IOBC Capital: 10 Predictions for 2024
Looking back at 2023, the total market value of crypto has returned to $1.7 trillion, with an annual growth of over 110%. Cryptocurrencies have weathered the cyclical winter.Author: IOBC Capital
Looking back at 2023, the total market capitalization of Crypto has returned to $1.7 trillion, with an annual growth of over 110%. The cryptocurrency market has weathered the cyclical winter.
In this year, the cryptocurrency industry has seen several impressive events:
Binance reached a settlement with U.S. regulators, making compliance for Crypto enterprises a mainstream trend;
The Bitcoin ecosystem led the new paradigm of Fair Launch for inscriptions, primarily due to the feasibility brought by the Taproot upgrade.
Ethereum's LSD/LSDFi defined "risk-free yield" in the cryptocurrency industry, with ETH Staking yields positioned similarly to "Crypto treasury yields";
Layer 2 gradually took over Ethereum ecosystem DApps, with the current Layer 2 TVL reaching $20B, close to Ethereum's $29B;
Solana has once again become a hot topic, with its ecosystem attracting market attention through DePIN and MEME projects;
RWA yields have become a ballast for the profitability of DeFi lending protocols, with the most profitable DeFi protocol MakerDAO deriving 58.1% of its revenues from RWA (mainly TBills).
2024 is the Year of the Dragon, starting from February 4, marking the official beginning of the twenty-year Nine Purple Li Fire cycle, which is long-term bullish for Crypto.
IOBC Capital believes that there may be the following 10 development trends in 2024:
1. Approval of Bitcoin Spot ETF may bring in over $30B in incremental funds
The launch of a Bitcoin Spot ETF will not only attract potential investors from mainstream stock markets like Nasdaq, NYSE, and CBOE but also facilitate the entry of more institutions. Based on the existing management scale of Bitcoin-related products in the market, a conservative estimate suggests that the Bitcoin Spot ETF could bring in over $30B in incremental funds.
2. The total market capitalization of inscriptions in the Bitcoin ecosystem may reach over $20B, with only truly Fair Launch top MEMEs having medium to long-term consensus
Fair Launch has been the core engine in the early stages of every previous Crypto bull market. Inscriptions in the Bitcoin ecosystem are categorized by asset issuance protocols such as Ordinals, Atomicals, Runes, PIPE, and Taproot Assets. Without delving into the differences and pros and cons of these protocols, from the perspective of MEME coins, only truly Fair Launch top MEMEs have medium to long-term consensus in the early stages.
3. Bitcoin Layer 2 will experience rapid development, benefiting Bitcoin ecosystem application infrastructure
Since ordinals NFTs and BRC20 gained widespread market attention, many Bitcoin Layer 2 financing projects have emerged in the second half of 2023—some adopting client verification methods, which may be more Bitcoin Native; others using Rollup methods, which may develop more rapidly based on years of development in Ethereum Rollups.
The development of the Bitcoin ecosystem and its Layer 2 is beneficial for the infrastructure of the Bitcoin ecosystem. For example: Bitcoin ecosystem wallets like Xverse; Bitcoin Layer 2 Lightec and its zkBridge and WrapBTC.
4. Ethereum Layer 2 TVL will surpass Ethereum Layer 1, potentially reaching over $100B
The TVL of Ethereum Layer 1 is mainly contributed by LST protocols. As of now, over 28.6 million ETH have been staked. With liquid staking protocols like Lido (stETH) and Alluvial (LsETH), the liquidity of Staked ETH has been re-released, leading to more use cases based on LST assets, such as perpetual contracts and ReStaking. This effectively improves the capital utilization of ETH.
As various Layer 2 projects launch on mainnet, various dApps are migrating their main battlefield from Ethereum Layer 1 to Layer 2, which has lower gas fees and faster speeds. In 2024, the TVL of Layer 2 may exceed that of Layer 1.
5. The TVL of ZK Rollup still cannot compete with Optimistic Rollup, but the zk modular components of Ethereum Layer 2 will become more complete
The development of ZK Rollups and their supporting components is becoming increasingly refined. In the past year or two, various zk projects focusing on specific vertical segments have emerged, such as ZK co-processors, proof marketplaces/ZKProver (Risczero), zkDevOps, Hardware Accelerators (Ingonyama), and zkOracles (Hyper Oracle).
The trend of zk component modularization helps lower the barrier for developers to build zkDApps and provides greater flexibility.
6. Layerzero will launch its token in the first half of the year, likely igniting the Omnichain track
Layerzero has supported 54 chains, with over 96 million cross-chain messages sent, and the number of applications within its ecosystem exceeding 35,000.
According to Layerzero's official Twitter account, it will launch its token in the first half of 2024, likely igniting market activity in the Omnichain track.
7. The new narrative of Parallel EVM will drive secondary growth for chains like Sei v2
Parallel EVM is a method to make blockchain networks faster and more efficient by running multiple (non-interfering) transactions simultaneously.
Currently, several projects are attempting to use Parallel EVM. For example, Sei Network's Sei v2 proposes significant upgrades to Parallel EVM, creating a new component to support EVM smart contracts, which can also interact with existing Cosmwasm smart contracts. The Sei v2 chain will optimistically run all transactions in parallel, and in the case of conflicting transactions (interfering with each other), the Sei blockchain will track the storage parts touched by each transaction, re-running transactions involving different storage parts in parallel, while transactions involving the same state will be re-run sequentially.
In addition to Sei v2, other projects like Neon EVM and Nomad are also adopting Parallel EVM to enhance performance. Meanwhile, EVM remains the most popular DApp environment, and these chains supporting Parallel EVM can enjoy many foundational infrastructure tools from the EVM ecosystem.
8. The market size of DePIN may grow tenfold
DePIN is an essential infrastructure for achieving true Web3, serving as a security fortress for the robustness of Web3 and Crypto projects.
According to Depinscan statistics, the current market cap of the DePIN sector is approximately $62 billion, indicating significant growth potential. Among them, the Solana ecosystem has several projects in the DePIN track that are gaining market attention, including Helium, Render Network, Hivemapper, Shadow, and Media.
9. There may emerge popular Autonomous World / Fully on-chain games with strong social attributes
Fully on-chain games have FT/NFT assets, state storage, and logic execution all on-chain, featuring decentralization/community autonomy, permissionless access, and composability. Compared to traditional games and non-fully on-chain games, they have two key advantages: first, players' game assets exist long-term and are secure; second, the game mechanisms are transparent and trustworthy.
While the games themselves may be lightweight, Fully on-chain games with strong social attributes and high playability may experience small bursts of popularity, potentially attracting market attention through social fission and gambling characteristics.
10. Star cases of AI and Crypto integration may emerge in multiple application scenarios
The integration of the most advanced productive forces with the most equitable production relations will jointly shape a new way of life for humanity. In 2024, AI and Crypto may present two combined scenarios:
Using Bitcoin as the payment currency for AI may become a fundamental rule in the future AI world. Setting up AI Agents / AI Bots to automatically perform various tasks and access various resources, utilizing crypto infrastructure and BTC for automated payments in the process.
Employing ZKML for sensitive data training and machine learning model evaluation. Using zk to address privacy protection issues of AI models/inputs and verifiability of inference processes, thereby ensuring the correctness of machine learning inference. This will support smart contracts to safely schedule AI Models based on ZKML, further enabling more application logic and scenario exploration.
