Messari 2024 Industry Summary and 2025 Trend Forecast

Written by: Messari Team Compiled by: Yangz, Techub News

Note: The original text is long, and the recommended reading time is about 3 hours. For the convenience of readers, Techub News has deleted and summarized it.

2024 is the year of transformation and revitalization of the cryptocurrency industry. After the turmoil of the previous cycle, the industry has made great progress in rebuilding trust, promoting innovation, and maturing the financial and technological ecology.

• We have seen the arrival of cryptocurrency ETFs, legitimizing the asset class and being adopted by institutions.

• 2024 will go down in history as a decisive year in the evolution of cryptocurrency policy. At the very least, a more friendly US regulatory environment should eliminate many concerns for hesitant investors.

• The US election was the catalyst that pushed 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 has attracted many new users.

• Memecoins dominate narrative discussions and further help attract new users. In addition to speculation, DePIN has also ushered in a year of explosion, with the market value of the track more than doubling and having practical use.

This article is divided into two main parts, including "The current situation of the cryptocurrency industry" and "Segmented tracks".

Current Status of the Cryptocurrency Industry

Macro Environment

In traditional markets, investors are still worried about the return of inflation in 2024 after experiencing inflation shocks in 2022 and 2023. But as inflation eases, the focus turns to the weak labor market. Despite the rising unemployment rate, Claudia Sahm, the creator of Sam's Law, believes that the US economy is resilient enough and the Federal Reserve has ample room to cut interest rates.

Overall, the US economy remains strong, and except for brief fluctuations around the unwinding of yen carry trades, geopolitical conflicts, and standard election-driven hedging, the S&P index has been on a steady upward trend for most of the year. At the same time, factors such as increased AI productivity and increased demand for gold reserves by global central banks are also affecting the market.

As for the cryptocurrency market, after Bitcoin hit a staged top in March, it entered a consolidation, responding downward to all the risks facing traditional markets, but 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 got the market out of eight months of consolidation and volatility, and the improvement of the regulatory environment also boosted market confidence.

Looking forward 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 policy

2024 is a turning point for cryptocurrency policy, laying the foundation for transformational development in 2025.

In the first half of the year, the U.S. SEC asserted 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, with the support of allies in Congress, fought back, 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).

In the second half of the year, the political landscape changed dramatically as the Trump campaign took a pro-crypto stance. And with Trump's victory, expectations for a more favorable regulatory environment surged, and 2024 became a decisive year for the evolution of cryptocurrency policy.

Trump made a series 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

• End "illegal and un-American cryptocurrency repression"

• Hold Bitcoin purchased by the federal government as a strategic reserve asset

• Defend the right to mine Bitcoin

• Remove US SEC Chairman Gensler

• Oppose US CBDC

• Make the United States the world's "cryptocurrency capital"

• Protect the right to self-custody and "transactions free from government surveillance and control"

• Release "Silk Road" creator Ross Ulbricht

In addition, several new narratives have emerged regarding cryptocurrency policy in 2024, including the right to self-custody, allegations of the Choke Point 2.0 operation, privacy and illicit finance (mixers), Bitcoin mining and energy consumption, and cryptocurrency lobbying.

Prospects for the US cryptocurrency regulatory environment in 2025:

1. 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 jurisdictional boundaries of the SEC and CFTC through the FIT-21 bill, 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.

2. 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.

3. 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.

4. Self-custody is protected, and privacy issues remain the focus: Legislation is expected 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 combat illegal behavior.

5. DeFi remains unregulated: Despite growing interest and concerns about DeFi, DeFi will remain largely unregulated by 2025. However, Congress will commission a comprehensive study of DeFi to explore its potential benefits, risks, and appropriate regulatory approaches.

6. Trump may adjust his stance on cryptocurrencies: Trump may change his support for cryptocurrencies if they conflict with maintaining the hegemony of the US dollar, especially in the context of the economic crisis and the rise of the BRICS financial system.

7. 2025 will be a critical year for cryptocurrency reform: The Trump administration is expected to introduce policies that support cryptocurrencies within its first year, but it may face political turmoil after the 2026 midterm elections, and policy advancement may slow down.

The outlook for US cryptocurrency policy is bright, and the Trump administration's support will bring opportunities to the cryptocurrency industry, but there is also the risk of policy reversal.

