Original source: Unchained
Compiled and edited by Yuliya, PANews
In 2024, a year full of challenges and opportunities, the cryptocurrency market has experienced ups and downs. At the end of the year, the Chopping Block program invited four industry Dragonfly Managing Partner Haseeb Qureshi, Dragonfly General Partner Tom Schmidt, Superstate CEO Robert Leshner, and Robot Ventures Managing Partner Tarun Chitra to review the key moments of the year. PANews compiled the text of this podcast.
Biggest Winner
Haseeb:
I think the biggest winner this year is HyperLiquid. This decentralized perpetual contract trading platform conducted the most successful token airdrop of the season, which can be called the "Uniswap moment" of this cycle. Although there is still a long way to go in terms of true decentralization, its token distribution method and community response are exciting. As a VC, we really regret not being able to participate in it - in fact, almost all VCs tried to invest in HyperLiquid, but they were all rejected. This kind of "perfect birth" project is indeed impressive, especially in terms of product capabilities, execution, and technical delivery.
Robert:
From my perspective, the biggest winners this year are all the cryptocurrency founders and companies in the United States. We have witnessed an important turning point: from the extreme hostility and resistance faced before, to the favorable situation we see now. As a U.S. cryptocurrency founder, this shift is exciting. 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, with valuations of unimplemented public chains often ten times that of DeFi projects. But now, DeFi has made a strong comeback. As someone who has been working in the DeFi space, seeing this development is indeed gratifying.
Tom:
My choice may be a bit surprising—it's Tether (USDT). They have performed exceptionally well this year, becoming one of the most profitable companies in the world. For years, many have been waiting for Tether to collapse or encounter major issues, but the opposite has happened; it has become increasingly successful and more regulated. Tether is not only continuing to grow, but it has also become an important case in the cryptocurrency industry, especially regarding stablecoin applications and the trend of global dollarization.
Biggest Loser
Robert:
Without a doubt, the anti-crypto camp is the biggest loser this year, including some members in both houses of Congress and certain people 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 could advance their political careers, but the reality has proven this to be a completely failed strategy. I hope this will change the future political landscape and prevent political suppression against cryptocurrencies from being a viable political tool.
Tarun:
I want to say that the biggest losers this year are the many second-tier Layer 2 projects and application chains. At the beginning of 2023, the market generally believed that there would be thousands of L2 projects, each L2 tech stack would derive a large number of purpose-specific application chains. But reality proved this assumption completely wrong. Just look at the ongoing turmoil in the Cosmos ecosystem. Previously, people thought that successful applications like Blur could launch their own application chains or L2, like Blast, but the actual results were not ideal. On the contrary, we see users tending to concentrate on a few top-tier L2 projects.
Haseeb:
I think financial nihilism is the biggest loser this year. In the first half of the year, the view that everything in cryptocurrency is a meme coin and all technology is meaningless once prevailed. But the reality is that the trading volume of meme coins has significantly decreased from the early 20-30% to now around 10% or even lower. The market has shown more enthusiasm and confidence in real technological innovation and substantial progress. If you believe that all technology is worthless, then you are indeed a big loser this year.
Tom:
I have to say the biggest losers are those who abandoned cryptocurrency this year in favor of artificial intelligence. This is a classic 'game over, we are back' case. When asset prices fall, investors exit, developers change careers, and market sentiment is extremely negative, but cryptocurrency always returns in different ways. I personally know many people who either sold their cryptocurrencies, closed their companies, or turned to other fields. It is unfortunate because in this field, you really need to have strong faith to succeed. Those who lack this faith and turned to AI may now regret it.
Biggest Surprise
Tarun:
Without a doubt, the most surprising for me this year are the projects Pump.fun and BonkBot. I remember we discussed Pump.fun in the show back in January and February when it was just starting, offering users an innovative way to create assets. I believe that without Pump.fun, the development of meme coins would not have been so rapid. The other is BonkBot, a Telegram bot focused on meme coin trading. In terms of revenue, BonkBot can be called an invisible champion; like Pump.fun, both companies achieved $100 million in revenue in their first year. The speed of development of meme coin infrastructure really surprised me.
Tom:
I have two surprises to share. The first is the launch of World Liberty Financial, a presidential candidate associated with a DeFi token, and Trump even holds a wallet, which is indeed unbelievable. But 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 only sold 25%, and sales have continued to decline. Both points are greatly beyond my expectations.
In addition, regarding the viewpoints mentioned by Tarun, I would like to add that as early as the beginning of 2024, I predicted that the application layer would generate a lot of revenue. For example, Photon, Banana Gun, and even Uniswap have all reached revenues of hundreds of millions, exceeding most DeFi protocols. Although I did not specifically predict the infrastructure of meme coins, applications have indeed performed well, with revenues and profitability surpassing many protocols.
