2024 is a promising year for the crypto market, with all eyes on those noteworthy new tracks in the crypto space, as well as the top institutions. At the beginning of the year, various institutions have released their own research reports, looking forward to 2024 from a professional and detailed perspective, which is very valuable for reference.
Vernacular Blockchain consulted the research reports of 23 leading institutions (including Messiri, A16Z, Coinbase, MT Capital, etc.) in an attempt to summarize and find institutional consensus to improve certainty, which is compiled as follows:
1) Bitcoin ecological revival
After the launch of Ordinals (a Bitcoin-based digital content encoding method) in December 2022, it led to a boom in inscriptions and the Bitcoin ecosystem. In 2023, the Bitcoin ecosystem has developed strongly, with Bitcoin's dominance (Bitcoin's share of cryptocurrency market capitalization) rising from 38% in January to around 50% in December, making it one of the most noteworthy ecosystems in 2024.
The ** of institutions are also basically optimistic about the development of the Bitcoin ecosystem this year:
A major U.S. crypto index management company**bitwiseBitcoin trading will break through $80,000 in 2024;
coinbaseIt is believed that at least in the first half of 2024, the main focus of institutional investment will continue to be on Bitcoin, as the passage of ETFs will give traditional investors a strong demand to enter this market.
Other institutions are also optimistic, mainly for the following reasons:
The U.S.** Exchange Commission (SEC) has approved spot Bitcoin ETFs, and the next big event, the Bitcoin halving event in April, is just around the corner,** and demand is expected to change significantly;
The Bitcoin ecosystem will see infrastructure upgrades, programmability additions, including base protocols (such as ordinals), as well as the development of various protocols such as Layer 2 and other extensible layers (such as stacks and rootstock).
2) The development of Ethereum L2
In addition to the Bitcoin ecosystem, Ethereum, as the pioneer of smart contracts, the development of Ethereum Layer2 is also the highlight of all institutions** in 2024, especially with the release of Vitalik's Ethereum 2024 roadmap and the approach of the Cancun upgrade, ARB, OP and other Ethereum Layer2 project tokens have skyrocketed recently.
The competition in the public chain ecology has always been fierce, and in 2023, the public chain ecology such as Solana and Avalanche will develop rapidly, and the momentum will even overshadow Ethereum. But Ethereum, as a leader, has also begun to exert forceMost of the institutions** are based on the fact that with the completion of the Cancun upgrade, gas fees will be further significantly reduced, which can drive the explosion of the Ethereum layer2 ecosystem in 2024. Platforms like Bitwise believe that a major upgrade to the Ethereum blockchain will result in an average transaction cost of less than 0$01 to lay the groundwork for more mainstream uses.
If the upgrade is successfully achieved, some leading projects of Ethereum layer 2 (such as optimism, arbitrum, base, etc.) can compete with other layer 1 public chains in terms of performance.
In addition, according to Vitalik's vision, in the long run, zero-knowledge proofs are the future of Ethereum's Layer 2, and the two Layer 2 projects Zksync and Starkware are also optimistic.
3) The development of the Solana ecosystem
In the past 2023, the Solana public chain ecosystem has performed well, both in terms of technology precipitation and community, which has laid a solid foundation for the long-term development of the Solana ecosystem, and the outbreak of the Solana ecosystem has also attracted a large number of users and funds.
In 2024, more projects will choose or migrate to the Solana public chain, and the Solana ecosystem will continue to explode. Because, whether it is TPS, gas fees, or community users, Solana is more resistant.
In 2024, the expectations of various market institutions for Solana are focused on the following aspects:
Solana's technical upgrades, such as the development of light clients through TinyDancer, allow validators to complete verification work at a lower cost, achieving a higher degree of decentralization;
Solana's robustness has been enhanced by performance improvements, including increased throughput and performance, improved user experience, and deployment of new token standards.
The release of new products, increased on-chain liquidity, and the expansion of developer tools have contributed to the prosperity of the Solana Depin ecosystem.
4、depin（decentralized public internet network）
DEPIN, or Decentralized Physical Infrastructure Network, is a new approach to building and maintaining infrastructure in the real world, with the goal of building decentralized networks in industries such as telecommunications, energy, mobile communications, and storage. In 2023, there are more than 650 depins, with a market capitalization of over $20 billion and an annual revenue of more than $1$500 million.