Institutional Arrival

1. Bitcoin and Ethereum ETF Approval: 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 broke through $40 billion in about 200 days, setting a record for the traditional market.

2. Institutional participation extends to multiple areas: It is not just wealth management companies that put client funds into cryptocurrencies, traditional financial companies (TradFi) have also increased their participation in tokenization, stablecoins, asset issuance and many other aspects. For example, companies such as Sky (formerly MakerDAO) and BlackRock have launched tokenized treasury bonds; Ondo Finance launched USDY (tokenized treasury bond fund), with an asset management scale of approximately US$440 million; Franklin Templeton also launched an on-chain fund backed by short-term treasury bonds and repurchase agreements, with a cumulative asset management scale of nearly US$500 million.

3. The convergence of fintech and cryptocurrency: 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 to reduce costs, increase transparency, or speed up inefficiencies in payments or other verticals.

4. Other institutional adoption highlights:

1. JPMorgan Chase expands its blockchain platform Kinexys to support cross-border payments and tokenization

2. Goldman Sachs plans to separate its digital asset platform to expand product range

3. Robinhood launches cryptocurrency transfer service in Europe and adds tradable assets

4. Revolut expands its cryptocurrency platform with plans to launch MiCa-compliant stablecoin

5. Stripe acquires stablecoin company Bridge for $1.1 billion, becoming the largest acquisition in the cryptocurrency field

6. Visa and Coinbase Coinbase integrates Apple Pay to facilitate conversions 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 value relative to Ethereum also increased from about 16% to 25% at the end of the year. Solana's growth is 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 launch of Firedancer, and innovative technologies such as ZK Compression.

In addition, low-cost, high-throughput transactions combined with growing narratives have driven the expansion of Solana's application ecosystem. Solana’s application fees exceed $500 million in 2024, 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 shows that Solana’s ecosystem is relatively lacking in diversity, with application fees highly concentrated in two areas, including liquidity staking and trading activity. The reason behind this is related to the promotion of staking rewards and its status 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 is the year of Solana’s rise, then 2025 may well be the year that Solana becomes a fully realized ecosystem. The emergence of DePIN applications and emerging AI-driven projects marks Solana’s expanding footprint in areas beyond finance. However, the scale of these developments is still in the early stages, and the ultimate impact on network activity remains uncertain.

Memecoin

Memecoin has dominated 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.

The rise of Memecoins is not driven solely by trends or user-friendly interfaces. They thrive in an environment of excess capital and abundant block space. As the broader cryptocurrency market appreciated in 2024, many traders found themselves with excess capital and limited high-quality investment opportunities. This prompted them to turn to Memecoin. Especially in high-throughput blockchains such as Solana and Base, low transaction costs and high scalability provide an ideal environment for these speculative assets. Additionally, Memecoin trading platforms, such as Pump.fun, Moonshot, and Telegram bots, have streamlined the trading process, attracting a 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 capture the largest share of the cryptocurrency market capitalization, their speculative and social appeal will ensure that they have strong sustainability, especially against the backdrop of increased macroeconomic uncertainty.

Funding

At the time of writing this article in early December, cryptocurrency funding (measured by the number of deals) has been on an upward trend since 2023. But in terms of total funding, funding for startups and protocols fell by about 20% year-over-year, mainly due to the unusual circumstances in the first quarter of 2023. However, there were still some large funding rounds in different verticals this year. Here are the main funding highlights for 2024:

• Big funding projects:

• Monad Labs: raised $225 million

• Story Protocol (backed by a16z): raised $80 million in Series B

• Sentient (AI): raised $85 million

• Berachain and EigenLabs: raised $100 million each

• Farcaster: raised $150 million

• Freechat: Raised $80 million

• AI and DePIN financing performed well:

• The total amount of financing in the field of artificial intelligence increased by about 100%, especially in accelerator projects such as a16z Crypto Startup Accelerator (CSX) and Polychain Beacon Fund

• The total amount of financing in the field of DePIN increased by about 300%

• Venture capital institutions expressed strong interest in the integration of AI and cryptocurrency, AI autonomous agents, and the potential of AI in the gaming field

• Other financing hotspots:

• DeSci (Decentralized Science): BIO Protocol and AminoChain receive funding

• Game Protocols: APAC VCs increase investment in gaming protocols based on TON blockchain

• NFT & Metaverse Projects: Funding rounds and funding amounts declined, down from 2021 and 2022

• Social: Despite uncertainty, projects such as Farcaster, DeSo and BlueSky continue to attract attention and funding.

