Every six months or so, I write an internal reflection on the current state of cryptocurrency and the future development direction. I believe it is worth sharing my recent thoughts with the public.
This article is divided into three parts: what’s working, what else is happening or has happened, and what I am looking forward to.
I have tried to base most of my analysis on data, but it is undeniable that my opinions have inadvertently surfaced. I hope this is an interesting article. If the response is positive or the feedback is productive, I will consider sharing more of these internal reflections in the future.
What’s Working:
The good news is that many things are working and progressing smoothly. The development of these things, many of which I call “big ideas” because they can effectively change the status quo, should create new opportunities, which are the secondary effects of their success.
For clarity, I use the term “what’s working” to refer to projects or trends that show sustainable product-market fit, expanding the size of the crypto market, or both.
So, what factors seem to be working or growing at the moment? I have listed 11 factors that I believe show signs of “what’s working” (not an exhaustive list):
1. Stablecoins
2. Bitcoin as an alternative asset
3. Farcaster, an early but growing social network
4. Asset creation
5. Community-created and trained AI models
6. Solana
7. Ethereum
8. Zora
9. Coinbase
10. On-chain exchanges
11. Bonus: Blackbird
#1: Stablecoins
The supply of on-chain stablecoins has seen a net inflow of approximately $25 billion this year to date. Overall, the inflow has been positive since November 2023. Permissionless global access to US dollars continues to have strong product-market fit.
#2: Bitcoin as an alternative asset
Less than 12 Bitcoin spot ETFs were approved in January. As of early June, the value of Bitcoin spot ETFs exceeded $80 billion.
#3: Farcaster
Farcaster, a social network built on an open protocol stack, has started to experience meaningful growth.
#4: Asset creation
The number of newly created tokens continues to increase. One way to track this trend is by looking at the number of new tokens appearing on decentralized exchanges (DEXs). The activity seems to be primarily driven by asset creation on Base and Solana.
#5: Community-created and trained AI models
We are moving towards a world with abundant low-latency meta-opportunities. In that world, where does value accrue? I believe value comes from scarce resources. We are starting to see crypto play a role by tightly coupling finance with taste and attention activities.
#6: Solana
Daily active addresses interacting with Solana are 2-3 times higher than the same period last year, roughly aligning with the peak activity period of 2021. The number of monthly active addresses has increased 3-4 times during the same period and reached a historical high in May 2024.
#7: Ethereum
The Ethereum ecosystem has also made significant progress. The monthly active addresses of Ethereum itself have shown significant growth. The average for the past 30 days has increased by about 30% year-to-date, only about 10% lower than the peak in 2021.
#8: Zora
Zora Chain has been live for nearly a year. During this time, the network has been searching for a foothold. The number of weekly active users has grown by about 60% year-to-date, recently surpassing a new high of 250,000. The chain has achieved a profit margin of approximately 34%, meaning Zora retains about one-third of the ETH spent on transaction fees by users.
#9: Coinbase
Coinbase has had a strong start to the year. It is custodian for 8 out of 11 Bitcoin spot ETFs. The exchange business continues to make progress, with trading volume reaching a high of $157 billion, the highest since November 2021.
#10: On-chain exchanges
On major Ethereum chains, the number of unique users (traders) on Uniswap has increased by about double in the past six months. Successful protocols can build successful businesses. We are seeing this with on-chain exchanges, such as the revenue growth brought by Uniswap Labs’ interface.
#11 (Bonus): Blackbird
Blackbird is a loyalty and rewards program for the restaurant industry built on crypto. When users check-in at restaurants associated with Blackbird, the application mints an NFT for them, which is a digital artifact of their visit and also acts as a voucher for discounts or other benefits.
These are the factors indicating what’s working in the crypto space. It is exciting to see the progress and potential opportunities they bring.