Source: Binance Research
1. Bitcoin
Bitcoin activity continues to accelerate on all fronts. Metrics continue to improve, and the new era of Bitcoin driven by ordinality has made significant progress on both homogeneous and non-homogeneous tokens (“NFTs”). Layer-2 (“L2”) and scalability have become hot topics, and the Bitcoin DeFi space continues to develop. Following the 4th Bitcoin halving in April 2024, Bitcoin’s mining block reward is halved to 3.125 Bitcoins per block, bringing another supply shock. Meanwhile, Bitcoin spot ETFs were successfully approved in the United States, paving the way for more than $14.7 billion in net inflows (1). Overall, Bitcoin is off to a good start in 2024.
Figure 2: Bitcoin’s market share has continued to rise this year and now exceeds 53%.
In this section, we will explore several key Bitcoin indicators and how they have evolved over the course of this year. We will then take a look at the main aspects and developments that lay the foundation for these indicators, while also looking ahead to the upcoming year 2024.
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Figure 3: Bitcoin’s various indicators are developing smoothly, and most of them have increased significantly compared to a year ago
Many of Bitcoin's key metrics have increased, both year-to-date and year-to-date. In addition to the significant increase in market capitalization, the growth in transaction volume is also worth noting. The continued growth in Lightning Network capacity is encouraging, as its use case is very important, while the continued increase in hash rate and mining difficulty are positive indicators of the growing strength of the Bitcoin blockchain. Note that hash rate and mining difficulty are both key indicators of security, and the higher the number, the more computing power is required to attack the network. Therefore, the continued growth in these two numbers shows that Bitcoin's resistance to attacks remains strong and is still increasing.
Sentiment Analysis
Bitcoin sentiment analysis can also be performed, providing valuable insights into the collective emotions expressed towards Bitcoin by market participants and the public at large. A related indicator is the Bitcoin Fear & Greed Index, a widely cited sentiment indicator that assesses market attitudes and investor psychology regarding Bitcoin. The index ranges from 0 to 100, with values below 50 representing periods of "fear" and values above 50 representing periods of "greed". The index is based on a variety of factors including market share, trading volume, Google Trends, social media sentiment, and price volatility.
As we can see in Figure 4, the indicator fluctuated in the first half of the year, but has fallen significantly recently. The index was in the "greed" range for most of the year, but quickly fell to the "fear" range in the past month, perhaps stimulated by the approval of the US Bitcoin spot ETF. Although this indicator is not comprehensive, it still shows that traders and markets have become more conservative in recent weeks, perhaps due to recent news, including the potential selling pressure from the German government's sale of Bitcoin and the start of the distribution of repayments from the defunct trading platform Mt. Gox.
Figure 4: Bitcoin Fear and Greed Index recently fell into the fear zone
Comparison with Traditional Asset Performance
Comparing Bitcoin performance to other TradFi investments, Ethereum and Bitcoin have been at the top of the heap with year-to-date returns of 48% and 43%, respectively. Alphabet and Amazon shares are the only other investments in the control group that have gained more than 25% this year. Major stock market indices are far behind, with many posting returns in the single digits. Gold, often touted as a competitor to Bitcoin, is up just 13% this year, while crude oil is up around 14%. This chart further illustrates Bitcoin's potential diversification advantage and strong performance compared to a pure TradFi portfolio.
Figure 5: Bitcoin and Ethereum outperformed the popular TradFi benchmark control group
Ordinals, Inscriptions, BRC-20 and Runes
Since the first launch of inscriptions in December 2022, the Bitcoin homogeneous token and NFT market has continued to expand and grow. To briefly review, the "Ordinal Theory" proposed by Casey Rodarmor can track individual satoshis (the smallest unit of Bitcoin) and assign a unique identifier to each satoshi. These individual satoshis can then be "engraved" with arbitrary content, such as text, pictures, videos, etc., to form "inscriptions", which are later Bitcoin NFTs.