Users

a16z reported this year that the number of monthly active addresses for cryptocurrencies has reached 220 million, a record high. But the truth is, no one knows how many real users are actually adopting cryptocurrencies, as there is not a 1:1 relationship between active addresses and users. By filtering out some of the noise, a16z estimates that of these 220 million active addresses, approximately 30 million to 60 million are real monthly crypto users.

While we won’t attempt to speculate on user numbers, we believe that 2024 has provided a lot of evidence that cryptocurrencies as a whole have new users. Below, we will provide some of the successful user-led applications and ecosystems 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, and ranking among the top ten free apps on iOS. We believe 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 on the go. The ranking of these apps in the app stores will continue to provide insights into the speed at which users flock to cryptocurrencies.

• Adoption of stablecoins: In 2024, a wave of stablecoin adoption has emerged globally among both 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 Programs Combined with GameFi: Tap-to-earn mini-games on TON, especially Notcoin and Hamster Kombat, have become a viral marketing phenomenon in the cryptocurrency industry. Notcoin has attracted over 40 million users in a short period of time, becoming one of the most held cryptocurrencies with a valuation approaching $1 billion. Hamster Kombat has attracted around 200 million users.

• Polymarket: A True Crypto Use Case: In 2024, the 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 crypto use case. Not only has Polymarket achieved significant growth in trading volume, its market prediction capabilities have also surpassed traditional polls to become 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 transition from CEX to DEX: In 2024, 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 Coinbase to Base deposit and withdrawal services, driving significant growth in on-chain activity. At the same time, Hyperliquid provided 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, user growth in the cryptocurrency ecosystem began to shift from a sporadic and volatile pattern to a more predictable and scalable growth trajectory. New users discovered the natural appeal of cryptocurrencies through various applications, and the success of the above platforms is a sign that the cryptocurrency industry is moving in a more mature direction.

Breakthroughs in DePIN

In 2024, the DePIN sector saw a significant breakthrough, with a year-on-year surge of 132% in market value to over $40 billion. Here are the key developments and highlights in the sector:

• Surge in Financing: In 2024, DePIN projects received 326.45% more funding than in 2023. Among them, computing, energy, and data collection startups received a total of more than $266 million, showing investors’ strong interest in this field.

• Real-World Traction:

• Helium Mobile: Successfully attracted over 120,000 users in its first year.

• Glow: Deployed 70 solar farms in California and India.

• GEODNET: Built the world's largest RTK network with more than 11,000 nodes.

• Mainstream collaboration: Multiple 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; GEODNET working with the U.S. Department of Agriculture to provide high-precision agricultural services.

DePIN sector forecast for 2025

• Revenue breakthrough: In 2025, DePIN sector revenue is expected to exceed $150 million. 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 Leading: The energy (DeGEN) and wireless (DeWi) industries are expected to be the two fastest growing sub-sectors in the DePIN space by 2025. Multiple startups such as DAWN, Glow, XNET, etc. are ready to launch mainnets or officially exit the testing phase, providing growth potential for 2025.

• Helium Becomes the Leader in the DePIN Space: With the advancement of the Carrier Offload program and the continued growth of Helium Mobile, Helium is expected to become the largest project in the DePIN space by market value.

• Government Cooperation and Integration: As the utility of DePIN is proven, governments will become more actively involved in this space. 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: Although 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, access to liquidity, and DevX will become the main building platforms for DePIN projects, further driving the growth of DePIN.

Sub-tracks

Bitcoin

Bitcoin assets

For Bitcoin, 2024 will be a historic year. This year, Bitcoin has set new historical 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. Main highlights:

• Bitcoin ETF approval: The approval of the Bitcoin ETF is the biggest highlight of 2024, with only April experiencing net asset outflows in the 12 months.

• Increased enterprise adoption: Michael Saylor and MicroStrategy continue to increase their Bitcoin holdings with dollar-cost averaging 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 to accumulate Bitcoin reserves, indicating that the trend of enterprise adoption of Bitcoin is growing.

