Original source: Unchained
Original text compiled by: Yuliya, PANews
In this challenging and opportunity-filled year of 2024, the cryptocurrency market has experienced ups and downs. At the end of the year, the Chopping Block program invited four industry Dragonfly managing partners Haseeb Qureshi, Dragonfly general partner Tom Schmidt, Superstate CEO Robert Leshner, and Robot Ventures managing partner Tarun Chitra to review the key moments of this year, and PANews has compiled the text for this podcast.
Biggest Winner
Haseeb:
I believe the biggest winner this year is HyperLiquid. This decentralized perpetual contract trading platform conducted the most successful token airdrop of the season, marking a 'Uniswap moment' in this cycle. While there is still a long way to go in terms of true decentralization, its token distribution method and community response are exhilarating. As a VC, we indeed regret not being able to participate—actually, almost all VCs tried to invest in HyperLiquid, but all were declined. This 'perfect birth' project is indeed impressive, especially in terms of its product capability, execution, and technical delivery.
Robert:
"From my perspective, the biggest winner this year is all the cryptocurrency founders and companies in the U.S. We have witnessed an important turning point: from the extreme hostility and resistance faced before to the favorable situation now. As a U.S. cryptocurrency founder, this shift is exhilarating. Finally, I no longer have to feel troubled about engaging in cryptocurrency business in the U.S."
Tarun:
"I want to choose the entire field of DeFi (decentralized finance). Do you remember the 36-month bear market predicted by Degen Spartan? DeFi was once seen as the problem child of the cryptocurrency world, where the valuations of unlaunched public chains were often ten times that of DeFi projects. But now, DeFi has made a strong comeback. As someone who has worked in the DeFi field, seeing such development is indeed gratifying."
Tom:
My choice may be a bit surprising—it's Tether (USDT). They performed exceptionally well this year and can be said to be one of the most profitable companies in the world. For years, many have been waiting for Tether to collapse or to have significant issues, but the reality is quite the opposite; it has become increasingly successful and more regulated. Tether not only continues to grow but has also become a significant case in the cryptocurrency industry, especially in terms of stablecoin applications and the trend of global dollarization.
Biggest Loser
Robert:
Undoubtedly, the anti-crypto camp is the biggest loser this year, including some members from both houses of Congress and certain individuals in the executive branch, especially some members of the SEC and those pushing for 'Operation Choke Point 2.0'. They mistakenly believed that suppressing the cryptocurrency industry would advance their political careers, but it has proven to be a completely failed strategy. I hope this can change the future political landscape, making political repression against cryptocurrency no longer a viable political tactic.
Tarun:
I want to say that the biggest losers this year are the numerous second-tier Layer 2 projects and application chains. At the beginning of 2023, the market generally expected thousands of L2 projects, with each L2 tech stack giving rise to a large number of application chains for specific purposes. But reality has proven this assumption to be completely wrong. Just look at the ongoing turmoil in the Cosmos ecosystem. Previously, people thought that successful applications like Blur would be able to launch their own application chains or L2, like Blast, but the actual results have not been ideal. Instead, we see that users are more inclined to concentrate on a few top L2 projects.
Haseeb:
I believe that financial nihilism is the biggest loser this year. In the first half of the year, the idea that everything in cryptocurrency is just meme coins and that all technology is meaningless was once prevalent. But the reality is that the trading volume of meme coins has significantly decreased from the early 20-30% of total trading volume to now 10% or even lower. The market has shown more enthusiasm and confidence in true technological innovation and substantial progress. If you think all technology is worthless, then you are indeed a big loser this year.
Tom:
I want to say that the biggest losers are those who abandoned crypto this year to switch to artificial intelligence. This is a classic 'game over, we're back' case. When asset prices fall, investors exit, developers switch careers, and market sentiment turns extremely negative, but cryptocurrency always makes a comeback in different ways. I personally know many people who either sold their cryptocurrencies, shut down their companies, or turned to work in other fields. It's unfortunate because in this field, you really need a strong belief to succeed. Those who lack that belief and switched to AI may regret it now.
Biggest Surprise
Tarun:
Undoubtedly, the most surprising thing to me this year was the two projects Pump.fun and BonkBot. I remember we discussed Pump.fun in the show back in January and February when it had just started, providing users with an innovative way to create assets. I believe if it weren't for Pump.fun, the development of meme coins wouldn't have been so rapid. The other is BonkBot, a Telegram bot focused on meme coin trading. From a revenue perspective, BonkBot is an invisible champion, achieving $100 million in revenue in its first year, just like Pump.fun. The speed at which meme coin infrastructure has developed indeed took me by surprise.