Following the initial Inscription boom in January-February 2023, the launch of the BRC-20 token in March 2023 led to another significant increase in activity. Through BRC-20, fungible tokens associated with ordinals can be deployed, minted, and transferred on the Bitcoin network. Activity around Inscription and BRC-20 continued throughout the spring, then reached new highs in Q4 2023, even before the Bitcoin halving in April 2024. This halving event occurred almost simultaneously with the launch of the Runes protocol. Runes are another way to add fungible tokens to the Bitcoin network and are another brainchild of Casey Rodarmor, the developer behind the original Ordinals when they were first released. BRC-20 is built on ordinal theory and therefore inherits some of its complexity, but Runes has nothing to do with ordinal theory and simply extends Bitcoin's UTXO model to carry arbitrary balances of homogeneous tokens, making it more efficient than BRC-20.
Figure 6: Terminology review
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Since the first inscription was released in December 2022, 67 million inscriptions have been minted on the Bitcoin blockchain, generating more than 6,875 bitcoins (about $414 million) in transaction fees.
Figure 7: The monthly number of Bitcoin inscriptions has continued to decline this year, partly due to the introduction of Runes
In the case of BRC-20, the total market cap is approximately $1.3 billion, down about 50% since January. $ORDI, as the first BRC-20 token contract to be deployed, remains the most successful and popular token to date, and is currently listed on multiple major exchanges. ORDI has a market cap of over $600 million, accounting for more than 50% of the total BRC-20 market cap. We should also note that for more than a year, most inscriptions have been text-based (i.e., BRC-20 tokens).
However, relevant indicators show that Runes has significantly cannibalized the market share of BRC-20 since its launch on April 20. In fact, since its launch, Runes has captured an average of more than 95% of the Bitcoin fungible token market.
Figure 8: Runes take up most of the Bitcoin fungible token market
Runes have accounted for an average of over 60% of all Bitcoin transactions since their launch. It is encouraging to see that while standard Bitcoin transactions still dominate, various emerging Bitcoin markets are introducing new activity and fee revenue streams.
Figure 9: Runes have accounted for an average of 61% of all Bitcoin transactions since their launch in April
Figure 10: Runes has generated over 2,500 Bitcoins (about $145 million) in fees to date
While not game-changing, the fact that Inscriptions, BRC-20, and Runes have generated an additional 4,000 BTC (about $233 million) in fees this year is certainly welcome, especially considering that Bitcoin just went through a halving event. Note that Bitcoin miners are paid in two ways: block rewards and transaction fees, with block rewards halving every four years. The halving just happened in April 2024, causing the block reward to drop from 6.25 BTC to 3.125 BTC. Given that the block reward will eventually drop to zero, transaction fees must rise to ensure miners' income.
Spot ETF approved
One of the defining events of the first half of this year was the approval of the BTC spot ETF in the United States in January. This helped inject a new source of institutional demand into the Bitcoin market, increasing the diversity and depth of investment interest compared to previous cycles. Today, a wide range of US institutional investors, from hedge funds to pension funds, can easily enter the cryptocurrency market in a simple and intuitive way. ETF wrappers are well known and accepted by institutional investors and are an excellent way to introduce some conservative investor groups to the cryptocurrency market.
To date, the ETF’s cumulative inflows have reached $14.7 billion, with total holdings exceeding 865,000 BTC (approximately $52 billion).
Figure 11: More than $14 billion has flowed into new BTC spot ETFs, with an average of $122 million per day.
While institutional interest is currently focused on Bitcoin, there is a growing expectation that institutions will also begin to favor Ethereum in the near future (more on this later). In terms of leading ETF providers, BlackRock dominates with inflows of over $17.7 billion. Grayscale and Fidelity also performed well, with the three companies together accounting for more than 80% of the market share.
