Looking back at 2023, the total market value of Crypto has returned to 1.7 trillion US dollars, with an annual growth rate of more than 110%. Cryptocurrency has passed the cyclical winter.
In this year, the cryptocurrency industry has had the following impressive events:
1. Binance reached a settlement with US regulators, and Crypto companies' compliance has gradually become a mainstream trend;
2. The Bitcoin ecosystem leads the new paradigm of Fair Launch, which mainly stems from the feasibility brought by the Taproot upgrade.
3. Ethereum’s LSD/LSDFi defines the “risk-free return” of the cryptocurrency industry, and the ETH Staking return positioning is similar to the “Crypto Treasury bond return”;
4. Layer2 gradually takes over the Ethereum ecosystem DApps. Currently, Layer2's TVL has reached 20B, close to Ethereum's 29B;
5. Solana has become a hot topic again, and the Solana ecosystem has attracted market attention again with DePIN and MEME projects;
6. RWA income has become the ballast of the profit source of DeFi lending protocols. For MakerDAO, the most profitable DeFi protocol, 58.1% of its revenues come from RWA (mainly TBills).
2024 is the Year of the Dragon, and the beginning of spring is on February 4. From this day on, the 20-year Jiuzi Li Fire Luck officially begins, which is beneficial to Crypto in the long run.
IOBC Capital believes that there may be the following 10 development trends in 2024:
1. After the Bitcoin spot ETF is approved, it may bring in 30B+ incremental funds
The listing of Bitcoin spot ETF will not only bring in potential investors from mainstream stock markets such as Nasdaq, NYSE, and CBOE, but also facilitate the entry of more institutions. Combined with the management scale of existing Bitcoin-related products on the market, it is conservatively predicted that Bitcoin spot ETF will bring in 30B+ incremental funds.
2. The total market value of inscriptions in the Bitcoin ecosystem may reach 20B+, and only the top MEMEs with real Fair Launch have a medium- and long-term consensus
Fair Launch is the core engine of the early stages of every round of Crypto bull market in the past. The inscriptions of the Bitcoin ecosystem are classified into Ordinals, Atomicals, Runes, PIPE, Taproot Assets, etc. according to the asset issuance protocol. The differences and advantages and disadvantages of these protocols are not elaborated here. From the perspective of MEME coin, these inscriptions in the early stages are only the real Fair Launch head MEME with medium- and long-term consensus.
3. Bitcoin Layer2 will usher in rapid development, which is beneficial to Bitcoin ecological application-based Infra
Since ordinary NFT and BRC20 have attracted widespread attention from the market, many Bitcoin Layer2 financing projects have appeared in the second half of 2023. Some of them use client verification methods, which may be more Bitcoin Native; some use Rollup methods, which may develop faster based on the years of development of Ethereum Rollup.
The development of Bitcoin ecology and its layer2 is beneficial to the infrastructure of Bitcoin ecology, such as Xverse, Bitcoin ecological wallet, Bitcoin Layer2 Lightec and its zkBridge and WrapBTC, etc.
4. Ethereum Layer2 TVL will surpass Ethereum Layer1 and may reach 100B+
Ethereum Layer1's TVL is mainly contributed by the LST protocol. As of now, more than 28.6 million ETH have been staked. Because of the liquidity staking protocols such as Lido (stETH) and Alluvial (LsETH), the liquidity of Staked ETH has been released again, resulting in more use cases based on LST, such as perpetual contracts and ReStaking with LST assets as collateral. Effectively improve the capital utilization rate of ETH.
As various Layer2 projects are launched on the mainnet one after another, various dApps have migrated their main battlefield from Ethereum Layer1 to Layer2, which has lower gas fees and faster speeds. In 2024, the TVL of Layer2 may be higher than that of Layer1.
5. ZK Rollup’s TVL volume is still not comparable to Optimistic Rollup, but the zk-type modular combination of Ethereum Layer2 Components will be more complete
The development of ZK Rollups and its supporting Components is becoming more and more sophisticated. In the past one or two years, various zk projects focusing on specific vertical segments have emerged, such as ZK co-processor, proof marketplaces/ZKProver (Risczero), zkDevOps, Hardware Accelerators (Ingonyama), zkOracle (Hyper Oracle), etc.
The trend of modular combination of zk-type components helps lower the threshold for developers to build zkDApps and provide greater flexibility.
6. Layerzero will issue tokens in the first half of the year, which is expected to ignite the Omnichain track
Layerzero already supports 54 chains, with a total of more than 96 million cross-chain messages, and the number of full-chain applications within the ecosystem exceeds 35,000.
According to Layerzero's official Twitter account, the token will be issued in the first half of 2024, which is expected to ignite the market trend of the Omnichain track.
7. Parallel EVM’s new narrative will drive the secondary growth of Sei v2 and other chains
Parallel EVM is a way to make blockchain networks faster and more efficient by running multiple (non-interfering) transactions simultaneously.
There are several major projects trying to use Parallel EVM. Taking Sei Network as an example, Sei v2 proposes a major upgrade of the parallel EVM. Sei v2 will create a new component to support EVM smart contracts, which can also interact with existing Cosmwasm smart contracts. The Sei v2 chain will optimistically run all transactions in parallel. When there are conflicting transactions (interfering with each other), the Sei blockchain will track the storage parts touched by each transaction. Transactions involving different parts of the storage will be re-run in parallel, and transactions involving the same state will be re-run in sequence.
In addition to Sei v2, projects such as Neon EVM and Nomad are also using Parallel EVM to improve performance. At the same time, EVM is still the most popular DApp environment. These chains support Parallel EVM and can enjoy many infrastructure tools of the EVM ecosystem.
8. The market size of DePIN may grow 10 times
DePIN is an essential infrastructure for realizing the true meaning of Web3. It is a security fortress for the robustness of the Web3 network for Web3 and Crypto projects.
According to Depinscan statistics, the current market cap of the DePIN sector is about 62 billion US dollars, and there is still a lot of room for growth. Among them, Solana Ecosystem has many projects in the DePIN track that are more popular in the market, including Helium, Render Network, Hivemapper, Shadow, Media, etc.
9. Autonomous World / Fully onchain games with strong social attributes may emerge
The FT/NFT assets, state storage, and logic execution of full-chain games are all on the chain, with the characteristics of decentralization/community autonomy, no permission required, and composability. Compared with traditional games and non-full-chain games, there are two key advantages: first, the player's game assets are long-term and safe; second, the game mechanism is transparent and credible.
The game itself is relatively lightweight, but Fully on chain games with strong social attributes and high playability may have a small explosion, and may attract market attention with social fission and gambling characteristics.
10. There will be star cases of AI and Crypto integration in multiple application scenarios
The integration of the most advanced productivity and the most equitable production relations will jointly shape a new lifestyle for the future of mankind. In 2024, there may be two scenarios for the combination of AI and Crypto:
Using Bitcoin as payment currency for AI may be the basic rule of the future AI world. Setting up AI Agent / AI Bot to automatically perform various tasks and access various resources, in the process using encryption infrastructure and BTC for automated payments.
Use ZKML for sensitive data training and machine learning model evaluation. Use ZK to solve the privacy protection issues of AI models/inputs and the verifiability of the reasoning process, thereby ensuring the correctness of machine learning reasoning. Based on ZKML, smart contracts can be used to safely schedule AI models, thereby supporting more application logic and scenario exploration.
