10 Predictions for 2024

Nine Purples and Fire Luck in Twenty Years will be good for Crypto in the long run.

Written by: IOBC Capital

Looking back on the past 2023, Crypto’s total market value has returned to US$1.7 trillion, with an annual growth of more than 110%. Cryptocurrency has passed the cyclical winter.

During this year, the cryptocurrency industry mainly had the following impressive events:

1. Binance reached a settlement with US regulators, and Crypto corporate compliance has become a mainstream trend;
2. The Bitcoin ecosystem leads the new paradigm of Fair Launch, mainly due to the feasibility brought by Taproot upgrade.
3. Ethereum’s LSD/LSDFi defines the “risk-free return” of the cryptocurrency industry, and the ETH Staking return positioning is similar to the “Crypto Treasury Bond return”;
4. Layer2 gradually takes over the Ethereum ecological DApps. Currently, Layer2’s TVL has reached 20B, which is close to Ethereum’s 29B;
5. Solana has once again become a hot topic, and the Solana ecosystem has once again attracted market attention with DePIN and MEME projects;
6. RWA income has become the ballast stone for the profit source of DeFi lending protocols. For MakerDAO, the most profitable DeFi protocol, 58.1% of Revenues come from RWA (mainly TBills).

2024 is the Year of the Jiachen Dragon, and the Beginning of Spring is on February 4. Starting from this day, the twenty-year Nine Purple Fire Luck officially begins, which will be good for Crypto in the long run.

IOBC Capital believes that there may be the following 10 major development trends in 2024:

1. After the Bitcoin spot ETF is approved, it may bring in 30B+ incremental funds

The listing of Bitcoin spot ETF will not only bring potential investors from the mainstream stock markets of Nasdaq, New York Stock Exchange and CBOE, but also facilitate the entry of more institutions. Combined with the management scale of existing Bitcoin-related products on the market, it is conservatively predicted that Bitcoin spot ETF will bring 30B+ incremental funds.

2. The total market value of Inscriptions in the Bitcoin ecosystem may reach 20B+, and only the top MEME of the real Fair Launch has a mid- to long-term consensus

Fair Launch is the core engine in the early stages of every previous Crypto bull market. The inscriptions of the Bitcoin ecology are classified according to asset issuance protocols such as Ordinals, Atomics, Runes, PIPE, Taproot Assets, etc. I will not go into details about the differences and advantages and disadvantages of these protocols here. Looking at these inscriptions in the early stage from the perspective of MEME currency, the only There is a mid- to long-term consensus on the top MEME of a true Fair Launch.

3. Bitcoin Layer2 will usher in rapid development, which will benefit the Bitcoin ecological application Infra

Since ordinals NFT and BRC20 have received widespread attention from the market, there have been many Bitcoin Layer2 financing projects in the second half of 2023 - some use client verification methods, which may be more Bitcoin Native; some use the Rollup method, based on the many years of Ethereum Rollup development, may develop more rapidly.

The development of the Bitcoin ecosystem and its layer 2 is conducive to the infrastructure of the Bitcoin ecosystem. For example: Bitcoin ecological wallet Xverse, etc.; Bitcoin Layer2 Lightec and its zkBridge and WrapBTC, etc.

4. Ethereum Layer2 TVL will surpass Ethereum Layer1 and may reach 100B+

The TVL of Ethereum Layer1 is mainly contributed by the LST protocol. As of now, more than 28.6 million ETH have been pledged. Because of the liquidity staking protocols such as Lido (stETH) and Alluvial (LsETH), the liquidity of Staked ETH has been released again, resulting in more LST-based use cases, such as perpetual contracts and ReStaking that use LST assets as collateral. . Effectively improves the capital utilization rate of ETH.

As various Layer2 projects have launched their mainnets one after another, various dApps have migrated their main battlefield from Ethereum Layer1 to Layer2, which has lower gas fees and faster speeds. The TVL of Layer2 may be higher than Layer1 in 2024.

5. The TVL volume of ZK Rollup is still unable to match that of Optimistic Rollup, but the zk class modular combination of Ethereum Layer2 Components will become more complete

The development of ZK Rollups and its supporting components is becoming more and more refined. In the past year or two, various zk projects focusing on specific vertical segments have emerged, such as ZK co-processor, proof marketplaces/ZKProver (Risczero), zkDevOps, Hardware Accelerators (Ingonyama), zkOracle (Hyper Oracle), etc.

The trend of modular combination of zk-like Components helps lower the threshold for developers to build zkDApps and provides greater flexibility.

6. Layerzero will issue coins in the first half of the year and is expected to ignite the Omnichain track

Layerzero already supports 54 chains, with more than 96 million cross-chain Messages occurring in total, and the number of full-chain Applications in the ecosystem exceeds 35,000.

According to the official Twitter account of Layerzero, the currency will be issued in the first half of 2024, which is expected to ignite the market on the Omnichain track.

7. The new narrative of Parallel EVM will drive the secondary growth of chains such as Sei v2

Parallel EVM is a way to make blockchain networks faster and more efficient by running multiple (non-interfering) transactions simultaneously.

There are currently several major projects trying to use Parallel EVM. Taking Sei Network as an example, Sei v2 proposes a major upgrade of parallel EVM. Sei v2 will create a new component to support EVM smart contracts. These EVM smart contracts can also interact with existing Cosmwasm smart contracts. The Sei v2 chain will optimistically run all transactions in parallel. When there are conflicting transactions (that interfere with each other), the Sei blockchain will keep track of which parts of storage each transaction touches. Transactions involving different parts of storage will be re-run in parallel, involving the same state. The transactions are re-run in sequence.

In addition to Sei v2, projects such as Neon EVM and Nomad are also using Parallel EVM to improve performance. At the same time, EVM is still the most popular DApp environment. These chains support Parallel EVM and can enjoy many infrastructure tools of the EVM ecosystem.

8. DePIN’s market size may increase 10 times

DePIN is an indispensable infrastructure for realizing the true meaning of Web3. It is the security fortress of Web3 and Crypto projects for the robustness of Web3 network.

According to Depinscan statistics, the current Market Cap of the DePIN sector is approximately US$62 billion, and there is still a lot of room for growth. Among them, the Solana ecosystem has several projects on the DePIN track that have attracted market attention, including Helium, Render Network, Hivemapper, Shadow, Media, etc.

9. There may be popular Autonomous World / Fully onchain games with strong social attributes

The FT/NFT assets, state storage, and logic execution of the full-chain game are all on the chain, and have the characteristics of decentralization/community autonomy, no permission, and composability. Compared with traditional games and non-full-chain games, there are two key advantages: first, players’ game assets are long-term and safe; second, the game mechanism is transparent and credible.

The game itself is lightweight, but Fully on chain games with strong social attributes and high playability may have a small explosion, and may attract market attention with social fission and gambling features.

10. There will be star cases where AI and Crypto are integrated in multiple application scenarios

The integration of the most advanced productive forces and the fairest production relations will jointly shape a new way of life for mankind in the future. In 2024, there may be two combination scenarios of AI and Crypto:

Using Bitcoin as the payment currency for AI may be the basic rule of the future AI world. Set up AI Agent/AI Bot to automatically perform various tasks and access various resources. In the process, cryptographic infrastructure and BTC are used for automated payments.

Use ZKML for sensitive data training and machine learning model evaluation. ZK is used to solve the privacy protection problem of AI model/input and the verification problem of the reasoning process, thereby ensuring the correctness of machine learning reasoning. This supports smart contracts to securely schedule AI Models based on ZKML, thereby supporting more application logic and scenario exploration.