10 Altcoins That Will Survive The Bear
Dear Bankless Nation,
After last week's brutal reckoning for the space, things are feeling a bit less gloomy as Bitcoin rises above $30k and a number of altcoins mount significant comebacks.
Today, our Bankless Senior Analyst Ben Giove dives into 10 ecosystems he believes are looking particularly promising as we navigate the rest of this bear market.
- Bankless team
Every bear market claims its own victims. We've already seen a handful of teams shut down and walk away this cycle, but even as regulators sharpen their pitch forks and permabears unleash their shorts, there are a handful of ecosystems I have faith will weather the storm.
Some of these might surprise you, but I've got conviction in this list of projects. For more of my market takes, you can dial into the Bankless Token Hub where I analyze several projects every week!
The full list of projects (in no particular order) is for Paid Subscribers only but free users can check out my first pick: 👇👇
1. Frax Finance (FXS)
Token Type: DeFi - Conglomerate
Fully-Diluted Valuation: $611.3M
Why Frax Will Make It:
Frax is building an expanding ecosystem of DeFi products.
The most successful of these are FRAX, the fifth-largest stablecoin with a circulating supply of $1.0B, and frxETH, the third-largest liquid staking derivative with a 0.9% share of all ETH staking deposits. Frax also recently announced that they will be launching Fraxchain, an L2 which will settle to Ethereum.
These products, as well as the launch of Fraxchain, should help power growth of the Frax ecosystem, in turn generating revenues for and driving value to the FXS holders who lock their tokens for veFXS.
2. Polygon (MATIC)
Token Type: Layer 2
Fully-Diluted Valuation: $6.9B
Why Polygon Will Make It:
Polygon is an Etheruem scaling solutions that’s making moves during this bear market.
Polygon launched their zkEVM in March 2023, and just announced their plans to convert their Polygon Proof-of-Stake (PoS) chain into a zkEVM Validium. A validium is a Layer 2 scaling solution which posts data off-chain rather than on-chain, making the tradeoff of having lesser security guarantees in exchange for greater scalability.
The Polygon PoS chain currently has $981.3M in TVL, fifth among all Layer 1 and Layer 2 networks. The zkEVM Validium will still utilize the MATIC token as a means of decentralizing its sequencer set.
Although fears surrounding MATIC’s status as a security may present a headwind, Polygon’s focus on the zkEVM, as well as the launch of the zkEVM Validium, should help the network grow and remain competitive with other L2s like Arbitrum, Optimism, Starknet, and zkSync while still driving value back to the token.
3. Solana (SOL)
Token Type: Layer 1
Fully-Diluted Valuation: $9.4B
Why Solana Will Make It:
The Solana ecosystem is continuing to recover following a tumultuous 2022 that saw the price of SOL fall a whopping 94%.
Moving forward, the L1 should benefit from increased scalability from the launch of the currently in-development Firedancer client, which could enable the network to process more than 1 million transactions per second (TPS). Solana’s NFT ecosystem also remains robust, generating the third highest NFT trading volumes over the past month behind Bitcoin and Ethereum.
Although regulatory concerns linger following the SEC lawsuits against Binance and Coinbase which allege that SOL is a security, Solana’s positive momentum and infrastructure innovation should help it overcome this challenge and the remaining fallout of the FTX and Alameda Research collapse.
4. Lido (LDO)
Token Type: Liquid Staking
Fully-Diluted Valuation: $1.9B
Why Lido Will Make It:
Lido has established itself as Ethereum’s largest staking entity. The liquid staking derivative (LSD) issuer is a behemoth, with a 31.3% share of all staking deposits, more than 2x its closest competitor, Coinbase.
Lido should continue to benefit from the immense network effects of stETH, as its liquidity, integrations across DeFi, and strong security track record should help the protocol continue to attract deposits and maintain its leadership position in the staking landscape.
Although there has been a push at the Ethereum social layer to diversify stake away from Lido, the above factors should help the protocol remain a core beneficiary of the continued increase in the ETH stake rate following the Shapella upgrade in April 2023.
5. Rocket Pool (RPL)
Token Type: Liquid Staking
Fully-Diluted Valuation: $788.5M
Why Rocket Pool Will Make It:
Rocket Pool is another one of Ethereum’s largest liquid staking protocols, with a 3.2% share of all ETH staking deposits.
The protocol has managed to attract stakers and validators alike in part due to its emphasis on decentralization via its ability to permisionlessly onboard node operators to the network.
Like Lido, Rocket Pool should reap the benefits of its strengthening network effects, the protocol has grown 19% since the Shapella upgrade. This should drive value back to the RPL token, which validators need to buy and bond as slashing insurance in order to validate for the network.
