Author: Techub News
Written by: Messari Team
Compiled by Yangz, Techub News
Note: The original article is quite long, and it is recommended to read it in about 3 hours. For the convenience of readers, Techub News has deleted and summarized it.
2024 is a year of transformation and revitalization for the cryptocurrency industry. After the turmoil of the last cycle, the industry has made great progress in rebuilding trust, promoting innovation, and maturing the financial and technological ecosystem.
We saw the arrival of cryptocurrency ETFs, legitimizing the asset class and gaining institutional adoption.
2024 will go down in history as a decisive year in the evolution of cryptocurrency policy. At the very least, a friendlier U.S. regulatory environment should reassure hesitant investors.
The US election is the catalyst that could push Bitcoin to finally break through the $100,000 mark.
The development of Solana has turned the two-horse race between Bitcoin and Ethereum into a three-horse race. At the same time, Ethereum is also facing an identity crisis.
The success of Polymarket, Telegram Mini Apps, and Hyperliquid shows that the industry is attracting many new users.
Memecoins dominated the narrative discussion and further helped attract new users. In addition to speculation, DePIN also ushered in a year of explosive growth, with the market value of the track more than doubling and having practical use.
This article is divided into two main parts, including "Current Status of the Cryptocurrency Industry" and "Sub-segments".
Current state of the cryptocurrency industry
Macro Environment
In traditional markets, after experiencing inflation shocks in 2022 and 2023, investors are still worried about the return of inflation in 2024. But as inflation eases, the focus turns to the weak labor market. Despite the rising unemployment rate, Claudia Sahm, the creator of the Sam's Rule, believes that the US economy is resilient enough and the Federal Reserve has ample room to cut interest rates.
Overall, the U.S. economy remains strong, and aside from brief bouts of volatility around the unwinding of yen carry trades, geopolitical conflicts, and standard election-driven hedging, the S&P has been on a steady upward trend for much of the year. Meanwhile, factors such as increased productivity from AI and increased demand for gold reserves from global central banks are also influencing the market.
As for the cryptocurrency market, after Bitcoin hit a staged top in March, it entered a consolidation period, responding downward to all the risks facing traditional markets, while also facing its own special resistance, such as the German government's Bitcoin sell-off, Mt Gox's compensation, news about Tether's investigation by the Department of Justice, and the US SEC's lawsuits (or Wells notices) against Uniswap, Kraken, Coinbase, Metamask, Robinhood, etc. Fortunately, the election successfully freed the market from eight months of consolidation and volatility, and the improvement of the regulatory environment also boosted market confidence.
Looking ahead to 2025, the macro environment will be very beneficial. Although Trump's coming to power may disappoint some positive expectations, a more friendly regulatory environment may eliminate negative risks and drive the rise of risky assets such as Bitcoin, Ethereum, and SOL.
Regulatory policies
2024 is a turning point for cryptocurrency policy, laying the foundation for transformational development in 2025.
In the first half of the year, the SEC maintained its authority through various enforcement actions (including lawsuits against Uniswap, etc.), triggering a fierce struggle over the direction of industry development. In response, the cryptocurrency industry fought back with the support of its allies in Congress, advocating for clear and targeted legislation and seeking judicial intervention to limit excessive regulation (such as passing the FIT-21 bill and repealing SAB-121).
The political landscape changed dramatically in the second half of the year as the Trump campaign took a pro-crypto stance. And with Trump’s victory, expectations of a more favorable regulatory environment surged, making 2024 a decisive year for the evolution of cryptocurrency policy.
Trump has made a number of promises to the cryptocurrency industry, including:
Establish a Bitcoin and Cryptocurrency Advisory Committee composed of industry representatives to work on developing clear regulatory rules
Ending the "illegal and un-American cryptocurrency repression"
Holding Bitcoin purchased by the federal government as a strategic reserve asset
Defending the Right to Mine Bitcoin
Removal of SEC Chairman Gensler
Opposition to US CBDC
Making America the world’s “cryptocurrency capital”
Protecting the right to self-custody and “transact without government surveillance and control”
Freeing Silk Road creator Ross Ulbricht
Additionally, several new narratives emerge regarding cryptocurrency policy in 2024, including the right to self-custody, allegations of Operation Choke Point 2.0, privacy and illicit finance (mixers), Bitcoin mining and energy consumption, and cryptocurrency lobbying.
Outlook for the U.S. cryptocurrency regulatory environment in 2025:
Regulatory clarity comes from Congress rather than the SEC : With the support of the Republican-led Congress, the Trump administration will promote the reshaping of cryptocurrency regulations, focusing on clarifying the jurisdiction of the SEC and CFTC through the FIT-21 Act, simplifying the registration process and providing targeted disclosure requirements. This will provide a clear legal framework for digital assets and promote institutional adoption of digital assets.
Stablecoin legislation is expected to pass : With bipartisan support and the Trump administration's push for financial innovation, the stablecoin bill is expected to pass in 2025, and the final legislation may draw heavily on the Payment Stablecoin Transparency Act. As for decentralized stablecoins (such as DAI), their future is uncertain and may face more regulatory challenges.
CBDC development will continue, but retail CBDC is not on the agenda : The Trump administration and the Republican Party tend to rule out the possibility of retail CBDC, but the Federal Reserve will continue to develop wholesale CBDC for cross-border payments. Legislation may further restrict the Federal Reserve from issuing retail CBDC and emphasize the protection of financial privacy.
Self-custody is protected, and privacy issues remain the focus : It is expected that legislation will be passed to protect the rights of individuals to self-custody digital assets, but privacy-enhancing technologies (such as mixers) will continue to be controversial, and dedicated legislation may be introduced to balance privacy protection and combating illegal activities.
