Out of curiosity, I decided to research about DeFi narratives. And I'll be sharing a breakdown of what it's all about in this article. Follow me closely as I talk about some DeFi narratives.

DeFi Narratives Explained

DeFi narratives are stories that cause a token's pump. They are stories that cause the development, adoption and perception of DeFi technologies. That is, they include intentional hype that surrounds a particular token. The media, social media, online forums, influencers, and market trends can spur narratives and in turn cause a token's pump. For instance, the doge coin pump was caused by Elon Musk. Musk had mentioned the coin in an interview, and in a matter of days, the price of doge coin skyrocketed.

Recently, the rise of Socialfi, Liquid Staking Derivatives( LSD), Layer 1, Layer 2s, and telegram bots are narratives that have made waves . These narratives topped the chart in 2023, causing an increase in the crypto industry.

1.SocialFi (Decentralized Social Media)

2023 saw the rise of decentralized finance and social media. The emergence of Friendtech and Star Arena caused an attraction into decentralized finance. Focusing on Friendtech.Friendtech is a browser-based/ social finance application launched on the Base network. Base is an Ethereum scaling network provided by Coinbase,a crypto exchange.

Friendtech allows its users to connect with their audience and allows them to amerse wealth as well by selling their shares. In less than 2 weeks after its launch, Friendtech gained more than 100,000 users and made about $25 million.

Through the buying of keys of an individual whose wallet address is linked to their Twitter account, key buyers get access to a dedicated group chat only for holders. When keys are bought and sold, the individual whose keys are being traded receives a small “fee”, which serves as a percentage of the sale in Ethereum.

2. Liquid Staking Derivatives (LSD)

Liquid staking derivatives (LSDs) are an innovative trend in DeFi that present new investment opportunities whilst addressing some limitations of Ethereum staking.(unedited)

Liquid staking derivatives as one of the latest trends solves the problem of liquid staking by allowing users to receive a liquid staked derivative token for staking ETH that they can use in DeFi.

Lido is an LSD that accumulated over $14 billion in TVL. Being the first mover/protocol in liquid staking, Lido still dominates the liquid staking market till date.

3. Layer 1s

Layer 1s are the foundation in which other blockchains are built. However, traditional L1s have slow speeds,high gas fees and low scalability. With this, new Layer 1s have been created to solve these issues.

And they include Sui and Celestia.

4. Layer 2s

These are solutions that are built to solve the problems of high gas fees about other issues of the traditional layer 1. They are also known as vertical scaling networks. These networks include:

Layer 2 Optimism: Base, Optimism,Arbitrum.

Layer 2 ZK Rollup: Polygon zkevm,Scroll,ZKSync and Taiko

5. Telegram trading bots

Telegram bots allow for easier, and faster transactions. It allows for convenience as traders copy the contract address and then paste it as a chat in order to purchase such a token.

Also, some telegram bots also include sniping features that automatically buys a token when the bot notices an increase in the liquidity.

One of the telegram bots that made waves in 2023, is maestro bot.

Narratives provide an architecture that helps one determine the risk and rewards of different aspects of DeFi. The SocialFi, Liquid Staking Derivatives,Layer 1s, Layer 2s and telegram trading bots are narratives that has helped people determine gain as a result of the hypes and narratives. However, it's important to Do Your Own Research (DYOR), to help strengthen your knowledge about narratives and to have a better understanding of what it's about.