Tom:
I have two surprises to share. The first is the launch of World Liberty Financial, where a presidential candidate is associated with a DeFi token, and Trump even holds a wallet, which is indeed unbelievable. But what is even more surprising is its sales performance. Normally, ordinary meme coins or NFTs can sell out in a short time, but this presidential-related DeFi token has only sold 25%, and sales are continuously declining. Both of these points greatly exceeded my expectations.
Additionally, regarding the points Tarun mentioned, I want to add that I predicted early in 2024 that the application layer would generate a lot of revenue. Projects like Photon, Banana Gun, and even Uniswap have all achieved revenues in the hundreds of millions, surpassing most DeFi protocols. Although I did not specifically predict the meme coin infrastructure, applications have indeed performed excellently, with revenues and profitability exceeding many protocols.
Haseeb:
My two biggest surprises are: first, the rise of the 'Tap to earn' model was unexpected, although there is almost no news about it now, such as the Hamster Combat game even catching the attention of the military in Iran. Secondly, there were no major cryptocurrency security incidents (L1/DeFi) this year, indicating a significant improvement in industry security. Although TVL has rebounded sharply, we have not seen the massive losses of previous years, which is a positive signal.
Robert:
I want to add that the changes at the infrastructure level are remarkable. The rise of Solana and Base as meme coin infrastructure has been surprising. These two platforms have performed outstandingly in new user activities due to low transaction fees and convenient token issuance mechanisms, exceeding expectations in adoption speed and scale.
Best New Mechanism
Tom:
I think it must be the binding curve and LP locking mechanism of Pump. I'm glad to be the first to speak because I have a hunch this will be a popular choice.
Robert: I think the best mechanism is the 'yield amplification' model, which can be seen in several stablecoin projects like Ethena and Usual. Its core is to allocate the returns generated from a certain underlying asset (which can be arbitrage trading, government bonds, or any asset) to only a portion of users, significantly amplifying the yield. For example, if the annualized return of the underlying strategy is 5%, when only a quarter of users participate in the distribution, the yield for that quarter of users can be amplified to 20%. This mechanism has played an important role in Ethena's development, and I believe we will see more projects adopting similar mechanisms in the coming months.
Tarun:
From my perspective, there are two outstanding mechanisms innovations this year. The first is the liquidity guidance mechanism for meme coins; the second is the innovations related to basis trading, particularly the market maker lending pools. This type of lending pool can be traced back to the GLP pool launched by GMX at the end of 2021, and has now developed into Jupiter's JLP pool on Solana and HyperLiquid's HLP pool, among others.
The innovation of this mechanism lies in solving a key issue for decentralized exchanges: in centralized exchanges, the exchange can directly provide collateral loans to market makers, while decentralized exchanges previously lacked a similar mechanism. Through these lending pools, yield-seeking users can deposit assets into the pool, while perpetual contract traders can borrow these assets for market making and pay fees to deposit users. This greatly enhances the capital efficiency of decentralized perpetual contract trading and is one of the important reasons for the historical high trading volume of decentralized perpetual contracts.
It's worth mentioning that projects like HyperLiquid can develop rapidly, largely thanks to this lending pool mechanism. Currently, the JLP pool of Jupiter has reached $1.5 billion, and this infrastructure provides important support for on-chain basis trading. Although decentralized perpetual contract trading may never fully match centralized exchanges in capital efficiency, this mechanism has indeed greatly narrowed that gap.
Haseeb:
This is indeed an important innovation. So, regarding the specific operation of these lending pools, like JLP or HLP, are there specific third parties operating them?
Tarun:
This depends on the specific project. For example, GMX's liquidity provision is programmatic, with target weights determined by governance or multi-signature. HyperLiquid's HLP, on the other hand, is directly managed by the project team. JLP and GLP are similar to AMM (automated market makers), allowing anyone to perform arbitrage operations. The key is that this mechanism effectively connects LP users seeking yield with traders needing funds for market making.
