A Comprehensive Review of the Crypto Market from the Macroeconomic Environment to Vertical Tracks in the Second Half of 2024

1. Market Overview

I.1 Crypto Market Fundamentals

In 2024, the total market capitalization of the crypto market increased from $2.31 trillion to $3.33 trillion, a growth of 44.2%. This growth was attributed to key events such as the approval of spot Bitcoin ETFs and Trump's victory. Bitcoin's dominance rose to 56.8%, primarily due to the doubling of ETF assets under management, reflecting increased interest from institutional investors.

The Ethereum ETF has performed relatively flat, with institutional investors showing a clearer preference for Bitcoin. Solana has performed brilliantly, with SOL price rising 29.3% and a net inflow of $2 billion into its ecosystem.

The share of the DeFi market has expanded, with the total locked value ( TVL ) growing by more than double. The DEX/CEX trading volume ratio has risen to 11.05%, with an annual trading volume reaching $2.67 trillion. The DeFi TVL market share of Solana and Base has seen significant growth.

Stablecoins accelerated, with a market capitalization growth of 26.8%, reaching a historical high of over $205 billion. New entrants like Ethena further propelled this trend.

I.2 Macroeconomic Environment and Politics

politics

The political landscape in the United States has changed, with Trump being elected president again and the Republican Party gaining control of Congress. Trump's policies may bring uncertainty to the international situation. Europe is affected by the Russia-Ukraine war, with right-wing parties gaining more influence. The situation in the Middle East is tense, and many countries in South America are advancing encryption legislation.

economy

In 2024, the global GDP growth rate is 2.6%, with an inflation rate of 2.5%. The US economy lands steadily, while the Eurozone experiences slow growth due to geopolitical influences. China and emerging market countries maintain a relatively high growth rate, but face their own challenges. The Indian stock market performs the best, with the three major US indices rising significantly, while the stock markets in China and Russia perform poorly.

2. Bitcoin

2.1 Product and Protocol Design

In the second half of 2024, the Bitcoin network underwent significant software upgrades, including Bitcoin Core 28.0 and the Lightning Network BOLT12. The community engaged in vigorous discussions regarding the soft fork proposal, but consensus has not yet been reached. The implementation of BitVM is still progressing steadily, with a focus on the design and implementation of cross-chain bridges.

2.2 Layer 2 - Lightning Network

The number of Lightning Network channels has not changed much, maintaining a total of around 5000 BTC. The number of nodes remains basically stable, but the number of channels continues to decrease. BOLT12 has been adopted by many clients, supporting static payment methods. Some Layer 1 networks are developing Layer 2 solutions that comply with the BOLT specifications.

2.3 Layer 2 - Side Chains

Layer 2 sidechains show uneven performance. The challenges facing Bitcoin's second layer include reliance on unsustainable TVL surges and airdrop incentives. The key to success lies in ensuring asset security and pursuing a vertical integration strategy.

2.4 On-chain assets

The overall performance of Bitcoin on-chain assets has been poor. Assets from meta-protocols such as BRC20 and Runes have recently underperformed. RGB is still being promoted, and Taproot Assets, launched by Lightning Labs, allows for minting stablecoins at lower fees.

2.5 BTCFi

BTCFi can provide additional Bitcoin-denominated returns for Bitcoin holders. After several phases of controlled testing, Babylon has attracted a large amount of Bitcoin-denominated TVL. Various LST projects have also emerged to unlock liquidity and drive DeFi activity.

3. Ethereum

On July 23, 2024, the ETH ETF was launched in the United States, but its performance failed to replicate the success of the Bitcoin ETF. The price of Ethereum performed poorly, and the ETH/BTC ratio declined. After the Dencun upgrade, the gas fees on Layer 2 were significantly lower than those on Ethereum, leading to more funds flowing into Layer 2 projects.

3.1 L2s

Since the Dencun upgrade, the transaction fees for rollups have decreased by over 90%. Leading Layer 2 solutions such as Base, OP Mainnet, and Arbitrum have seen significant net inflows. The daily transaction count and the number of active addresses for Layer 2 have increased substantially.

3.2 Re-staking

In 2024, the overall amount of staked Ethereum is on the rise, but the yield is declining. Re-staking protocols (such as Eigenlayer) have attracted a large amount of TVL, although the growth momentum has weakened.