Figure 12: BlackRock, Grayscale, and Fidelity account for the majority of the US BTC spot ETF market
Other countries have also shown interest, including Hong Kong’s approval of Bitcoin and Ethereum spot ETFs in April. Although its transaction volume is relatively limited compared to the United States (7), it is a step in the right direction. European ETPs, which are essentially the same product as US spot ETFs, are also currently showing significant growth since their launch in 2015. The total European cryptocurrency ETP assets under management (8) increased from approximately US$5.3 billion in July 2023 to more than US$12 billion this year, an increase of approximately 130%.
According to the SEC documents, the largest number of participants in the US BTC spot ETF are mainly hedge funds, asset management companies and banks. While it is encouraging to see companies such as Morgan Stanley among the top ten holders, it is worth noting that the top ten also includes many hedge funds, which are usually focused on short-term strategies rather than long-term holdings. Nevertheless, we should also note the participation of traditional institutional investors, such as the Wisconsin Investment Committee. Let us wait and see what types of investors these products will attract in the second half of this year.
How is the future development expected?
1. Bitcoin L2: Various innovations are emerging in the Bitcoin field, which have a significant impact on transaction fees (as we have emphasized before). In fact, as shown in Figure 13, between 2022 and 2023, the average annual transaction fee of Bitcoin increased from US$1.5 to US$4.2, an increase of 175%. This pattern continues today, with the average Bitcoin transaction fee in 2024 exceeding $8.8. This further proves the importance of Bitcoin scalability and L2, which can be used to alleviate the congestion problem of Bitcoin L1 and provide users with a Bitcoin trading venue with lower fees.
Figure 13: The average annual transaction fee for Bitcoin has risen from $1.5 in 2022 to $4.2 in 2023, and has reached $8.8 in 2024.
While some argue that Bitcoin is only used for currency transactions, L2 still has its place. Last year, the Bitcoin network had 152 million transactions(9). Recently, Bitcoin transaction volume has just exceeded 1 billion. If users are already complaining about L1 congestion and rising fees when transaction volume is relatively low, then this is clearly a cause for concern. If Bitcoin is indeed to be widely adopted worldwide, then a scalability solution is essential.
Various teams are working on solutions, including veteran players such as Lightning Network, Stacks, and RGB. New teams are also constantly innovating, including Citrea and Merlin's Bitcoin zero-knowledge rollup.
2. More Bitcoin DApps are coming: Ordinals and inscriptions indirectly usher in a new era of Bitcoin expressiveness. Many emerging Bitcoin projects were either launched last year or are currently being financed and developed. These include various types of projects, from Bitcoin money markets to Bitcoin staking and re-staking. Such activities are expected to continue until the second half of this year.
Also worth mentioning is BitVM, which was launched in December 2023. It aims to expand the Bitcoin network by introducing smart contract functionality without making major changes to Bitcoin's existing infrastructure. BitVM operates in a similar way to optimistic rollups on L1 chains. Developments related to this protocol may help expand Bitcoin's functionality far beyond its current level, while also creating a more secure solution to bridge BTC to the secondary layer. Although BitVM is still in its early stages of development and it is too early to judge its development trend, this area is still worth continuing to watch.
3. ETF dynamics:
a. Potential size compared to gold: Given that Bitcoin is often referred to as “digital gold,” we can use the gold ETF market as a potential comparison to estimate the market size of Bitcoin ETFs. As of writing, the gold ETF market is approximately $105 billion to $110 billion (10). The U.S. BTC spot ETF market is approximately $52 billion, about half the size of the gold ETF market.
b. TradFi lags: Traditional financial institutions are often cautious, especially when it comes to emerging markets and technologies like cryptocurrencies. So while spot ETFs were approved in January, not all financial advisors and asset managers are ready to commit capital right away. The education and marketing process may take months, and some funds may choose to wait and see how other funds perform, and so on. So, in all fairness, there should be more investors joining in the coming months and years, and as more traditional investors are willing to embrace Bitcoin, there may be stronger inflows.