Depin development at a glance in 2023.
In 2024, cryptocurrency data platformscoinmarketcapDepin has been classified as a separate classification, reflecting the crypto market's strong focus on this space.
Depin covers a wide range of fields, including server networks, wireless networks, sensing networks and energy networks, and there is huge growth potential for each ** depin track. For example, according to crypto research firm Messari **Depin, the overall industry size is currently about 2$2 trillion and is expected to grow to $3 by 2028$5 trillion scale. Messari also pays special attention to the following segments of the Depin sub-tracks: cloud storage market, decentralized databases, decentralized wireless networks, and integration with AI
However, at the same time, various institutions also believe that the maturity of DEPIN still requires long-term investment and operational development of the market, institutions and developers, so that it can gradually penetrate into people's lives and applications, and from complementary to parallel to replacement with existing infrastructure.
5) The combination of AI and blockchain
The rapid development of artificial intelligence (AI) in 2023 has also boosted the development of AI+ Web3 services. At the beginning of January 2024, the market cap of AI-related tokens reached 70$400 million. Given the growing popularity of AI, most of them are bullish on AI as a core feature to enhance the appeal of blockchain-based crypto platforms.
At present, the tracks that various institutions are more optimistic about are:
Direct application of AI in crypto:The combination of trading bots, automated payment and arbitrage bots with blockchain. Combination scenarios include AI agents leveraging crypto infrastructure for payments, smart contracts securely scheduling AI models, token rewards, individual fine-tuning models, and collecting valuable data. Messari believes that advances in AI will increase the demand for cryptocurrency solutions.
Innovative applications of AI and cryptography:Here AI is being used to improve the user experience and efficiency of Web3, and more blockchain technology is being used as a guardrail and transparency layer for AI. For example, we're seeing research and new use cases for zero-knowledge and machine learning (ZKML), games that allow users to train AI with ERC 6551, and so on.
Bankless analyst Jack Inabinet believesCrypto + AI could be a combination of sex. While the early campaigns were mostly about using the hype to spread worthless projects, the prospects are still huge.
Crypto company DWFIt is believed that there is great potential for decentralized AI to lead the future of AI through Web3 in 2024 and its limitations in guiding social cognition in centralized AI.
6) The explosion of GameFi and the development of blockchain games
The chain games in 2021 and 2022 are full of flowers, from play to earn to x to earn, and smash hits such as axie and stepn have been run, and in comparison, the chain games in 2023 are relatively bleak. However, with the improvement of infrastructure, various institutions are still optimistic about the future development of chain games.
After all, from the perspective of the traditional web2 market, games are a very potential market, and they have almost become a part of many people's lives. And traditionally, most game users don't have much knowledge about the GameFi (gaming) space. From a TVL perspective, as of this article (2024.)2.1), the TVL of the GameFi sector in the chart below is only $19.6 billion.
Overview of TVL by track, **Coingeckocom
From the perspective of GameFi's development space, what is mentioned more is that it is expected that in 2024 and 2025, GameFi will have a larger narrative and will receive more attention.
For example:Azuki Researcher Wale SwooshThink that gaming will be one of the megatrends that will define 2024. Gaming has always been and will always be a great Trojan when it comes to cryptocurrency applications, and strongly believes that the web3 gaming trend seen at the end of 2023 will not only continue next year, but will become more pronounced.
Kelvin Koh, Co-Founder and CIO of Spartan CapitalThinks there will be a batch of AAA Web3 games launched in 2024 and believes that these games will bring in millions of new Web3 users.
In general, there are two main reasons why institutions are optimistic about GameFi at the moment:
First, in 2024, there will be an increasing number of gaming-focused blockchains. In addition to some traditional established public chains, new public chains such as OASYS and SUI have also joined them;
Second, the entry of large traditional game companies. For example, Oasys has attracted many well-known publishers to its ecosystem, such as Ubisoft Entertainment (Ubisoft Gaming Software), Square Enix (a Japanese game software production and development company and publisher), Activision Blizzard (Activision Blizzard), Epic Games, and many more.