DeFi remains unregulated : Despite growing interest and concern about DeFi, DeFi will remain largely unregulated through 2025. However, Congress will commission a comprehensive study of DeFi to explore its potential benefits, risks, and appropriate regulatory approaches.
Trump may adjust his stance on cryptocurrencies : If cryptocurrencies conflict with maintaining the hegemony of the US dollar, Trump may change his support for cryptocurrencies, especially in the context of the economic crisis and the rise of the BRICS financial system.
2025 will be a critical year for cryptocurrency reform : The Trump administration is expected to introduce pro-cryptocurrency policies within its first year, but it may face political turmoil after the 2026 midterm elections, and policy advancement may slow down.
The outlook for U.S. cryptocurrency policy is bright, and the support of the Trump administration will bring opportunities to the cryptocurrency industry, but there is also the risk of policy reversal.
The arrival of institutions
Approval of Bitcoin and Ethereum ETFs : The approval of Bitcoin and Ethereum ETFs legitimizes the asset class and makes it more accessible to retail and institutional investors. For example, the IBIT ETF reached $3 billion in AUM within the first 30 days of its launch and exceeded $40 billion in about 200 days, setting a record in the traditional market.
Institutional participation has expanded to multiple areas : not only wealth management companies have invested client funds in cryptocurrencies, but traditional financial companies (TradFi) have also increased their participation in tokenization, stablecoins, asset issuance, etc. For example, Sky (formerly MakerDAO) and BlackRock have launched tokenized treasury bonds; Ondo Finance has launched USDY (tokenized treasury bond fund), with an asset management scale of approximately US$440 million; Franklin Templeton has also launched an on-chain fund supported by short-term treasury bonds and repurchase agreements, with a cumulative asset management scale of nearly US$500 million.
The convergence of fintech and cryptocurrencies : The boundaries between fintech, payments, and cryptocurrencies are becoming increasingly blurred. In 2024, PayPal launched the stablecoin PYUSD on Solana; Agora, a stablecoin startup backed by Nick Van Eck, also launched the stablecoin AUSD on multiple chains. Institutions see the potential of this field in reducing costs, improving transparency, or speeding up inefficiencies in payments or other verticals.
Other institutional adoption highlights :
JPMorgan Chase expands its blockchain platform Kinexys to support cross-border payments and tokenization
Goldman Sachs plans to spin off its digital asset platform to expand product offerings
Robinhood launches crypto transfer service in Europe, adds tradable assets
Revolut expands its cryptocurrency platform, plans to launch MiCa-compliant stablecoin
Stripe acquires stablecoin company Bridge for $1.1 billion, making it the largest acquisition in the cryptocurrency space
Visa and Coinbase partner to enable real-time deposits for Coinbase customers via debit cards and pilot USDC transfers on Solana and Ethereum
Coinbase integrates Apple Pay to facilitate conversion between fiat and cryptocurrencies
The Rise of Solana
2024 is a key year for Solana’s rise. During the year, SOL rose by about 120%, and its market capitalization relative to Ethereum also increased from about 16% to 25% at the end of the year. Solana’s growth was driven not only by market speculation, but also by actual progress in its infrastructure and technology, including the introduction of the SPL standard, the phased rollout of Firedancer, and innovative technologies such as ZK Compression.
In addition, low-cost, high-throughput transactions combined with a growing narrative drive the expansion of the Solana application ecosystem. In 2024, Solana's application fees exceeded US$500 million, accounting for more than half of all on-chain application fees during the same period, which is comparable to the Ethereum ecosystem. However, a closer look at the fee distribution reveals that the Solana ecosystem is relatively lacking in diversity, and its application fees are highly concentrated in two areas, including liquidity staking and trading activities. The reason behind this is related to the promotion of staking rewards and its identity as the main platform for Memecoin speculation. Use cases that are very prominent on Ethereum, such as lending, liquidity mining, and liquidity staking, have not yet gained similar traction on Solana.
If 2024 was the year Solana rose to prominence, 2025 will likely be the year Solana becomes a fully realized ecosystem. The emergence of DePIN applications and emerging AI-driven projects signal Solana’s growing footprint beyond finance. However, the scale of these developments is still in its early stages, and the ultimate impact on network activity remains uncertain.
Memecoin
Memecoin has become a dominant force in the cryptocurrency space in 2024. Despite accounting for less than 3% of the top 300 cryptocurrencies by market cap (excluding stablecoins), Memecoin has consistently accounted for 6-7% of total non-stablecoin trading volume.
Memecoin’s rise wasn’t driven solely by trends or user-friendly interfaces. They thrived in an environment of overcapitalization and ample block space. As the broader cryptocurrency market appreciates in 2024, many traders find themselves with excess capital and limited quality investment opportunities. This has led them to turn to Memecoin. Especially in high-throughput blockchains like Solana and Base, low transaction costs and high scalability provide an ideal environment for these speculative assets. In addition, Memecoin trading platforms, applications such as Pump.fun, Moonshot, and Telegram bots have simplified the trading process, attracting a large wave of new retail investors.
Looking ahead to 2025, Memecoin is expected to continue to grow, driven by key factors such as scalable blockchain infrastructure, low transaction costs, and the continued development of user-friendly platforms. In addition, Memecoin has the potential to attract attention away from more traditional speculative markets such as sports betting as an outlet for speculation. While Memecoins may not account for the largest share of the cryptocurrency market capitalization, their speculative and social appeal will ensure their continued longevity, especially in the context of increased macroeconomic uncertainty.
