Every six months, I reflect on the state of cryptocurrency and its future trajectory. This public commentary highlights three key areas: what’s working, emerging trends, and anticipated innovations. While data-driven, my perspectives inevitably shine through.
Key Trends Showing Product-Market Fit
1. Stablecoins
- Net inflows of ~$25B into on-chain stablecoins since November 2023.
- Global, permissionless access to USD remains a strong use case.
2. Bitcoin as an Alternative Asset
- 11 spot Bitcoin ETFs approved in January 2024, now holding over $80B.
- Institutional adoption mirrors gold’s trajectory but with superior portability and transparency.
👉 Bitcoin ETFs outperform gold
3. Farcaster’s Growth
- Social network built on open protocols surged after launching frames (interactive mini-apps).
- Active users doubled in Q2 2024.
4. Asset Creation
- 10K+ new tokens daily on Solana, driven by memecoins and token extensions.
- Innovations like Solana’s token extensions enable complex economics (e.g., burn mechanisms).
5. Community-Trained AI Models
- Projects like Botto (autonomous artist) reward participants for refining AI outputs.
- Scarcity shifts to taste and attention, monetized via crypto incentives.
6. Solana’s Resurgence
- Daily active addresses match 2021 peaks; fee revenue proves sustainable low-cost model.
7. Ethereum’s Ecosystem
- Monthly active addresses up 30% YTD.
- L2s (Arbitrum, Base) drive ~60% of Ethereum’s scaling activity.
8. Zora’s Vertical Integration
- NFT network hits 250K weekly users with 34% profit margins.
9. Coinbase Diversifies
- $1B+ in Q1 trading fees but growing blockchain rewards (+100% YoY) and Base L2 revenue.
10. On-Chain Exchanges
- Uniswap’s volume surpassed Coinbase’s in May 2024.
- Solana DEXs (Orca, Raydium) see 3x growth.
Emerging Trends
Social-Fi Apps
- Friend.tech and FantasyTop monetize attention but face sustainability questions.
Proliferation of New Chains
- Base (Coinbase’s L2) thrives without token incentives—brand matters.
Differentiation via:
- Tech (zk-Rollups vs. optimistic).
- Tokenomics (fee redistribution).
- Community (cultural alignment).
Future Outlook
New Distribution Channels
- Farcaster scaling, Telegram wallet integrations, and World App (10M users).
Building Blocks
- Coinbase Smart Wallet: Pay directly from Coinbase accounts.
- World ID: Proof-of-personhood solutions.
Untapped Opportunities
- On-chain credentials: Employment verification, certifications.
- Tokenized Real-World Assets: Restaurant reservations (combatting scalping).
- Loyalty Programs: Blackbird’s NFT-based dining rewards.
FAQs
Q1: Are memecoins sustainable?
A: While speculative, they drive tooling innovation (e.g., Solana’s token extensions).
Q2: Why invest in Bitcoin over gold?
A: Bitcoin’s fixed supply, portability, and institutional adoption (ETFs) offer long-term advantages.
Q3: Will L2 fragmentation hurt Ethereum?
A: Competition spurs innovation (e.g., Solana’s speed pushing Ethereum’s rollups).
Q4: Is Social-Fi just a fad?
A: Attention economies need sustainable models—look for utility beyond speculation.
Q5: What’s next for stablecoins?
A: Regulatory clarity and cross-chain interoperability will dominate 2024–2025.
Final Thoughts
Cryptocurrency’s maturation is evident across Bitcoin, Ethereum, and Solana, each pushing the others to innovate. The focus now shifts to real-world utility—loyalty programs, RWAs, and seamless onboarding—bridging crypto with everyday use cases.
For deeper dives, explore my blog Back of the Envelope.