3.3 Ethereum Future Roadmap and EIP Proposals

2025 will be one of the most important years in the development of Ethereum, with plans for the Pectra upgrade. Key EIP proposals include EIP-7691, EIP-7702, and EIP-7251, which aim to enhance network performance and user experience.

4. Solana

In 2024, Solana performed exceptionally well, with a price increase of approximately 75%. Developments in the DeFi sector include the launch of cbBTC, PYUSD incentive programs, and a liquidity re-staking model. The market capitalization of stablecoins grew more than three times, reaching $5.1 billion. In terms of institutional adoption, partnerships with Shopify and Visa further strengthened the network's growth.

DePIN

Projects like Helium and Render Network migrating to the Solana network have promoted the development of the DePIN ecosystem. In 2024, a large number of noteworthy DePIN projects emerged, such as Hivemapper, Cudis, Grass, and XNET.

Meme

2024 can be called the year of Memecoin. The launch of Pump.fun has become a milestone in the crypto industry, driving a significant increase in the trading volume of Meme coins on Solana. Data analysis platforms like GMGN.ai provide investors with more features and insights.

PayFi

PayFi is a new concept proposed by Lily Liu, the chair of the Solana Foundation, aimed at integrating the efficient programmability of crypto payments and the low friction and composability of DeFi behaviors unique to Web3. Solana Pay is used as an integrated plugin option in stores supported by Shopify.

Looking to the future

The future activation of Firedancer will further enhance network performance and security. The release of the Solana plugin offers greater granularity, increased flexibility, and stronger programmability. The potential approval of Solana ETFs, the growth of the stablecoin market, institutional adoption, and the increasing DeFi activity will all serve as positive catalysts for the Solana ecosystem.

5. Alt-L1s

Berachain

Berachain introduces a Proof of Liquidity (PoL) mechanism to ensure incentive alignment among validators, dApps, and users. After its launch, Berachain has risen to become the eighth largest network by TVL.

TON

With over 900 million monthly active users on Telegram, TON has attracted significant attention in 2024. The daily active users of TON and DeFi TVL have increased significantly, but performance has not met expectations since Q4.

Kaia

Kaia is a brand new blockchain platform formed by the merger of Klaytn and Finschia, integrating LINE and KakaoTalk. The Kaia Wave initiative aims to promote ecological prosperity in various fields of Web3.

Move

The Move ecosystem gained wider adoption in 2024. Sui significantly outperformed Aptos on several key metrics, including FDV, TVL, net inflows, and DEX trading volume.

MegaETH

MegaETH is an EVM-compatible blockchain with a transaction throughput of up to 100,000 TPS. It addresses the limitations of transaction throughput and computing power by introducing node specialization.

Monad

Monad achieves optimistic parallel transaction execution across multiple EVM instances while maintaining compatibility with Ethereum bytecode. Technological innovations such as MonadBFT and MonadDB enhance network performance.

6. Other tracks

6.1 Meme

In 2024, the overall increase in the Meme sector reached 218%. Ethereum, Base, and Solana are the three most active public chains in the Meme ecosystem. The launch of Pump.fun became a milestone in the encryption industry, greatly unleashing retail demand.

6.2 AI

The development of AI in the crypto market encompasses the upstream and downstream industries of AI. Agents and applications, as the side closer to end users, align with the rapid development pace of developers in the crypto market. The successful transformation of Virtuals Protocol in the second half of 2024 has catalyzed the explosion of Agents.

6.3 RWA

The market value of RWA has grown by 63%, reaching $13.67 billion. Private credit and U.S. Treasury bonds are the main asset classes. Ethereum remains the dominant public blockchain favored by asset issuers.

6.4 Trading Bot

The competition in the trading bots market is intensifying in 2024. Emerging trading bots like Bonkbot, Trojan, and Bloom are performing well, continuously increasing their market share.

6.5 DeSci

DeSci aims to leverage blockchain technology to address the challenges faced by the scientific community. Currently, there are nearly 100 DeSci projects distributed across fields such as biotechnology, space, and humanities.

6.6 DePIN

The total market value of DePIN has reached $50 billion, an increase of over 176%. Energy networks, wireless networks, geospatial networks, and computing networks are the sub-sectors worth noting in the DePIN field.

6.8 Game

In 2024, the average daily active wallet count in the gaming industry exceeded 7.6 million. Major gaming chains include opBNB, Ronin, Xterio, Skale, TON, and XAI. Despite financing difficulties, the gaming industry remains resilient, displaying characteristics that are not entirely correlated with the overall market environment.

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