2024 Crypto Assets Market Overview: Bitcoin ETF Approved, Solana Rising, Layer 2 Thriving

1. Market Overview

1.1 Fundamentals of the Cryptocurrency Market

The total market capitalization of the cryptocurrency market in 2024 increased from $2.31 trillion to $3.33 trillion, a rise of 44.2%. This growth is mainly attributed to the approval of spot Bitcoin ETFs and favorable factors such as Trump's victory in the election. Bitcoin's dominance rose to 56.8%, and ETF assets under management doubled, reflecting increased interest from institutional investors.

The performance of the Ethereum ETF is relatively flat, with institutional investors showing a clear preference for Bitcoin. Solana performed well, with the SOL price rising by 29.3% and a net inflow of $2 billion into the ecosystem.

The DeFi market share is expanding, with the total locked value ( TVL ) increasing by more than double. The ratio of DEX to CEX trading volume has increased to 11.05%, with an annual trading volume reaching 2.67 trillion USD. Solana and Base have doubled their DeFi TVL market shares, reaching 7.17% and 3% respectively.

The market capitalization of stablecoins grew by 26.8%, reaching a historic high of over $205 billion, with new entrants like Ethena further driving this trend. The potential approval of ETFs for assets such as XRP and SOL in the future is expected to have a positive impact on the market.

1.2 Macroeconomic Environment and Politics

In the United States, Trump has been re-elected as president, and the Republican Party has won a majority in both houses of Congress. Trump's America First and isolationist policies may trigger global trade protectionism. He expressed a friendly attitude towards cryptocurrencies during the campaign, but actual policies remain to be seen.

Europe is affected by the Russia-Ukraine war, with rising energy prices and increased military spending. The discourse power of right-wing parties has significantly strengthened. Europe is in a following position regarding cryptocurrency policy and has implemented the MiCA regulatory framework.

The Middle East is engulfed in continuous warfare, with armed conflicts occurring between Israel and Hamas. Several countries in South America are advancing the legalization of cryptocurrency.

In terms of the global economy, the GDP growth rate for 2024 is 2.6%, with an inflation rate of 2.5%. The United States has begun to cut interest rates, while the Eurozone's economic growth is slow due to geopolitical conflicts. China and emerging market countries maintain a high growth rate but face challenges. All three major U.S. stock indices have risen sharply, with technology companies performing well, and the development of AI has had a significant impact.

2. Bitcoin

2.1 Product and Agreement Design

In the second half of 2024, Bitcoin underwent some important software upgrades, such as Bitcoin Core 28.0 introducing flexible transaction forwarding strategies, and the Lightning Network launching BOLT12. Discussions on soft fork proposals are ongoing, mainly focusing on adding new opcodes and improving the Lightning Network, but no consensus has been reached yet. The implementation of BitVM is still progressing steadily, with a focus on cross-chain bridge design and implementation.

2.2 Layer 2 - Lightning Network

The number of publicly accessible channels in the Lightning Network has not changed much, remaining at approximately 5000 BTC. The number of nodes is basically stable, but the number of channels continues to decrease, which may indicate that liquidity is gradually concentrating in the hands of large node service providers. BOLT12(offer) has been adopted by multiple clients, supporting static payment methods. Some Layer 1 networks are developing Layer 2 solutions compatible with the Lightning Network.

2.3 Layer 2 - Side Chains

The performance of various Layer 2 sidechain projects is uneven. The main challenge faced by BTCFi is its reliance on unsustainable spikes in TVL and airdrop incentives. The main driver for Bitcoin deposits in L2 solutions is the opportunity to obtain low-risk returns priced in Bitcoin. The key to future success lies in ensuring asset security and pursuing a vertical integration strategy.

On-chain assets 2.4

The overall performance of on-chain Bitcoin assets has been mediocre, with low activity levels. BRC20, Runes, and other meta-protocol assets have recently performed poorly. RGB is still being promoted, with some progress in integration with the Lightning Network. Taproot Assets, launched by Lightning Labs, enables low-cost minting of stablecoins with instant settlement on Bitcoin.

2.5 BTCFi

BTCFi can provide additional Bitcoin-denominated returns for Bitcoin holders, and the overall locked value is expected to grow. The types of returns pursued by BTC assets have shifted from L2 to staking, liquid staking, and liquid re-staking. Babylon has attracted a large amount of Bitcoin-denominated TVL. Various LST projects have emerged, generally borrowing from mature DeFi design concepts.

3. Ethereum

Despite the launch of the ETH ETF in 2024, its performance has not replicated the success of the Bitcoin ETF. The ETH/BTC ratio has dropped from 0.054 to 0.037, highlighting institutional investors' preference for Bitcoin. Gas fees on Layer 2 are significantly lower than those on Ethereum, leading to more funds flowing into Layer 2 projects like Base.