Haseeb:
My two biggest surprises are: first, the rise of the 'Tap to earn' model is unexpected, although there is almost no news about it now, like the Hamster Combat game even drew military attention in Iran. Second, there have been no major cryptocurrency security incidents (L1/DeFi) this year, indicating a significant improvement in industry security. Although TVL (Total Value Locked) has rebounded significantly, we did not see the huge losses of previous years, which is a positive sign.
Robert:
I want to add to the changes at the infrastructure level. The rise of Solana and Base as meme coin infrastructures is surprising. These two platforms have excelled in new user activities due to low transaction fees and convenient token issuance mechanisms, with adoption speed and scale exceeding expectations.
Best New Mechanism
Tom:
I think it must be the bonding curve and LP locking mechanism of Pump. I am glad to speak first because I sense 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. The core idea is to allocate the yield generated by a certain underlying asset (which can be arbitrage trading, government bonds, or any asset) only to a subset of users, thereby significantly amplifying the yield. For example, if the annualized yield of the underlying strategy is 5%, when only one-fourth of the users participate in the allocation, the actual yield obtained by this subset of users will be amplified to 20%. This mechanism played an important role in the development of Ethena, and I believe we will see more projects adopting similar mechanisms in the coming months.
Tarun:
From my perspective, there are two prominent mechanism innovations this year. The first is the liquidity guiding mechanism for meme coins; the second is innovations related to basis trading, especially market maker lending pools. This lending pool can be traced back to the GLP pool launched by GMX at the end of 2021, and now has developed into Jupiter's JLP pool and HyperLiquid's HLP pool, among others.
The innovation of this mechanism lies in solving a key issue of decentralized exchanges: centralized exchanges can directly provide collateral loans to market makers, whereas decentralized exchanges previously lacked a similar mechanism. Through these lending pools, users seeking returns can deposit assets, while perpetual contract traders can borrow these assets for market making and pay fees to depositors. This greatly enhances the capital efficiency of decentralized perpetual contract trading and is one of the key reasons for the historic high trading volume in current decentralized perpetual contracts.
It is worth mentioning that projects like HyperLiquid have been able to grow rapidly largely due to this lending pool mechanism. Currently, the JLP pool of Jupiter has reached $1.5 billion, providing 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, is there any specific third party operating them?
Tarun:
This depends on the specific projects. For example, GMX's liquidity provision is programmatic, with target weights determined by governance or multisig. HyperLiquid's HLP is directly managed by the project team. JLP and GLP are similar to AMMs (Automated Market Makers), and anyone can engage in arbitrage. The key is that this mechanism effectively connects LP users seeking returns with traders needing funds for market making.
Best Meme
Haseeb:
I voted for Justin Sun's birthday photo. You may remember that this entrepreneur, who is very much in the spotlight in our industry and supposedly loved by employees, posted a photo 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 did leave a deep impression on me, and I think I will remember it for a long time.
Robert:
Although strictly speaking, this may not count as a typical meme, I want to award the best meme to Pudgy Penguins. Perhaps because they just launched the PENGU token, the fully diluted valuation at launch reached $5 billion. Although I do not hold any Pudgy Penguins or PENGU tokens, I have to acknowledge their achievement: continuing to build in a bear market, turning an ordinary meme into a great success through ongoing promotion and deep operations. They have now launched penguin dolls, meme coins, and other peripheral products, and the community is thriving.
Tarun:
I have to choose Bonk. Mainly because BonkBot is a brilliant marketing strategy that helped Bonk grow from nearly zero to a market cap of billions in one year. If we have to 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, who operates the Polymarket intern Twitter account exceptionally well. Their content is novel and interesting, and they often have witty remarks in the comments section, making it a very 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 reduce meme coin-related topics next year.
Best/Worst Transformation
Robert:
I want to merge the awards for 'Best Transformation' and 'Best Comeback Story' and present 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 when this transformation is truly recognized by the market. They not only broke through the historical high of the internet bubble era but also created an amazing business model: raising funds at a premium higher than Bitcoin through convertible bonds, and then continuing to purchase Bitcoin, forming a perpetual funding cycle.
Tarun:
I want to nominate the Babylon protocol. Although their transformation technically started in 2023, it truly realized in 2024. Babylon initially only provided Bitcoin timestamp services for the Cosmos chain, but later developed the 'remote staking' technology, allowing users to stake using Bitcoin as collateral. Now their TVL (Total Value Locked) 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 the incident involving Trump at Mar-a-Lago to Biden's executive statement on digital assets, to Kamala's vague statements on cryptocurrency investment, the whole process seems very chaotic. In contrast, Trump has taken a straightforward strategy, saying what people want to hear and doing what people want, such as 'Free Ross.' The performance of the Democratic Party on this issue is as disappointing as shooting wide at two inches in front of the goal.