“…although cash ETFs were approved in January, not all financial advisors and asset managers are ready to commit capital immediately. The education and marketing process may take months, and some funds may choose to wait and see how other funds perform…”
c. Indirect impact: It can be said that the biggest impact of the approval of the US BTC spot ETF is that it has increased the recognition of the cryptocurrency industry in the traditional financial market. For some of these participants, the spot ETF is just the starting point for entering the vast cryptocurrency ecosystem. Their next stop may be Ethereum, BNB Chain, Solana, DeFi, NFT, games, etc. For other participants, the recognition and support of BlackRock, the world's largest asset management company, may inspire them to start getting involved in Bitcoin. And many professionals who combine traditional finance and emerging technologies have opened up a new path of development with the support of large-scale participants in the market. The above impact and its possible future results may be the most important and exciting part of the US spot ETF, and we may witness its results in the coming months or years.
2. Other L1
Overview
Figure 14: Summary of the current status of major L1s (data as of the first half of 2024)
Looking at high-level metrics, Ethereum is clearly in the lead in terms of market cap, average transaction volume, annual revenue, total DeFi locked value, and total number of developers. BNB Chain is a solid second in metrics such as market cap and total number of developers, and has the second-lowest average transaction fee. It is worth noting that Ethereum leads by a wide margin in total number of developers, with BNB Chain, Solana, and Avalanche having similar total number of developers, while Tron has a relatively small developer community.
Ethereum
As shown above, Ethereum is still maintaining good momentum and leading other L1s in many key indicators. The narrative in the first half of the year mainly revolves around re-staking and its various related markets, EIP-4844, the growing DeFi field, and the US ETH spot ETF.
❖ Re-staking dominates the headlines: Re-staking allows users to reuse staked tokens to provide security for other applications. Re-staking has been the dominant narrative for Ethereum over the past six months.
➢ EigenLayer, as one of the first large-scale projects launched in this space, has driven the narrative forward and has captured the majority of the market’s TVL. EigenLayer’s current TVL stands at $14 billion (11), accounting for over 85% of the entire market.
Figure 15: TVL in the restaking space has exploded this year, now exceeding $16 billion
➢ To recap, through EigenLayer, Ethereum stakers can reuse their staked ETH to secure other applications, namely Active Verification Services (AVS). Stakers can choose these services and earn income from them. In return, they agree to grant EigenLayer the additional right to forfeit their staked ETH.
Figure 16: Simple illustration of how EigenLayer works
❖ EigenLayer launched its mainnet in April and introduced its first AVS, the data availability (DA) layer EigenDA.
❖ Other notable platforms entering the re-staking market include Karak and Symbiotic. Karak focuses on multi-chain re-staking, supporting Arbitrum, Mantle, BNB Chain, Karak Network, and Ethereum. Symbiotic focuses on Ethereum, but can accept re-staking of multiple ERC-20 tokens, covering a very wide range.
❖ Dencun Upgrade and EIP-4844: The Ethereum Dencun hard fork went live in March, bringing nine major changes to the network. The most notable of these is EIP-4844 (Proto-danksharding), which allows users to profit from lower L2 transaction gas fees. This is an important milestone on the road to Ethereum scalability and lays the foundation for full Danksharding in the future.
➢ EIP-4844 introduces "Blob", which provides L2 with a more fuel-efficient way to publish transaction data. Blob stores large amounts of data off-chain and uses a pricing mechanism called "Blob Gas" that operates independently of the Ethereum gas fee market. In addition, data is temporarily stored for about two weeks, not permanently.
Figure 17: After the Dencun upgrade, many L2 transaction fees dropped by 90%
➢ After the launch of EIP-4844, L2 transaction fees have dropped significantly across the board. As shown in the figure above, after the Dencun upgrade, the median gas fee of major L2s has dropped by more than 90%. Currently, in most major L2 networks, the cost of sending ETH is less than $0.01, and the cost of exchanging tokens is usually less than $0.1.
❖ ETH spot ETF: Following the approval of the US BTC spot ETF in January, many people in the market were speculating how long it would take for the ETH spot ETF to be approved. By May, most people believed that it was unlikely to be approved before the summer. However, surprisingly, at the end of May, the US Securities and Exchange Commission approved the listing of several ETH spot ETFs.
