Market Overview

1.1 Crypto Market Fundamentals

Since the first half of 2024, the crypto market has experienced remarkable growth, with its total market capitalization surging by 44.2%, from $2.31 trillion to $3.33 trillion. This growth has been underpinned by key milestones, including the approval of spot BTC and ETH ETFs in 1H 2024 as well as the landslide election victory of Donald Trump in 2H 2024, whose deregulatory agenda and pro-crypto policies have fueled optimism in the industry. Bitcoin’s dominance has risen from 53.4% in 1H 2024 to 56.5% in 2H 2024, as assets under management (AUM) of Bitcoin ETFs more than doubled, reflecting heightened institutional interest. Despite the launch of ETH ETFs in 2H 2024, their relatively muted performance compared to BTC ETFs highlighted institutional investors’ continued preference for Bitcoin, as evidenced by the declining ETH/BTC ratio. Solana also stood out for its strong performance, with SOL price increasing by 29.3% from 1H 2024.

Alongside the price increase, Solana recorded a $2B net inflow into its ecosystem in 2024, driven by record DeFi activity. In 2024, DeFi expanded its market share, with TVL more than doubling since the start of the year. DEX/CEX volume grew from 9.37% at the start of the year and ended at 11.05% as trading volume grew significantly to an annualized value of $2.67T driven by the deeper liquidity and established branding seen in DEXs on Solana and Base, among others. The more seamless listing procedures also encouraged more projects to pivot to a DEX-first approach, which supports a wider variety of long-tail assets for trading. Notably, Solana and Base more than doubled their DeFi TVL market share to 7.17% and 3% respectively in 2024. Stablecoins, often regarded as crypto’s “killer app,” have also seen accelerated adoption, with market capitalization growing by 26.8% to an all-time high of over $205 billion, bolstered by new entrants like Ethena offering competitive yields. Looking ahead, potential ETF approvals for other institutional favorites such as XRP and SOL are positive catalysts for the market.

1.2 Macro and Politics

Politics

The American political landscape has changed. In the November 2024 general election, Trump defeated Harris and was re-elected as president, while the Republican Party won a majority in both the House and the Senate. This time, the Trump administration will have greater influence and stronger executive power. Trump’s “America First” and isolationist policies are likely to bring significant uncertainty to international affairs, prompting other countries to follow the U.S. example by adopting trade protectionism and regionalizing economic trade. During his campaign, Trump put forward very crypto-friendly policies, declaring that he would allow self-custody wallets, vigorously develop US dollar stablecoins, appoint pro-crypto economic and political figures, and even consider designating BTC as a national treasury reserve asset. However, whether these measures will truly drive the development of the crypto market will depend on the actual policies implemented once he takes office.

Europe is primarily affected by the Russia–Ukraine war. At present, the conflict appears to be in a prolonged stalemate that could last for some time, potentially driving up energy prices across Europe. At the same time, the war has led European countries to increase their military spending. Politically, right-wing parties have gained significant influence. In the Netherlands, the far-right Party for Freedom has become the largest party in the lower house; in Germany, the Choice Party came in second in the European Parliament elections, surpassing the ruling Social Democratic Party. Additionally, right-wing parties play important roles in governments in Italy, Finland, the Czech Republic, Slovakia, and others. Influenced by the United States, issues such as restricting illegal immigration and pursuing economic isolation have also become key topics in many European countries. In the crypto market, European policies have largely been reactive. The Crypto-Asset Markets Regulation (MiCA), which will be officially implemented at the end of 2024, clearly outlines regulatory measures for stablecoins and crypto entities, while European nations continue to enforce strict oversight over crypto taxation.

Other Regional Geopolitics

In the Middle East, conflict continues unabated. Last year, Hamas launched a large-scale terrorist attack against Israel, followed by Israel conducting a series of operations in the Gaza Strip, decapitating several senior Hamas leaders as the situation began to wind down. At the same time, friction and armed clashes broke out between Israel and both Iran and Lebanon, and the Syrian civil war led to the downfall of the Assad regime.

In South America, Argentina’s Milai came to power and implemented sweeping reforms — eliminating numerous government departments and dollarizing the currency — which yielded some success by reducing the nation’s overall inflation rate. Against a backdrop of poor macroeconomic conditions, many South American countries and regions have become proponents of Bitcoin, with Argentina, Brazil, El Salvador, and others advancing legislation to allow crypto to be legally regulated and traded.

Economy

In 2024, the global GDP grew by 2.6% overall, and the inflation rate was 2.5%. Overall, the global economy has rebounded from the COVID-19 recession, returning to pre-pandemic growth levels. In the United States, after a two-year cycle of rate hikes, inflation was finally partially controlled, and beginning in September 2024, the Federal Reserve lowered rates by 25 basis points in three consecutive meetings. Inflation now seems to be under control, with the economy on track for a soft landing.

The Eurozone was more affected by geopolitical conflicts, which led to soaring energy prices. Moreover, the European Central Bank, forced to raise its rates to cope with the high U.S. interest rates, also contributed to sluggish economic growth. China and emerging market countries continued to maintain relatively high growth rates, but both faced considerable challenges. In China, weak domestic consumption and export resistance have pushed the economy into a deflationary state, accompanied by rising unemployment and difficulties in business operations.

Furthermore, the bursting of the real estate bubble has led to significant risks from related debts and bad loans. Markets in emerging countries, impacted by U.S. rate hikes, have seen severe depreciation of their local currencies in some cases.

Looking at the development of the U.S. economy in 2024, it still holds a leading position in the world. All three major U.S. indices rose significantly, with the Nasdaq — dominated by technology companies — rising by more than 28%, and the S&P 500 up by 15.2%. Throughout the year, the United States was engaged in a long-term battle against inflation, and despite extremely tight liquidity conditions, technology companies demonstrated remarkable growth potential. AI technology companies, led by Nvidia, delivered the most impressive performance this year, and the development of AI has lived up to investors’ expectations. Large AI models, exemplified by ChatGPT, have disrupted various fields including professional work, education, and artistic creation, exponentially boosting productivity. Moreover, with the continuous improvement in computing power, AI will be applied in even more areas.

Another standout performance is seen in the Nikkei index. During the global rate-hiking cycle, the yen’s 0% interest rate attracted international investors to the Japanese stock market for carry trades. This, in turn, pushed up Japanese stock prices and contributed to the depreciation of the yen. The combination of capital inflows and the export advantage brought by the weakened yen enhanced the profitability of Japanese companies, leading to the Japanese stock market hitting new highs for the first time in over 30 years since the burst of the bubble.

Bitcoin

Products & Protocol Designs

In the latter half of 2024, Bitcoin introduced notable software enhancements, such as the flexible transaction relaying strategy in Bitcoin Core 28.0 and BOLT12 of the Lightning Network. These client upgrades could influence various applications. For instance, Bitcoin Core’s implementation of V3 transactions now enables zero-fee transaction relaying, potentially affecting the development of MEV-related business models utilized by mining pools.

Discussions about the design of the Bitcoin protocol layer are also ongoing, with a key focus on soft fork proposals. Many developers do not agree with each other, as evidenced by the OP_NEXT summit at the end of 2024 and subsequent discussions. Currently, these discussions can be broadly categorized into several groups: introducing new opcodes like OP_CTV and OP_CAT to enable covenants and other flexible functionalities; LNHANCE, which enhances the Lightning Network with a packaged toolset; and a more ambitious faction of developers advocating for the “Great Script Restoration” movement.