Although LSD competition is heating up with projects like Frax, Swell, StakeWise Ether.fi, Diva, and others all competing for market-share, Rocket Pool should continue on its growth trajectory over the coming months.
6. GMX (GMX)
Token Type: DeFi - Perpetuals DEX
Fully-Diluted Valuation: $732.5M
Why GMX Will Make It:
GMX is one of DeFi’s largest decentralized perpetuals exchanges, having facilitated $8.2B in volumes and generated $42.8M in revenue over the past year. The protocol has emerged as the heart of Arbitrum DeFi, accounting for ~24% of the total DeFi TVL on the network.
GMX should continue to grow over the coming months as a result of the launch of GMX V2, an upgrade to the DEX which will bring several new features to the protocol including the trading of more assets, new risk parameters, and increased order types.
While it faces intense competition from other perps DEXs like dYdX, Kwenta, Gains Network, Pika Protocol and others, V2 should help GMX maintain its status as a market leader in the sector, as well as increase the yields that can be earned by GMX stakers, who take a 30% cut of all fees generated by the platform.
7. Optimism (OP)
Token Type: Layer 2
Fully-Diluted Valuation: $6.1B
Why Optimism Will Make It:
Optimism has solidified its place as one of Ethereum’s leading L2s.
Optimism Mainnet is currently the second largest L2 by TVL at $813.1M, good for the sixth highest total among all L1s and L2s. The OP Stack has also emerged as the leading solution for building custom rollups, with Coinbase, Binance, Ribbon, and others utilizing it to build Base, opBNB, and Aevo respectively.
While competition among L2s is fierce, these wins should help the Optimism ecosystem continue to attract developers, users, and liquidity as it aims to execute on its vision of building the Superchain, a network of interoperable rollups connected by a shared sequencer.
8. Arbitrum (ARB)
Token Type: Layer 2
Fully-Diluted Valuation: $11.4B
Why Arbitrum Will Make It:
Arbitrum is another of Ethereum’s leading L2s.
The optimistic rollup is the largest L2 by TVL, and fourth largest among all networks, with more than $2.2B locked in its DeFi protocols. Arbitrum is also bringing several innovative infrastructure developments to the table in the form of Orbit, its framework for developing Layer 3s (L3s are L2s that settle to another L2) as well as Stylus, which developers use to build applications in common programming languages like Rust and C++ on Arbitrum.
This robust DeFi ecosystem, as well as technologies like Orbit and Stylus, should help Arbitrum stave off competition from the likes of alt L1s and L2s while continuing to grow and attract new capital, users, and applications.
9. Immutable X (IMX)
(Editor's Note: Immutable is indeed a Bankless sponsor but its inclusion in this list is not tied to its sponsorship in any way and was made at the sole discretion of this piece's writer. Questions/concerns? My DMs are open!)
Token Type: Gaming
Fully-Diluted Valuation: $1.4B
Why Immutable Will Make It:
Immutable X is developing one of the leading Web3 gaming ecosystems.
Immutable is planning a level-up to its infrastructure, as it will be launching a zkEVM built using Polygon’s tech stack that should improve the network's throughput.
The Layer 2 is also host to numerous successful titles including mobile trading card game (TCG) Cross the Ages which has topped the App Store charts in multiple countries. Immutable is also home to God’s Unchained, another successful Web3 TCG that is planning a mobile launch later this year, as well as Illuvium, a highly anticipated auto-battler and creature collector RPG that is currently in private beta.
While there are numerous Web3 gaming ecosystems aiming to attract gamers and game studios like Ronin, Gala and Treasure DAO – the success of the titles in this ecosystem, as well as the scalability upgrade upon the launch of its zkEVM, should help Immutable remain competitive with these other players (pun intended).
10. Uniswap (UNI)
Token Type: DeFi - Spot DEX
Fully-Diluted Valuation: $4.8B
Why Uniswap Will Make It:
Uniswap is DeFi’s largest decentralized exchange, having facilitated $429.6B in trading volumes over the past year while currently holding a 54.4% share of all DEX volumes.
Uniswap has maintained its lead in the DEX sector following the release of Uniswap V3 in May 2021, which significantly improved the protocol's capital efficiency by introducing concentrated liquidity, or the ability to provision liquidity across a specific price range.
Uniswap seems poised to retain and perhaps grow this position with the launch of Uniswap V4, the recently announced next version of the protocol. V4 brings both improvements in gas efficiency as well as greater functionality to Uniswap through Hooks. Hooks are executable code that enable customizations of liquidity pools to include features like dynamic fees, limit orders, TWAP orders, and more.
Although V4 will not launch for several months, this newest iteration of DEX should help Uniswap maintain its leadership status.