7) Modularity and the development of zero-knowledge proof (SNARK) technology
In 2023, both modular blockchains and zero-knowledge proofs (ZKPs) have been quite fully developed, such as Celestia, ZKEVM, etc. And it's clear that these two narratives are starting to converge on a convergent trend, with projects in the ZK space starting to modularize with specific verticals such as coprocessors, privacy layers, proof markets, and zkdevops.
Leeor Groen, Managing Director, SpartanThinking that privacy and security will be key drivers in web3, as technology evolves, it will see users begin to realize the value of zero-knowledge proofs and modular blockchains, and users don't even know that they rely on these zero-knowledge proofs and modular blockchains on the backend of everything from digital identities to gaming.
a16zIt is believed that the rise of modular technology stacks has brought the greatest benefits of open-source, modular technology stacks, and that the next wave of smart contract protocols is expected to be more robust and less susceptible to expensive hacks as formal-method-inspired tools are widely adopted by developers and security experts. The mainstreaming of SNARKS technology will be a trend.
For the outlook for 2024, institutions and researchers also expect this trend to continueZero-knowledge proofs will be the interface between the different components of the modular blockchain stack. This gives developers more flexibility in building dapps while lowering the barrier to entry for the blockchain stack; For consumers, ZKP may be seen as a way to protect identity and privacy, for example in the form of ZK-based decentralized identity.
It is also important to mention that SNARKS will be a key project in 2024 because they can provide proofs of proofs for computations that generate specific outputs, making verifying proofs much faster than performing corresponding computations.
8) The trend of mobile and decentralization may become mainstream channels, and the user experience will be improved.
Regardless of the crypto ecosystem, the ultimate goal for long-term growth is to attract new users and encourage existing users to become more active participants. With the recovery of the market, the improvement of infrastructure, and the layout of various institutions, it is generally believed that there will be a large influx of crypto users in 2024.
Like Eddy Lazzarin, CTO of A16ZAlthough the user experience in the crypto space has been criticized, developers are actively testing and deploying new tools to reset the crypto front-end user experience, such as multi-party computation, simplifying the pass-in of applications and passing, embedded wallets, etc. These innovations will allow users to experience a better and more secure environment when using encrypted applications.
However, on the whole, the reasons for the optimism of various institutions mainly lie in the following two points:
On the one hand, a big theme of the recent bear market cycle** has been the focus on how to make crypto more user-friendly and easy to use. The additional responsibility of managing cryptocurrencies and all related stuff (wallets, private keys, gas fees, etc.) isn't for everyone, making it difficult for the industry to mature unless it can overcome some key challenges related to user experience. For example, the development of account abstraction to facilitate the development of wallet recovery mechanisms and better create fault protection against simple human errors, such as losing private keys.
On the other hand, the Ethereum Cancun upgrade is likely to reduce rollup transaction fees by a factor of 2-10, and it is thought that more DApps may pursue a gas-free transaction path, effectively allowing users to focus solely on advanced interactions.
9) Regulatory Policies
Over the past year, the entire crypto industry has faced increased regulation, and as the crypto industry expands, regulatory compliance is an inevitable issue
Many institutions** believe that in the new year, with the election of national leaders, there will be other regulatory policies that will continue to be introduced.
Digital AssetsJi Kim, General Counsel and Global Policy Director, Crypto Innovation Council (CCI).It is believed that one of the bigger stories in 2024 will be that jurisdictions will continue to compete for top status, racing to become key hubs for digital assets and the future financial system.
Gillian Lynch, Head of European Union, GeminiWhile opinions on cryptocurrencies and blockchain technology remain divided, the vast majority would agree that the crypto industry needs a regulatory framework centered on customer protection while striking a balance between creating a clear and consistent rulebook that ultimately helps foster innovation.
Stuart Alderoty, Chief Legal Officer, RippleThe SEC's lawsuit against the Ripple coin is expected to end in 2024, but its regulatory strategy is likely to continue to target other high-profile individuals. The U.S. Congress will work to reach an overarching agreement on cryptocurrency regulation, but the best approach remains to be determined.
The more controversial tracks are RWA and NFT, some are bullish and some are bearish, and there are relatively few mentions.
1）nft
Compared to the popular inscriptions, NFTs have been in the doldrums in 2023. Except for a few projects, the top blue-chip projects have fallen into the dilemma of ** rather than reversal. In the case of BAYC, the average price at the beginning of the year reached 71 ETH, but by the end of the year, the floor price** had reached less than 30 ETH.
