Original article: Unchained
Compiled 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, Chopping Block invited four industry experts, 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 inspiring. 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 US-based crypto founders and companies. We have witnessed an important turning point: from the extreme hostility and resistance we faced before, to the positive momentum we see now. As a US-based crypto founder, this transition is exciting. Finally, I don’t have to worry about doing crypto business in the United States anymore."
Tarun:
"I'm going to go with the entire DeFi space. Remember the 36-month bear market predicted by Degen Spartan? DeFi was once seen as the problem child of the cryptocurrency world, and the valuations of the public chains that hadn't yet landed were often ten times that of DeFi projects. But now, DeFi has made a strong comeback. As someone who works hard in the DeFi space, it's really gratifying to see such developments."
Tom:
My choice might be a little surprising - it's Tether (USDT). They have performed very well this year and are arguably one of the most profitable companies in the world. For years, many people have been waiting for Tether to fall or have major problems, but the opposite has happened. It has become more and more successful and more regulated. Tether has not only continued to grow, but has also become an important case in the cryptocurrency industry, especially in terms of stablecoin applications and the global trend of dollarization.
Biggest Loser
Robert:
There is no doubt that the anti-crypto camp is the biggest loser this year, including some members of both houses of Congress and some people in the executive branch, especially some members of the SEC and those who promote "Operation Disconnect 2.0". They mistakenly believe that suppressing the cryptocurrency industry can advance their political careers, but it has proven to be a completely failed strategy. I hope this can change the political landscape in the future and make political suppression of cryptocurrencies no longer a viable political means.
Tarun:
I would say 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, and each L2 technology stack would spawn a large number of application chains for specific purposes. But reality has proved that this assumption is completely wrong. Just look at the continued turmoil in the Cosmos ecosystem. People used to think that successful applications like Blur could launch their own application chains or L2s, such as Blast, but the actual effect was not ideal. Instead, we see that users tend to focus on a few top L2 projects.
Haseeb:
I think financial nihilism is the biggest loser this year. In the first half of this year, the view that everything in cryptocurrency is a meme coin and all technology is meaningless was once prevalent. But the reality is that the proportion of meme coin trading volume in total trading volume has dropped sharply from 20-30% in the early days to 10% or even lower now. The market has shown more enthusiasm and confidence in real technological innovation and substantive progress. If you think all technology is worthless, then you are indeed a big loser this year.
Tom:
I would say the biggest losers are those who gave up crypto for AI during the year. It was a classic case of 'game over, we're back'. When asset prices fall, investors leave, developers switch careers, and market sentiment is extremely negative, crypto always comes back in a different way. I personally know a lot of people who either sold crypto, closed their companies, or moved on to work in other fields. This is a shame because you really need a strong belief in order to succeed in this field. Those who lacked that belief and switched to AI are probably regretting it now.
Biggest surprise
Tarun:
Without a doubt, the two projects that surprised me the most this year were Pump.fun and BonkBot. I remember we discussed Pump.fun on the show in January and February this year, when it was just starting out and provided users with an innovative way to create assets. I don't think memecoin would have developed so quickly without Pump.fun. The other one is BonkBot, a Telegram robot that focuses on memecoin trading. In terms of revenue, BonkBot is a hidden champion. Like Pump.fun, both companies achieved $100 million in revenue in their first year. The speed of development of memecoin infrastructure really surprised me.
Tom:
There are two surprises I want to share. The first is the launch of World Liberty Financial. It is incredible that a presidential candidate is associated with a DeFi token, and Trump also holds a wallet. But what is more surprising is its sales performance. Normally, ordinary meme coins or NFTs can be sold out in a short time, but this DeFi token related to the president has only sold 25%, and the sales volume continues to decline. Both of these points are far beyond my expectations.
Also, I would like to add to the point Tarun made. 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, these applications have achieved hundreds of millions of dollars in revenue, exceeding most DeFi protocols. Although I did not specifically predict meme coin infrastructure, the application did perform well, with revenue and profitability exceeding many protocols.