Financing
At the time of writing this article in early December, cryptocurrency funding (by deal count) has been on an upward trend since 2023. But funding for startups and protocols, by total funding, is down about 20% year-over-year, largely due to the anomalies of the first quarter of 2023. Still, there were some big funding rounds across a variety of verticals this year. Here are the top funding highlights for 2024:
Large financing projects :
Monad Labs: Raised $225 million
Story Protocol (backed by a16z): Raised $80 million in Series B funding
Sentient (AI): Raised $85 million
Berachain and EigenLabs: Raised $100 million each
Farcaster: Raised $150 million
Freechat: Raised $80 million
AI and DePIN have outstanding financing performance :
Funding in the AI space grew by about 100%, particularly in accelerator programs such as a16z Crypto Startup Accelerator (CSX) and Polychain Beacon Fund
Total financing in the DePIN sector increased by approximately 300%
Venture Capitalists Show Interest in AI and Cryptocurrency Integration, AI Autonomous Agents, and AI’s Potential in Gaming
Other financing hotspots :
DeSci (Decentralized Science) : BIO Protocol and AminoChain receive funding
Game Protocol : APAC VCs increase investment in TON blockchain-based game protocols
NFT and Metaverse Projects : Funding rounds and funding amounts declined, down from 2021 and 2022
Social : Despite the uncertainty, projects such as Farcaster, DeSo and BlueSky continue to attract attention and funding.
user
a16z reported this year that the number of monthly active addresses in cryptocurrency has reached 220 million, a record high. But in fact, no one knows how many real users are actually adopting cryptocurrency, because there is no 1:1 relationship between active addresses and users. By filtering out some of the noise, a16z estimates that of these 220 million active addresses, about 30 million to 60 million are real monthly cryptocurrency users.
While we won’t attempt to speculate on user numbers, we think 2024 has already provided plenty of evidence that cryptocurrencies as a whole have found new users. Below, we’ll provide some of the user-driven applications and ecosystems that have been successful this year.
Phantom Wallet : As the most popular wallet in the Solana ecosystem, Phantom has achieved remarkable success due to its mobile-friendly user experience. Its performance in the App Store is extremely outstanding, even surpassing giants such as WhatsApp and Instagram to enter the top ten iOS free apps. We believe that Memecoin has largely replaced NFTs in this cycle, and mobile apps such as Phantom and Moonshot provide users with a seamless way to trade Memecoin anytime, anywhere. The ranking of these apps in the App Store will continue to provide us with insights into the speed at which users are flocking to cryptocurrencies.
Popularity of stablecoins : In 2024, a wave of stablecoin adoption has emerged globally among retail users and small businesses. Emerging markets such as Southern Africa, Latin America, and Eastern Europe are bypassing the traditional banking system and embracing stablecoins, driven by limited banking infrastructure and growing mobile device penetration. Companies such as Yellow Card, Bitso, and Kuna are leading this shift by providing seamless stablecoin swaps, payment APIs, and financial services tailored to local needs.
Telegram Mini Program and GameFi Integration : Tap-to-earn mini games on TON, especially Notcoin and Hamster Kombat, have become viral marketing phenomena in the cryptocurrency industry. Notcoin has attracted more than 40 million users in a short period of time, becoming one of the most held tokens in cryptocurrency, and its valuation has approached $1 billion. Hamster Kombat has attracted about 200 million users.
Polymarket: A True Crypto Use Case : The 2024 U.S. presidential election further fueled Polymarket’s growth, with nearly 1 million new registered users on the platform, highlighting its emergence as a breakthrough cryptocurrency use case. Not only has Polymarket achieved significant growth in trading volume, its market prediction capabilities have also surpassed traditional polls, becoming an emerging tool for predicting political events. During the election, Polymarket’s mobile app became the second most downloaded iOS news app, surpassing traditional media such as The New York Times and CNN.
Base and Hyperliquid accelerate the transformation from CEX to DEX : In 2024, the two applications, Base and Hyperliquid, played a key role in accelerating the migration of users from traditional CEX to DEX. Base reduced the friction of new users through free deposit and withdrawal services from Coinbase to Base, driving significant growth in on-chain activities. At the same time, Hyperliquid provides perpetual product traders with a high-performance trading experience similar to Binance, making up for the shortcomings of DEX in user experience, and driving the trading volume of derivatives DEX to a new historical high.
In 2024, the cryptocurrency ecosystem’s user growth begins to shift from a sporadic, volatile pattern to a more predictable, scalable growth trajectory. New users discover the natural appeal of cryptocurrencies through various applications, and the success of the above platforms is a sign that the cryptocurrency industry is moving towards a more mature direction.
DePIN’s Breakthrough
In 2024, the DePIN field has seen a significant breakthrough, with its market value surging 132% year-on-year to over $40 billion. The following are the main developments and highlights in the field:
Financing surge : In 2024, the amount of funding received by DePIN projects increased by 326.45% compared to 2023. Among them, the total funding of computing, energy and data collection startups exceeded US$266 million, showing investors' strong interest in this field.
Real World Traction :
Helium Mobile : Successfully attracted over 120,000 users in the first year of its launch.
Glow : 70 solar farms deployed in California and India.
GEODNET : Established the world's largest RTK network with more than 11,000 nodes.
Mainstream collaboration : Several DePIN projects have collaborated with large companies, such as Helium Mobile and XNET working with telecom companies on Carrier Offload programs; DIMO integrating its services into Tesla; and GEODNET working with the U.S. Department of Agriculture to provide high-precision agricultural services.
DePIN Field Forecast in 2025
Revenue Breakthrough : DePIN sector revenues are expected to exceed $150 million by 2025. Despite limited demand-side revenue growth, several protocols have shown strong growth potential, with companies such as GLOW and Helium both exceeding $10 million in annual revenue.
