This year will be a year of transformation and innovation for the blockchain and cryptocurrency industry. From the approval of BTC ETF to the integration of AI and crypto, every aspect shows the vitality and potential of the industry.
BTC Ecosystem
1. BTC New Asset Issuance Protocol
2. BTC Infrastructure
3. BTC Scaling Solutions
Modular Blockchain and Data Availability (DA)
1. Modular Blockchain
2. Data Availability Layer
DePIN
New Public Chains and Ethereum Ecosystem
1. Parallel EVM Public Chains
2. Ethereum Ecosystem
GameFi
1. Full-chain Games
2. Non-full-chain Games
AI & Crypto
1. Decentralized Computing Power Network
2. AI & Crypto Applications
MEME
Conclusion
On January 11th, BTC ETF finally obtained approval from the SEC, and today, 11 BTC ETFs officially started trading on the US stock market. These past few days can be considered as a milestone moment in the history of crypto.
With the ETF bringing BTC into the mainstream world and the upcoming BTC halving event at the end of March, 2024 is undoubtedly an important year for the crypto industry.
So, what are the tracks worth paying attention to in 2024? In this issue, we bring you an analysis and outlook of the seven major tracks in 2024, jointly written by the Biteye community.
Looking back at 2023, the narrative of the BTC ecosystem was clear. After Domodata proposed the BRC20 standard on March 8th, a series of articles quickly prospered on the BTC mainchain. The narrative of new assets combined with BTC led to the first article asset, ORDI, surpassing a $1000M market value within a year.
As the number of transactions on the chain increased, the problems of network congestion and high transaction fees began to emerge. When popular articles were minted, the GAS fees of BTC reached a level that ordinary users could not accept, and the scalability of BTC also took the stage as a future narrative. So, what are the directions we can focus on for the future of the BTC ecosystem?
Atomicals, an optimization project for Ordinals and BRC20, solves the problem of BRC20’s excessive reliance on centralized chain-based indices. It uses and extends the UTXO model of Bitcoin by packaging each satoshi’s UTXO as a specific Atomical token or digital object. $ATOM is the first token of Atomicals, minted through POW, and is considered more decentralized by the community, in line with the original ideology of BTC. Due to its technical superiority, it currently has strong community consensus.
SRC-20, a token standard based on the Stamps protocol, BTC Stamps, invented by @mikeinspace. The main difference between Stamps and Ordinals is that the image/text information of Ordinals is stored in witness data, while Stamps data is stored in transaction outputs. This difference creates an important feature of Stamps, which is that it can always exist on the BTC chain, and all nodes must synchronize the data.
Bitmap, the first metaverse project in the BTC ecosystem, reflects each transaction input in a block of the BTC blockchain as a parcel, forming a block or region. Bitmap also proposed the BRC-420 protocol, which is an asset protocol based on Bitmap. By combining multiple articles, it creates a complex article and creates a variety of assets from small characters and pets.
Other projects to watch include CBRC, Veda, Rune, and Sat.
The current mainstream BTC infrastructure projects are as follows, and it can be seen that the future BTC infrastructure will mainly be divided into the following directions:
1. Cross-chain Bridges
2. IDO Platforms
3. DEX Exchanges
4. Lending Platforms
5. Trading Markets
The development directions of BTC scaling solutions mainly include Lightning Network and sidechains.
1) Lightning Network: Proposed by Joseph Poon and Tadge Dryja in 2016, Lightning Network is one of the Layer 2 solutions for Bitcoin. It consists of payment channels and aims to achieve fast and low-fee transactions, allowing users to make off-chain payments without confirmation, with final settlement on the mainchain. In theory, Lightning Network can achieve a processing speed of millions of transactions per second.
Taproot Asset Protocol: Taproot Asset Protocol was proposed by Lightning Labs, the development team of Lightning Network, on October 19th, 2023. The mainstream platform for the issuance and trading of Taproot Assets is Nostr Aeest, and its tokens, $TREAT and $TRICK, are mainly used for staking.
2) Sidechains:
Stacks ($STX): Stacks is currently the most developed L2 in the BTC ecosystem. Stacks uses the POX (Proof of Transfer) consensus algorithm for validation. By anchoring transactions, block information from the Stacks chain is broadcasted to the Bitcoin network to ensure the security of transactions. Stack has a complete execution environment, where any application built on chains like Ethereum can be built on the Stacks layer. Validators and miners in Stacks can stake $STX and $BTC respectively to mine $BTC and $STX tokens to maintain network security. Based on Stacks’ roadmap, the release of the Nakamoto network and SBTC in Q1 of this year will be important milestones in Stacks’ development and worth paying attention to.