• Bitcoin Block Reward Halving: 2024 is also the year when the Bitcoin block reward is halved. As a landmark event that occurs every 4 years, as miners' rewards decrease, the number of natural sellers of Bitcoin will also decrease.

2025 Forecast

• Increase in 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.

• 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 promises, it may further promote Bitcoin's growth and prosperity.

Bitcoin Network

1. Inscriptions and Runes: At the end of 2022, Casey Rodarmor first inscribed text on the Bitcoin mainnet, resulting in the Bitcoin inscription, which received 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.

2. Bitcoin Programmability: Although Bitcoin's base layer was originally designed to pursue security and decentralization, the programmability of the Bitcoin network has been significantly enhanced with the launch of BitVM. BitVM implements mechanisms for 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. There are currently more than 40 related projects in the testnet or mainnet. 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.

3. Bitcoin Staking: Babylon, launched in the third quarter of 2024, is Bitcoin's first staking protocol, allowing Bitcoin holders to stake their assets to other networks for security and receive rewards. Similar to Ethereum's EigenLayer, Babylon leverages Bitcoin's large-scale economic security to achieve shared security across the entire PoS network. Unlike the current form of staking, Bitcoin is still on its mainnet, and holders can entrust others to provide security without giving up control of their Bitcoin.

2025 Prediction

• From static chain to diversified ecosystem: In 2024, the Bitcoin network gradually transforms 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 eventually turn to runes and inscriptions on Bitcoin. And 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 a single-digit penetration of Bitcoin's 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 of competitors: In 2024, Ethereum overall underperformed major crypto assets such as Bitcoin and Solana. Due to low network activity, Ethereum supply has been inflated throughout 2024.

• Ethereum ETFs had a disappointing early performance: In July, the Ethereum spot ETF was approved. However, compared to the Bitcoin ETF, the Ethereum ETF is a small fry and has only recently begun to show traffic growth.

• Smart contract platform leadership challenged by Solana: In 2024, Ethereum was inferior to Solana in several key areas, including transaction fees and DEX trading volume. Despite the growth of Ethereum L2 activity, well-known investors have questioned whether this growth is value-added or ultimately value-extracting.

• 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. Additionally, the growth of Base and the news that others like Kraken, World (Worldcoin), and Uniswap are building L2 on Ethereum are positive signals. However, the growth of L2 also means a decrease in Ethereum mainnet activity. More worryingly, Ethereum is unable to effectively monetize its data availability service. Blob fees have long remained at a minimum level of 1 wei. At the same time, the mismatch between growing L2 profitability and non-existent DA fees has become the core argument behind the view that "L2 is extractive." L2 also creates fragmentation and worsens the user and developer experience. Multiple stopgap solutions 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 main place for crypto speculation: in 2024, due to the success of Pump Fun, the number of tokens launched on Solana is 8 times that of Ethereum. Beyond Memecoin, other Ethereum-native narratives have also failed to deliver on their promises in 2024: EigenLayer AVS has yet to find product-market fit; Friend.tech has not delivered the future of SocialFi; even Farcaster and Lens have seen a decline in interest.

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 in Ethereum or its L2 would lead to more revenue, better sentiment, and potentially higher growth.

2025 Predictions

• 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 argue that Ethereum does both poorly, while believers argue that it does both well enough. We believe that Ethereum does not have a 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.

• Fee is not a key driver: Although fees play an important role in network economics, they are not the main value driver of L1s such as Bitcoin, Ethereum, and Solana. Current fees are mostly dominated by speculative behavior, 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, these loose fundamentals can make Ethereum a "home" for 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 repeated above, and this section focuses on Solana's ecological progress

In the past 12 months, we have clearly seen that Solana's "comeback" is not a simple return after the collapse of FTX. The two-horse race between Bitcoin and Ethereum has now evolved into a situation where the three giants are in a tripartite situation. Looking forward to 2025, the Firedancer plan will be fully implemented to greatly increase the diversity of network customers. Additionally, the first Solana L2s are expected to launch in 2025.

Solana in 2024 is reminiscent of the early days of Ethereum. Solana ecosystem users have made a fortune this year, with projects such as Jupiter, Tensor, Kamino, Drift, and Parcl airdropping more than $1 billion to their communities. 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, the core DeFi 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 have broadened the design space for on-chain applications, from embedded wallets and Blink-powered URLs to upcoming mobile devices.