3.1 L2s

Since the introduction of blob data storage after the Dencun upgrade, the transaction fees for rollups have decreased by over 90%. Leading Layer 2s like Base, OP Mainnet, and Arbitrum have achieved net inflows of $3.5 billion, $2.1 billion, and $1.7 billion respectively. The daily transaction count for Layer 2 has increased by 325%, and the number of daily active addresses has also risen significantly.

The significant influx of funds into Base can be attributed to a smooth user experience, strategic cooperation with Coinbase, and the launch of popular applications. Arbitrum launched Stylus, allowing developers to write smart contracts in multiple languages. The OP Superchain continues to gain strong momentum, with the total number of chains based on OP-Stack reaching 56 by the end of the year.

3.2 Re-staking

The amount of staked Ethereum is showing an overall upward trend, but the yield continues to decline. Re-staking protocols like Eigenlayer have attracted a large TVL, although the growth momentum has weakened. The TVL of Symbiotic has seen significant growth, increasing from $307 million to $2.12 billion.

3.3 Ethereum Future Roadmap and EIP Proposals

2025 will be one of the most important years in the development of Ethereum, with plans for the Pectra upgrade. Key EIP proposals include:

• EIP-7691: Expand Blobs target capacity, further reduce L2 fees
• EIP-7702: Introduce smart contract functionality for EOA accounts
• EIP-7251: Optimize validator management, reduce network load

The Ethereum core research team has reorganized its long-term development roadmap, aiming for a major upgrade in 2029 that will introduce core technologies such as zero-knowledge proofs and post-quantum cryptography.

4. Solana

In 2024, Solana performed exceptionally well, with a price increase of approximately 75%, and the SOL/ETH ratio rising from 0.04 to 0.06. Solana offers lower transaction fees and higher throughput, attracting many high-performance decentralized applications. The market value of stablecoins has more than tripled, reaching $5.1 billion. Solana has also achieved significant growth in developer adoption, surpassing Ethereum for the first time.

The focus of the Solana ecosystem is mainly on areas such as DePIN, meme, and PayFi.

• DePIN: Leading projects like Helium and Render Network migrate to Solana, driving ecosystem development.
• Meme: With the help of platforms like Pump.fun, Solana has become a popular choice for issuing Meme coins.
• PayFi: Collaborating with Shopify, VISA, and others to promote applications in the payment field.

The activation of Firedancer in the future will further enhance network performance and security. The release of the Solana plugin provides higher granularity and programmability, which is expected to drive more institutional adoption.

5. Alt-L1s

In 2024, Alt-L1 continues to gain strong attention, providing investors with a different experience from Ethereum. Notable projects include:

• Berachain: Introduced liquidity proof ( PoL ) mechanism, with TVL exceeding 1.5 billion USD after launch.
• TON: Leveraging the Telegram user base, DAU increased to 293,539, and DeFi TVL grew by more than 10 times.
• Kaia: Merged from Klaytn and Finschia, integrating LINE and KakaoTalk, with a TVL of 60 million USD.
• Move ecosystem: Sui and Aptos are the main representatives, with Sui significantly outperforming Aptos in several key metrics.
• MegaETH: Introduces node specialization, supporting a transaction throughput of up to 100,000 TPS.
• Monad: Achieves high performance through optimistic parallel transaction execution, supporting up to 10,000 transactions per second.

6. Other tracks

6.1 Meme

The overall increase in the Meme sector in 2024 reached 218%. The launch of Pump.fun has become an important milestone, greatly unleashing retail demand. Ethereum, Base, and Solana are the three most active public chains in the Meme ecosystem.

6.2 AI

The development of AI in the crypto field covers upstream and downstream industries. Agents and applications have become a hot topic, and the successful transformation of the Virtuals Protocol has catalyzed this trend. The combination of AI tokens and memes has also become a community hotspot.

6.3 RWA

The RWA market value has increased by 63%, reaching $13.67 billion. Private credit and US Treasury bonds are the main asset classes. Institutional issuers such as Franklin Templeton and BlackRock have joined to drive development. Ethereum remains the leading public blockchain platform.

6.4 Trading Bot

The competition in the trading bots market will intensify in 2024. Bonkbot once reached an 80% market share, but failed to maintain it. Trojan stabilized at a 30-40% market share. GMGN.AI's trading volume caught up to 2/3 of Trojan's by early 2025.

6.5 DeSci

DeSci projects are distributed across academic fields such as biotechnology, space, and humanities, with biotechnology being dominant. They still face challenges such as insufficient funding and legal risks.

6.6 DePIN

The total market value of DePIN reached 50 billion USD, an increase of over 176%. Number of projects