Consensus has yet to be reached in the ongoing discussions. Some discussions focus on whether some upgrades are too focused on certain areas and lack versatility (OP_CTV), while others focus on the fact that some proposals may be too flexible (OP_CAT), which may lead to unintended usage such as recursive restrictions, causing unintended risks at the protocol layer. At the same time, some developers also advocate for consensus cleanup first, rather than functional upgrades.

Discussions on the proposals primarily take place on mailing lists, supplemented by a feedback form to gather input from developers across diverse backgrounds. Additionally, several studies have been conducted to analyze transactions related to the soft fork proposals currently active on the signet.

However, heated discussions during the activation of future soft forks can still be expected, similar to the previous Taproot soft fork upgrade. In 2025, we can expect to see some form of consensus and development.

Another previously widely discussed implementation relating to BitVM, is still progressing. Similar to the previous report, the current focus is on the design and implementation of cross-chain bridges. Recently, some test versions of cross-chain bridges based on BitVM have yielded positive results, with upcoming comprehensive code audit and end-to-end implementation expected soon, showcased by BitLayer and others.

Layer 2 — Lightning Network

The number of LN channels with public access has not changed much, and the total Bitcoin capacity is still around 5,000 BTC. The number of nodes has not changed much, but the number of channels has continued to decrease. This may indicate that the liquidity of the Lightning Network is gradually being concentrated among some large node service providers, or that some early channels have been closed due to security patch updates. However, the Lightning Network’s protocol and application ecology are still developing. For example, BOLT12 (offer) has been adopted by many clients, which can support static payment methods to improve the user experience.

Furthermore, certain Layer 1 networks, such as Nervos CKB and others, are actively developing Layer 2 solutions that align with the BOLT specification, enabling compatibility and interoperability with the Lightning Network.

In this sector, the emphasis remains on evaluating the viability of business models. Since token issuance is not typically employed as a fundraising mechanism or integrated into business operations, investment and financing decisions must place greater emphasis on project performance metrics, such as user numbers and asset volume.

As the payment sector continues to attract increasing attention, the Lightning Network’s ability to support payment services positions it as a promising solution for broader adoption. Service-oriented projects providing Lightning Network as a settlement layer for cross-border, P2P, B2B transactions such as Breez Technology, are likely to gain traction. Future developments in this field depend on having more stablecoins being issued on the Lightning Network. Possible approaches include RGB and Taproot Assets mentioned below.

Layer 2 — Side Chains

The performance of Layer 2 side chain is mixed. Some projects have declined from their peak, while others continue to grow. As seen in the figure below, there is also a clear alternation of the respective L2 TVL.

The challenges facing Bitcoin Layer 2 (L2) and BTCFi are multifaceted, with one key issue being relying on unsustainable TVL surges and airdrop incentives. Although approaches like using points to incentivize TVL have yielded initial success, the critical factor remains the creation of a robust ecosystem to ensure lasting liquidity. A primary driver for Bitcoin deposits into L2 solutions is the opportunity to earn Bitcoin-denominated, low-risk returns. However, in terms of the combinability of assets, BTCFi can achieve better liquidity abstraction and protocol layer stacking by leveraging existing infrastructure. If the Bitcoin L2 can focus on building an ecosystem around increasing the utility of BTCFi instead of simply replicating the EVM chain, there will still be good room for growth.

Therefore, the key to Bitcoin L2 success remains: 1) ensuring asset security (third-party custody or self-custody), and 2) pursuing vertical integration strategies (which can better serve BTCFi).

Onchain Assets

The assets on the Bitcoin chain can generally be divided into two categories: meta protocol and CSV (client-side validation). Overall, these assets have not mirrored the rise of Bitcoin price and have not seen much activity. The altcoins on Bitcoin have generally not outperformed other altcoins.

BRC20, Runes

BRC20, Runes and other meta protocol assets have not performed well recently. Market cap and growth have not been as strong as many memes this year, a testament to the short lifespan and cyclical nature of such assets without strong utility. These easily displaced tokens are now replaced by newer memes and AI agent narratives.

RGB

As the earliest CSV protocol, RGB is still being promoted recently. There are already some technical implementations that can support integration with the Lightning Network. A large part of RGB’s narrative lies in Tether’s stablecoin issuance, but it is still unclear how the plan will be carried out.

In terms of further programmability, it may still take some time for AluVM to support more flexible development possibilities. Overall, the performance of RGB-type protocols and assets remains to be seen.

Taproot Assets

Taproot Asset protocol is implemented by Lightning Labs, which is one of the development teams of Lightning Network. The protocol can usher in the ability to mint stablecoins at lower fees and benefit from instant settlement on Bitcoin. Tether also announced issuing USDT using the Taproot Assets protocol.

In the onchain asset sector, Bitcoin onchain DEXs still lack the experience and liquidity support needed to meet token trading performance demands, making CEXs essential for supporting these assets. However, the inherent reliance of CEXs on technologies like hot and cold wallets may present challenges when integrating newer asset types.

BTCFi

BTCFi can give Bitcoin holders additional Bitcoin-based income, and as the infrastructure improves, the overall TVL is expected to grow.

In addition, as mentioned in the L2 section above, the type of returns pursued by BTC assets has shifted from L2 to staking, liquid staking and liquid restaking, which can stack multiple layers of returns, and has also brought about the growth of various BTCFi projects.

Among them, Babylon, as the cornerstone of the track’s returns, has attracted a significant TVL in Bitcoin after several controlled phases, underscoring community demand to drive greater utility of BTC by capitalizing on Bitcoin’s decentralized and battle-tested security.

As the gateway into the BTCFi ecosystem, Babylon enables direct participation from BTC holders. On top of this, various LST projects emerged to unlock liquidity and drive DeFi activities. The design of these LST projects generally also refers to successful DeFi designs, introducing methods such as veModel and Pendle into the protocol. In addition, there is also a unified abstraction of the liquidity layer and the rewards extracted by various partners. The composability of these protocols has matured further in the past six months.

However, in light of the recent Solv controversy; the problem of how BTCFi’s TVL is calculated and how promised yields can be redeemed has cast a shadow over BTCFi’s start in 2025.

An important focus this year is finding ways to enable the efficient utilization and circulation of staked assets, rather than allowing them to remain idle. Projects like Yala, along with other lending and stablecoin initiatives, are leveraging infrastructure native to the Bitcoin blockchain. Underpinned by a bullish market sentiment towards BTCFi, these projects could see significant opportunities for further growth and development. However, on the other hand, as the cost of capital in the bull market increases, it also poses certain challenges for projects’ go-to-market strategies. Protocols that can more flexibly mobilize Bitcoin liquidity and support a richer asset class will have a better chance.