Haseeb:
My two biggest surprises were: first, the rise of the "Tap to earn" model was unexpected, although there is almost no news about it now, such as the Hamster Combat game in Iran, which even attracted the attention of the military. Second, there were no major cryptocurrency security incidents (L1/DeFi) this year, which shows that the industry security has improved significantly. Although TVL (total locked value) has rebounded significantly, we have not seen huge losses like in previous years, which is a positive sign.
Robert:
I would add changes at the infrastructure level. The rise of Solana and Base as meme coin infrastructure is surprising. These two platforms have performed well in new user activity due to low transaction fees and convenient token issuance mechanisms, and the speed and scale of adoption have exceeded expectations.
Best New Mechanic
Tom:
I think it has to be the Pump's binding curve and LP locking mechanism. I'm glad to be the first to say this because I have a feeling this will be a popular choice.
Robert: I think the best mechanism is the "yield amplification" model, which can be seen in many stablecoin projects such as Ethena and Usual. The core is to distribute the income generated by a certain underlying asset (which can be any asset such as arbitrage trading, treasury bonds, etc.) to only a part of the users, thereby significantly amplifying the yield. For example, if the annualized yield of the underlying strategy is 5%, when only a quarter of the users participate in the distribution, the actual yield obtained by these users will be amplified to 20%. This mechanism has 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 guidance mechanism of meme coins; the second is the innovation related to basis trading, especially the market maker lending pools. This type of lending pool can be traced back to the GLP pool launched by GMX at the end of 2021, and now it has developed into the Jupiter JLP pool on Solana and the HLP pool of HyperLiquid.
The innovation of this mechanism is that it solves a key problem of decentralized exchanges: in centralized exchanges, exchanges can directly provide collateralized loans to market makers, while decentralized exchanges previously lacked a similar mechanism. Through these lending pools, users seeking returns can deposit assets into the pools, and perpetual contract traders can borrow these assets for market making and pay fees to depositors. This greatly improves the capital efficiency of decentralized perpetual contract trading, and is one of the important reasons why the current decentralized perpetual contract trading volume has reached a record high.
It is worth mentioning that the rapid development of projects like HyperLiquid is largely due to this lending pool mechanism. At present, the scale of Jupiter's JLP pool has reached 1.5 billion US dollars. These infrastructures provide important support for on-chain basis trading. Although decentralized perpetual contract trading may never be able to fully match the capital efficiency of centralized exchanges, this mechanism does greatly narrow the gap.
Haseeb:
This is indeed an important innovation. So how do these lending pools work, such as JLP or HLP, are there specific third parties operating them?
Tarun:
This depends on the specific project. For example, GMX's liquidity provision is programmatic, and the target weight is determined by governance or multi-signature. HyperLiquid's HLP is managed directly by the project team. JLP and GLP are similar to AMM (automatic market maker), and anyone can perform arbitrage operations. The key is that this mechanism allows LP users who want to earn returns and traders who need funds for market making to achieve effective docking.
Best Meme
Haseeb:
I vote for Justin Sun's birthday photo. You may remember that this entrepreneur, who has received much attention in our industry and is said to be well-liked by his employees, posted a photo on his birthday. The photo was obviously generated by AI because he actually has 14 fingers in the photo. This may be the most embarrassing moment of one of the most successful entrepreneurs in the crypto industry, but this joke really impressed me and I think I will remember it for a long time.
Robert:
Although this may not be a typical meme strictly speaking, I have to give the best meme to Pudgy Penguins. Maybe it's because they just launched the PENGU token, which opened with a fully diluted valuation of $5 billion. Although I don't own any Pudgy Penguins or PENGU tokens, I have to acknowledge their achievements: continuous construction in the bear market, and through continuous promotion and in-depth operation, a common meme has finally achieved great success. Now they have launched peripheral products such as penguin dolls and meme coins, and the community is also thriving.