Energy and wireless sub-tracks lead : The energy (DeGEN) and wireless (DeWi) industries are expected to become the two fastest growing sub-industries in the DePIN field in 2025. Several startups such as DAWN, Glow, XNET, etc. are ready to launch the main network or officially exit the testing phase, providing growth potential for 2025.
Helium becomes the leader in the DePIN field : With the advancement of Carrier Offload plans and the continued growth of Helium Mobile, Helium is expected to become the largest project in the DePIN field by market value.
Government cooperation and integration : As DePIN's utility is proven, governments will become more actively involved in this field. In 2024, the U.S. Department of Agriculture has partnered with GEODNET to provide high-precision services to farms. And the incoming AI and cryptocurrency czar David Sacks is an investor in Solana, Helium, Render, and Hivemapper, indicating his understanding and interest in DePIN.
The rise of Solana competitors : While Solana is the main base for DePIN projects in 2024, other blockchains tailored for DePIN, such as Peaq and IoTeX, are also stepping up efforts to attract DePIN projects. In addition, it is expected that in 2025, emerging chains such as Base that prioritize user experience, liquidity, and DevX will become the main building platforms for DePIN projects, further driving the growth of DePIN.
Segmented Track
Bitcoin
Bitcoin assets
2024 will be a year that goes down in history for Bitcoin. This year, Bitcoin has set new all-time highs many times, entered the balance sheet of the largest asset management company in the United States, and became the focus of the 2024 election. Key highlights:
Bitcoin ETF Approval : The approval of the Bitcoin ETF is the biggest highlight in 2024. Only April in the 12 months saw net asset outflows.
Increased corporate adoption : Michael Saylor and MicroStrategy continue to dollar-cost average their Bitcoin holdings and plan to raise $42 billion over the next three years to purchase more Bitcoin. Other public companies such as Marathon Digital Holdings, Riot Platforms, and Semler Scientific have also begun accumulating Bitcoin reserves, indicating that the trend of corporate Bitcoin adoption is growing.
Bitcoin block reward halving : 2024 is also the year when Bitcoin block rewards are halved. As a landmark event that occurs every 4 years, as miners' rewards decrease, the number of natural sellers of Bitcoin will also decrease.
Predictions for 2025
Increased ETF inflows : Bitcoin ETF inflows continue to increase in 2025, especially as Grayscale's GBTC turns to positive net inflows. Over time, institutions are likely to slowly become the main driver of Bitcoin's daily price action and help Bitcoin mature.
The world's leading store of value: The approval of a Bitcoin ETF is likely to put Bitcoin in the early to mid-stage of becoming the world's leading store of value. In November, Bitcoin replaced silver as the world's eighth-largest asset.
Trump administration policy changes : Although the new Trump administration has shown a positive attitude towards cryptocurrencies and Bitcoin, it remains to be seen whether the government will ultimately deliver on its claims. We believe that the possibility of a strategic Bitcoin reserve is low, but if the government can deliver on its promise, it may further promote the growth and prosperity of Bitcoin.
Bitcoin Network
Inscriptions and Runes : At the end of 2022, Casey Rodarmor first inscribed text on the Bitcoin mainnet, resulting in Bitcoin inscriptions, which gained industry attention during 2023. In April 2024, Casey launched a follow-up protocol called Runes, which represents a new non-fungible token standard for Bitcoin, similar to ERC-20 on Ethereum.
Programmability of Bitcoin : Although the original intention of Bitcoin's base layer design was to pursue security and decentralization, with the launch of BitVM, the programmability of the Bitcoin network has been significantly enhanced. BitVM implements the mechanism of off-chain computing and on-chain verification, enabling Bitcoin to support applications such as decentralized finance (DeFi), cross-chain bridges, and smart contracts. Following BitVM, the development of "Bitcoin L2" is also a key to the Bitcoin network in 2024. Currently, there are more than 40 related projects in the test network or main network. In terms of TVL, CORE, Bitlayer, Rootstock, and Merlin Chain lead the programmable layer, but whether they will develop into a mature ecosystem remains to be seen.
Bitcoin Staking: Babylon, launched in Q3 2024, is the first staking protocol for Bitcoin, allowing Bitcoin holders to stake their assets to other networks for security and rewards. Similar to Ethereum's EigenLayer, Babylon leverages Bitcoin's large-scale economic security to achieve shared security across the PoS network. Unlike current forms of staking, Bitcoin remains on its mainnet, and holders can entrust others to provide security without giving up control of their Bitcoin.
Predictions for 2025
From static chain to diversified ecosystem: In 2024, the Bitcoin network gradually transformed from a static chain mainly used to store and trade BTC to a diversified ecosystem. The Bitcoin network is undergoing an identity transformation, and while development seems to continue to move forward, the actual demand for these new categories is uncertain.
Runes and inscriptions may take off: We believe that as Solana and Memecoin on Ethereum continue to maintain their upward momentum, people's attention will most likely eventually turn to runes and inscriptions on Bitcoin. Magic Eden has strengthened its support for inscriptions and rune transactions. We expect that if the Bitcoin ecosystem takes off, Magic Eden will be a well-deserved winner.
Bitcoin's addressable market still has a lot of room to grow: Bitcoin's programmability and Bitcoin staking are still in their infancy, and early TVL growth is not enough to indicate real demand. In 2024, consumers mostly favor the performance of networks like Solana and Base, and pay less attention to decentralization and security. If this trend continues, Bitcoin developers will face an uphill battle. Despite this, Bitcoin's addressable market still has a lot of room to grow. We note that even single-digit penetration of Bitcoin network utility can bring in more than $30 billion in value inflows. We just need more evidence that this is what users want.
Ethereum
Overall underperformance compared to competitors : Ethereum overall underperformed mainstream crypto assets such as Bitcoin and Solana in 2024. Due to low network activity, Ethereum supply has been inflated throughout 2024.