➢ Currently, the issuer and the SEC are communicating on the details of its ETF, which is expected to be listed and traded in the coming weeks.
➢ Some predict that the ETH ETF flow will be comparable to the BTC ETF, while others predict that the ETH ETF flow will be relatively sluggish. We can draw a more accurate conclusion based on the following two comparable data: (i) Ethereum's market value is about 32% of Bitcoin; (ii) the size of the Grayscale Ethereum Trust is about 58% of the Grayscale Bitcoin ETF (Grayscale Bitcoin ETF is converted from the original Grayscale Bitcoin Trust Fund).
Figure 18: Ethereum’s comparable volume is 30% to 60% of Bitcoin’s, what does this mean for its ETF flows?
❖ Future development:
➢ Pectra Upgrade: Pectra is scheduled to launch an update in the first quarter of 2025 and will be the next major upgrade of Ethereum, including a series of updates to the execution layer and consensus layer.
■ Major new additions include: EIP-7002 (improving the flexibility of re-staking and staking pools), EIP-7251 (increasing the maximum effective balance of Ethereum validators from 32 ETH to 2048 ETH, helping to reduce system complexity), EIP-7594 (introducing peer data availability sampling to further optimize L2), EIP-7702 (improving account abstraction capabilities), etc.
BNB Chain BNB Chain has always maintained its leading position in L1 and continued to make progress in multiple directions. Its major progress in the first half of the year includes: the development of opBNB, improving decentralized data storage capabilities through BNB Greenfield, and starting to pay attention to meme coins. BNB Chain's position in the DeFi field remains solid, and its TVL of more than US$7 billion ensures that it remains the third largest DeFi chain. PancakeSwap is still the leading DeFi DApp with a TVL of approximately US$1.5 billion; Venus is closely behind with a TVL of US$1.4 billion.
❖ opBNB is progressing well: opBNB is the BNB Chain optimistic aggregation L2 solution, based on OP Stack, compatible with EVM, with up to 5,000 transactions per second (“TPS”), and an average gas fee of about 0.001 Gwei (valued < $0.001). In fact, the recent Haber hard fork, which uses Blob (similar to Ethereum’s EIP-4844), further reduced the average gas fee by 90%. opBNB also supports Native Account Abstraction (“AA”) and optimizes account abstraction transactions. The above factors complement each other, making opBNB attractive to developers working on applications such as games that require high-frequency microtransactions.
➢ Since its launch in September last year, opBNB has recorded more than 1.1 billion transactions from approximately 3.5 million daily active accounts. Leading DApps include derivatives platforms KiloEx, APX Finance, and PancakeSwap.
Figure 19: opBNB’s daily active accounts have been growing steadily, exceeding 3.5 million at the time of writing.
❖ BNB Greenfield Update: BNB Greenfield provides decentralized data storage infrastructure within the vast BNB Chain ecosystem. It is a storage-oriented blockchain where users can create, store and exchange data that they own entirely. All data stored in BNB Greenfield can be easily transferred to the BNB Smart Chain through the native cross-chain bridge for use by BNB Chain DApps and new BNB Greenfield DApps. Related use cases include website hosting, cloud storage, blockchain data storage, publishing, personal data marketplaces, etc.
➢ Since launching its mainnet in Q4 2023, BNB Greenfield has ~2.15 TB of storage and executed 6.8 million transactions involving ~35,000 addresses. Notable participants include infrastructure players CodexField, Aggregata, and Rido.
Figure 20: BNB Greenfield’s network usage continues to rise, with strong growth in the second half of the first half
❖ Memecoins and airdrops: BNB Chain has launched a series of community activities in the past few months, including focusing on memecoins and airdrops.
➢ Battle for Meme Innovation: BNB Chain has invested $1 million through this campaign to drive memecoin innovation within the ecosystem. $100,000 was distributed in the first phase, and the remaining $900,000 will be distributed in the second phase. These funds will be used to support liquidity pools to develop and grow the most promising meme projects on BNB Chain.