3) Others: Apart from the above-mentioned protocols, other BTC scaling solutions worth noting include the RGB protocol, Bitcoin sidechain project Rootstock ($RIF), BitVM, BEVM, etc.
Modular blockchain is a type of blockchain that specializes in specific functions such as execution, consensus, settlement, or data availability (DA), and relies on other blockchains or services to perform other tasks.
This design enhances the security of the project and saves the project team’s energy to focus on developing core features.
Modular blockchain decouples the functions and components of the blockchain to solve the performance bottleneck of traditional monolithic chains. Each module is provided by specialized providers, offering the possibility of customized blockchain solutions.
There are many projects in the modular blockchain direction worth paying attention to:
1. Celestia ($TIA): Celestia uses off-chain methods to achieve DA, ensuring data availability through Reed-Solomon erasure codes and specialized namespaced Merkle Trees structures, making DA cheaper and more efficient. Although Celestia has already launched its token, indirect participation in modular projects that use Celestia is still possible through staking within the account. Many recent projects in the Cosmos ecosystem also include Celestia staking accounts in their airdrops.
2. Manta: Manta Network is a modular blockchain for zero-knowledge (ZK) applications and the first to transform the data availability layer from the ETH mainnet to Celestia’s Layer 2. Since Manta transferred DA from the ETH mainnet to Celestia in December last year, its transaction fees have been reduced by 99.8%. Currently, Manta’s TVL exceeds $800 million, second only to OP and Arb.
3. AltLayer: AltLayer is a decentralized rollup-as-a-service protocol, designed with a modular approach, allowing end-users to choose rollups based on their needs. Rollup SDKs support Arbitrum Orbit, OP Stack, etc. The data availability layer supports Eigenlayer, Celestia, Astria. AltLayer has already released the first phase of the testnet and OAT on the Galaxy, and it is worth paying attention to future testnet tasks. It may empower OAT in the future. Altlayer has also released the Ottie NFT series, which has the opportunity to receive token airdrops.
4. Cevmos: Cevmos is a rollup stack developed in collaboration between Cosmos EVM application chain Evmos and Celestia, aiming to become the best settlement layer for EVM rollups built on Celestia. Cevmos is short for Celestia, Evmos, and Cosmos.
Data availability layer is one of the main development directions for modular blockchains, and Celestia is a modular blockchain specifically designed for the data availability layer.
Data availability refers to the public storage of transaction data for verification. The data availability layer ensures that data is correct, protected, and easy to verify. In the current scenario, the most direct benefit is that the data availability layer can greatly reduce gas fees for project teams and users.
Currently, ETH L2 needs to upload calldata to the ETH mainnet, which means the ETH mainnet is responsible for DA, resulting in a huge expense.
As seen from the significant reduction in transaction fees for Manta, the advantages of cost-saving, combined with the current market enthusiasm, show that DA has become a real need for Web3 projects, with a very broad market outlook.
However, problems also arise with the growth of the market, which is competition among DAs, or DA War. Many new DA projects will be launched one after another in the near future (the following are DA service providers, excluding users who use DA services):
1. Avail: Led by the Polygon team, Avail is a modular blockchain project that is a major competitor to Celestia. Currently in the testnet phase, Avail can be seen as a project benchmarking Celestia. It has already launched an “Node Conflict” incentivized testnet, where users can participate in running nodes and earn rewards.
2. Fuel: Unlike Celestia, Fuel is a modular blockchain that focuses on the execution layer, using the SwayLang language and currently providing Zealy identities.
3. EigenDA: EigenDA provides low-cost and large-scale rolling data availability through Eigenlayer, which is protected by ETH restaking. Participation in the Eigenlayer project can be attempted.
At the same time, some old projects will also support their own exclusive DAs. At that time, the market game will revolve around the choice of which DA to use.
For example, ETH’s Danksharding is essentially a DA, and its verification technology is more complex than Celestia’s.
Vitalik, the founder of Ethereum, has repeatedly advocated for his own DA technology. He has stated multiple times on social media that using third-party DA services cannot be considered as Ethereum’s Layer 2, setting a moat for his own DA.
Essentially, DA is a business that targets project teams, and its perception at the user level is minimal. Therefore, the soft power of the DA project team, such as first-mover advantage, network relationships, and influence, may be more important than the technical details themselves. The DA War will be very exciting this year.
As Biteye predicted in the 2023 outlook report, DePIN has become a hot track, and the crypto community seems to have found a large-scale practical use case beyond finance.