Ethereum ETF's initial performance was not satisfactory: In July, the Ethereum spot ETF was approved. However, compared with the Bitcoin ETF, the Ethereum ETF is a "small witch in the face of a big witch", and it has only recently begun to show traffic growth.
Smart Contract Platform Leadership Challenged by Solana: Ethereum is inferior to Solana in several key areas, including transaction fees and DEX trading volume, in 2024. Despite the growth of Ethereum L2 activity, prominent investors have questioned whether this growth is value-added or ultimately value-extracted.
The contradiction between the continued growth of L2 and the decline of mainnet activity : By the end of 2024, Ethereum Rollups will expand Ethereum's throughput capacity by 15 times, with a cumulative throughput of about 200 transactions per second. In addition, the growth of Base and the news that others such as Kraken, World (Worldcoin) and Uniswap are building L2 on Ethereum have released positive signals. However, the growth of L2 also means a decline in Ethereum mainnet activity. More worryingly, Ethereum cannot effectively monetize its data availability service. Blob fees have long been maintained at a minimum level of 1 wei. At the same time, the mismatch between the growing profitability of L2 and the non-existent DA fees has become the core argument behind the view that "L2 is extractive". L2 also causes fragmentation and worsens the experience of users and developers. A variety of stopgap measures have been implemented and more solutions have been proposed. But holistic and neutral chain abstraction solutions, such as Particle Network and Polygon's AggLayer, are still in the early stages of implementation.
Ethereum is no longer the primary place for crypto speculation: In 2024, 8 times more tokens were launched on Solana than Ethereum, thanks to the success of Pump Fun. Other Ethereum-native narratives besides Memecoin also failed to deliver on their promises in 2024: EigenLayer AVS, for example, has not yet found product-market fit; Friend.tech did not bring the future of SocialFi; even Farcaster and Lens have seen a decline in attention.
While some investors look down on speculation, in the cryptocurrency space, speculation can drive innovation. DeFi speculation in 2020 created the DeFi space and exposed Ethereum's limitations at the base layer. Speculation can also attract more users and builders, generating long-term value. A larger share of speculation on Ethereum or its L2 would lead to more revenue, better sentiment, and potentially higher growth.
Predictions for 2025
Ethereum's Dual Role : Ethereum is the backbone of cryptocurrency. It competes with Bitcoin in terms of currency and with other emerging blockchains in terms of decentralized innovation. Critics believe that Ethereum does both poorly, while believers believe that Ethereum does both well enough. We believe that Ethereum has no marketing problem and does not need a so-called "North Star". However, Ethereum can make some low-cost or no-cost improvements to better serve users.
L2 is better than L1 : Ethereum’s upgrade roadmap is effective, especially in the expansion of L2. The theoretical capacity of high-throughput L2s such as MegaETH far exceeds any L1, and L2 has greater flexibility and expression space in design.
Fees are not a key driver : While fees are important for network economics, they are not the primary value driver for L1s such as Bitcoin, Ethereum, and Solana. Current fees are mostly driven by speculation, and the sustainability of this model remains to be seen. We believe that low fees are good as long as the network economy is sustainable.
Ethereum is nearly perfect, with multiple paths to success. A super-large Rollup, an interconnected Rollup-based network, and high fee consumption are all easing fundamentals that can make Ethereum a "home" for both cryptocurrency natives and new entrants again. Taking market share among natives is likely to attract institutional interest, creating a positive growth flywheel.
Solana
Solana's technical progress is somewhat similar to the above. This section focuses on Solana's ecological progress.
Over the past 12 months, it has become clear that Solana’s “comeback” is not a simple return after the FTX debacle. What was once a two-horse race between Bitcoin and Ethereum has now evolved into a three-horse race. Looking ahead to 2025, the Firedancer program will be fully implemented to greatly increase the diversity of network clients. In addition, the first Solana L2 is also expected to be launched in 2025.
Solana in 2024 is reminiscent of the early days of Ethereum. This year has been a bonanza for Solana ecosystem users, with projects like Jupiter, Tensor, Kamino, Drift, and Parcl airdropping more than $1 billion to their community. This massive wealth effect has rippled across the ecosystem, driving a surge in DeFi participation, pushing TVL from $1.5 billion at the beginning of the year to more than $9 billion at the time of writing. In addition, DeFi core infrastructure has matured as lending platforms integrate new stablecoins and on-chain derivatives develop. Stablecoin issuance has also skyrocketed, climbing from $1.8 billion to nearly $5 billion, further enriching the network's liquidity base. Beyond DeFi, consumer-centric innovations, from embedded wallets and Blink-powered URLs to upcoming mobile devices, have broadened the design space for on-chain applications.
In addition, Solana has also become the focus in the DePIN field and the Memecoin craze.
Trends for 2025
Beyond speculation and ecosystem expansion: In the third quarter of 2024 alone, the Solana ecosystem received $173 million in financing, the strongest quarter since the second quarter of 2022. In 2025, we expect the Solana ecosystem to have applications beyond speculation. In addition, although it is still early for network expansion, the emerging Solana L2 ecosystem is worth paying attention to.
The integration of AI and cryptocurrency: One of the most important emerging trends in the second half of 2024 is the integration of artificial intelligence and the cryptocurrency ecosystem, especially AI agents. It is necessary to point out that some of the leading AI agent applications are built on Solana, such as ai16z.
Growing TradFi Interest: Shortly after the U.S. presidential election, VanEck, Bitwise, and 21Shares submitted SOL spot ETF applications, indicating the growing market demand for SOL asset ETFs.
Intensifying competition: While Solana has established a considerable lead in the high-throughput, general-purpose smart contract space, competitors are also gathering momentum. Sui and Aptos have performed strongly in the past few years, and a new batch of L1s are expected to join the competition next year, such as Monad, Berachain, and Sonic.