➢ Airdrop Alliance: This program is created by BNB Chain in collaboration with high-quality projects that have not yet issued tokens, and airdrops tokens to users with traceable past activities on BNB Chain and opBNB. BNB Chain recently launched the third phase of the program, which will distribute more than 8 million tokens.
➢ BNB Incubation Alliance: Launched in partnership with Binance Labs, this program aims to support and promote the development of early-stage blockchain projects through a series of global events. Winning projects can quickly enter the Most Valuable Builder (“MVB”) program, receive BNB Chain funding support, and use BNB Chain’s issuance as a service (“LaaS”) package. The initial series of events will be held at EthCC in Brussels, Bitcoin 2024 in Nashville, Token 2049 in Singapore, Binance Blockchain Week in Dubai, and DevCon / EthGlobal in Bangkok.
❖ Future development:
➢ New node client: The BNB Chain team has been working with Paradigm to evaluate, test, and improve Reth (a node client for Rust-based Ethereum and BSC). There are currently two BNB node clients, and this will be the third. BNB Chain also hopes to build the next generation of high-performance node clients on this basis.
➢ Focus on gas-free infrastructure: BNB Chain will launch support measures to allow DApps to connect users without gas tokens, including Paymaster based on smart contracts.
Solana
Solana has had an excellent 2024, with continued growth in on-chain activity and increasing market attention.
Figure 21: Solana’s active addresses have shown clear positive momentum over the past year
❖ Home of Memecoins: Memecoins have been the dominant narrative over the past six months. As will be covered later in this report, memecoins are the best performing sub-sector this year with year-to-date returns of over 279%.
➢ Solana has been central to the growth of the memecoin market, with many traders choosing Solana when trading memecoins. This is due to a number of factors, with relatively low transaction fees and a complete and tight product suite being the main highlights. Solana has also created some natural memecoin activity, airdropping BONK memecoins to owners of Solana Saga phones, making it one of the leading memecoins in this cycle.
➢ As can be seen in Figure 22, Solana’s weekly number of DEX traders has shown significant growth compared to other participants in the market. While not entirely attributable to memecoin trading, it is certainly a major development driver.
Figure 22: Solana’s weekly DEX trader count surges
➢ The launch and development of Pump.fun is also important to Solana's memecoin narrative. Pump.fun is a simple platform dedicated to creating and trading memecoins, ensuring that each token is issued fairly, with no pre-sales and no allocations to the team, solving typical problems such as unfair distribution and runaway scams. Given that users can create and deploy a new memecoin at a price of 0.02 SOL in only about 2 minutes, the platform has indeed helped the development of Solana's memecoin trading market. More than 1.1 million new memecoins have been deployed through Pump.fun, and the platform has generated more than 308,000 SOL (about $42 million) in revenue.
Figure 23: Pump.fun has generated over $42 million in revenue since launch
❖ DePIN: Decentralized Physical Infrastructure Networks (“DePIN”) remain one of the most interesting innovations in the cryptocurrency world and deserve close attention. DePIN projects are typically infrastructure projects that leverage blockchain technology and cryptoeconomics to incentivize individuals to allocate funds or rent out resources to create a transparent and verifiable decentralized infrastructure network. Examples include Hivemapper, a community-driven decentralized mapping service, and Helium, a cryptocurrency-driven 5G cellular network.
➢ DePin has become a class of DApps that “can only be done on Solana” due to Solana’s localized fee market and high throughput (relative to other major networks, which are often EVM-based and may not be suitable for intensive use cases on Solana). As a result, Solana has played an integral role in hosting important DePin projects such as Helium, Render, and Hivemapper. In addition, a large number of new projects such as Ambient and Natix, both of which are focused on collective environmental and geographic data, have recently raised funds to continue developing their products.