DePIN refers to the decentralized physical infrastructure network, using cryptocurrency incentives and coordination to bootstrap and sustain decentralized infrastructure operations.
DePIN is an important connection between the virtual crypto world and the real world, promoting data security and effective coordination of idle resources to make our lives better.At the beginning of the project, DePIN used tokens or airdrops to incentivize users to participate in ecosystem construction and attract powerful developers to provide more cost-effective products.
As more users use the products or services, the project’s revenue increases, which can be used for market value management and further marketing, providing rewards to the demand side and supply side of the product, incentivizing more participants, and attracting the attention of market funds, creating a prosperous ecosystem.
During the bull market, DePIN will have a good positive flywheel effect and has recently received attention from Binance and OKX, producing an introduction video on the DePIN theme.
In a joint research report by Messari and Escape Velocity, the DePIN track is divided into computing, wireless, energy, artificial intelligence, services, and sensors.
Below, we will introduce representative projects worth paying attention to in each sub-track. This is not investment advice. Readers can continue to explore and discover more interesting projects that have practical promotion for society.
Computing:
With the promotion of machine learning and AIGC, the amount of data generated has grown exponentially, driving the need for more secure decentralized storage. Filecoin ($FIL) is the leader in the storage track and ranks among the top in DePIN track revenue.
Wireless:
Helium ($HNT) is a decentralized wireless network protocol and one of the earliest and most famous DePIN projects. It is tied with Filecoin for the top spot in DePIN track financing with a funding amount of $250 million.
Sub DAO Helium Mobile ($MOBILE) provides users with discounted phone plans and has recently become a shining star due to the rapid rise in coin prices.
Energy:
Arkreen is a global decentralized renewable energy data network that tokenizes trusted and verifiable data from renewable energy devices to promote carbon neutrality.
Artificial Intelligence:
Render Network ($RNDR) is a decentralized GPU rendering network that connects idle GPUs to assist in movie and animation rendering. It has partnered with well-known companies such as Stable Diffusion and Netflix.
Services:
Braintrust ($BTRST) is the first decentralized talent network that matches top freelance technical talents with the needs of large companies.
Sensors:
Hivemapper ($HONEY) is a map network where contributors collect street view images through Hivemapper’s dashcam and create up-to-date maps.
Investors can participate in DePIN track investment in two main ways. One is to purchase related products and devices as a supplier and provide services, earning token rewards to recover costs and make profits. Another way is to purchase related tokens because during the bull market, the project will use the revenue from device sales to stimulate price comparison and encourage people to continue buying products and devices, rapidly promoting the construction of the ecosystem.
However, it should be noted that the market-making willingness of the DePIN track will be stronger. Currently, observed token prices often experience large fluctuations. Investors can consider short-term trading, phased entry, or grid trading.
In addition, we can also consider enjoying more cost-effective services from the perspective of demand in the DePIN track.
Public chains are the backbone of the cryptocurrency industry and the largest infrastructure. With the development of blockchain technology, we believe that high-performance single chains (parallel EVM), Ethereum re-staking, the Cancun upgrade, and modular blockchains will be the four major directions to watch in 2024. (We have already introduced modular blockchains in the first section.)
1. Parallel EVM public chains:
Recently, Paradigm’s CTO Georgios proposed that 2024 will be the “year of parallel EVM” and Paradigm is actively exploring this technology internally.
One of the performance bottlenecks of EVM is that transaction execution is sequential, which can cause network congestion and delays during peak periods. The auction mechanism for gas fees also leads to high gas costs, which is a headache for Ethereum users.
If EVM can achieve parallel computing, it will greatly improve network processing speed and system throughput, enhancing the performance and efficiency of EVM. Currently, there are mainly two solutions:
1) Independent design of parallel EVM public chains, and
2) Treating parallel processing layer as Layer2 for transaction execution.
Projects worth paying attention to:
Sei ($SEI):
Sei is a Layer1 optimized for trading, adopting an optimistic parallel scheme, and is expected to achieve parallel EVM in its latest V2 version. At the same time, Sei allows interaction between Cosmwasm smart contracts and EVM smart contracts, providing a more diverse execution environment.
Eclipse:
Eclipse is a modular rollup platform that brings Solana to Ethereum. It uses the parallel computing Solana virtual machine as the execution layer and Ethereum as the settlement layer. Celestia is used to implement the DA layer, and Risk Zero is used for fraud proof, creating a parallel EVM public chain. Eclipse is currently running on the testnet and can be tested by applying on the official website.