Ethereum

Despite the launch of ETH ETFs for trading in the U.S on July 23 2024, it was not met with similar success as its BTC predecessor and did not act as a positive catalyst for the underperforming ETH price. This can be seen from the ETH/BTC ratio falling from 0.054 in January to 0.037 in December, underscoring greater institutional interests in Bitcoin relative to Ethereum. Additionally, since the Dencun Upgrade has significantly led to gas fees on L2s being much cheaper than Ethereum, this has contributed to more inflows into L2s like Base that recorded $3.2B in net inflows while Ethereum bled close to $8B in 2024. However, with a crypto-friendly Trump administration in 2025, Ethereum ETFs notched their best month in December, taking in record net inflows of around $2B. EVM also remains the most dominant and active VM in terms of ecosystem projects, leading many developers to continue building networks and applications that are EVM compatible such as MegaETH and Monad, two of the most highly anticipated launches in 2025. Given the simplicity of Solidity, battle-tested security and the extensive ecosystem of Ethereum, we believe Ethereum and its EVM-ecosystem will continue to remain dominant in 2025 although competing alternatives may chip away at its market share.

3.1 L2s

Since the Dencun Upgrade that introduced blobs data storage, transaction fees on rollups have been reduced by more than 90%, resulting in significant net inflows to leading L2s such as Base, OP Mainnet and Arbitrum which witnessed net inflows of $3.5B, $2.1B and $1.7B respectively. Consequently, usage of rollups has visibly increased in 2024. Daily transaction count on L2s has increased more than 325% from 5.18M to 16.86M. Daily active addresses have also swelled from 989K to 2.18M. These dominant rollups are also optimistic in nature, underscoring users’ preference for lower costs and higher efficiency as compared to zk rollups which are relatively more expensive although the risks of fraud are lower.

Base’s significant inflow can be attributed to various factors, including slick consumer experience, strategic partnership with Coinbase, and the launch of popular consumer applications like Farcaster, and Virtuals Protocol which have onboarded mass users to Base. Daily active users have surged from 68,324 to 1.6M. DeFi activity on Base has proliferated in 2024, with the stablecoin market growing from $178M to $3.6B and daily DEX volume surging from $21.6M to $1.7B. Additionally, Base also announced a notable partnership with Stripe. This partnership will see Stripe adding support for USDC on Base to their crypto payout products and adding USDC on their fiat-to-crypto onramp, while Coinbase Wallet will also add Stripe’s onramp feature to allow users to seamlessly purchase crypto using their credit card. Moving forward, we believe the previous success of consumer applications on Base will attract more consumer-focused innovations as developers seek to capitalize on the strategic partnership that Base has with Coinbase.

Arbitrum, currently the largest rollup in terms of TVL, is also a main beneficiary of the shift to L2s. Advancements such as Arbitrum Stylus, which enables developers to easily write smart contracts across different developer-friendly languages (e.g. Rust, C, C++) have been pivotal in opening the doors to over 10 million developers globally. Upgrades such as ArbOS 32 and Nitro v3.2.0 also further enhance network security, preventing potential denial of service attacks. Future roadmap of the protocol encompasses multi-client support, adaptive pricing, chain clusters and decentralization of sequencer will push the network to achieve greater alignment between Arbitrum orbit chains and generate accretive value for Arbitrum’s community.

OP Superchain continues to gain momentum in 2H 2024 with new chains such as Unichain, Ink, and Sonieum joining the ecosystem, bringing the total number of OP-Stack-powered chains to 56 at the end of the year. This represents 43% of all L2/3 chains, with the number of transactions by Superchain taking up more than 56% of all L2 transactions. The number of active developers on OP Stack chains has also more than doubled from less than 900 to 3,446 by the end of 2024. These metrics have created a positive reinforcement of the network effects established by OP Superchain.

However, currently, most of the activity is dominated by Base, which has established itself as the top Superchain member. New entrants like Unichain by Uniswap, Ink by Kraken, and Sonenium by Sony could leverage their network effects to challenge Base, potentially capturing a share of the market. Overall, we believe the competition between OP Stack, Arbitrum Orbit, and zkSync’s Hyperchain will intensify in 2025 as each strives to capture the virtuous cycle of network effects with unique, competitive, value propositions.

The Dencun Upgrade has significantly benefited many Layer 2s (L2s), as evidenced by blob capacity consistently operating near target utilization since November. However, it has also sparked debate over whether the upgrade might cannibalize Ethereum itself. With the upcoming Pectra Upgrade, expected in Q1 2025, set to increase target/max blob capacity from 3–6 to 6–9 blobs, we anticipate further consolidation and stronger user retention on L2s with distinct niches and value propositions, positioning them as key challengers to alt-L1s.

3.2 Restaking

With staked Ethereum generally increasing in 2024, up to a peak of 34.5M staked ETH recorded on November 10 2024, yields have trended lower to 3% at the end of the year, highlighting the inverse relationship between rewards rate and staked Ethereum. This prompted users to explore alternative yields through liquid restaking tokens, leveraging liquidity provisioning and lending activities. Restaking protocols such as Eigenlayer have thus attracted significant TVL although traction has slowed in 2H 2024, with TVL decreasing from 5.11M ETH to 4.44M ETH by year-end. We think this is due to the dampened optimism as the rollout of the slashing mechanism is delayed and is expected to only go live in Q1 2025. In 2H 2024, Karak’s performance as a restaking platform remained subdued, while Symbiotic experienced a surge in total value locked (TVL), growing over 5x from $307M to $2.12B. This growth highlights the appeal and competitiveness of Symbiotic flexible restaking mechanism, which has attracted a broader and more diverse range of restakers. As restaking solidifies its importance as a key economic and infrastructural pillar, future catalysts will depend on the success of the slashing mechanism as well as the flexibility offered to AVSs, restakers and node operators that can strike an optimal balance between economic security and the yields provided.

3.3 Ethereum Future Roadmap and EIPs

2025 marks one of the most important years for Ethereum as it is slated to undergo a major upgrade, Pectra. The planned upgrade which is expected to be completed by Q1 2025 was not a smooth sailing journey initially as clients and researchers engaged in a heated debate over the inclusion of a slew of EIPs that presented an insurmountable milestone to achieve by the set timeline. After multiple rounds of discourse, a finalized version of EIPs to be included has been ironed out and if smoothly executed, Pectra could meet its set timeline. Below, we will highlight key EIPs that will meaningfully impact the adoption and scalability of Ethereum.

• EIP-7788. This upgrade is planned to increase the target blobs for Ethereum blocks from 3 to 6, further driving down L2s fees. Blob fees have been closed to target since November 2024 and as demand exceeds the target blob capacity, this would result in fees scaling exponentially. Therefore, this upgrade will help to manage the costs for L2s, allowing L2s to compete more aggressively with alt-L1s in 2025.
• EIP-7702. This EIP has replaced the previous EIP-3074 with the goal of enabling smart contract capabilities for EOA wallets. The adoption of ERC-4337 has been slow to take off as it requires applications and protocols to introduce support. With EIP-7702, which natively embeds account abstraction into the underlying network, this serves to normalize and provide a slicker user experience. We’re excited about a future with improved wallet UX and enhanced security mechanisms that safeguard users from unintentionally signing fraudulent transactions.
• EIP-7251. This EIP aims to alleviate the network bloat by increasing the maximum Ethereum balance for a validator from 32 ETH to 2048 ETH, therefore reducing the validator count.

Moving forward, the leading Ethereum researcher has reorganized the Ethereum roadmap with the ultimate goal of transforming Ethereum’s consensus layer with zk proofs and post-quantum cryptography alongside other key features that can be expected in a major upgrade slated for 2029. As fees on L1s continue to trend lower, this has resulted in Ethereum being net inflationary for the most part in 2024. Ethereum must carefully manage staking reward issuance curves while continuing to attract high-throughput applications to sustain value growth for its holders.