Best Meme
Haseeb:
I vote for Justin Sun's birthday photo. You may remember this entrepreneur, who is well-known in our industry and reportedly well-liked by employees, posted a photo of himself on his birthday. This photo was clearly AI-generated, as he had 14 fingers in it. This might be one of the most embarrassing moments for one of the most successful entrepreneurs in the crypto industry, but this meme indeed left a lasting impression on me.
Robert:
While technically this may not count as a typical meme, I want to give the Best Meme award to Pudgy Penguins. Perhaps because they just launched the PENGU token, which reached a fully diluted valuation of $5 billion at the opening. Although I do not hold any Pudgy Penguins or PENGU tokens, I must admit their achievement: they have continued to build during the bear market, turning an ordinary meme into great success through sustained promotion and deep operations. Now they have launched penguin dolls, meme coins, and other peripheral products, and the community is thriving.
Tarun:
I want to choose Bonk. Mainly because BonkBot is a genius marketing strategy that helped Bonk grow from near-zero to a market cap of billions of dollars in just one year. If we talk about the most successful 'blue chip' meme coin in the Solana ecosystem, it would be Bonk.
Tom:
This choice is indeed difficult, but I want to nominate Hugo Martingale, the operator of the Polymarket intern Twitter account, which is doing an excellent job. Their content is new and interesting, often coming up with witty remarks in the comments section, making it a high-quality account.
Haseeb:
I am glad to see that not everyone has chosen meme coins. To be honest, we may have discussed meme coins too much this year, and I hope we can discuss fewer meme-related topics next year.
Best/Worst Transformation
Robert:
I want to merge the 'Best Transformation' and 'Best Comeback Story' awards and give them to MicroStrategy. Although their decision to transform from a mediocre business intelligence software company to a Bitcoin leveraged ETF was made five years ago, 2024 is the year this transformation has truly been recognized by the market. They not only broke historical highs from the dot-com bubble but also created an amazing business model: issuing convertible bonds to raise funds at a premium over Bitcoin and then continuing to buy Bitcoin, forming a perpetual funding cycle mechanism.
Tarun:
I want to nominate the Babylon protocol. Although their transformation technically started in 2023, it was not truly realized until 2024. Babylon initially only provided Bitcoin timestamp services for the Cosmos chain, but later developed 'remote staking' technology, allowing users to use Bitcoin as collateral for staking. Now their TVL has reached $6 billion. Transforming from a single timestamp service to such a large-scale business is one of the most successful business model transformations I have ever seen.
Tom:
I want to nominate the Democratic Party's 'worst transformation'. From Trump’s event at Mar-a-Lago to Biden's executive statement related to digital assets, to Kamala’s vague remarks on cryptocurrency investments, the entire process seemed very chaotic. In contrast, Trump adopted a simple and direct strategy, saying what people wanted to hear and doing what people wanted, like 'Free Ross'. The Democratic Party's performance on this issue is as disappointing as missing a shot just two inches from the goal.
Haseeb:
I choose the best transformation as the transition of the NFT community to meme coins. For example, Miladys launched the CULT token, and Pudgy Penguins launched PENGU; the market caps of these meme coins even exceeded those of the original NFT projects. Interestingly, this transformation did not meet with community backlash, and no one accused them of straying from NFTs. Although these tokens seem to have no practical use, this transformation strategy has surprisingly succeeded. This may be related to the choice of public chains, as many high-quality NFT projects are on Ethereum, while meme coins have developed more on Solana, and this natural friction may explain why this transformation came relatively late.
Tom:
Interestingly, we find that in the cryptocurrency field, sometimes simple 'vibe coins' are more popular than tokens that attempt to create serious value. This seems to prove a point: when launching new tokens, it doesn't need to be overly complicated; people prefer to have multiple simple tokens rather than one complex conversion mechanism.
Most Disappointing Project
Tom:
I think the rebranding plan of MakerDAO to Sky is a failure. The most obvious evidence of this failure is that even after the rebranding, people still refer to it as Maker rather than Sky. Although DAI still significantly outscales USDS, it is said they are considering retracting this rebranding, which is clearly an unnecessary and ineffective decision.
Haseeb:
I choose Bitcoin L2 projects as the biggest failure. At the beginning of the year, the market had high hopes for Bitcoin L2, expecting it to reach billions of dollars in TVL, believing that the Bitcoin ecosystem would embrace DeFi. But the reality is that even with multiple projects launched, they have all turned into 'ghost towns'. Hardly anyone discusses these projects, and founders rarely express intentions to launch projects on Bitcoin L2.
