Pantera Partner Paul Veradttakit gave his predictions for the six tracks of the cryptocurrency industry in 2024 in CoinDesk’s “Crypto 2024” special report.
Table of Contents:
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The Resurgence of Bitcoin and DeFi Summer 2.0
Tokenized Social Experiences for New Consumer Use Cases
TradFi-DeFi Bridge Realization, Stablecoins, and Asset Mapping
Cross-Integration of Modular Blockchains and Zero-Knowledge Proofs
More Computation-Intensive Applications Moving to the Chain, Such as Artificial Intelligence and “Decentralized Physical Infrastructure Networks (DePIN)”
Integration of Public Blockchain Ecosystems and the “Hub-Spoke” Model of Application Chains
Bitcoin experienced a resurgence in 2023, with its market share rising from around 38% in January to approximately 50% in December. According to Paul Veradttakit, there are at least three key catalysts that will continue to drive the resurgence of Bitcoin next year:
The fourth Bitcoin halving expected in April 2024
Potential Bitcoin spot ETFs
Programmable functional enhancements, including both on-chain (such as ordinals) and off-chain solutions like layer two networks and other scalable layers such as Stacks and Rootstock.
Veradttakit is optimistic about the development of layer two networks and other scalability layers within the Bitcoin ecosystem and believes that the DeFi Summer trend has the potential to resurface within the Bitcoin ecosystem. Additionally, NFT-related tracks are also expected to experience rapid growth within the Bitcoin ecosystem.
Following friend tech, Veradttakit expects more experimental projects in the social field next year. Tokenization, whether it be fungible or non-fungible tokens, will play a key role in reinventing social applications. Fungible tokens are more likely to be used as new forms of points and loyalty systems, while non-fungible tokens (NFTs) are more likely to be used for personal profiles and social resources. Both will be tradable on-chain and participate in the DeFi ecosystem.
In 2024, institutional adoption is expected to increase significantly, with institutions seeking not only ETFs but also tokenization of real-world assets (RWA) and traditional financial products. In other words, TradFi assets will be “mapped” in DeFi, while crypto assets will gain more exposure channels in the TradFi market, creating a bridge between TradFi and DeFi, providing investors with more liquidity and diversification options. Stablecoins will play a significant role in this process.
Veradttakit points out that with the maturity of modular blockchains and zero-knowledge proof (ZKP) concepts, ZKP development companies will launch “modular” ZKP solutions by focusing on specific vertical markets, such as co-processors, privacy layers, proof markets, and zkDevOps, combining these two technologies. For example, Axiom’s ZK co-processor utilizes ZKP to provide historical state proofs that developers can use for computations in DApps. Veradttakit concludes:
“With ZKP becoming a common interface between these different providers, we will enter a new era of composability for smart contracts. This will provide developers building DApps with greater supplier choice flexibility and lower barriers to entry into the blockchain stack. On the consumer side, ZKP may be more widely applied as a means of protecting identity and privacy, such as using ZK-based decentralized identity proofs.”
Veradttakit believes that with the birth of L2 and new public chains, computationally expensive applications that can utilize billions of bytes of RAM will become more economically viable on-chain in the near future. This includes vertical applications such as on-chain AI systems, decentralized physical infrastructure networks (DePIN), on-chain knowledge graphs, and fully on-chain games and social networks. All of these have the potential to fundamentally change the on-chain data economy, greatly improving user and developer experiences as they are no longer constrained by heavy gas fees and computational power limitations.
Some examples of these include Hivemapper, Bittensor, Modulus Labs, The Graph, and Realmsverse.
In recent years, the public blockchain ecosystem has seen significant development and integration, especially in first-layer (L1) and second-layer (L2) technologies. While there are technical differences between L1 and L2, users do not perceive the differences (such as Solana and Arbitrum).
Veradttakit states that with the development of this homogenization trend, liquidity has become an important concentration of power in the public blockchain ecosystem, benefiting large existing participants such as Arbitrum, Optimism, and Solana. Currently, the top four ecosystems in the market occupy the majority of the total value locked (TVL).
In this context, small ecosystems must focus on specific vertical markets such as social, gaming, or decentralized finance (DeFi) in order to remain competitive, effectively transforming into “application chains” or “industry chains” focused on specific areas. For example, some major L2 projects like dydx, Loopring, and Ronin have already become application chains focused on a single domain. Meanwhile, smaller or newer L2 chains like Base and Blast have seen significant TVL growth largely dependent on specific killer applications like friend.tech and Blur.
Furthermore, most major general-purpose public blockchains have launched application chain toolkits such as OP Stack, Arbitrum Nitro, and StarkEx, allowing these application chains to leverage the liquidity of these public networks and be incorporated into their ecosystems. As a result, we are beginning to see the formation of a “hub-spoke” model, with a few general-purpose public blockchains acting as the “hub” and numerous specialized application chains as the “spokes”. In 2024, it is worth noting the emergence of some Rollup-as-a-Service providers like Caldera, Conduit, and Eclipse, which may leverage this “hub-spoke” model to expand their businesses.
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