2023 Crypto Market Review and 2024 Outlook

Infrastructure

In 2023, the infrastructure is experiencing an explosion, showing a situation where various solutions and technological routes are intertwined. It mainly focuses on three key points: faster transaction speeds, more decentralized forms, and more secure architectures, with the ultimate goal of creating a more user-friendly encryption network.

Infrastructure topics worth revisiting:

1. Ethereum Development Roadmap

   • Completed the Shanghai upgrade, allowing stakers to withdraw ETH and rewards
   • The Cancun upgrade is expected to be executed in Q1 2024, introducing EIP-4844.
   • Develop in the direction of Layer 2 as the main execution layer.

2. Layer 2 Summer

   • The overall TVL of Layer2 has increased nearly threefold.
   • Arbitrum and Optimism hold a major market share
   • Promote ecological growth through airdrops and token incentives
   • Blast has attracted attention as a new Layer2.

3. Modular Technology

   • Development of modular blockchains such as Mantle and Celestia.
   • Provide greater freedom and customization
   • Complexity and security issues need to be addressed.

4. Current Status of Application Chains

   • dYdX V4 mainnet launched, transitioning from application to application chain
   • The Cosmos ecosystem has more than 70 application chains.
   • Application chains face challenges such as liquidity isolation and security.

5. Account Abstraction

   • EIP-4337 promotes the development of smart contract wallets
   • There are nearly 1.4 million accounts created based on EIP-4337.
   • Layer2 is a good soil for the development of account abstraction.

DeFi

The overall DeFi in 2023 shows a stable development trend. LSD and RWA bring new attention to DeFi.

1. Current Status of DeFi Protocols

   • Total locked value of 47 billion dollars, up 23.6% year-on-year
   • Ethereum accounts for 56%, TRON accounts for 16%
   • Lido, Maker, and Justlend rank in the top three

2. Real World Assets ( RWA )

   • MakerDAO's U.S. Treasury RWA scale reaches $2.8 billion
   • Avalanche develops RWA ecosystem
   • It is necessary to improve off-chain infrastructure and regulation.

3. Decentralized Stablecoin

   • There are over 120 types of stablecoins issued with over-collateralization in the crypto market.
   • Native decentralized stablecoins issued by Curve and AAVE, etc.
   • Facing challenges but hopeful to reduce reliance on USDT and USDC

Bitcoin Track

Bitcoin is showing strong momentum again, with the market presenting bullish signals. Contributing factors include:

1. Favorable macro environment
2. Institutional capital inflow expectations
3. Upcoming halving event
4. Bitcoin ecosystem innovation breakthroughs

Key areas of the Bitcoin ecosystem:

• Developer SDK and Market
• ZK Rollups
• EVM L2/Scalability Solutions
• Sidechain
• Staking

SocialFi track

In 2023, the SocialFi sector has seen good development, with major projects accumulating nearly 4 million wallet interactions.

Main development direction:

1. Social Infrastructure

   • Such as Galxe, Lens, CyberConnect, etc.
   • As a traffic entrance for the Web3 SocialFi track

2. Social Dapp

   • Including various types such as post forums, fan platforms, video streaming, etc.
   • Projects like Friend.Tech have achieved good results.

3. Social Robots

   • Mainly includes trading bots, harvesting bots, and Q&A bots
   • Such as Unibot, Banana Bot, etc.

The SocialFi sector is in the early to mid-development stage, and it is expected that concentrated projects will mature and a wave of token issuance will occur in 2024.

GameFi

The overall performance of GameFi in 2023 is stable:

• The number of on-chain game contracts exceeds 2600
• The circulating market value of issued token projects exceeds 6.5 billion USD.
• Daily active addresses exceed 1 million

Main trends:

• 3A games and full-chain games have become key development directions.
• The next bull market may focus more on the long-term entertainment attributes of games.
• Expected to achieve a breakthrough in user access thresholds.

2024 Outlook

Key Trends:

1. Trading Innovation: The emergence of mature trading bots and new trading infrastructure
2. Layer 2 Evolution: The Cancun Upgrade Drives Competition for Layer 2 Solutions
3. Web3 and X-Fi Dynamics: Social and Gaming Elements Further Integrated into the crypto market
4. Integration with Traditional Finance: The Discussion on Bitcoin ETFs and RWAs Continues to Heat Up

Overall, the industry remains optimistic about 2024, anticipating that these trends will foster new developments and opportunities.