2024 Crypto Assets Market Overview: Bitcoin ETF Approved, Rise of Layer 2, Solana Ecosystem Explosion

1. Market Overview

I.1 Fundamentals of the Cryptocurrency Market

In 2024, the total market capitalization of the cryptocurrency market increased from $2.31 trillion to $3.33 trillion, a growth of 44.2%. This growth is attributed to key events such as the approval of spot Bitcoin ETFs and Trump's election victory. Bitcoin's dominance rose to 56.8%, mainly due to the doubling of ETF asset sizes. Ethereum ETFs performed relatively flat, with a clear preference for Bitcoin among institutions. Solana performed well, with a price increase of 29.3% and a net inflow of $2 billion into its ecosystem.

The DeFi market share has expanded, with the total locked value doubling. The DEX/CEX trading volume ratio has increased to 11.05%, with an annual trading volume reaching $2.67 trillion. Solana and Base have both doubled their DeFi TVL market shares, reaching 7.17% and 3%, respectively.

Stablecoins have accelerated, with a market capitalization growth of 26.8%, surpassing $205 billion. New entrants like Ethena are driving this trend. The potential approval of ETFs for XRP and SOL in the future will have a positive impact.

I.2 Macroeconomic Environment and Politics

Politics

Trump is elected president of the United States again, and the Republican Party wins control of Congress. Trump's policies may bring uncertainty to the international situation. Whether his crypto-friendly stance can be implemented remains to be seen.

Europe is affected by the Russia-Ukraine war, and the discourse power of right-wing parties is strengthening. Crypto policies are largely in a follow-up state, and the MiCA legislation has clarified the regulatory framework.

The situation in the Middle East is tense, and the conflict between Israel and Hamas is entering its final stages. Many countries in South America are advancing the legalization of crypto.

Economy

In 2024, the global GDP growth rate is 2.6%, and the inflation rate is 2.5%. The U.S. economy lands steadily, with inflation under control. The Eurozone experiences slow growth due to the impact of geopolitical conflicts. China faces challenges such as sluggish consumption and export obstacles. Emerging market countries are affected by the U.S. dollar's interest rate hikes.

The US stock market performed strongly, with all three major indexes rising significantly. AI technology companies stood out, disrupting multiple sectors. The Nikkei index reached a 30-year high, boosted by carry trades and export advantages.

2. Bitcoin

2.1 Product and Agreement Design

In the second half of 2024, Bitcoin will have important software upgrades, such as Bitcoin Core 28.0 and the Lightning Network BOLT12. There are disagreements within the community regarding soft fork proposals, such as OP_CTV and OP_CAT. The BitVM implementation is making steady progress, focusing on cross-chain bridge design.

2.2 Layer 2 - Lightning Network

The number of Lightning Network channels is stable, with a total of about 5000 BTC. The number of nodes is stable, but the number of channels is decreasing, possibly due to liquidity concentration or security updates. BOLT12 is widely adopted, supporting static payments. Some Layer 1 networks are developing Layer 2 solutions compatible with the BOLT specifications.

2.3 Layer 2 - Side Chains

Layer 2 sidechains show mixed performance. BTCFi faces challenges such as unsustainable TVL surges and airdrop incentives. The key to success lies in asset security and vertical integration strategy.

On-chain Assets

BRC20, Runes and other meta-protocol assets have performed poorly. RGB is being promoted, integrated with the Lightning Network. Taproot Assets are launched by Lightning Labs, and Tether will issue stablecoins based on it.

2.5 BTCFi

The value growth of BTCFi locked assets. Staking and liquid staking have become mainstream yield methods. Babylon attracts a large amount of TVL. LST projects are emerging, drawing on mature DeFi designs. Projects like Yala utilize Bitcoin's native infrastructure.

3. Ethereum

The performance of the ETH ETF was below expectations, and the ETH/BTC ratio has decreased. Layer 2 gas fees are lower than Ethereum, leading to capital inflow into Layer 2 projects. EVM remains the dominant virtual machine, with MegaETH and Monad highly anticipated.

3.1 L2s

After the Dencun upgrade, rollups transaction fees decreased by over 90%. Base, OP Mainnet, and Arbitrum achieved significant net inflows. Daily trading volume on Layer 2 grew by 325%. Base stood out for its consumer experience and strategic partnerships. Arbitrum launched Stylus to enhance development flexibility. OP Superchain continues to grow, accounting for over 56% of all L2 trading volume.