Other L1 and infrastructure
High performance universal L1
Last cycle’s newcomers Sui and Aptos have both surpassed $1 billion in TVL this year, indicating that developers and users are increasingly confident in exploring high-performance alternatives to the Ethereum Virtual Machine (EVM).
TON has risen from relative obscurity. While activity has dropped significantly since the summer, TON arguably has the largest distribution funnel of all the major L1s, with its mini-app integrated directly into Telegram.
Tron remains a strong player in the payments space, with nearly $60 billion in stablecoin circulation.
Modular Building Blocks: Celestia and the Data Availability Layer
All demand for data availability (DA) on Celestia came from Ethereum Rollups designed to reduce transaction costs, leading to the view that external data availability layers are just Ethereum’s “alt-DA.” Combined with the distribution of nearly $1 billion in unlocked funds to contributors and early supporters, on the surface, this has been a slow year for Celestia.
However, significant research breakthroughs and continued engineering progress have solidified Celestia’s technology roadmap, clarifying a path to large-scale, lightweight verification and a new interoperability standard called Lazybridging, which has the potential to unify the currently fragmented Rollup ecosystem.
We believe that cross-chain interoperability initiatives, such as Celestia’s Lazybridging proposal and Avail’s Nexus ZK proof validation layer, have the potential to build meaningful network effects for modular L1 in the second half of 2025. Celestia, in particular, is on the verge of becoming a self-contained ecosystem. Next year, a lineup of projects such as Astria, Forma, Hashflow’s xOS, SpiceNet, and Prism will bring healthy DeFi, infrastructure, and consumer applications to the Celestia ecosystem.
Next-generation L2
Applications are phasing out L1 and choosing to launch their own L2: stablecoin protocol Frax launched Fraxtal; Uniswap launched Unichain. Both are built on the Optimism technology stack, and institutions such as Sony and Kraken have also announced their participation in the Superchain program. In addition, this trend is not limited to the Ethereum ecosystem. Solana-based platforms such as Zeta Markets and Grass are also exploring the prospects of L2.
Next-generation virtual machines : As non-EVM-based L1 virtual machines have proven their viability, it is not surprising that L2 virtual machines follow a similar path. The most notable this year are Eclipse and Movement. Although both are still in their infancy, in the coming year, such progress will increase the power to convince developers to abandon the EVM and accept the new paradigm.
The L2 design space continues to expand
This year, Optimistic EVM L2 (such as Base, Arbitrum, and OP Mainnet) continued to dominate in most indicators, leading in adoption and activity. ZK Rollup, led by StarkNet and zkSync, lagged behind in adoption, but also achieved important interim results.
The next generation of L2 is facing fierce competition and needs differentiated value propositions to break through. This has given rise to new L2 designs, such as MegaETH, which unreservedly adopts a centralized sequencer design with the goal of achieving 100,000+ TPS and millisecond block confirmation times. In contrast, Ethereum-based Rollups (such as Taiko) focus on making Rollups closer to L1.
In 2025, all eyes will be on Unichain, and if it succeeds, it will set off a wave of protocols that will abandon their L1 and build application-specific or domain-specific L2s to increase value accumulation and generate more income for token holders.
We also expect that alternative VMs (primarily Solana and Move VM) will continue to gain traction. However, it is too early to determine which L2 architecture will ultimately win out in the long run.
Avalanche, Cosmos, and Lisk
Independent application chains have long been seen as a "pipe dream" for researchers and developers, and it is difficult to achieve lasting success. However, Avalanche has gone against the tide and steadily developed into one of the most powerful multi-chain ecosystems.
It is worth noting that two L1s in the Avalanche ecosystem, DeFi Kingdoms and Dexalot, surpassed C-chain in total gas usage and transaction costs as early as September. However, C-chain remains healthy, with a TVL of more than $1.5 billion and a stablecoin supply of more than $2 billion, both of which rank in the top ten among all L1s according to DeFi Llama data.
On the other hand, Cosmos has not performed well this year, and the value accumulation mechanism of ATOM is also questionable. However, Cosmos has also had some positive developments, for example, the cumulative issuance of US dollar cards by Noble, the Cosmos stablecoin issuance platform, has exceeded 1.5 billion US dollars.
Looking ahead to 2025, the Avalanche9000 upgrade will bring significant performance improvements to any L1 in the Avalanche ecosystem. Combined with Avalanche's BD capabilities in the institutional and gaming sectors, this will be another strong year.
As for Cosmos, the outlook remains unclear. We believe that most of the problems in the Cosmos ecosystem stem from historically troubled decision-making and failed coordination. However, this may change after the Interchain Foundation (ICF) acquired Skip Protocol.
Other infrastructure trends
Interoperability: As the number of L1 and L2 continues to increase, interoperability will become key. Optimism's Superchain is positioned as the largest "Rollup Cluster" on Ethereum, and Coinbase, Kraken, Sony, Uniswap and other companies have launched L2 on their networks. In addition, intention protocols like Across will play a key role in the field of interoperability next year. Espresso and other shared sorting infrastructures are another way to increase composability between L2s.
Chain abstraction : Chain abstraction will be one of the most noteworthy trends in the coming year.
Zero-knowledge technology : ZK technology is advancing at an incredible pace. We are excited about many developments in this area, including Succinct's decentralized proof network and RISC Zero's unbounded protocol. A mature ZK technology stack will revolutionize scalability, privacy, interoperability, Bitcoin programmability, and even extend to applications beyond blockchain.