Lumio:
Lumio is an OP rollup-based Layer2 that aims to use Aptos as the second-layer execution layer. The Aptos system has also gained popularity and has the potential to shine in the parallel EVM track. Lumio is currently in closed testing on Ethereum and will gradually open to NFT holders and Liquidswap users. Users can pay attention to the testing qualifications and participate in the testnet early.
2. Ethereum ecosystem:
In 2023, Ethereum Layer2 experienced explosive development with the launch of more than ten Layer2 mainnets. According to L2Beat statistics, the total TVL of Ethereum Layer2 has reached $19.35 billion. OP Stack and Polygon CDK have further reduced the difficulty of launching Layer2 mainnets, so it is predicted that the total TVL will continue to increase in 2024 with more Layer2 deployments.
1) Re-staking narrative:
In addition to leveraging Ethereum’s security, EigenLayer also utilizes Ethereum nodes to provide convenience for building new public chains. EigenLayer is a middleware protocol based on Ethereum that introduces the concept of re-staking, allowing Ethereum nodes to re-stake their staked ETH or LSD tokens into other oracles, bridges, and public chains, allowing them to enjoy Ethereum-level security at a lower cost, while users can benefit from multiple rewards.
Recently, there has also been a play called LRTfi, which converts the liquidity staked in EigenLayer into liquidity tokens of a new layer. This has created a nested liquidity staking game. Projects worth paying attention to are:
Pendle ($PENDLE):
Pendle will soon launch eETH, a liquidity staking token on ether.fi. Users can deposit eETH into Pendle’s LP and receive EigenLayer points, EtherFi points, and multiple staking rewards.
Swell:
Swell is an LSDfi protocol where users can stake ETH to obtain Pearls and staking rewards. Pearls are linked to airdrop tokens, and Swell plans to add re-staking functionality to its swETH, allowing users to stake ETH to obtain rswETH, releasing ETH liquidity and increasing additional rewards.
Puffer Finance:
Puffer is a liquidity staking protocol based on EigenLayer. It uses its self-developed Secure-Signer tool and RAV technology to solve confiscation issues in Ethereum and EigenLayer networks, providing participants with low-risk dual rewards. It plans to launch its mainnet in 2024.
2) Cancun upgrade:
On the evening of January 4th, the 178th Ethereum Core Developers Meeting confirmed the testnet activation schedule for the Cancun upgrade. The testnet for the Cancun upgrade will begin on January 17th.
The core content of the Cancun upgrade is the implementation of EIP-4844, which aims to increase the total number of transactions Ethereum can handle.
Before the Cancun upgrade, L2 transactions were stored in the Dalldata of L1 transactions. This method is costly and Calldata space is limited.
After the Cancun upgrade, L1 will store the data submitted by L2 in a new location called “blob.” Blob storage is cheaper and has more space.
It should be noted that the income source of L2 is essentially the gas fees charged to users minus the gas fees paid to Ethereum. After the Cancun upgrade, the fees paid by L2 to Ethereum will be greatly reduced, meaning the income level of L2 can increase significantly.
Therefore, the Cancun upgrade is essentially beneficial to all Layer2s that use Ethereum as the data availability layer, including Optimistic rollup, ZK rollup, and other relevant Layer2s.
In the next quarter, projects related to the Cancun upgrade have certain fundamental positive factors.
The most obvious beneficiaries are OP and ARB, as they are native protocols in the ecosystem. There will also be some linkage effects. For example, Velodrome ($VELO), the largest DEX in OP, and GMX ($GMX) on ARB are worth paying attention to.
In addition, small and medium-sized Optimistic rollups, such as MetisDAO ($METIS) and Boba ($BOBA), are also beneficiaries. MetisDAO plans to build a Layer2 decentralized sorter, which is worth paying attention to due to the overlapping narratives.
Furthermore, due to the temporary storage solution introduced by EIP-4844, the data stored in Blob will be deleted after about one month. If L2 wants to retain the related data for a long time, it will need other storage providers to store it based on actual needs. This indirectly increases the demand for decentralized storage, which is also a positive factor for the decentralized storage track.
The GameFi track currently has two categories for games:
1) Full-chain games (FOCG)
2) Non-full-chain games (NFT assets + off-chain games)
Full-chain games refer to games where assets and game state storage and execution logic are on the blockchain. Therefore, compared to non-full-chain games, full-chain games are more decentralized and have stronger composability.
However, full-chain games are still in the early stages, and the entry barrier for users is relatively high. Therefore, related tokens or NFTs may need to be held for a long period to obtain returns.
The two main game engines for full-chain games (FOCG) are:
1) MUD
2) Dojo
The former belongs to OP-stack, and the latter is on Starknet.