➢ Projects in this space are progressing quite well. For example, Hivemapper has mapped over 20% of the world’s road network (13), and Helium’s mobile hotspot coverage is expanding across North America, Europe, and East Asia. It will be interesting and important to watch how these projects develop and how emerging protocols perform, as chains such as Polygon and Arbitrum have also entered the DePIN space and may compete with Solana.
❖ Solana Actions and Blinks: Recently, Solana also announced the launch of Solana Blinks (short for blockchain links). Actions are APIs that redirect transactions to the Solana chain, while blockchain links convert Solana Actions into shareable links. In other words, on-chain actions can be triggered wherever a link can be shared. In practice, this means that users can mint NFTs, vote on proposals, donate, redeem tokens, etc. directly on the X timeline. Essentially, Blinks allows users to perform blockchain transactions anywhere their links are shared and access Solana DApps from any platform that can host links.
Figure 24: Users can interact with Blinks directly and perform various on-chain activities without leaving the website they are on.
➢ Many leading Solana protocols have integrated Blinks. Drift Protocol will allow users to long/short tokens directly on X, while Meteora allows users to trade memecoins on the timeline. Users can mint Tensor NFTs, vote on Helium proposals, use Sanctum for liquidity staking, or redeem tokens on Jupiter while scrolling the X timeline. While this emerging primitive is still in the early stages of development, we look forward to seeing how it develops in the future and the innovations that Actions and Blinks may bring.
❖ Future development:
➢ Firedancer: Solana’s next-generation independent validator client, whose release has been highly anticipated and is expected to be launched later this year or early next year.
■ Solana currently has two clients: the original Solana Labs client and another built by Jito Labs. However, Jito Labs is a fork of the original Solana Labs client, so if a vulnerability shuts down one of them, it’s possible that the other would be similarly affected. Firedancer, on the other hand, is completely separate and even written in a different language (the original client is in Rust, while Firedancer is in C++).
■ Firedancer’s main benefit is that it improves the reliability and resilience of the network, meaning that if a bug causes other clients to shut down, the network can still run on Firedancer. Additionally, Firedancer is designed to significantly improve Solana’s scalability: in testing, Firedancer was able to process over 1 million transactions per second (14), far higher than Solana’s current average of 3,000-4,000 (15). Firedancer will also help reduce latency and improve the performance of Solana DApps. All of this adds up to a more robust blockchain and more exciting possibilities for high-throughput DApps.
➢ Saga Chapter 2: Solana’s Saga phone is tightly integrated with the blockchain, providing users with a convenient way to easily manage digital assets. It sold out in late 2023 due to strong demand. This can be attributed in part to the rise of memecoins, especially BONK. At the time, Saga owners were given BONK airdrops, and many people’s shares were later worth more than the price of the phone itself (16).
■ Later, Solana opened pre-orders for the second-generation device, Saga Chapter 2. This phone is expected to be released in 2025, and pre-order users have received two airdrops.
➢ Scalability: Recently, Light Protocol announced that it has partnered with Helius Labs, another Solana development company, to introduce ZK compression technology to Solana. This is an expansion technology that aims to further reduce the cost of on-chain computing, using zero-knowledge proofs and call data (somewhat similar to how Ethereum L2 works). Its solution is currently in the testnet stage. Recently, Solana L2 Sonic, which focuses on games, also raised $12 million. Sonic is currently in the development network stage, and five game studios have developed on its basis. Its mainnet and token are expected to be launched in the third quarter.
other
❖ Avalanche: Avalanche released Teleporter in March. This is a communication protocol designed to improve the connectivity between subnets. Teleporter facilitates the transmission of tokens, NFTs, and messages between subnets. The number of subnets has reached about 125, but less than 50 of them have validators.
➢ The gaming sector remained in the spotlight, with the announcement of the launch of (17) MapleStory Universe subnets attracting the most attention.
➢ The Avalanche Foundation continues to support the ecosystem with its $100 million Culture Catalyst (18) grant program for Avalanche-based memecoins and its $50 million Vista Program (19) for Avalanche-based tokenized assets, or RWAs.