3.2 Re-staking

The amount of staked Ethereum has increased, and the yield has decreased to 3%. Re-staking protocols like Eigenlayer are attracting a large TVL. Symbiotic TVL has grown more than 5 times. In the future, pay attention to the introduction of reduction mechanisms and the balance of flexibility.

3.3 Future Roadmap of Ethereum and EIP Proposals

The Pectra upgrade plan will be completed in Q1 2025, including key EIPs such as expanding Blobs capacity, EOA smart contract functionality, and optimizing validator management. The long-term roadmap goal is to introduce zk proofs and post-quantum cryptography by 2029.

4. Solana

Solana price increased by 75%, with the SOL/ETH ratio rising. DeFi developments include the launch of cbBTC and PYUSD incentives. The market cap of stablecoins has grown more than threefold, reaching $5.1 billion. The number of developers has surpassed Ethereum for the first time. Institutional adoption has increased significantly.

DePIN

Top projects like Helium and Render Network are migrating to Solana. In 2024, a large number of new DePIN projects will emerge, such as Hivemapper and Cudis.

Meme

2024 is referred to as the year of Memecoin. Pump.fun has successfully launched, contributing significant trading volume with multiple memecoins. Analytical tools like GMGN.ai have emerged.

PayFi

Solana Pay, as an important infrastructure, collaborates with Shopify and VISA. The goal is to create a new era of payments and commerce.

Looking to the Future

Firedancer activation will further enhance network performance. The Solana plugin offers more flexible token issuance. Factors such as ETF approval potential, stablecoin growth, and institutional adoption will drive ecosystem development.

5. Alt-L1s

Berachain

Introducing a liquidity proof mechanism, the BeaconKit modular consensus client is EVM compatible. Before launch, the TVL exceeded $1.5 billion, and after launch, it soared to become the eighth largest network.

TON

Rapid growth leveraging the Telegram user base. Daily active users increased to 293,539, and DeFi TVL grew over 10 times. Future growth relies on collaboration with Telegram and innovative user acquisition channels.

Kaia

Merged from Klaytn and Finschia, integrating LINE and KakaoTalk. Provides account abstraction, gas fee delegation, and other optimization measures. Launched the Kaia Wave program to promote ecological development.

Move

The Move ecosystem has grown to over 1,500 developers. Sui leads Aptos in several metrics. The market capitalization of Sui's stablecoin has significantly increased, and DeFi activity is vibrant. Aptos focuses more on institutional directions such as RWA tokenization.

MegaETH

Possesses high throughput and millisecond block times. Optimizes performance through node specialization. Focus on its competition with Monad and Solana.

Monad

Implement optimistic parallel transaction execution, integrate MonadDB to optimize data storage. Support asynchronous I/O to improve throughput. The foundation actively supports ecological development.

6. Other Tracks

6.1 Meme

The overall increase in the Meme track is 218%. Ethereum, Base, and Solana are the three most active public chains. Pump.fun's launch has become a milestone.

6.2 AI

AI development in the crypto field encompasses upstream and downstream. Agents are expected to explode in the second half of the year, and the Virtuals Protocol has successfully transformed. Development frameworks such as ElizaOS and RIG framework have emerged.

6.3 RWA

The RWA market value has increased by 63%, reaching $13.67 billion. Private credit and US Treasury bonds are the main asset classes. Institutional participation has risen, and public chains have become a popular choice.

6.4 Trading Robot

Market competition is intensifying. Emerging bots like Trojan and GMGN.AI are rising, while traditional bots like Maestro and Unibot are losing market share.

6.5 DeSci

Nearly 100 DeSci projects are distributed across fields such as biotechnology and space. They still face challenges such as insufficient funding and legal risks.

6.6 DePIN

The total market value of DePIN has reached 50 billion USD, with the number of projects increasing to 295. Sub-sectors such as energy networks, wireless networks, geospatial networks, and computing networks are worth paying attention to.

6.8 Game

The daily active wallets exceed 7.6 million. opBNB, Ronin, and others are the main gaming chains. Financing remains challenging, but the industry shows resilience. There is optimism for games with diversified distribution channels and unique gameplay.