Narrative Upgrade: New Hype Focus

Introduction

The cryptocurrency market entered a bull market phase after 2024, and investment opportunities in the market continue to emerge. Historical data shows that the cryptocurrency market has a characteristic of alternating pumps, where BTC usually leads the upward trend of the entire industry, followed by other tokens. However, unlike in the past, most altcoins have shown relatively weak performance in this bull market. Although BTC saw a 70.86% increase in 2024, the gains of most altcoins failed to surpass BTC and even experienced declines. Taking the leading projects in the major tracks as an example:

• ETH (leading public blockchain) has increased by 55.65% since the beginning of 2024.
• ARB (leading in the ETH-L2 track) The increase from early 2024 to date: -37.81%;
• LDO (LSD track leader) 2024 year-to-date increase: -34.84% ;
• STX (leader of the BTC-L2 track) has gained 30.46% since the beginning of 2024;

This rare phenomenon can be explained from two perspectives: macroeconomics and the encryption market.

• Macro-economic perspective: The Federal Reserve has always maintained a high interest rate environment of 5.25%. There is uncertainty in the expected returns of risk capital, leading to fewer new investors compared to previous bull markets.
• From the perspective of the cryptocurrency industry: With a significant increase in supply, the market cap of tokens unlocked each month has remained at a high level, leaving investors silent.

Although the overall performance of the cryptocurrency market is mediocre, there are still some bright spots. For example, Meme tokens and AI tokens have achieved gains surpassing Bitcoin this year, attracting widespread attention from investors. In addition, tokens that focus on the “narrative upgrade” of crypto assets have been overlooked by most investors, and tokens based on the concept of narrative upgrade are expected to become a new focus of market speculation this year.

Definition of Narrative Upgrade Track

Narrative Upgrading Track is an emerging concept that is no longer limited to single project changes but covers a wider range.

The core of this concept lies in comprehensive upgrading and reform of the project, making it rejuvenated and competitive again. Specifically, narrative upgrading can be achieved by changing the project’s narrative, adjusting its basic logic, upgrading business models, launching innovative products, adjusting token mechanisms, merging with other projects, and even upgrading the brand.

In short, as long as a project can reshape its image through the introduction of transformative measures, it can be classified as part of the narrative upgrade track. The introduction of this concept injects new vitality into the development of the project and opens up new paths for the industry’s progress. Therefore, the narrative upgrade track will become one of the important directions for future project development and will play a significant role in future development.

The advantages of narrative upgrading track

• Having User Base: Most projects in the narrative upgrade track have usually experienced at least one bull market and bear market, and have a stable community and user base. In contrast, new projects usually need some time to build their own community and cultivate loyal users. The consensus obtained by projects in the narrative upgrade track makes it easier for them to be accepted by the market for their new changes.
• **High Market Trust: **In the narrative escalation track project, the team is more stable. After a long period of operation, the team has a deeper understanding of user preferences and market characteristics. Compared to new projects, the teams of old projects are more likely to gain the trust of the market and users. New project teams need time to establish themselves in the market and gain recognition.
• Strong resource integration: After long-term operation in the cryptocurrency market, such projects have accumulated various resources, including capital recognition, familiarity with more market-making teams, and exposure to more operational strategies, which is an advantage that new projects cannot compare with.
• More abundant experience: In the cryptocurrency market, in addition to having advantages in their own business and operations, projects also need to be familiar with the operating rules of the entire market. An experienced team can seize opportunities at different time nodes in the market as much as possible.

Although there is a widely spread saying in the cryptocurrency market that “speculate new, not old”, the reason why old projects can survive in the market for a long time, especially those teams that have experienced bull and bear markets, is because they are still actively promoting project reforms, which is precisely because they have various advantages that new projects do not have, and also provide impetus for the rise in token prices.

Classic Case - Vanar Chain

Before upgrading the narrative

Vanar Chain, formerly known as Terra Virtua, was founded by Gary Bracey and Jawad Ashraf. In 2018, the mainnet of Terra Virtua was launched. At that time, Terra Virtua’s main business was to establish a metaverse-based public chain project. Initially, it was a VR (Virtual Reality) and AR (Augmented Reality) content platform based on paid subscriptions, supporting cryptocurrency payments. At that time, it belonged to the category of public chain and metaverse.

After the narrative upgrade

First Narrative Upgrade: In 2020, Terra Virtua underwent its first narrative upgrade. At that time, the entire cryptocurrency market started a craze for NFT issuance. Terra Virtua followed the industry trend and added an NFT service platform on top of its metaverse business, transforming itself into a digital collectibles (NFT) platform project.

The second narrative upgrade: In 2023, Terra Virtua underwent its second narrative upgrade, changing the project’s name from Terra Virtua to Vanar Chain, and replacing the original project token TVK with VANRY. Existing TVK holders are able to convert their TVK to the new token VANRY at a 1:1 ratio. This project upgrade not only involves changes to the project’s name and token, but also proposes changes to the main business of the project. It adds a Gamefi narrative on top of the existing metaverse and NFT-based public chain, allowing users to experience and unlock games in interactive metaverse player lounges, and earn rewards such as Virtua XP and free collectibles in the process.