3.4 Other Infrastructure

Sequencing

As most L2s on Ethereum operate on a single sequencer, this centralization risk has led to concerns over censorship resistance and network resilience. The concept of decentralized shared sequencing aims to enhance network resilience during periods of high network traffic and redistribute value captured through a decentralized network of sequencer node operators. This concept is further accentuated by the increasing liquidity fragmentation and interoperability challenges experienced in rollups that operate siloed sequencers. In 2024, Metis became the first Ethereum rollup to decentralize its sequencer. Key players in shared sequencers include Astria, Espresso, and Rome Protocol, among others. Building on the existing adoption of decentralized sequencers, we anticipate more growth of decentralized sequencing in 2025 with Arbitrum, Optimism and Linea, among others outlining plans to decentralize their sequencers. Other innovative designs such as having a shared sequencer using Solana, designed by Rome protocol, leveraging Solana’s localized fee markets and performant network could also gain more traction. The success of shared sequencing hinges on rollups’ demand for decentralization, value redistribution, and enhanced network liveness — while carefully balancing trade-offs in latency and economic incentive alignment across a distributed sequencer network.

Data Availability and Modular Blockchain

Data availability continues to be dominated by Ethereum blobs, Celestia, Avail, and EigenDA. With RaaS making the deployment of rollups seamless, demand for data availability solutions will also increase. Currently, there are 23 rollups using Celestia, with Eclipse being the largest client in terms of blob size consumed for data availability needs.

EigenDA also boasts a strong integration with leading RaaS providers like Altlayer and rollup stack architectures. EigenDA achieves a throughput of 15MB/s with the aim of reaching 1GB/s in the future. However, this is subjected to trust assumptions in its Data Availability Committee.

At the current phase, Ethereum DA remains costly and slow, hence offering DA players opportunities to capture market share and address this issue through higher data throughput and lower cost. Ultimately, with Ethereum’s long-term vision to provide a low-cost data availability solution, starting with the Pectra Upgrade and eventually implementing PeerDAS, having Ethereum alignment would be beneficial for data availability solutions targeting rollups.

Intent and Chain Abstraction

Chain abstraction continues to be a pertinent narrative in Web3, particularly when the ecosystem evolves from monolithic, siloed networks to modular network architecture with each component of the stack optimized for performance. However, as this innovation continues to emerge, the issue of liquidity fragmentation across chains has once again surfaced. With a shared goal of addressing this issue, the Chain Abstraction Coalition was launched last year, consisting of more than 60 blockchains including Arbitrum, Berachain, Linea, BNB among others. Other key players such as Particle Network and Xion have also launched Universal Accounts and Meta Accounts respectively, driving adoption for chain abstraction solutions. Particle Network’s UniversalX, a trading platform powered by Universal Account, has already integrated with 12 EVM networks and Solana.

Xion’s Meta account has also exceeded 4M, underscoring the demand and relevance of chain abstraction. Probably one of the most significant developments in cross-chain interoperability this year is the introduction of a proposed cross-chain interoperability standard ERC-7683 in Q2 2024. ERC-7683 aims to address the pressing interoperability challenges faced by blockchain networks by creating a universal filler network to power a shared liquidity layer. We believe ERC-7683 is likely to gain more traction from protocols looking to enhance user experience on its platform. In August 2024, Circle Research published a report on a simple experiment done using LLMs (OpenAI GPT-3.5 Turbo) for intents, which is an area that is innovating rapidly, driven by the maturity of LLMs with more powerful logical reasoning and AI Agents. In the future, innovations on this front will push the boundaries of what could be achieved with an agentic-driven DeFi transaction, significantly enhancing user experience. One notable example is AI Agent, Griffain, which is able to execute transactions autonomously through users’ natural language requests.

Solana

In 2024, Solana stood out as one of the best blue chip performers as it witnessed price growth of around 75% in 2024, driven by the increasing competitiveness against Ethereum with SOL/ETH ratio increasing from 0.04 to 0.06. Through its unique SVM architecture, which supports localized fee markets and parallel transaction processing, Solana offers lower fees and higher throughput. As a result, many high-performance dApps have chosen to build on the network. This influx of innovative applications has significantly improved the fundamentals of Solana. It has also transformed itself perfectly from the TradFi chain into a leading platform across multiple verticals, including DeFi, NFT, DePIN, payments, consumer-grade applications, and many other fields, attracting many important projects and partners. In 2024, the major hotspots of the Solana ecosystem include DePIN, meme, and PayFi.

DePIN

In early 2023, the leading DePIN project, Helium, officially migrated to Solana. Helium promotes the connection and management of network hotspots and has become one of the world’s largest IoT wireless networks calling Solana its home. Helium has also established a strong user community in the Solana ecosystem. Subsequently, another major DePIN project, Render Network, has migrated to the Solana network. It provides decentralized computing and rendering services with the help of Solana’s platform advantages. The token FDV once exceeded $8 billion, and network revenue has tripled in 2024.

Additionally, as AI continues to advance, the capabilities of various multimodal large language models have become increasingly evident. This growth, along with a rising number of applications built on these LLMs, has in turn fueled greater demand for computing resources, such as GPUs. As one of the most influential computing power projects in 2024, io.net native token $IO has been highly anticipated since its primary market financing and the start of the mining incentive program. After its launch, its FDV exceeded $4.8 billion.

Thanks to its strong platform advantages, robust ecosystem, and powerful network effects, Solana has created a highly favorable environment in 2024 — attracting numerous high-profile DePIN projects such as Grass, Cudis, and XNET. Building on this success, it is poised to remain a prime destination for upcoming DePIN ventures in the future.

Meme

2024 can be regarded as the first year of memecoins. The status of memecoins in this cycle can even be compared to DeFi in the previous cycle. It closely integrates new cultural and social forms with crypto and also introduces a large number of users to the crypto industry. Because of memecoin’s low barrier to entry and frequent user transactions, it needs a platform like Solana, which has high TPS, low transaction fees, and stable fees, to provide users with the most user-friendly trading environment. At the same time, it also needs an active community to quickly gain community attention, which are all advantages Solana has.

Notably, Pump.fun, a meme coin launchpad that abstracted the complexity of launching meme tokens, has witnessed remarkable success. Multiple tokens launched on the platform — including PNUT, FARTCOIN, MOODENG, and GOAT — have collectively driven significant trading volume on Solana, which has, since Q4 2024, largely overtaken Ethereum. Solana/Ethereum’s weekly DEX trading volume increased from 48.85% to 137.47%. Other DeFi developments in 2024 such as the launch of cbBTC on Solana, the incentive campaign for using PYUSD as well as the Solana liquid restaking narrative helped drive liquidity to the platform. Stablecoin market cap, often a leading indicator of network adoption, has more than tripled to reach $5.1B in 2024. In addition to its growing appeal among retail users, Solana has also seen a notable rise in developer adoption. According to Electric Capital’s latest report, Solana onboarded more new developers in 2024 than any other blockchain, outpacing Ethereum for the first time. Institutional adoption of Solana is also evident with partnerships with Shopify and Visa further strengthening network growth.