Some predictions for the infrastructure sector in 2025:
The Year of ZK: ZK technology is on the verge of exponential growth. By 2025, as proof costs decrease and performance continues to improve, it is expected that almost all infrastructure protocols will adopt ZK technology.
Mature modular ecosystem: High-performance, general-purpose smart contract chains have dominated coverage this year. But in hindsight, this may prove to be an overcorrection as cross-chain user experience improves and application ecosystems such as Celestia, EigenDA, Avail, etc. begin to find their footing. While there is an element of infrastructure fatigue, especially in more complex modular protocols, the technology is clearly gaining traction. The line between applications and infrastructure will become increasingly blurred, and modular protocols will benefit from this trend.
Competition for high-performance general-purpose chains intensifies: So far, the next batch of high-throughput general-purpose smart contract chains, led by Solana, have developed well under the leadership of Aptos and Sui. However, with the launch of new L1s such as Monad and Sonic, competition will be real. It is too early to draw a conclusion now, and L2s such as MegaETH, Eclipse, and Movement will also compete for market share in this field.
DeFi
DEX and Trading
In 2024, the share of spot DEX exchanges’ trading volume relative to CEX increased slightly, from about 9.4% in January to about 11.4% in November, peaking at about 13.9% in October. The share of derivatives DEX relative to CEX increased from about 2.7% in January to about 3.7% in November, peaking at about 5.2% in February.
Spot Trading: Total spot DEX volume grew 171% year-over-year from January to November 2024. Over time, some newer DEXs have gained market share, while Uniswap, Pancakeswap, Curve, and other incumbent exchanges have suffered. The surge in Solana trading activity has driven the growth of Raydium, which currently leads the market with a spot volume share of approximately 30%. Other Solana DEXs, such as Orca’s Whirlpool, Lifinity, and Meteora, have also improved their relative positions. In addition, Uniswap’s leading volume share in the Base and Optimism markets was replaced by Aerodrome and Velodrome.
Derivatives Trading: Total volume on derivatives DEXs grew 328% year-over-year from January to November 2024, indicating a return to speculative activity as market conditions improve. As with spot DEXs, new perpetual DEXs are gaining share in competition with dYdX. Hyperliquid was the clear winner in 2024, dominating the derivatives space with around 40% at the end of the year. Additionally, perp DEXs on Solana, such as Jupiter and Drift Protocol, also grew their market share in 2024.
Prediction Market and Trading Robots
This year, Polymarket has achieved great success as a new type of cryptocurrency exchange, with monthly trading volume exceeding $2 billion during the October and November elections. In addition, DEX trading robots such as Trojan, Bonkbot, and Maestro appeared in 2024 and quickly became the preferred method for many users to conduct on-chain transactions. Currently, the average daily trading volume of these robots exceeds $180 million.
Trend predictions for 2025
DEX volume on Base and Solana will continue to grow: The two blockchains with the fastest volume growth in 2024 are Solana and Base. Solana's volume is mainly concentrated in Memecoin, while Base's volume is mainly concentrated in spot ETH and Coinbase's cbBTC. We believe that the success of these two chains is largely due to low transaction costs and user-centric product routes. We believe that Solana and Base DEX's share will continue to grow in 2025 relative to DEXs on other chains.
Vertical Integration vs. Composability: 2024 brings us the choice between vertical integration and composability. On one hand, protocols like Hyperliquid and Uniswap have transitioned to owning their own infrastructure; on the other hand, VCs like Multicoin are backing Solana-native applications like Drift. Both perspectives have merit, and we believe both approaches offer great paths forward as high-value execution-focused traders gravitate toward vertically integrated protocols and more less mature on-chain participants opt for composability.
Post-election Prediction Markets: This year, Polymarket found product-market fit as an on-chain venue for atypical trading markets, such as politics and pop culture. Nonetheless, open interest on the platform has shrunk dramatically with the 2024 presidential election over. We predict that volumes may decline compared to the trading months leading up to the election, but Polymarket can continue to succeed in its core competency as the election catalyzes usage and mind share of its product. In addition, new and existing cross-chain prediction markets will gain traction.
The Return of RWA
Since the start of 2023, RWA total value locked (TVL) has increased from $2 billion to $9 billion, driven primarily by tokenized Treasuries, which have been launched by major financial institutions such as BlackRock and Franklin Templeton. Despite their limitations, tokenized Treasuries have played a key role in bridging traditional finance and cryptocurrencies in a high-interest rate environment. However, this reliance on favorable macro conditions raises questions about whether the industry can remain resilient after interest rates normalize.
Looking ahead to 2025, tokenized treasuries are expected to face headwinds as interest rates fall, and growth may slow as on-chain yields become more competitive. However, RWAs have significant opportunities to expand their reach and attract new capital in several areas, including idle on-chain capital, exchange collateral, exporting on-chain yields, and higher-yielding products such as tokenized private credit.
Points and Earnings Strategy
In 2024, protocols that have not issued tokens will choose to launch points programs, including EigenLayer, Ethena, and recently Hyperliquid. Well-known protocols have adopted this strategy. In addition, the points market, led by the Solana ecosystem Whales Market, has also received widespread attention, allowing users to monetize points and pre-allocations.
In addition to points, Pendle has become an important platform for interest rate derivatives through its integration with Liquidity Re-Pledge Tokens (LRT) and its connection to the EigenLayer Re-Pledge Points program, allowing users to separate principal and yield from Liquidity Re-Pledge Tokens and LRT, thereby facilitating the trading of EigenLayer points and creating a secondary market for these speculative incentives. EigenLayer has partnered with protocols such as ether.fi and Kelp DAO to allow Pendle users to trade the expected airdrop value of EigenLayer through Yield Tokens (YTs). Within three weeks of launching its LRT-based pool, Pendle had already generated $200 million in TVL from these integrations, accounting for 40% of its total TVL by the end of the year.
