1. Comparison between the cryptocurrency market and the traditional financial market
1.1 The gap between total market value and trading volume
According to Figure 1.1, the market value comparison of the U.S. stock market, cryptocurrency market and gold market is shown. The total market capitalization of the U.S. stock market (the total market capitalization of all listed companies in the U.S. stock market covered by the Wilshire 5000 Index) exceeds $54 trillion, far ahead of the other two markets. In comparison, the market value of the cryptocurrency market is only $2.5 trillion, which is about 1/25 of the U.S. stock market. The market value of the gold market exceeds $15 trillion, which is about 6 times that of the cryptocurrency market, but still less than 1/3 of the U.S. stock market. This shows that the market value of the U.S. stock market is significantly higher than the cryptocurrency and gold markets, which are relatively smaller markets. Through comparison, it is found that the total market value of the cryptocurrency market has huge room for growth, whether by attracting capital inflows from traditional markets or giving full play to its own potential advantages.
Source: MacroMicro,CompaniesMarketCap 图1.1
As shown in Figure 1.2, in 2023, the average annual trading volume of cryptocurrencies will reach 36.6 trillion, far exceeding the 162.6 billion of gold, the 252.9 billion of the S&P 500 index, and the 44.5 billion of the Dow Jones index. Such a gap in trading volume shows that the cryptocurrency market has a high degree of liquidity and participation, attracting a large number of investors and speculators, and showing the market's strong interest and confidence in emerging asset classes. This high liquidity also enhances the market's ability to resist risks, allowing the market to quickly adjust and maintain stability in the face of emergencies. This also shows that the cryptocurrency market is becoming more and more important globally and has become an important part of the financial system.
Average annual transaction volume (2023)
gold
162.6B
S&P 500
252.9B
Dow Jones Index
44.5B
Cryptocurrency
36.6T
Source: World Gold Council,CoinGecko 图1.2
1.2 Potential of the cryptocurrency market
Huge user base
The cryptocurrency market is in a stage of rapid development, with an increasing number of users and a gradually maturing market structure. More and more individual and institutional investors are joining the market, driving the overall market prosperity. The cryptocurrency market is optimistic about the substantial growth of users in the crypto industry in 2024. Recently, on June 8, 2024, Binance announced that the number of registered users on the platform has exceeded 200 million worldwide.
And according to estimates from the Statista data website, as shown in Figure 1.3, depending on favorable market conditions, the number of cryptocurrency market users will be between 850 million and 950 million in the future, which highlights the growing global interest in crypto assets. The continuous growth of user numbers has brought significant market vitality to the cryptocurrency market. The participation of a large number of users has improved the liquidity of the market, making asset buying and selling more convenient and efficient.
Source: Statista Figure 1.3
Participate in the investment of primary market projects
The entry threshold of the cryptocurrency market is relatively low, and ordinary investors have more opportunities to participate in the investment of projects in the primary market. This means that investors can not only trade in the secondary market, but also intervene in the early stages of the project and obtain higher returns. In addition, the cryptocurrency market is highly innovative. The development and application of blockchain technology continue to generate new projects and investment opportunities, and these emerging technologies and business models can often achieve rapid growth in a relatively short period of time. Such an environment brings unprecedented opportunities to investors.
The active user community also provides strong support for the promotion and development of new projects. Users are not only market participants, but also early investors and promoters of new projects. This user-driven market dynamic promotes the popularization of cryptocurrency technology and the healthy development of the ecosystem, while attracting more investors and developers to enter the market, forming a virtuous circle and further enhancing the market's innovation and competitiveness.
2. Leverage the user base to unlock potential
2.1 DePIN track: Expanding users while strengthening resource utilization
Application: The concept and operation mode of DePIN track
DePIN (Decentralized Physical Infrastructure Networks) refers to the use of blockchain technology and token incentive mechanisms to distribute infrastructure originally provided by centralized companies, such as storage space, network traffic, cloud computing capabilities, energy, etc., to users around the world to jointly build and maintain network infrastructure.
Use: Example Analysis: Ionet
In the past few months, the DePIN track project io.net has attracted widespread attention for its unique community participation and reward mechanism. Let's first explore the entire operating logic of io.net in detail. As shown in Figure 2.1, Ionet collects the remaining GPU computing power of gamers or mining institutions and sells it in packages to start-up AI companies or developers. Due to the limitations of these startups and developers in terms of funds and team technology, they will not compete with industry-leading AI companies for large model training, but focus on the AI model reasoning and result stage with relatively low computing power requirements. Therefore, these startups and developers prefer to choose more cost-effective computing power integrators, such as Ionet, rather than renting GPU computing power from large manufacturers.
The success story of io.net shows that DePIN essentially plays the role of a middleman, which not only solves the requirements of specific entities on the B-side for computing power, network, etc., but also solves the excess economic benefits pursued by C-side users within the hardware capabilities. DePIN integrates the remaining computing power, network and storage space of different users' mobile phones or computers to provide services to institutions that need these resources, such as AI companies, game companies, etc. DePIN is particularly suitable for providing computing power support for AI, which is also the first application scenario that people think of when they mention DePIN.
io.net not only attracted a large number of users, but also successfully provided cost-effective computing power solutions for AI startups and developers. This successful model demonstrates the great potential of DePIN in optimizing resource utilization, reducing costs and improving efficiency.