On the other hand, data analysis platforms are important for the early identification of meme investment opportunities. In addition to general platforms such as DexScreener and Dextool, GMGN.ai, which launched with the meme craze, provides more direct features such as the Pump.fun line graph service, address tracking, and SmartMoney/KOL wallet tracking, which better meet the needs of meme coin investors. At the same time, a large number of TG bots have also emerged to provide users with timely trading reminders through on-chain or community sentiment analysis, such as Solana Early Birds and Pump Alert.

Solana’s Memecoin has time and time again proven the activity of the Solana ecosystem, as well as the rationality of memecoin’s existence. It is not air, but a carrier of community power with much stronger liquidity than NFTs.

PayFi

PayFi is a new concept proposed by Lily Liu, president of the Solana Foundation, which aims to build a brand new financial market around the time value of money. It leverages Web3’s unique advantages — efficient programmability of crypto payments, seamless composability of DeFi activities like trading and lending — while aiming to bridge traditional assets into Web3, establish new financial markets, and make global financial transactions more accessible and cost-effective.

One of the major differences or advantages between the Solana ecosystem and others is that it has a lot of out-of-the-box infrastructure, such as Solana Pay. The goal of Solana Pay is not just to “pay with cryptocurrency,” but to usher in a new era of payments and commerce. Solana enables users to pay merchants with near-instant confirmation, at the lowest and most predictable fees. Solana Pay is available as an integrated plugin option for Shopify-powered stores. Solana has also partnered with VISA to open up offline payment channels.

In addition to growing in popularity with retail users, Solana has also seen significant growth in developer adoption. According to a recent report by Electric Capital, Solana attracted more new developers than any other blockchain in 2024, surpassing Ethereum for the first time. Institutional adoption of Solana is also becoming more visible, with partnerships with Shopify and Visa further strengthening the network’s growth.

While Firedancer is not yet activated, future activation and adoption will further enhance the performance and security of the network, allowing it to capture more market share from Ethereum. Solana token extension, released in early 2024, allows greater granularity, flexibility and programmability over token issuance which we believe will encourage greater institutional on-chain adoption while maintaining enterprise-grade security in place. The potential for Solana ETF approval, stablecoin market growth, institutional adoption and increasing DeFi activities serve as positive catalysts for the Solana ecosystem.

Ethereum vs Solana DEX volumes

Fundamentals of Solana (2024)

In the coming year, we will continue to pay attention to the following:

• Solana itself: Solana has two potential benefits in 2025. One is that the SOL ETF may be launched, and the other is the launch of the Firedancer client. These two points will be long-term benefits for Solana. Of course, in the short term, there will also be a large amount of Sol unlocked in the secondary market. It’s better to pick an appropriate time if one decides to invest in the SOL token.
• Solana SVM and Layer2: Solana’s current TPS may not be enough to support future ecosystem prosperity. In addition to the Firedancer upgrade of the main network itself, SVM is also an opportunity. Of course, Solana’s Layer2 not only solves the problem of network scalability, but also serves as a bridge for the Solana ecosystem, allowing applications from other ecosystems to settle on the Solana mainnet, bringing more transaction volume and ecological activity to Solana.

Applications

• Community-driven applications: Solana’s community is undoubtedly the most active in the crypto industry. If we say Ethereum is driven by the technical community and is prone to produce new infra innovations, then Solana is driven by the user community and is prone to phenomenal applications. Even meme-like application scenarios with no practical use have attracted the attention of countless users, and this attention is the most valuable resource for making applications.
• Applications that have broken out of the circle: Solana is clearly trying to break out of the circle in various fields. In terms of infrastructure, it has solved payment and deposit and withdrawal issues, and has also launched the Solana mobile app as a carrier for applications and PayFi. In terms of users, it has already made an impact in the traditional world through memes, DePIN, etc. In terms of business, it has the support of many traditional partners such as VISA and Shopify. If there is an ecosystem in the crypto industry that can break out of the circle the fastest, it must be Solana. The mass adoption pursued by the crypto community will also likely happen first in the Solana ecosystem.

ALT-L1S

Alt-L1s have been gaining strong traction in 2024, offering investors a differentiated experience from Ethereum, competing on various factors such as having a vibrant ecosystem, lower latency, higher throughput and lower fees. Below are some notable and emerging alt-L1s to watch in 2025.

5.1 Berachain

Unlike traditional PoS networks where value accrues to stakers and validators, Berachain introduces a different consensus mechanism. Through a unique Proof of Liquidity mechanism which rewards participants for providing liquidity with its governance token, Berachain ensures incentive alignment between validators, dApps and users while ensuring decentralization. Berachain’s BeaconKit modular consensus client is also able to interface with EVM-compatible execution environments, enabling it to tap into the vast EVM ecosystem while also offering competitive features such as single-slot finality and optimistic payload building. Before the launch of Mainnet on 6 February 2025, Berachain has already gathered significant traction, accruing more than $1.5B in TVL across various partners’ pre-deposit vaults. Post launch, given its large cult-driven community, Berachain has climbed the ranks to become the 8th largest network by TVL overtaking Sui and Avalanche. Future success of the network will hinge on how it matches the demand with innovative incentive mechanisms and applications.

5.2 Ton

One of the most hyped narratives last year was TON, especially in Q2 & Q3. By leveraging more than 900M MAU on Telegram, TON attracted significant mindshare in 2024. Notable game launches such as Catizen, boasting an MAU of around 4.7M, are one of the hottest telegram mini-games in 2024. While most networks struggle with the cold start problem and incentive bootstrapping, TON holds a competitive advantage as the network is integrated with Telegram, allowing the large user base to seamlessly interact on-chain through TON wallets like UXUY, TON trading bots and Telegram mini-games. This is evidently reflected by the DAU on TON, which has grown from 27,725 to 293,539 in 2024. DeFi TVL on TON has also increased more than 10x since the start of 2024 from $13.51M to $261.7M.

Since Q4 2024, as market attention shifted to other hotspots, TON’s ecosystem and performance have fallen short of expectations. Additionally, its underlying architecture has made it difficult to attract high value projects, such as top DeFi protocols, which contributed to a decline in TVL by the end of the year. In 2025, TON’s growth will hinge on forging stronger partnerships with Telegram and exploring innovative channels beyond simple tap-to-earn models to attract new users and invigorate its ecosystem.

5.3 Kaia

Kaia, a blockchain platform created from the merger of the Klaytn and Finschia blockchains, officially launched its mainnet on August 29, 2024. Kaia, a fully EVM-compatible platform, seamlessly integrates with LINE and KakaoTalk — two of the world’s largest messaging applications, with a combined user base exceeding 250 million. With the cold start problem already addressed, user onboarding becomes the next hurdle towards adoption. Kaia simplifies user onboarding through support for account abstraction, gas fee delegation and the creation of keyless MPC wallets, which reduces the technical complexities for retail users. Since its mainnet launch, Kaia’s total value locked (TVL) has grown from $37 million to $60 million by the end of 2024, highlighting increasing engagement and adoption of the network.

While Kaia’s integrations provide a significant advantage, its success depends on applications implementing effective customer acquisition and retention strategies. To foster a thriving ecosystem across various Web3 verticals, Kaia and LINE NEXT launched the Kaia Wave initiative, a $10 million incentive campaign. This program offers applications support in the form of access to the NEXT WEB SDK, Dapp Portal of LINE NEXT, marketing resources, funding, and more.