The MUD game engine is released by Lattice, a sub-project of 0xPARC. 0xPARC is founded by the Dark Forest team, the pioneer of full-chain games, and they have received donations from the Ethereum Foundation and Gitcoin.
Currently, the game Sky Stife running on MUD is worth paying attention to. If you missed getting a Pass in the last season, don’t miss the new season starting on January 8th.
Dojo is a full-chain game engine proposed by core members of Loot Realms, the founder of Cartridge, and the founder of Briq, to develop a full-chain game engine on the Starknet network.
Cairo has higher efficiency and modular characteristics compared to Solidity, which is why Dojo’s core development team chose Starknet instead of OP-stack.
Projects worth paying attention to in the Loot Realms series:
1) Realms: Eternum (sandbox strategy game): Participation in the game requires the purchase of Realms NFTs. By playing the game or staking Realms, players can earn rewards.
These are the translations of the given news article.Token $Lords is available, but the game is not fully open yet.
2. Loot Survivor (a text-based Roguelike game) and Shoshin by Topology have been launched on the mainnet and can be tested on the testnet. Playing the game requires a minimum consumption of 25 $Lords tokens.
Non-full-chain games refer to games where only some game assets are on the blockchain. Currently, most NFT-related games fall into this category.
Although the NFT market has been cold this year, NFTs in the gaming sector are very popular. Analyzing a project generally focuses on three aspects:
1. Technology
2. Operations (breadth)
3. Community (depth)
Among these, 2 and 3 are the most important, while 1 is relatively secondary.
One project worth paying attention to is Matr1x. Matr1x aims to create a web3 boutique gaming platform, and its first shooting game is already available for experience. The related community is also very active, making it a rare project with high community engagement and strong market presence.
Of course, this game also faces challenges: how to attract web2 users? Since the number of web3 users is limited, and most of them are only concerned about profits rather than the game itself, the project needs to attract web2 players to make the game more sustainable.
Matr1x’s approach is to use platforms like Douyin and Bilibili for live streaming and hold e-sports competitions. Based on game data, a significant proportion of their players come from web2.
There are two ways to participate in Matr1x:
1) Pledge NFTs to obtain tokens.
2) Participate in subsequent game activities or public testing.
If the Gamefi trend arrives, non-full-chain games will be the first to receive attention. When the entire ecosystem is overflowing with funds, full-chain games will also be brought up.
According to a report by Binance Research, the financing growth of Web3 projects related to artificial intelligence in 2023 reached $298 million, far exceeding the total financing amount of AI-related projects from 2016 to 2022.
At the same time, AI-related tokens overall outperformed BTC and ETH in 2023. 2023 can be regarded as the AI year of the whole world, as the importance of AI in the Web2 world continues to strengthen. We should also consider how AI and blockchain can be combined and explore the possible directions for integration. Thus, we can focus on the following projects:
1) Bittensor ($TAO): a decentralized machine learning network based on blockchain that coordinates the collaboration of AI models through blockchain and mining incentive mechanisms.
2) FetchAI ($FET): a blockchain-based machine learning platform that aims to enable traditional products to access AI through Fetch.ai tokens without changing the underlying business applications.
3) Dynex ($DNX): a neural morphology supercomputing blockchain based on the DynexSolve chip algorithm, which proposes the Proof of Useful Work (PoUW) method to improve the speed and efficiency of decentralized networks, aiming to provide computing power for machine learning, fintech, biopharmaceuticals, etc.
4) Grass: a decentralized incentivized network for internet scraping. Users can sell their unused internet resources through the Wynd Network to companies, laboratories, etc. The buyer companies seek unused internet resources to access a more diverse range of IP addresses for market research, web scraping, AI training, and other tasks.
5) Clore.ai ($CLORE): a platform that provides GPU computing power rental services based on PoW. Users can rent their GPUs for AI training, video rendering, cryptocurrency mining, etc., to individuals and organizations in need of computing power services.
In summary, 2024 will be a year of transformation and innovation in the blockchain and cryptocurrency industry. Each development injects new vitality into the industry, from the launch of the first modular blockchain to the rise of the BTC metaverse, to the integration of AI and crypto. As we step into 2024, these developments will continue to shape the industry. Keeping an eye on the market and learning, analyzing market trends rationally, and exploring new areas will be essential for everyone in 2024.
Disclaimer: The content shared in this article is for learning and exchange purposes only and does not constitute any investment advice, nor does it represent the position of Biteye. If you like our articles, please follow us by clicking the card below!
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