Source: io.net Figure 2.1
Practical: Future Outlook
The success of io.net demonstrates how the DePIN model can achieve the construction of decentralized infrastructure by converting users' idle resources into economic benefits. This resource redistribution model, on the one hand, brings direct economic benefits to users and strengthens the use of users' surplus resources; on the other hand, it solves the urgent needs of a large number of AI companies and developers for medium computing power. Therefore, DePIN is not only beneficial to project parties and users, but also has strong social benefits. The DePIN model reduces resource waste by improving resource utilization, while reducing the costs of small and medium-sized enterprises and developers, allowing them to focus more on innovation and product development. This model not only injects new impetus into economic development, but also contributes to resource conservation. Therefore, DePIN is not only an innovation in business models, but also a manifestation of social progress, with broad and far-reaching impacts.
2.2 RWA track: attracting traditional traders
Application: Definition and function of RWA track
RWA (Real World Assets) refers to assets with real value that are tokenized through blockchain technology. Owning a token means that you own the asset in the real world, and you can conduct transactions such as lending, renting, buying and selling on the chain. The underlying assets that support its value are usually real estate, stocks, bonds, etc.
Through the RWA track, traditional Web2 traders can more easily enter the Web3 world. For example, by tokenizing real estate, investors can buy, sell, and manage real estate assets on the blockchain, enjoying higher transaction efficiency and lower costs. Similarly, by tokenizing stocks and bonds, investors can trade on decentralized exchanges, achieving 24/7 uninterrupted trading and improving investment flexibility.
Use: Example Discussion: Propbase
Propbase is a cutting-edge real estate tokenization platform that leverages the power of the Aptos blockchain to provide users with a new and exciting way to invest in real estate. The $PROPS native utility token powers the entire ecosystem and provides a unified method for all smart contract interactions, property transaction fees, and access to new listings on the Propbase DApp. PROPS coins can be used to purchase virtual goods, services, and content on the platform to meet user needs. As the platform ecosystem continues to accumulate and develop, the application scenarios of PROPS coins will become more extensive, further enhancing its value.
Propbase facilitates the tokenization of real estate assets, enabling owners to convert physical property into digital tokens that can be easily traded, transferred, and managed on the blockchain. By breaking down traditional barriers to real estate investment, Propbase democratizes real estate investing and expands investment diversification opportunities.
Practical: Future Outlook
The asset tokenization of real estate and other physical assets is just the tip of the iceberg in the RWA (Real World Assets) track. The U.S. debt tokenization and credit lending market dominate this track. According to a report by the Boston Consulting Group (BCG), the tokenization scale of RWA may reach a staggering US$16 trillion by 2030, equivalent to 10% of global GDP. This includes the tokenization of on-chain assets as well as the securitization of traditional assets (such as ETFs and real estate investment trusts). Against this backdrop, attracting traditional traders to the RWA market becomes crucial. While traditional traders are used to highly stable and regulated environments, the tokenization of RWA offers new investment opportunities while also bringing greater transparency and efficiency. Through smart contracts and blockchain technology, RWA tokenization can significantly reduce transaction costs and improve asset liquidity, which is a huge attraction for traditional traders. In addition, the expansion of the RWA market can also promote the development of the entire encryption market, attracting more traditional financial capital to enter this emerging field, and promote the maturity and steady development of the encryption industry.
If you want to know more specific information about the RWA track and related project recommendations, you can read the previously published article "Unveiling the Wealth Code of the RWA Track: Prospect Analysis and High-quality Project Recommendations", which contains a comprehensive analysis of the RWA track
4. Conclusion and Future Outlook
in conclusion
From the above analysis, we can see that although the cryptocurrency market still has a large gap with the traditional financial market in terms of total market value, its high liquidity and user participation show great potential. As the user base of the cryptocurrency market continues to expand, more and more individual and institutional investors are participating in it, which has promoted the rapid development of the market. At the same time, the rise of tracks such as DePIN and RWA has further enhanced the market's innovation ability and attractiveness. These emerging tracks not only bring new investment opportunities to the market, but also promote the maturity and development of the cryptocurrency market by optimizing resource utilization, reducing costs and improving efficiency.
Future Outlook
Looking ahead, the cryptocurrency market has great potential for development. First, the continued growth in the number of users will inject more vitality and funds into the market, driving the further expansion of the market size. Secondly, the success of the DePIN track shows that by integrating users' idle resources, resource utilization and economic benefits can be effectively improved, bringing new development momentum to the market. In the future, we can expect more projects like Ionet to emerge, further promoting the development of decentralized infrastructure networks. At the same time, the emergence of the RWA track provides new possibilities for the combination of traditional assets and blockchain technology. By tokenizing real-world assets, the cryptocurrency market can not only attract more traditional investors, but also achieve efficient management and trading of assets, and improve market liquidity and transparency.
In general, the cryptocurrency market is in a stage of rapid development. With the continuous advancement of technology and the expansion of applications, there will be more investment opportunities and development space in the future. Market participants need to maintain keen insight, seize market changes and opportunities, and gain greater benefits in this dynamic and potential market.
Disclaimer: Please strictly abide by the laws and regulations of your location. This article does not represent any investment advice.