Although both have a good user base, Kaia and TON are different in that the Kaia community is mainly concentrated in Japan, Taiwan, and Thailand. Both networks also have different go-to-market strategies and ecological support strategies. As Kaia ramps up its mini dApp ecosystem expansion efforts with the release of its first batch of 32 Web3 services under the Kaia Wave program, we remain optimistic of Kaia’s future growth.

5.4 Move

The Move ecosystem has witnessed more adoption in 2024 with the number of monthly active developers working on the Move stack increasing from 1,014 to more than 1,500 at the end of 2024. Move is a Rust-based open-source programming language developed by the Facebook team behind Diem. Move stands out for its emphasis on security, scalability and usability. When talking about the Move ecosystem, two blockchains dominate mindshare here: Sui and Aptos. Both Sui and Aptos are positioned as a high performance L1 although Sui has visibly outperformed Aptos in 2024 across multiple metrics such as FDV, TVL, net inflows, and DEX volumes.

Sui has recorded $1.2B in net inflows in 2024, while its native token skyrocketed by close to 500%. Stablecoin market cap on Sui witnessed remarkable growth from less than $10M to $370.77M by the end of the year, driven by Sui’s support for native USDC, FDUSD, and USDY. Since the announcement of native USDC on Sui, TVL has increased by more than 70%, ending the year at $1.6B. Together with the growth in stablecoin market cap, DEX volumes have also surged. DEX, like Cetus, got listed on Binance in November, contributing to a surge in its trading volume. Other DeFi protocols like Navi, Bluefin, and Haedal have also benefited from this beta play, witnessing growth in TVL and volume. Moving forward, we believe Sui will continue to attract capital driven by increasing DeFi activity, institutional adoption surrounding the tokenization of assets and the rise of consumer applications.

Aptos has seen significant growth in 2024. In 2024, Aptos’ TVL grew from $117.81M to $975.52M, representing a more than 8x increase. Alongside TVL growth, the stablecoin market cap on Aptos has also increased more than 12x in 2024 from $49.27M to $633.22M by the end of 2024. Daily active users on Aptos have increased from 88K to 1.1M. But Aptos focuses more on institution applications such as RWA tokenization, stablecoins and BTCFi. Leading asset managers, BlackRock and Franklin Templeton have deployed their tokenized funds on Aptos. It remains to be seen whether the Aptos ecosystem will improve in 2025 after recent team restructuring.

Movement is another noteworthy Move network besides Sui & Aptos. In Q4 2024, Movement announced the mainnet beta launch of its Move-based Ethereum scaling solution also known as M2. M2 provides the benefits of parallel transaction execution of MoveVM while allowing applications to leverage on the security and deep liquidity of Ethereum. Movement Network also provides a modular toolkit to deploy Move-Rollups with options to customize data availability solutions, use M1 shared sequencer for atomic cross-chain settlement and benefit from fast finality settlement (FFS). In a prevalent narrative of modular architecture, it will be interesting to see how M2 and Move-Rollups can compete with existing rollups through its unique architecture.

5.5 MegaETH

MegaETH is an EVM-compatible blockchain which features high transaction throughput of up to 100,000 TPS, substantial compute capacity, and sub-10ms block times, enabling developers to create demanding applications that require low latency. Despite the emergence of numerous blockchains, existing chains still face significant limitations in transaction throughput and compute capacity. MegaETH addresses these challenges by introducing node specialization, which separates the roles of sequencers, provers, full nodes, and replica nodes to optimize performance. This innovative architecture allows each node type to have tailored hardware requirements, enhancing execution efficiency while maintaining decentralization. The blockchain also focuses on real-time transaction processing and state synchronization, essential for applications that require high transaction throughput and low latency. Discussion of MegaETH has been robust, detailing its innovative real-time blockchain technology with the potential to enhance Ethereum’s scalability and attract high-performance applications. It will be interesting to see how the upcoming launch of MegaETH competes with rivals like Monad and Solana in attracting high performance applications.

5.6 Monad

Monad is a L1 that enables optimistic parallel transaction execution across multiple EVM instances while maintaining bytecode compatibility with Ethereum. This is achieved through a customized consensus mechanism known as the MonadBFT. MonadBFT differs from HotStuff BFT with a focus on reducing latency. It also includes MonadDB which is its own database that natively implements the Patricia Tree Structure on both disk and memory to reduce inefficiencies. Additionally, it also supports async I/O, allowing the CPU to process other transactions concurrently, enhancing performance throughput. This unique architecture allows Monad to process up to 10,000 TPS, offering 1 second block times and 1 second finality. Monad Foundation continues to play an active role in ecosystem development, organizing 65 builder events globally in 2024 and accelerating 46 early stage projects via Mach and Jumpstart. We remain optimistic about Monad’s launch and future ecosystem growth.

5.7 Competitive Landscape

Evidently, the narrative in 2024 is no longer confined to Ethereum vs. Solana. A growing number of alt-L1s have emerged as notable contenders — ones we believe could capture a larger market share in 2025.

Competitive L1 Landscape

OTHER SECTORS

6.1 Meme

In 2024, meme emerged as the best performing sector, notching a price performance of 218%, underscoring its role as the barometer for the attention and culture-driven economy. Ethereum, Base and Solana stood out with the most vibrant meme ecosystems. The launch of Pump.fun has marked a key milestone in the crypto industry as the technical complexities of creating and launchpad has been completely abstracted away via a standard framework for token issuance, unlocking huge retail demand and volumes in memecoin trading on Solana. Besides pump.fun, the vibrant meme ecosystem can be attributed to ecosystem support provided by Solana Foundation. Ethereum-based memes like Pepe and SHIB have very strong communities while memes on Base are generally more AI-focused; led by the success of Virtuals Protocol, which, like Pump.fun, enabled the seamless creation and launch of AI Agents for the retail community.

Amid the memecoin boom, new tools have emerged to help retail users capitalize on opportunities. Notably, Kaito, an AI-driven analytics platform enhances market insights, while platforms like Photon and GMGN.AI enable efficient sniping and trading, leveraging the sector’s volatility. Despite the majority of memecoins failing and having a short lifespan, the memecoin sector is expected to become a mainstay in the industry. Solana and Base, which have established vibrant meme communities, are expected to lead in this area going forward.

6.2 AI

The AI space is one of the hottest areas in 2024. From the infrastructure at the beginning of the year to the big explosion of agents in the second half of the year, the development of AI in crypto covers the upstream and downstream industries of AI. As shown in the figure below, Agents+applications, being close to end-users, are met with high developer demand, while the upstream of AI is more difficult for crypto developers due to the cost needs and development cycle. Thus, Agents ushered in a big explosion in the second half of the year.

The explosion of agents in the second half of the year was catalysed by the successful launch of Virtuals Protocol in the second half of 2024, which witnessed the launch of several highly successful agents such as AIXBT. It is the first time that agents are positioned as an asset, not a tool. Riding on the elevated interests and speculative nature of trading AI Agents, Virtuals Protocol possessed a strong first mover advantage.

At this stage, the functionality of Agents covers more than a dozen categories, with social media bots, on-chain execution and VC agents being popular in the crypto market. We anticipate that the ecosystem of agents will continue to exhibit robust diversity moving forward.