Haseeb:
The best transformation I choose is the NFT community's shift to meme coins. For example, Miladys launched the CULT token, and Pudgy Penguins launched the PENGU token, which even surpassed the market value of the original NFT projects. Interestingly, this transformation did not draw opposition from the community, and no one accused them of deviating 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 are developing 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 those tokens that try to create serious value. This seems to prove a point: when issuing new tokens, there's no need to overcomplicate things; people prefer to have multiple simple tokens rather than a complicated conversion mechanism.
Most Disappointing Project
Tom:
I think the rebranding plan of MakerDAO to Sky is the most obvious failure. The clearest evidence of this failure is that even after the rebranding, people still refer to it as Maker instead of Sky. Although DAI's scale compared to USDS is still significant, it is said that they are considering reversing 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 expectations for Bitcoin L2, anticipating a TVL in the billions, believing 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 very few founders express intentions to launch projects on Bitcoin L2.
Additionally, celebrity tokens are also a significant failure. There was a time when people thought celebrity tokens would perform better than ordinary meme coins due to celebrity endorsements. For example, MOTHER belongs to this category. But these are essentially social tokens, and over time, their performance has been extremely poor. Initially, the market believed this would be a huge opportunity, but now it seems that expectation has completely fallen short.
Robert:
I want to nominate the downfall of Friend.tech and the social finance (Social Fi) craze it sparked. Earlier this year, Friend.tech was once considered the hottest startup in the crypto space, 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 fading into silence. Now the product and token's value is nearly zero, making it one of the few truly self-destructive projects. While projects like Farcaster are still developing, the growth of the entire crypto social field faces huge challenges.
Best Comeback Story of 2024
Tom:
I want to nominate Coinbase. When cryptocurrency prices fall, Coinbase often becomes the market's 'punching bag.' In 2023, they laid off thousands of employees, and many believe they might go bankrupt. But with the launch of Bitcoin ETFs, Coinbase, as the custodian of the ETFs, has gained new growth opportunities. Their overseas business, while not particularly outstanding, is steadily growing. Additionally, they have obtained a stay in their lawsuit with the SEC, marking a series of important victories in 2024. It is worth noting that this is the second consecutive year Coinbase has been rated as the best comeback story, and this 'double comeback' is indeed impressive.
Haseeb:
I want to nominate Magic Eden. They were once considered the 'second-tier' NFT trading platform after OpenSea and Blur. But by entering the Bitcoin ecosystem, especially in the areas of BRC-20 tokens and Ordinals, they achieved impressive trading volumes. Their performance in the Solana ecosystem is also quite good. Recently, they launched a platform token, which can be said to be a perfect transformation.
Robert:
In addition to the previously mentioned MicroStrategy, I also want to nominate the entire Bitcoin ETF ecosystem. After years of refusals and failures, this year finally saw breakthroughs. This is thanks to Grayscale's lawsuit against the SEC and their victory, paving the way for Bitcoin ETFs' success for Ethereum ETFs. The performance of these ETF products has been outstanding, exemplifying a revival from 'death.' Although some may see it more as a 'winner' story than a 'revival' story, institutions like BlackRock have indeed showcased their strong capabilities during this process.
Tarun:
I choose the Move ecosystem as the best comeback story. Sui's market cap has reached $50 billion, Movement's funding exceeds $5 billion, and many DeFi protocols have also launched on these public chains. In the third and fourth quarters of 2023, when Solana received a lot of attention, the Move ecosystem seemed to be overlooked. But now they have clearly achieved a strong recovery by improving user experience and optimizing other features.
Host: From these cases, we can see that in the cryptocurrency market, even projects that have experienced downturns can achieve a strong recovery as long as they have the right strategic positioning and execution. This also reflects the resilience and innovative capability of this industry.
2025 Predictions
Haseeb:
I have three predictions. First, Bitcoin will hit $150,000 and then experience a pullback; second, DeFi tokens will see explosive growth; and third, AI-related tokens will rise significantly, although the actual application of underlying protocols may be relatively limited.
Robert:
I am more optimistic about Bitcoin, predicting it will reach $180,000 without experiencing a sharp decline. Secondly, I believe the U.S. will introduce dedicated legislation for cryptocurrencies for the first time, marking an important milestone for the industry. Lastly, I predict there will be an AI cryptocurrency scam incident that attracts media attention.
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 several merger cases, mainly due to high operating costs and the concentration issue of trading volume. Second, the total market cap of AI-related tokens will grow at least fivefold, significantly increasing 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 become mainstream and go viral on platforms like TikTok. Second, new cryptocurrency asset ETFs will be approved, likely for 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 application-layer security incident, possibly stemming from a supply chain attack or library vulnerabilities.
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