According to Blockworks, gaming and social applications are emerging as significant use cases in the crypto sector, as highlighted in the State of Crypto 2024 report by Andreessen Horowitz. The report also indicates that decentralized finance (DeFi) has the highest number of daily active addresses at 34%, closely followed by stablecoins at 32%. Infrastructure ranks third with approximately 14% of daily active addresses. The report notes a continued growth trend, with monthly active addresses reaching an all-time high of 220 million, a growth pattern reminiscent of early internet adoption. Among these addresses, Solana and Base are the most active, with EVM chains accounting for 52 million addresses and other chains comprising 174 million.
Further analysis reveals that only about 10% of crypto owners are currently active, translating to between 30 to 60 million monthly active users. Daren Matsuoka, a data scientist at a16z, emphasized the potential for growth by converting passive holders into active users. He stated, “There are a lot of people who are just passive holders, but if we can convert them into active users…That is how I think we grow the use of crypto in the ways that I think we believe is very promising going forward.” The goal is to bring more people onchain and increase the number of active crypto users.
Venture capital has significantly invested in infrastructure, and a16z data shows that the sector is maturing. This growth is positively impacting related areas, with blockchains now processing over 50 times more transactions per second than four years ago. Matsuoka explained that the infrastructure is reaching a point where it can scale blockchains and unlock new applications and behaviors. He cited stablecoins as an example, noting that they have found a product-market fit largely due to reduced transaction fees. Additionally, DAO treasuries hold billions that could be used for network improvements.
Looking ahead, a16z anticipates that legislation will be a key focus in 2024 and beyond. Institutions are increasingly participating in the crypto market, and there is potential for crypto to become part of a diversified portfolio for institutional investors, extending beyond just bitcoin and ETH. The report concludes that the price-innovation cycle will continue to drive the crypto market, with rising prices spurring interest, development, and new products that push the industry forward.