The NFT market landscape has also changed dramatically, with Blur competing fiercely with OpenSea at the beginning of 2023 to almost monopolizing the market share by the end of the year, while OpenSea, which once dominated the market, accounted for only 20% of the market in December 2023 in terms of weekly trading volume. Despite product and community feedback from OpenSea in an attempt to withstand the onslaught of Blur, little has been done. With the rise of Blur, the zero royalty debate has faded away, and the debate about whether creators should get royalties has drifted away.
NFT trading platform market share comparison in 2023.
Some institutions believe that consumer brands will use NFT to give birth to a new model of user participation, and NFT can continue to promote the liquidity of the collectibles and art market, especially if GameFi develops, NFT as an important basic accessory can also develop with it. For example, A16Z means that more and more well-known brands have begun to launch digital assets to mainstream consumers in the form of NFTs, and in 2024, the conditions for NFTs to become a universal digital brand asset have been met.
Some institutions also believe that it is difficult for NFT trading volume to replicate the booming scene of 2021, because most NFT projects have more hype and lack real cumulative value, and NFT creators need to adjust their strategies to improve their competitiveness.
2）rwa
Compared to NFTs, there will be more institutions that are bullish on RWA:
Researcher at The BlockIt is believed that Bitcoin spot ETFs have triggered a surge in institutional interest, and the bridge between DeFi and TradFi continues to widen. In turn, tokenized real-world assets have seen more adoption as more variety of traditional financial elements enter the on-chain environment, hence the bullish RWA.
bitwiseThinking that RWA will set off a new trend, JPMorgan Chase will tokenize ** and put it on-chain at the request of Wall Street.
delphi digitalRWA is considered to be one of the most successful areas of cryptocurrency in 2023 and will continue to grow in 2024.
In summary, their reasons are as follows:
It is conducive to building a bridge of communication between traditional institutions and the crypto world. RWA tokenizes off-chain assets and converts them into blockchain digital assets that are easy to understand. Stablecoins are a common RWA application because of their tokenized expression based on fiat currencies.
Several major institutions are already investing in RWA, and crypto projects like Chainlink are partnering with the world's largest traditional financial institutions to bring and tokenize large amounts of RWA.
RWA is building a financial ecosystemDigital tokens represent tangible assets that are more accessible and scalable to public users, not just privileged or institutional investors. RWA has a wide range of applications and can also be divided into various categories such as private credit, treasuries, real estate, commodities, stablecoins, insurance, etc.
But the less optimistic institutions think:
As interest rates peaked, on-chain Treasury yields emerged. Cryptocurrencies are pursuing the same or even more returns pursued by traditional financial investors, but everyone's needs need to be further explored, and this will take a long development process, but it is difficult to have a big development in 2024.
3）socialfi
SocialFi is a fusion of social** and DeFi, and from a macro point of view, Web2 has a trend of shifting from social to finance, and Web3 from finance to social.
Looking back at social networking in Web2, it took Twitter 5 years to reach 100 million users, and Facebook took 8 years to reach 1 billion, and SocialFi is still a relatively new concept.
The SocialFi track has attracted the attention of investors in the second half of 2021, such as Whale, Chiliz, Rally, BBS Network, Showme, and MirrorXYZ and other projects have become popular, and even some platforms have a grand occasion where it is difficult to find a registration invitation code. However, as the market as a whole turned bearish, SocialFi also died down.
It's popular again because in August 2023, friendTech has pioneered a new form of social experience on Base Layer 2 where users can buy and sell other people's shares on X (Twitter). It peaked at 30,000 ETH TVL in October and has inspired several copycat projects. friend.Tech has pioneered a new model of token economics for the SocialFi space by financializing Twitter's profile.
However, among these institutions**, there is less mention of SocialFi's development outlook in 2024, and occasionally it is also mentioned because with the continuous spread of the concept of decentralization, more decentralized social ** networks and tools will be launched, but we can look forward to whether it can really get out of the circle.
Overall, 2023 has seen the entire crypto industry go through the trough and despair of a bear market and begin to set off a small bull market**. The development of the public chain ecology led by Bitcoin has entered a new stage, and new narratives and new tracks have taken turns to appear on the stage, laying the foundation for the next big bull market.
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