Q1 encryption narrative observation: no main line, only real returns

The Hong Kong Consensus conference in February 25th did not reach consensus. There was no mainline in the encryption market in Q1 25.

For 24 years, Solana has been strictly implementing the memecoin strategy formulated by Messari, and the trading volume of the single-chain overwhelms the entire ecosystem of Ethereum, becoming the first L1 to win the block space war between the Ethereum ecosystem in history.

However, the foundation of Solana’s victory is not solid. The meme coin’s fundamental consists of attention-FOMO sentiment-liquidity trinity, and the on-chain trading volume has rapidly declined due to the holiday effect. The weak LP pool cannot support the high FDV/LP ratio, and in February 25, it staged a greater retreat than Dunkirk.

The old king has fallen, and the new king is still behind the scenes. Standing at the historically unpredictable month of March, let’s make a blind guess about the future trend.

In the current chaotic market structure, there emerges a clue: funds are flowing from narrative-only chain PVP to YieldFarming supported by fundamentals.

Representative projects fall into three major categories:

–The new classical YieldFarming of Sonic, an enhanced version of Ve (3,3);

–BeraChain and Initia’s (3,3,3) new model, the chain version of Olympus DAO’s (3,3) mechanism;

–DePIN project represented by Aethir, a variant of YiledFarming with real income and positive externalities.

Sonic and BeraChain, as well as Initia, have a high market mindshare, while the DePIN track has been lacking market discussion for a year after silence.

However, the most bullish track in Messari’s 25-year outlook report is DePIN, and it suggests that Solana should strategically refocus on DePIN in 25 years.

As is well known, the trick to obtaining Alpha returns lies in taking the narrow path and cultivating lean fields. The less attention DePIN receives, the more worthwhile it is for us to deeply lay out.

The above figure is the TOP DePIN project data compiled by CryptoDep. In the top 5 income rankings, in addition to the well-known Aethir, io.net, and Akash, there are also two newcomers, Braintrust and GEODNET, entering the list.

Among them, Aethir ranks first in the DePIN project with a $10M 30-day revenue. I checked Aethir’s GPU Dashboard, and the project has achieved an annual recurring revenue (ARR) of $1.05 billion, providing 4.87 billion hours of computing power, and distributing over 3.6 billion ATH tokens as rewards, with nearly 1 million on-chain transactions.

I used to think that the real income model pricing in the encryption market would take many years to be recognized, but seeing Aethir’s growth trajectory, perhaps this day may come sooner than we think.

The success of Aethir is due in part to Aethir’s differentiated competitive strategy. Instead of following the route of other DePIN projects focusing on edge device networks and serving the long-tail market demand, Aethir chose to build a decentralized cloud computing platform using high-performance GPUs such as NVIDIA H100, providing enterprise GPU computing power for AI and game developers worldwide. On the other hand, the Aethir team seized the AI x Crypto trend in Q1 2024, successfully raised funds, and used them to purchase a large number of high-end GPUs, creating a moat for Aethir and accelerating the realization of network effects. The network effects of Aethir have attracted more enterprise GPU computing power suppliers to join.

Recently, there has been a view circulating in the market that open-source low-cost models like DeepSeek will reduce the demand for NVIDIA high-end graphics cards. This has caused many investors to worry about the sustainability of Aethir’s revenue. However, this view is actually market noise deliberately created by financial market manipulators some time ago, and feeling anxious about it is a bit of an overreaction.

NVIDIA’s ‘leather jacket yellow’ has long since publicly refuted this view, not to mention the ‘Jensen effect’ at play. In simple terms, open-source models like DeepSeek not only do not reduce the demand for high-end GPUs, but instead stimulate demand growth. After DeepSeek went viral, the domestic Maas (Model as a Service) inference market saw a significant increase in size, reviving many nearly cold computing power centers.

And the paradigm innovation in the field of AI is on the rise. In addition to LLM, Embodied AI, which requires low-latency, high-reliability computing power, and a multi-layer network structure of edge devices and cloud collaboration, has become another hot spot pursued by capital, and will become the engine igniting the second growth curve of Aethir.

So, there is no need to worry about Aethir on the demand side at all. The current focus of the Aethir team is on the supply side, where they are trying their best to onboard more enterprise-level high-end GPU computing power suppliers to the network. To this end, Aethir has also specifically launched the Aethir AVS network, providing compliance support and waiving the Staking threshold for GPU computing power suppliers.

In addition to AI-related projects such as Aethir, io.net, and Akash, DePin’s fundamentals are also very good. However, due to its niche market of geographic location information services, it limits its room for imagination. We will not conduct in-depth analysis here. If you are interested, you can Grok3 on your own.

To sum up, DePin has evolved from a ‘epic scam’ in 23 years to a physical equipment collaboration network with real income and positive externalities, but the market has not yet priced in this. And this is exactly a good point of attack.

Above.