Tarun:
I’m going to go with Bonk. Mainly because BonkBot is a genius marketing tool that helped Bonk grow from near zero to a multi-billion dollar market cap in a year. If there’s one most successful “blue chip” meme coin in the Solana ecosystem, it’s Bonk.
Tom:
This is a tough one, but I would like to nominate Hugo Martingale, who runs a great Polymarket intern Twitter account. Their content is fresh and interesting, and they often have witty comments, which makes this a great account.
Haseeb:
I'm glad to see that not everyone has chosen memecoin. To be honest, we may have discussed memecoin too much this year, and I hope that next year there will be less memecoin-related topics.
Best/worst transformation
Robert:
I'm going to combine the two awards for "Best Transformation" and "Best Recovery Story" and give 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 that this transformation is truly recognized by the market. Not only did they break through the historical highs of the Internet bubble, they also created an amazing business model: by issuing convertible bonds, obtaining funds at a higher premium than Bitcoin, and then continuing to buy Bitcoin, forming a perpetual capital circulation mechanism.
Tarun:
I would like to nominate Babylon Protocol. Although their transformation technically began in 2023, it was not truly realized until 2024. Babylon initially only provided Bitcoin timestamping services for the Cosmos chain, and later they developed "remote staking" technology, allowing users to use Bitcoin as collateral for staking. Now their TVL (total locked value) has reached 6 billion US dollars. Transforming from a simple timestamping service to a business of this scale is one of the most successful business model transformations I have ever seen.
Tom:
I'm nominating the Democratic Party for the "worst transformation". From Trump's incident at Mar-a-Lago, to Biden's executive statements on digital assets, to Kamala's vague stance on cryptocurrency investment, the whole process seems very chaotic. In contrast, Trump adopted a simple and direct strategy, saying what people want to hear and doing what people want, such as "free Ross", etc. The Democratic Party's performance on this issue is as disappointing as shooting two inches in front of the goal and missing it completely.
Haseeb:
The best transition I chose is the transition of the NFT community to meme coins. For example, Miladys launched the CULT token and Pudgy Penguins launched PENGU. The market value of these meme coins even exceeded the original NFT projects. Interestingly, this transition did not cause opposition from the community, and no one accused them of turning away from NFT. Although these tokens seem to have no practical use, this transition strategy was surprisingly successful. This may be related to the choice of public chain. Many high-quality NFT projects are on Ethereum, while meme coins are more developed on Solana. This natural friction may explain why this transition came relatively late.
Tom:
Interestingly, we’ve seen in the cryptocurrency space that sometimes simple “vibe coins” are more popular than tokens that are trying to create serious value. This seems to prove that there’s no need to overcomplicate when issuing new tokens, and people prefer to have multiple simple tokens rather than a complex conversion mechanism.
Most disappointing project
Tom:
I think it was the rebranding plan of MakerDAO to Sky. The most obvious evidence of this failure is that even after the rebranding, people still call it Maker instead of Sky. Although the scale of DAI vs USDS is still large, they are said to be considering reversing this rebranding, which is obviously an unnecessary and ineffective decision.
Haseeb:
I chose the Bitcoin L2 project as the biggest failure. At the beginning of the year, the market had high hopes for Bitcoin L2, expecting it to reach billions of dollars in TVL and believing that the Bitcoin ecosystem would embrace DeFi. But the reality is that even though multiple projects were launched, they all became "ghost towns". Almost no one discussed these projects, and it was rare to hear founders express their intention to launch projects on Bitcoin L2.
Celebrity Coins were also a major failure. There was a time when people thought that celebrity tokens would be better than regular meme coins because they were backed by celebrities. MOTHER was one such token. But these were essentially social tokens, and they performed extremely poorly over time. The market thought this would be a huge opportunity, but now it seems that this expectation has been completely missed.
