of 2021 can be summarized as "metaverse interoperability", and the theme of 2022 is "network effect". The narrative for 2023 may consist of two sub-themes of "cycle" and "fusion".

On the one hand, concepts such as Metaverse, X2E, and GameFi, which debuted in the bull market, will rise again after being polished by the bear market. On the other hand, with the improvement of infrastructure and the continuous emergence of innovative technologies, new core narrative elements will be developed. , Mutual integration has become a new trend, which in turn may lead to the gradual establishment of new forms of Web3 market systems and social systems.

We think the same is true for Web3. When a new innovation emerges, in most cases it will be initially ignored, then criticized, then continued to be discussed by the media and the public, followed by the acceptance and adoption of the innovation by everyone. Today's Web3, AI, Metaverse and previous cars, airplanes, Internet, etc. are experiencing similar scenarios.

 The emergence of the Z era and the new generation has triggered a new innovation cycle. Each generation hopes to own and use symbolic products that represent their own uniqueness. Just as Twitter and Tiktok, which are popular among young people, have gradually become mainstream, smartphones and smart wearable devices have become getting more popular. New users and new ways of thinking bring new demands, and a new cycle arrives.

The advice we often get when starting a business is to "focus on one thing", and it really does matter. But things have changed over the past 10 to 15 years, with more and more companies launching multiple product lines from their inception and offering extended services based on the product. Use multiple products and services to build competition barriers, shield competitors, and increase market size.

The transformation of the industry is formed in the process of "separation" and "combination". The Internet is subdivided into various contents through the combination of multi-layer protocols. The innovation of DeFi technology has stimulated new liquidity, and small innovations in multiple fields such as cross-chain have spawned multi-functional aggregators and DEXs with complex functions. For entrepreneurs, both horizontal innovation and vertical exploration may promote the development of the industry and achieve career success and wealth growth.

All of the above will be worth it if our ultimate goal is GAFA (Google, Apple, Facebook, Amazon). Animoca Brands is a good example. With its investment in NFT, metaverse, games and other fields, it gradually forms an ecosystem network effect.

New Flywheel For X2E Cycle:

From 2020 to 2022, we have witnessed the ups and downs of X2E, whether it is Play-to-earn's Axie or Walk-to-earn's Stepn. Although it was hot at the time, after entering the bear market in the second half of 22 years, NFT sales and Token Prices are facing a huge reduction. This also proves that it is unsustainable to rely solely on Earn to maintain the project: The main problem (and charm) of GameFi: the sole purpose of most game project participants is to make money. Once this premise is broken, the high churn rate of users makes Play to Earn The token economics model is not sustainable.

We need to add other powerful new core narrative elements, such as: UGC (User Generated Content) will be an inevitable trend of future games, making money will become a by-product of the game, and LIQUIDITY is eternal driving force for continuous growth of NFT/FT assets value ...

So It can be judged that the growth flywheel of new projects will be: fun→low threshold participation/feedback/sharing→bringing more and wider out-of-group players→continuous optimization of the project→money-making effect and ecological value growth→continuous innovation motivation and participation fun.

2023 New Core Narrative:

YieldDAO's views on the X2E cycle trend in 2023, including the following core elements of the new narrative: 

1. Simple and pure fun: Realize simple and pure competitive fun, such as GAME card game type design. 

2. Low threshold and universality: low threshold participation/direct feedback (out-of-group)/extensive social media sharing, such as the ultimate use of NFT blind box skills and props. 

3. New liquidity engine: The core of DEFI is liquidity, and the same is true for GameFi. Combining GAMEFI + NFT, the new GameFi engine is best able to provide FT/NFT dual derivative liquidity, 

4. Market system innovation: the flexible combination of the above elements creates a high-friction threshold business and creates a new user experience and market system 

5. IP brand gamification: the products exported by the brand will become popular culture, and the brand itself will also become part of the digital culture

New Fusion Power Of X2E : AvatarBattle

We invite Maxium, a core contributor of YieldDAO Labs team, to roughly describe the basic outline of the AvatarBattle X2E demonstration project:

From the perspective of 2022, the number of users and popularity of NFT is significantly faster than that of DeFi. Of course, this is also true for GameFi. NFT has brought a strong force out of the crypto economy. Even in a bear market, we still find that NFT has a strong culture and brand resilience.

We need the low-threshold participation/out-of-circle feedback/extensive social media influence brought by NFT. Avatar/PFP is the best carrier for Web3 social network entrance, accounting for 70% of the NFT market share.

AvatarBattle has several main features: 

● Competitive Games onChain: open and fair competition smart contract services on the chain... 

● NFT Liquidity: AB will create the largest value-added liquidity for all social NFT... 

● GameFi Engine: 6 yuan VRF GameFi engine, equipment and skill NFT blind box, PFP combat power numerical design, provide simple and pure fun, create an infinite competitive mode... 

● Event Combination: Based on simple and combinable competitive modules, build a complex event combination. This is a brand new track

AvatarBattle integrates the key core elements of X2E: Interesting, Earn, Access, Friction, and Combination, which will bring recovery and prosperity to GAMEFI and NFT Bringing a strong boost to innovation

In order to accelerate the application of the new X2E fusion narrative, YieldDAO is rapidly promoting the open construction of the X2E demonstration project AvatarBattle, and will closely unite with major industry forces to jointly promote the great process of the digital renaissance.

Summarize

Price cycles are the most visible cycles we're going through, bear markets will push builders to get more creative, and during market troughs we can see: 

● Reduction of speculators: The amount and quantity of NFT and FT transactions are greatly reduced 

● Extrusion of bubbles: Explosions of Luna, Three Arrows Capital, FTX, and DCG squeeze out capital bubbles 

● Big brands enter: Nike, Gucci, Reddit and other brands test the waters of Web3 

● Technological innovation: new public chain, L2, cross-chain, Move language, etc. 

● New modes of growth: GMX, DYDX, Blur, Lens, AvatarBattle...etc 

● ...

Looking forward to 2023, whether it is technology, product, or model-level innovation, basic innovation is constantly promoting the innovation of the overall Web3 system. New entrepreneurs and new entrants are reshaping the gameplay of the Web3 system. We predict that X2E, Metaverse, NFT, etc. will become active with a new attitude after experiencing the bear market.

We can predict with more certainty: due to the improvement of Web3 basic innovation, the improvement of public knoledge and awareness, and the popularization of online collaboration driven by the epidemic, the next innovation paradigm will shift from a few geniuses (Genius) to a broader DAO organization Innovation + gathering scene crowd creation (Scenius).

Refer To: 

1. This article cites some data from the Binance Live FORJ research report https://www.binance.com/en/live/video?roomId=2119321
2. Full Report 
3. AvatarBattle is an open DAO construction project. Partners who are willing to learn more and participate are welcome to contact the project team: YieldDaoio@gmail.com