The third narrative upgrade: In 2024, Vanar Chain underwent the third narrative upgrade. Vanar Chain announced a partnership with AI giant NVIDIA to introduce multiple AI solutions into its products. These solutions include AI-driven IP tracking for brands, AI analysis for creators, AI-enhanced identity verification, and AI-powered DApp development and review. Vanar integrated NVIDIA’s technology into its platform, providing developers with tools to create advanced AI solutions, thereby enhancing its narrative in the AI field.

In summary, Vanar Chain has undergone three narrative upgrades and has transformed from an initial metaverse public chain project to a public chain project that encompasses metaverse, NFT, Gamefi, and AI narratives. Vanar Chain can be said to occupy the popular narratives of various periods of cryptocurrency, keeping it as a hot topic in the market.

Narrative Upgrade Effect

Vanar Chain, while occupying the Metaverse, NFT, Gamefi, AI, and public chain tracks, is currently more focused on AI and public chain tracks. Therefore, we choose FET, a project that also spans AI and public chain tracks.

Classic Case-Beam

Before the X Narrative Upgrade

Beam, formerly known as Axie 420, was founded by Marco van denHeuvel, Tommy Quite, and Mark Borsten in July 2021. Its initial goal was to allow players from low-wage countries to play Axie Infinity. However, in September 2021, it was renamed Merit Circle and expanded its focus from Axie Infinity to include more popular games and metaverses. Merit Circle’s main business is to establish a game guild similar to YGG. It has established a scholarship system and SubDao model, mainly by providing funds to players for gold farming, and Merit Circle receives a share of the earnings. It can be considered a large-scale gold farming studio and falls within the category of guilds in the Gamefi field.

After narrative upgrade

Because the entire cryptocurrency market entered a bear market phase in 2022, the prices of various project tokens plummeted. The revenue of Gamefi sector also sharply declined. If Merit Circle still adheres to the original scholarship system and SubDao model, in addition to being overshadowed by YGG in all aspects of business, the existing system and structure cannot enable Merit Circle to generate profits and may not be able to support Merit Circle through the cryptocurrency winter. Therefore, Merit Circle decisively underwent transformation in 2022.

In 2022, Merit Circle began to transform the structure and positioning of DAO, hoping to create a gaming DAO. Merit Circle divides DAO into multiple zones. Currently, its main zones are investment, studio, game, and infrastructure (Beam game chain built on Avalanche). The original token MC will be exchanged for BEAM at a ratio of 1:100.

Investment: The funds for project investment come from 100 million USDC raised on the Copper platform. The investment is managed by the Investment Committee established according to the MIP-2 proposal, with specific members including Flow Ventures LP, Sergei Chan, CitizenX, and Maven 11. The projects for investment are clearly marked on their official website’s treasury, mainly including holdings of USDC, blue-chip coins, NFT assets, and tokens/equity related to blockchain gaming tracks. Currently, the investment zone is the main source of income for Merit Circle.

Studio: The studio brings value to other zones in the DAO ecosystem, serving as the birthplace of creative projects within the Merit Circle DAO, collaborating with existing projects and those from non-web3 companies. It mainly includes three aspects:

• Subsidies: They are divided into research subsidies and development subsidies, which are provided to researchers and developers of specific projects, respectively.
• Edenhorde NFT Collection: It is initially created by illustrator Andy Ristaino, and the IP story behind the NFT is written by Celia Blythe, the author and historian of “Edenhorde”. Currently, a total of eight collections have been released. The main purpose is to release NFTs for the project itself.
• Merit Circle Tactile： It is also a creative project for NFTs. Merit Circle Tactile is a set of 650 merchandise boxes specially designed for the community, containing seven wearable items (T-shirts, hoodies, scarves, and hats). Holding the Merit Circle Tactile NFT can obtain these merchandise boxes. The NFT is distributed in two phases to proposal creators, contributors, Edenhorde NFT holders, etc.

Game: Promote cooperative games to attract game users; provide learning tutorials for popular blockchain games; provide exclusive game experience for Merit Circle game community users, and players can earn rewards (NFT, lottery, etc.) by completing tasks.

Infrastructure: The infrastructure product that has been released is the Beam gaming chain built on Avalanche. According to the MIP-28 proposal, the original token MC will be converted to the token BEAM at a ratio of 1:100. However, the name Merit Circle will continue to be used as the overall brand associated with the Beam network and BEAM. In the future, BEAM will serve as the token for gas consumption and node staking on the Beam chain. Games have already started to be gradually released on the Beam chain.

In conclusion, Merit Circle has transformed from a game guild to a comprehensive game industry platform that invests in the primary market of blockchain games, collaborates in game development, builds distribution channels for blockchain games, and constructs infrastructure. Through this business transformation, Merit Circle has expanded its business scope and increased its profitability.