In addition, Solana has also become the focus in the DePIN field and the Memecoin craze.

Trends in 2025

• Beyond speculation and ecological 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, while 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’s worth pointing out that some of the pioneering AI agent applications are built on Solana, such as ai16z.

• TradFi Interest Grows: Shortly after the U.S. presidential election, VanEck, Bitwise, and 21Shares submitted SOL spot ETF applications, indicating a growing demand for SOL asset ETFs.

• Increasing Competition: While Solana has established a considerable lead in the high-throughput, general-purpose smart contract space, competitors are also preparing to move in. Sui and Aptos have performed strongly over 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 L1s & Infrastructure

High-Performance General-Purpose L1

• Last cycle’s newcomers Sui and Aptos have both surpassed $1 billion in TVL this year, demonstrating growing confidence among developers and users 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 mini-apps integrated directly into Telegram.

• Tron remains a strong player in payments, with nearly $60 billion in stablecoins in circulation.

Modular Building Blocks: Celestia and the Data Availability Layer

All the demand for data availability (DA) on Celestia comes from Ethereum Rollups, which are designed to reduce transaction costs, leading to the view that external data availability layers are just "alt-DA" for Ethereum. Coupled with the allocation of nearly $1 billion in unlocked funds to contributors and early supporters, on the surface, this year has been a down year for Celestia.

However, significant research breakthroughs and continued engineering progress have solidified Celestia's technical roadmap, clarifying the 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 verification layer, have the potential to build meaningful network effects for modular L1s 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 a healthy dose of DeFi, infrastructure, and consumer applications to the Celestia ecosystem.

A new generation of L2

• Applications are retiring 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 that they will join the Superchain program. Moreover, this trend is not limited to the Ethereum ecosystem. Solana-based platforms such as Zeta Markets and Grass are also exploring L2 prospects.

• 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, such progress will increase the power to convince developers to abandon EVM and embrace new paradigms in the coming year.

L2 design space continues to expand

This year, Optimistic EVM L2 (such as Base, Arbitrum, and OP Mainnet) continued to dominate in most indicators, maintaining their lead in adoption and activity. ZK Rollup, led by StarkNet and zkSync, lagged behind in adoption, but also achieved important interim results.

Next-generation L2s face stiff competition and require differentiated value propositions to break through. This has led 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, are focused 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 revenue for token holders.

We also expect alternative virtual machines (primarily Solana and Move VM) to continue to be sought after. However, it is too early to determine which L2 architecture will ultimately win in the long run.

Avalanche, Cosmos, and AppChains

Independent appchains have long been viewed as a “pipe dream” for researchers and developers that would be hard to achieve lasting success. However, Avalanche has bucked the trend and steadily developed into one of the strongest 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 over $1.5 billion and a stablecoin supply of over $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 ATOM’s value accumulation mechanism has also been questioned. However, there are some positive developments in Cosmos, for example, the cumulative issuance of USD cards by Noble, the Cosmos stablecoin issuance platform, has exceeded 1.5 billion US dollars.

Looking forward 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, it 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 decisions and failed coordination. However, this situation 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 interoperability field next year. And Espresso and other shared sorting infrastructures are another way to improve 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 astonishing rate. We are excited about many developments in this space, including Succinct’s decentralized proof network and RISC Zero’s unbounded protocol. A mature ZK stack will revolutionize scalability, privacy, interoperability, Bitcoin programmability, and even extend beyond blockchain applications.

Some predictions for the infrastructure space next year in 2025:

• ZK’s Breakout Year: ZK technology is on the verge of exponential growth. In 2025, with the cost of proof decreasing and performance continuing to improve, it is expected that almost all infrastructure protocols will adopt ZK technology.

• Mature Modular Ecosystem: High-performance, general-purpose smart contract chains 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 with 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.

• High-performance general-purpose chain competition intensifies: So far, the next batch of high-throughput general-purpose smart contract chains, led by Aptos and Sui, have gained momentum, mainly led by Solana. However, with the launch of new L1s such as Monad and Sonic, competition will be real. It is too early to tell, and L2s such as MegaETH, Eclipse, and Movement will also compete for market share in this field.