Moreover, celebrity coins are also a significant failure. There was a time when people thought celebrity coins would perform better than ordinary meme coins because of celebrity endorsements. For example, MOTHER belongs to this category. But these are essentially social coins, and over time, their performance has been extremely poor. The market initially believed this would become a huge opportunity, but it now seems that expectation has completely fallen through.
Robert:
I want to nominate the fall of Friend.tech and its driven social finance (Social Fi) craze. Earlier this year, Friend.tech was once regarded as the hottest startup in the cryptocurrency field, but its development cycle was extremely short. From the initial concept to being highly sought after, then launching V2 and the Friend token, and finally quickly fading into silence. Now the value of the product and token is nearly zero, which may be one of the rare self-destructive projects. Although projects like Farcaster are still developing, the entire crypto social domain faces huge challenges.
2024 Best Comeback Story
Tom:
I want to nominate Coinbase. During the decline in cryptocurrency prices, Coinbase often became the 'punching bag' of the market. In 2023, they laid off thousands of employees, and many believed they might go bankrupt. But with the launch of the Bitcoin ETF, Coinbase, as the custodian of the ETF, gained new development opportunities. Their overseas business, while not particularly outstanding, is steadily growing. In addition, they received a stay of execution in their lawsuit against the SEC, achieving a series of important victories in 2024. Notably, this is the second consecutive year that Coinbase has been recognized as the best comeback story, and this 'double recovery' is indeed impressive.
Haseeb:
I want to nominate Magic Eden. They were once considered a 'second-tier' NFT trading platform after OpenSea and Blur. However, by entering the Bitcoin ecosystem, particularly with their layout in BRC-20 tokens and Ordinals, they achieved remarkable trading volume. Their performance in the Solana ecosystem is also quite good. Recently, they launched a platform token, achieving what can be described as a perfect transformation.
Robert:
In addition to the previously mentioned MicroStrategy, I also want to nominate the entire Bitcoin ETF ecosystem. After years of rejections and failures, it finally achieved a breakthrough this year. Thanks to Grayscale suing the SEC and winning, the success of the Bitcoin ETF has paved the way for Ethereum ETFs. The performance of these ETF products has been quite impressive, serving as a model of resurrection from 'death'. While some may think this is more of a 'winner' story than a 'comeback' story, institutions like BlackRock have indeed shown strong capabilities in this process.
Tarun:
I choose the Move ecosystem as the best comeback story. Sui's market cap has reached $50 billion, Movement's startup fund exceeds $5 billion, and many DeFi protocols have also launched on these public chains. In the third and fourth quarters of 2023, when Solana gained a lot of attention, the Move ecosystem seemed to be overlooked. But now, through improving user experience and optimizing other functions, they have clearly achieved a strong comeback.
Host: From these cases, we can see that in the cryptocurrency market, even projects that have experienced lows can achieve a strong recovery as long as they have the right strategic positioning and execution. This also reflects the resilience and innovative capacity of this industry.
2025 Predictions
Haseeb:
I have three predictions. First, Bitcoin will reach $150,000 and then see a pullback; second, DeFi tokens will experience explosive growth; third, AI-related token prices will surge, but the actual applications of the underlying protocols may be relatively limited.
Robert:
I am more optimistic about Bitcoin, predicting it will reach $180,000, but without a sharp drop. Secondly, I believe the U.S. will introduce dedicated legislation for cryptocurrency for the first time, which will be an important milestone for the industry. Finally, I predict there will be a media-covered AI cryptocurrency scam incident.
Tarun:
My predictions mainly focus on three aspects. First, there will be a wave of consolidation in application chains and L2 tracks, and we may see multiple merger cases, mainly due to high operational costs and transaction volume concentration issues. Second, the total market value of AI-related tokens will increase at least fivefold from the current $10 billion. Finally, Solana's inflation rate will be reduced by at least 25%.
Tom:
I also have three predictions. First, money games like Farcaster or 'buttons' will achieve mainstream popularity and go viral on platforms like TikTok. Second, there will be new crypto asset ETFs approved, but they might be relatively traditional coins like XRP or Litecoin, rather than the emerging assets that the crypto community is looking forward to. Third, we might see a significant security incident at the application layer, possibly stemming from supply chain attacks or library vulnerabilities.