Robert:
I would nominate the fall of Friend.tech and the Social Fi craze it helped to fuel. Earlier this year, Friend.tech was considered the hottest startup in the crypto space, but its development cycle was extremely short-lived. From the initial conception to the acclaim, to the launch of V2 and the Friend token, it quickly fell silent. Now the value of the product and token is almost zero, this may be one of the few projects that truly self-destructed. While projects like Farcaster are still developing, the development of the entire crypto social space faces huge challenges.
The best comeback stories of 2024
Tom:
I would like to nominate Coinbase. Coinbase often becomes the market's "punching bag" when cryptocurrency prices fall. They laid off thousands of people in 2023, and many people thought they might go bankrupt. But with the launch of the Bitcoin ETF, Coinbase has gained new development opportunities as the custodian of the ETF. Although their overseas business is not particularly outstanding, it is growing steadily. In addition, they received a stay of execution in the lawsuit with the SEC, which can be said to have achieved a series of important victories in 2024. It is worth noting that this is the second consecutive year that Coinbase has been named the best recovery story, and this "double recovery" is indeed impressive.
Haseeb:
I would like to nominate Magic Eden. They were once considered a "second-tier" NFT trading platform after OpenSea and Blur. But by entering the Bitcoin ecosystem, especially in the layout of BRC-20 tokens and Ordinals, they have achieved amazing trading volume. The performance in the Solana ecosystem is also quite good. Recently, they also launched a platform token, which can be said to have achieved a perfect transformation.
Robert:
In addition to the aforementioned MicroStrategy, I would also like to nominate the entire Bitcoin ETF ecosystem. After years of rejection and failure, this year finally saw a breakthrough. This is thanks to Grayscale suing the SEC and winning, and the success of the Bitcoin ETF paved the way for the Ethereum ETF. These ETF products have performed quite well and can be regarded as a model of resurrection from "death". Although some people may think that this is more of a "winner" than a "recovery" story, institutions such as BlackRock have indeed demonstrated strong strength in this process.
Tarun:
I chose the Move ecosystem as the best recovery story. Sui has a market cap of $50 billion, Movement started with over $5 billion, and many DeFi protocols were launched on these public chains. In the third and fourth quarters of 2023, when Solana gained a lot of attention, the Move ecosystem seemed to be ignored. But now they have clearly achieved a strong recovery by improving the user experience and optimizing other features.
Moderator: From these cases, we can see that in the cryptocurrency market, even projects that have experienced a trough can achieve a strong recovery as long as they have the right strategic positioning and execution. This also reflects the resilience and innovation ability of this industry.
2025 Prediction
Haseeb:
I have three predictions. First, Bitcoin will hit $150,000 before a correction. Second, DeFi tokens will experience explosive growth. Third, AI-related token prices will rise sharply, but the actual application of the underlying protocol may be relatively limited.
Robert:
I am more optimistic about Bitcoin and expect it to reach $180,000 without a sharp pullback. Secondly, I think the US will introduce cryptocurrency-specific legislation for the first time, which will be a major milestone for the industry. Finally, I predict an AI crypto scam that will attract media attention.
Tarun:
My predictions focus on three areas. First, there will be a wave of consolidation in the application chain and L2 track, and we may see multiple merger cases, mainly due to high operating costs and transaction volume concentration issues. Second, the total market value of AI agent-related tokens will increase by at least 5 times, a significant increase from the current $10 billion. Finally, Solana's inflation rate will be reduced by at least 25%.
Tom:
I have three predictions. First, money games like Farcaster or Button will go mainstream and go viral on platforms like TikTok. Second, new crypto asset ETFs will be approved, but they will probably be relatively traditional currencies like XRP or Litecoin, rather than the emerging assets that the crypto community is looking forward to. Third, we may see a major application-level security incident, perhaps due to a supply chain attack or a library vulnerability.