DeFi

DEX and Trading

In 2024, the trading volume of spot DEX exchanges increased slightly relative to CEX, 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: From January to November 2024, the total trading volume of spot DEX increased by 171% year-on-year. Over time, some of the newer DEXs have gained market share, while Uniswap, Pancakeswap, Curve, and other incumbents have suffered. The surge in Solana trading activity has driven the growth of Raydium, which now 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 volume share lead in the Base and Optimism markets was replaced by Aerodrome and Velodrome.

• Derivatives Trading: From January to November 2024, total volume on derivatives DEXs increased by 328% year-over-year, indicating a resumption of speculative activity as market conditions improve. Like spot DEXs, new perpetual DEXs are also gaining share in competition with dYdX. Hyperliquid was the clear winner in 2024, dominating the derivatives space with around 40% dominance at the end of the year. In addition, Perp DEXs on Solana, such as Jupiter and Drift Protocol, also grew their market share in 2024.

Prediction Markets and Trading Bots

This year, Polymarket has seen great success as a new type of cryptocurrency exchange, with monthly trading volumes exceeding $2 billion during the October and November elections. In addition, DEX trading bots such as Trojan, Bonkbot, and Maestro emerged in 2024 and quickly became the preferred method for many users to conduct on-chain transactions. Currently, these bots have an average daily trading volume of over $180 million.

Trend Prediction for 2025

• Base and Solana will continue to grow DEX trading volume: The two blockchains with the fastest trading volume growth in 2024 are Solana and Base. Solana's trading volume is mainly concentrated in Memecoin, while Base's trading 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 of vertical integration vs. composability. On one hand, protocols like Hyperliquid and Uniswap have transitioned to owning their own infrastructure; on the other, VCs like Multicoin are backing Solana-native applications like Drift. There is merit to both perspectives, 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 players 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 as the 2024 presidential election has concluded. We predict that volumes may decline compared to the trading months leading up to the election, but that Polymarket can continue to succeed in its core competency as the election catalyzes usage and mind share of its products. 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 (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 influence 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 Yield Strategies

In 2024, protocols that have not issued tokens will choose to launch points programs, and well-known protocols including EigenLayer, Ethena, and recently Hyperliquid have adopted this strategy. In addition, the points market, led by the Solana ecosystem Whales Market, has also gained widespread attention, allowing users to monetize points and pre-allocations.

In addition to points, Pendle relies on its integration with Liquidity Re-Pledge Tokens (LRT) and its connection to the EigenLayer Re-Pledge Points Program to become an important platform for interest rate derivatives, allowing users to separate principal and returns 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 like ether.fi and Kelp DAO to allow Pendle users to trade EigenLayer’s expected airdrop value through Yield Tokens (YTs). Within three weeks of launching its LRT-based pool, Pendle had already earned $200 million in TVL from these integrations, accounting for 40% of its total TVL by the end of the year.

We expect points programs to remain core to protocols designed to bootstrap user adoption through token distribution in 2025. But future points programs may be adjusted to align incentives with desired user behavior.

AI x Crypto

The convergence of AI and cryptocurrencies is undoubtedly one of the hottest new topics in 2024. Investments in the space exceeded $1 billion in 2024. In the open market, the total market value of AI-related protocols has grown from about $5 billion in October 2023 to more than $60 billion in early December. As for 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 forward to 2025, we expect Bittensor to upgrade through Dynamic TAO and become a cutting-edge artificial intelligence research center in the crypto field; in 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 shift their focus to fine-tuning smaller professional 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 artificial intelligence 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 gamer 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 capture the lion’s share of Memecoin transaction activity through 2025.

• DeSoc and SocialFi: The decentralized social space has experienced accelerated growth over the past year, continuing momentum from 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 falling sharply shortly after launch. In contrast, DeSoc platforms such as Farcaster and Lens saw higher adoption throughout the year.

• NFTs: Interest in NFTs was largely flat throughout 2024, with trading volumes continuing to decline after a brief uptick in the first quarter. However, some of the blue-chip projects in the space 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 line 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 the launch, cumulative net inflows have been steadily rising. Currently, Bitcoin ETFs hold a total of more than $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's 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 vigorous 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 expand 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 US$3.5 trillion, 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 the innovation of on-chain stablecoins. For example, Ethena's USDe has become the fastest stablecoin to reach a supply of $3 billion, while Maker has 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.