However, these agents with different functions/scenarios have not really matured on the ground, and most of them are still in the stage of narratives. Despite so, the community’s enthusiasm for agent development framework has sustained for more than 2 months, underscoring conviction beyond just speculative trading. Among these, ElizaOS is the most developed framework. Other frameworks differ in language and design: for instance, @arcdotfun’s RIG is Rust-based, while ZerePY builds on the open-source Zerebro Python framework. There are also development frameworks that specialise in coordinating the scheduling of resource API interfaces, such as FXN .

Thanks to last year’s meme culture boom, AI tokens (including AI agents) combined with memes, have emerged as a major community focus. While most of these meme tokens are valued between $1M and $5M and carry significant volatility, their narratives are becoming increasingly specialized — encompassing virtual towns, unlearning, jailbreaks, and multi-agents.

The huge paradigm shift brought about by AI leads us to believe that this technology can be applied to multiple domains, including Crypto, so we will continue to focus on Agents that can get off the ground and the synergies between Agents, such as multi-agents infra, tools, and economics.

6.3 Real World Assets (RWA)

Since the start of the year, the value of the RWA market has grown by 63%, rising from $8.36B to $13.67B with the majority of the tokenized assets being concentrated in 2 main asset classes: private credit and US Treasuries. As of December 2024, there are more than 66,931 asset holders and over 115 asset issuers, with notable institutional issuers such as Franklin Templeton and BlackRock, among others. Several key events have shaped the narrative for RWA this year with BNB, Tether, Hedera, Visa among others announcing tokenization services. This year also saw the formation of the Tokenized Asset Coalition, an industry group that aims to bring the next trillion dollars of assets onchain. We seem to be at an inflection point for RWA tokenization and this renewed momentum can be attributed to the growing maturity in tokenization technology, regulatory clarity as well as greater awareness of the efficiency from leveraging blockchain technology. Aside from private blockchains used by institutions, public blockchains are also becoming increasingly popular choices. Among them, Ethereum remains the dominant public blockchain favored by asset issuers due to its battle tested security and mature ecosystem. Other popular chains for RWA are Plume Network, Stellar, Polygon, Solana and Avalanche.

Private Credit

Private credit in the Web3 RWA sector has experienced significant growth, with total value locked (TVL) increasing by nearly 50% since the beginning of the year, surpassing $16 billion. Top protocols operating in this area are Huma Finance, Maple, Centrifuge and Goldfinch. Maple Finance has originated more than $5B in loans while Centrifuge and Goldfinch have originated more than $560M and $168M respectively. Huma Finance, which facilitates cross-border payment financing has also originated more than $1.4B within its first year of operations. While this amount is just the tip of the iceberg when compared to the traditional private credit market, it underscores the demand for these platforms in private credit. Despite the growing appetite for private credit, this does not exempt the sector from default risks which is not an unfamiliar scenario for participants in decentralized private credit protocols. Transparent execution of prudent underwriting and collateral management will enhance confidence in the sector.

Finally, tackling the various regulatory climates through astute understanding of local laws, enforcing KYC/AML and identity solutions through privacy preserving soul-bound token, zkTLS etc. could steer the next leg of growth in this sector.

US Treasuries

Overall, this subsector has seen TVL rapidly grow from $769M at the start of the year to $3.96B as of 31 December 2024. In March last year, the world’s largest asset manager, BlackRock launched its own tokenized fund, called BUIDL that is backed by money market securities such as cash, Treasury Bills, and repurchase agreements. By the end of 2024, it has more than $648M in AUM. With over $634 million in assets under management, Ondo — widely considered the leading decentralized RWA protocol — offers two primary products: USDY, a yield-bearing stablecoin backed by U.S. Treasuries at 4.65% APY, and OUSG, an institutional-only product backed by short term US Treasuries with a 4.6% APY and 24/7 minting and redemption. Demand for tokenized US Treasury has been strong as Ondo records more than 200% growth in TVL since the start of the year and currently leads the market in terms of token holders. This success is driven by increased demand for yield-bearing stablecoins, a strategic partnership with PayPal that enables seamless swaps between PYUSD and OUSG, low entry barriers for retail investors, and a multichain approach that broadens its ecosystem integration. Tokenized treasury is extremely competitive with major players removing subscription fees, redemption fees and performance fees completely. Coupled with their strong reputation and distribution networks, it makes it hard for small players to enter and capture a slice of the pie.

Stablecoins

Stablecoins emerged as one of the biggest use cases in 2024, serving as the gateway for onchain adoption. Since the start of the year, the total stablecoin market supply has increased by 56% to $203.73B as of 31 December 2024, reaching all-time high. Stablecoin transaction volume has also taken a significant share of traditional payment network processors. Adjusted stablecoin transactions in the past 12 months exceeded $5.5T, notching a 50% growth YoY as compared to Visa’s 2024 transaction volume of $15.7T, which recorded a 7% growth YoY. Average monthly active stablecoin addresses have grown close to 50% YoY to 37.83M in December 2024. Evidently, this underscores the growing significance of stablecoin in our daily lives as a mainstream form of payment. With stablecoins offering much lower transaction fees than incumbent payment networks, they have become a financially viable option for many businesses. Moving forward, we anticipate more adoption from SMEs and large enterprises looking to enhance operational efficiency. While most stablecoins today are dominated by USD, we also expect to see a growing shift towards other currencies following the likes of other stablecoins such as EURC. RWA-backed and yield-bearing stablecoins are also another area which saw demand in 2024, benefitting players such as Ondo Finance and Ethena. Ethena, a yield bearing stablecoin that generates yields from staking and delta neutral strategy, has witnessed overwhelming demand since its public launch in February 2024. TVL for USDe quickly soared past $5.8B by the end of 2024, overtaking DAI as the third largest stablecoin. RWA-backed stablecoin such as Ondo’s USDY has also grown from $15.64M to more than $400M as at the end of the year, underscoring the demand for real-sustainable yields. In light of the rising adoption of stablecoins into mainstream payments, regulators are also catching up by legislating frameworks to govern the growth of stablecoins. Stablecoins that are regulatory compliant will gain more traction moving forward.

6.4 Trading Bot

A Dune dashboard on trading bot revealed that until January 2024, Maestro (light blue) held the largest market share. It was followed by Banana Gun (dark yellow) and Unibot (purple) — with Unibot entering the market in mid-2023 — each capturing 20% of the market volume. In 2024, competition among trading bots intensified. Bonkbot (grey) briefly surged to an 80% market share for two months before settling at 15–20%, similar to Maestro. Meanwhile, Trojan (light yellow) steadily rose to become the leading bot, maintaining a 30–40% market share from April 2024 onward. Additionally, Bloom (fuchsia) emerged at the end of 2024, gradually increasing its presence and worth keeping a lookout for.

However, the dashboard does not show data related to GMGN.AI. Combined with the two statistics in the chart below, GMGN.AI’s trading volume is about 1/2 that of Trojan’s until 2025, but catches up to 2/3 of Trojan’s as we enter 2025.

6.5 DeSci

DeSci, which stands for Decentralized Science is a relatively nascent sector that aims to leverage blockchain technology to tackle current challenges in the scientific community. These challenges involve unclear review processes, insufficient funding and interest in new areas, and ensuring fair access and compensation for contributors. Currently, there are close to 100 DeSci projects spanning across different fields such as biotech, space, humanities and other scholarly areas; although biotech dominates the DeSci sector and has been gaining traction after recent investment into Bio Protocol by Binance Labs. However, challenges in DeSci remain; such as the relatively low funding compared to traditional science, legal repercussions, and the misaligned incentives that often accompany the launch of speculative tokens.