We expect that points programs will remain core to protocols designed to bootstrap user adoption through token distribution in 2025. However, future points programs may be adjusted to align incentives with desired user behavior.
AI x Crypto
The integration of AI and cryptocurrency is undoubtedly one of the hottest new topics in 2024. In 2024, the investment in this field exceeded $1 billion. In the public market, the total market value of AI-related protocols has increased from about $5 billion in October 2023 to more than $60 billion in early December. As for the specific tracks, they can be divided into decentralized model training (such as Bittensor), AI agent tools and services (such as Autonolas and Wayfinder), and the recent new trend, AI agent KOL (such as Terminal of Truths, Zerebro, Luna, Ai16z, etc.).
Looking ahead to 2025, we expect Bittensor to become a cutting-edge AI research center in the crypto space through the Dynamic TAO upgrade; in terms of decentralized model training, project parties may not try to compete with giants such as OpenAI and Google by training a large number of basic models, but will instead focus on fine-tuning smaller specialized models; for AI agents, on-chain development will increase, and AI agent coins will be more "dynamic" than Memecoin; in addition, open source and closed source AI will also be discussed in the cryptocurrency industry.
DePIN
This section focuses on the progress of the subdivided tracks in the DePIN field, including two major sections: physical resource network (PRN) and digital resource network (DRN). Among them, PRN is further divided into energy (such as Daylight and Grow), wireless (such as Helium and DAWN), environmental data collection (such as GEODNET and Onocoy), mobile and map images (such as Hivemapper and NATIX) tracks. DRN is subdivided into computing (such as Akash and Render), file storage (such as Filecoin), AI data layer (such as Grass), etc. Due to space limitations, this article will not elaborate. Interested readers can read the original text for further understanding.
Consumer Applications
Web3 Games: After two years of relatively stagnant growth, 2024 marks a significant recovery in Web3 game player activity. On-chain daily active addresses (DAA) continued to trend upward throughout the year, starting at 1.3 million and reaching an all-time high of nearly 7 million in December. Looking ahead to 2025, we believe that games still have great potential as an entry point into Web3. In addition, P2A will continue to be the main way to attract players to Web3 games, and mobile applications will become the defining trend of Web3 games in 2025.
Memecoin: Love it or hate it, Memecoin is undoubtedly one of the most prominent narratives in 2024, and Solana is undoubtedly the biggest beneficiary of this trend. We expect Solana to continue to account for the largest share of Memecoin transaction activity through 2025.
DeSoc and SocialFi: The decentralized social space has experienced accelerated growth over the past year, continuing momentum in the second half of 2023. Similar speculation-focused platforms such as fantasy.top and time.fun gained traction in 2024, but much of the growth was short-lived, with retention rates dropping sharply shortly after launch. In contrast, DeSoc platforms such as Farcaster and Lens saw higher adoption throughout the year.
NFT: Interest in NFTs remained largely flat throughout 2024, with trading volumes continuing to decline after a brief rise in the first quarter. However, some blue-chip projects in this field have still made a lot of progress. For example, Doodles partnered with McDonald's to launch 100 million limited-edition McCafé holiday cups across the United States; Pudgy Penguins expanded its Pudgy Toys series to major retailers, including a recent launch at Target; in addition, BAYC launched the ApeChain mainnet in October, while Pudgy Penguins and Azuki are also developing their own infrastructure, launching Abstract Chain and AnimeChain respectively.
CeFi
The rise of ETFs: Bitcoin ETFs have been a huge success. After some volatility after their launch, cumulative net inflows have been steadily rising. Currently, Bitcoin ETFs hold a total of over $100 billion in asset value. In addition, Ethereum ETFs began to gain traction after the election, with multiple nine-digit inflow days in December.
CEX efforts and struggles: On the regulatory side, exchanges seek to expand their global influence by complying with new regulatory frameworks. Binance and Crypto.com obtained virtual asset service provider licenses in Dubai; OKX obtained regulatory victories from their respective monetary authorities in Australia and Singapore. Similarly, Bybit completed VASP registration in a few emerging markets, seeking to compete in markets such as Turkey and Georgia where demand for digital dollars and alternative currencies is particularly strong. In the stablecoin field, Circle became the first stablecoin issuer to comply with Europe's new regulatory framework for crypto asset markets. In addition, Kraken reached a settlement with the SEC over its staking services, while Coinbase continued to fight the SEC. In addition to regulatory efforts, CEXs have expanded in terms of on-chain integration, trading functions, growth plans, stablecoin expansion, etc.
The arrival of new institutions: In addition to BlackRock's strong embrace of cryptocurrencies, some large companies have entered (or re-entered) the cryptocurrency field this year, such as Revolut's launch of an independent cryptocurrency exchange Revolut X; Goldman Sachs plans to spin off its digital asset division and cooperate with TradeWeb; Standard Chartered Bank and Nomura Securities expanded custody services for institutional clients, etc.
Stablecoin trends: 2024 is the year when stablecoins shine. In mid-2024, the monthly transfer volume of stablecoins on all chains exceeded 3.5 trillion US dollars, equivalent to Visa's entire third quarter transaction volume. In addition, considering the fact that the US dollar is still the world's main reserve currency, US dollar stablecoins have become another option for many investors to hold US dollars. At the same time, there have been many substantial developments in on-chain stablecoin innovations, such as Ethena's USDe becoming the fastest stablecoin to reach a supply of 3 billion US dollars, and Maker changed its name to SKY, hoping to re-accelerate the growth of its stablecoin supply through its new stablecoin USDS. The evolving stablecoin track has also spawned a new vertical industry PayFi, which allows the use of blockchain to fund on-chain and off-chain payment applications.
