LayerGG, a leading analytics platform, recently explored the intriguing space of Ecosystem Funds (EF) in the cryptocurrency space via a thought-provoking Twitter thread. In this research, LayerGG sheds light on the important role EF plays in shaping the trajectories of L1 and L2 projects such as ARB coin, INJ. Let’s unravel the insights shared by LayerGG and examine the impact of EF on various projects in the crypto ecosystem.
Best case scenarios: ARB coin, OP, INJ, METIS, SUI and SEI
LayerGG defines a set of best-case scenarios that include projects such as OP, INJ, METIS, SUI, SEI and ARB. The common thread between these projects is the significant size of their EFs, with active public discussions on platforms such as Optimism and Arbitrum, an increase in subprojects such as Sei Network and Sui Network, and notable Total Value Locked (TVL) growth across the board. LayerGG examines representative case studies to demonstrate the impact of EF on specific projects. Optimism’s role during “Op Summer” and Injective’s $150 million EF, which was 70% of its market capitalization at the time, exemplify the positive impact of EF.
Sui and Metis also experienced significant TVL growth and price increases following EF announcements, demonstrating a direct correlation between EF and project success. The analysis also highlights the success stories of Optimism, Injective, Sui and Metis and shows significant price increases and TVL growth attributed to EF. These case studies exemplify how a well-implemented EF strategy can contribute to the overall success and enrichment of a project’s ecosystem.
“Good” case scenarios: HOOK, Dfinity, NYM
LayerGG also investigates cases where EF announcements lead to positive results, although the direct impact on the number of projects and TVL remains unclear. Projects such as Hooked Protocol, Dfinity, and Nym saw significant increases in their market caps and narratives following EF announcements, demonstrating the potential benefits of EF during bullish market phases.
Disappointing scenarios: FLOW, ROSE, CORE, TT…
Despite significant EF size, some projects such as Flow, Rose, Core, and TT have faced minimal reactions, often attributed to unfortunate announcements made during bear markets, unclear EF use cases, and a lack of ongoing discussions. LayerGG offers insights into the disappointing results of these projects and highlights the importance of considering market conditions and communication strategies when implementing EF.
LayerGG concludes by pointing to projects currently being discussed or recently announced to develop the ecosystem. While an emerging market is crucial, the potential success of these projects depends on factors such as public discussions about use cases, enrichment of subprojects, and linkage to TVL growth. LayerGG suggests that if these projects comply with best-case scenarios, they can guarantee high expectations for their future.
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