6.6 DePIN

As of 31 December 2024, the total DePIN market cap stands at $50B, up from $18.1B at the start of the year, representing an increase of more than 176%. The number of projects has grown to more than 295 as of 31 December 2024. AI dominates the narrative this year and some of the largest DePIN projects lie at the intersection of AI x DePIN. Although Ethereum and Solana dominate the DePIN ecosystem in terms of market capitalization, DePIN-focused blockchains like Peaq and IoTeX are also gaining traction with 46 and 50+ projects building on them respectively. The topic of DePIN has been heavily discussed and can be broadly classified into 2 categories: more ‘Physical’ intensive that often requires hardware and capital infrastructure investment such as energy networks or less ‘Physical’ intensive such as storage, compute etc. However, one common thing about DePIN is that the use of token incentives is crucial for these projects to overcome the cold start problem and develop a viable business model. Moving forward, certain sectors within DePIN are worth watching in 2025.

Energy Networks

Decentralized energy networks leverage blockchain technology to create renewable energy-powered grids, improving energy efficiency and addressing infrastructure challenges like transmission losses and outdated systems.

This approach, driven by trends such as electrification, and net-zero goals, utilizes token incentives to deploy distributed energy resources (DERs) and supports grid modernization through Virtual Power Plants (VPPs) and Demand Response Providers (DRPs). While global investments in solar energy exceed $500B annually, achieving net-zero emissions by 2050 requires a $21T investment in grid modernization. Challenges include weather-dependent renewables, grid destabilization from bidirectional energy flows, regulatory buy-in, and consumer awareness of VPPs. Early projects in this space, such as Project Zero and Plural Energy, highlight opportunities but require substantial innovation, education, and regulatory support to unlock their full potential.

Wireless Networks

Decentralized Wireless networks (DeWi) addresses longstanding issues faced by incumbents such as limited accessibility, network congestion by enabling individuals to become internet service providers, offering affordable and widespread coverage. Unlike traditional telecom operators, DeWi networks thrive in areas where environmental, political, or economic factors make traditional operations infeasible. Helium, a prominent DeWi player, has grown 21.5% YTD, with a $1.85B FDV, highlighting its potential despite being smaller than traditional telecoms. As of the end of the year, Helium Mobile boasts more than 124,000 mobile subscribers and inked commercial partnerships with various large mobile carriers for carrier offload programs. The global 5G market presents a compelling investment opportunity, with subscriptions projected to grow from 2.17 billion in 2023 to 5.56 billion by 2029. Emerging economies, particularly in regions like Latin America and MENA, are poised for exponential growth, with adoption rates expected to increase over tenfold, highlighting significant potential for the sector.

Geospatial Networks

This sector consists of geospatial positioning, imagery and mapping networks. Projects in this space deploy physical sensors in vehicles, properties, and other locations to collect data, which is then used to deliver valuable services like mapping, weather monitoring, and high-precision real-time positioning.

In the field of geospatial positioning sub-sector, a notable project is Geodnet which aims to address the positioning inaccuracies of GPS technologies by having a network of Global Navigation Satellite Systems to improve location accuracy through real time kinematics. This not only helps to improve location precision valued by industries such as agriculture and construction, it also increases the bottom line for firms switching over from more expensive options. As of the end of 2024, Geodnet has onboarded more than 10,000+ satellite miners in 2024, unlocking monetization opportunities for its RTK positioning service which now generates more than $2M in annual recurring revenue (ARR). In the field of mapping, the traditional mapping industry is a multi-billion dollar industry, with Google Maps alone generating more than $11B in revenue in 2023. However, traditional mapping is often expensive, inefficient and sometimes inaccurate. Hivemapper, which is a decentralized alternative, aims to address these challenges by outsourcing the mapping to a global community of 156,000 contributors who have helped map more than 10 million miles in just over 2 years.

The key to success for projects in this area is to have a globally distributed network of devices that can contribute meaningful data in terms of quantity and quality in order to achieve threshold scale and be at a revenue generating phase (excluding the sales from nodes to better gauge actual demand for such services). By focusing on areas that are neglected and lacking in high quality location data while adopting optimal manufacturing and distribution strategies, projects are able to quickly unlock serviceable markets and meet scalability demands. Key risks to projects in this field include scalability challenges that can arise from complex setup processes.

Compute Networks

The rapid growth of the artificial intelligence (AI) industry has significantly increased demand for computing power, resulting in supply bottlenecks of high-performance infrastructure like GPUs and advanced data centers. Decentralized compute networks address this gap by utilizing idle computing resources, unified via blockchain, to provide affordable solutions for SMEs and AI researchers priced out by traditional providers.

Notable players in this space include Aethir, Akash Network, Hyperbolic, Compute Labs, and Render. As one of the largest decentralized compute providers, Aethir has bootstrapped a decentralized network of 360,000+ GPUs and generated more than $80M in ARR. Long-term success requires overcoming challenges like task verification, privacy concerns, and latency issues associated with consumer devices, as well as building robust partnerships with Web2 businesses.

6.7 Gaming

In 2024, the gaming industry marked a year of remarkable resilience and growth, with the number of daily unique active wallets exceeding 7.6M as at the end of the year; which is more than 5 times the number recorded in 2023. Key games that have contributed to the onboarding of mainstream users are LOL, World of Dypians, Treasure Ship Game, Pixudi and Age of Dino which each amassed more than 250K in daily unique active wallets (UAW).

Gaming platforms like Forge have also been pivotal in its role as a distribution channel for Web3 games as it exceeded more than 1M users and partnered with more than 65 games.

In terms of gaming chains, the top gaming chains in terms of daily UAW are opBNB, Ronin, Xterio, Skale, TON, and XAI. Ronin continues to strengthen its presence in the gaming community with peak daily active users at 2.27M, more than 10x compared to 2023. The Ronin Forge program onboarded 7 games while over the full year of 2024, 17 new games were launched on the network. Games like Pixels Heroes on Ronin also ranked #1 on both the Google Play Store and Apple Store, underscoring the growing acceptance of Web3 games.

Challenges remain and the sector still struggles to raise funds, with blockchain gaming investment decreasing by 38% YoY, marking its worst year yet since 2020. Despite that, the gaming industry has remained resilient, highlighting its uncorrelated characteristics to the broader market environment. Moving forward, we are optimistic on games with diverse distribution channels and unique gameplay that mirrors or outperform Web2 gaming experience to lead the next stage of growth for the gaming industry.

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https://dappradar.com/blog/dappradar-games-report-2024-overview

https://medium.com/forge-gg/forge-turns-1-bbd7696c9e29

https://iotex.io/blog/iotex-2024-year-in-review/#:~:text=The%20IoTeX%20Network%20is%20buzzing,and%2023%25%20respectively%20in%202024.

https://www.peaq.network/learn/ecosystem?category=DePINs+%26+dApps

https://x.com/monad_eco/status/1875934991965884452/photo/1

2024 H2 Web3 Industry Review was originally published in HashKey Capital Insights on Medium, where people are continuing the conversation by highlighting and responding to this story.