Narrative Upgrade Effect

Now that Merit Circle has become a comprehensive gaming industry chain, we choose to compare it with XAI, which is also a gaming chain.

Classic Case-Fantom

Before upgrading the narrative

Fantom was founded in December 2019. Fantom positions itself as a public chain because at that time, various projects appearing on the Ethereum blockchain caused high gas fees and network congestion. Therefore, Fantom aims to solve the scalability and transaction limitations by providing a high-speed and low-cost alternative for dApp developers and users seeking to interact with DeFi protocols.

After the narrative upgrade

On May 18, 2024, members of the Fantom community initiated a series of governance proposals regarding the Sonic network. The main content includes: Sonic will be a new L1 chain and will be bridged to Ethereum and other chains through native L2 cross-chain bridges. This upgrade is commonly referred to as the Sonic upgrade.

Sonic upgrade mainly includes: creating a new L1—Sonic Network, the upgraded network mainly improves the TPS of the network by adopting parallel EVM, increasing it from the original 30 to 2000+, and enhancing the network experience by several levels, making it very smooth for developers and users to operate, with a very good experience; at the same time, when designing node storage, it reduces the requirements for nodes by more than 90%, greatly improving the speed of block synchronization; and in order to bring more liquidity to the chain, it allows new public chains to bridge to Ethereum’s L2; issuing a new native token S, users can choose to exchange FTM tokens for S at a ratio of 1:1.

In summary, although the FTM upgrade this time did not change the original narrative, it has made a qualitative improvement in the performance of the project and has taken the lead in the parallel EVM track.

Comparison with Similar Projects

After the Fantom upgrade, it becomes a parallel EVM public chain. Let’s compare it with SEI, which is also a parallel EVM public chain.

Other Projects

Nervos Network

Nervos Network, as a public chain project, was initially aimed at solving the scalability limitations faced by traditional networks such as Bitcoin and Ethereum. Nervos’ blockchain is built on a Proof of Work (PoW) consensus and supports the development of smart contracts on its layer-1 protocol. It also includes a series of layer-2 scaling solutions to facilitate high-capacity use cases. Nervos’ native token, CKByte or CKB, allows users and developers to apply for storage space on the Nervos blockchain in proportion to their holdings.

On February 13, 2024, Nervos Network announced the issuance of a new product: RGB++. This represents Nervos Network’s transition from being a layer-1 public chain similar to Bitcoin and Ethereum, to a project specifically focused on Bitcoin layer-2. It leverages its own advantages to concentrate on Bitcoin’s layer-2 scalability.

In 2024, CKB performed exceptionally well, rising from 0.00397 U at the beginning of the year to a peak of 0.0379 U, an increase of over 900%.

Arweave

Arweave was originally a decentralized data storage protocol designed to optimize long-term permanent storage through its unique proof-of-access mechanism and token economic model. Since February 2024, Arweave has launched a new product, Arweave AO, which has changed the fundamental narrative of Arweave from decentralized storage to public chain. Arweave AO features low costs, high-speed computing, permanent data storage, and is very friendly for contract deployment and status implementation, giving Arweave a significant advantage in the competition of public chains.

In 2024, AR’s performance has been very impressive, rising from 9.64 U at the beginning of the year to a peak of 49.55 U, an increase of up to 414%.

Track Risk

In the process of project development, most projects that improve and enhance the narrative level of the original project are new transformations in response to the original track’s lack of progress and competitiveness. Although the project may regain market attention, it also faces long-term development risks.

Narrative upgrade projects may have only made superficial improvements without truly addressing the underlying issues. It remains to be seen whether the team has performed well in overcoming previous challenges. Therefore, such projects carry significant development risks.

Even if the project undergoes changes and attracts some market attention, it may still fail to achieve the expected results, and face the risk of not being accepted after market development, or even remaining indifferent as before.

Therefore, when conducting investment research in the narrative escalation zone, investors need to think deeply and evaluate comprehensively to ensure that the new changes truly solve the original problems and bring long-term development. At the same time, it is necessary to recognize that the market may not be highly receptive to new changes, so thorough research is needed.

Summary

Narrative upgrade track projects refer to those projects that quickly gain market attention and funding by changing the original narrative, project logic, business model, launching revolutionary new products, reforming token structure, or merging with other similar projects, and may change project names, etc. These projects usually have extensive consensus, stable teams, abundant resources and experience, enabling them to quickly improve coin prices, brand influence, and return to the competition stage. However, such projects often experience failure or a dim phase, and the market questions their prospects. Investors may have doubts about their future development due to their past poor performance, worrying about whether the project can continue to grow and solve previous problems. Therefore, narrative escalation runway projects are easily overlooked by investors. However, the potential of these projects is still huge. Upgraded old projects often show amazing token price performance, bringing a sense of rebirth to the market. Therefore, these projects are still worthy of sufficient attention from the market, and more narrative upgrade projects are expected to emerge in 2024.