❖ Cosmos: The Cosmos ecosystem is centered around the Cosmos Hub, a chain of apps secured by the $ATOM token. Multiple other chains, called “Zones,” are connected to the Cosmos Hub and use the Inter-Blockchain Communication (“IBC”) protocol to communicate and transfer data between each other. A “Hub” is essentially a Zone that facilitates communication with multiple other Zones. The Cosmos Hub was the first Hub to emerge, however, many other Hubs have become more active than the Cosmos Hub (20). Other leading Hubs include Osmosis, Celestia, Axelar, and Noble. At the time of writing, there are 80 active Zones in the Cosmos ecosystem that support IBC, with a market cap of over ~$31 billion.
Figure 25: On-chain activity of the top five Cosmos application chains in the past 30 days
➢ Replicated Security and Mesh Security: Last year, Cosmos began to focus on shared security, released Replicated Security and announced the launch of Mesh Security. However, apart from the Neutron and Stride application chains deciding to use Replicated Security, there has been no further news on the development of these two projects.
➢ Babylon Chain is coming soon: Babylon is a Cosmos project that aims to leverage Bitcoin’s security to enhance the security of Cosmos application chains and other proof-of-stake (PoS) chains. Babylon has integrated 50 chains on its testnet with a total market value of over $9.8 billion (22). These include most of the top Cosmos application chains, such as Osmosis, Injective, Akash, Sei, Stride, Evmos, etc.
■ Babylon uses a hybrid model that combines Proof of Stake (PoS) and Proof of Work (PoW), and adds IBC for communication, which can be seen as an effort to leverage the strengths of Ethereum, Bitcoin, and Cosmos. This is a promising new blockchain design, and we will be watching its development closely as its mainnet is about to be released.
❖ Tron: As a stablecoin settlement chain, Tron continues to perform well, with its custody of USDT accounting for more than 50% of the total issuance (23). In addition, Tron's DeFi TVL still ranks second, although it only consists of about 34 protocols, while Ethereum contains more than 1,000 protocols and BNB Chain has more than 770 protocols. (24) JustLend and JustStable are the leading protocols on the chain. In addition, earlier this year, Justin Sun also claimed (25) that Tron is developing a Bitcoin L2 solution.
❖ TON: Over the past year, TON has made great strides in both popularity and narrative recognition. Its market capitalization has grown from approximately $8 billion in January to over $18 billion at the end of June, and TON’s transaction volume and number of addresses have continued to rise. Perhaps the most notable aspect of its development is the integration of the TON network with the Telegram messaging app (which has over 800 monthly active users). Telegram games such as Hamster Kombat (which plans to airdrop tokens on TON (27)) and Notcoin have also been in the spotlight recently.
❖ Fantom: Fantom is constantly releasing news, and the Fantom Foundation recently announced that it will launch a new L1 network, Sonic. Sonic will have a native L2 cross-chain bridge to Ethereum, and will reportedly process transactions at a speed of up to 2,000 transactions per second (“TPS”). They also recently announced that they have raised $10 million in funding and allocated 200 million $FTM to migrate DApps and partners to Sonic.
❖ Berachain: One of the emerging L1s that have entered the market in recent months, it is more eye-catching among the products of the same period. Berachain adopts a novel liquidity proof consensus mechanism, focuses on establishing system liquidity within Berachain's DApp ecosystem, and enables all stakeholders to reach consensus through a three-token model. Berachain recently launched the testnet V2 version and plans to launch the mainnet in the next few months.
❖ Cardano: Cardano’s DeFi TVL hit a new high in the first half of the year, exceeding $500 million in March, but then fell back. Cardano is also preparing for its upcoming Chang hard fork (expected to be launched at the end of July), which will make its governance fully decentralized.
❖ NEAR Protocol has been very active, especially focusing on the AI-integrated cryptocurrency sub-industry. They are about to release the data availability (“DA”) solution NEAR DA.
