Pantera’s managing partner, Paul Veradttakit, provided predictions for the six tracks of the cryptocurrency industry in 2024 in CoinDesk’s “Crypto 2024” special report.
Bitcoin’s revival and DeFi Summer 2.0
Tokenized social experiences for new consumer use cases
Establishing a bridge between TradFi and DeFi, stablecoins, and asset mapping
Cross-integration of modular blockchains and zero-knowledge proofs
Increased migration of compute-intensive applications to the chain, such as AI and DePIN
Integration of public blockchain ecosystems and the “hub-spoke” model of application chains
Bitcoin experienced a revival in 2023, with its market share rising from about 38% in January to around 50% by December. Veradttakit believes that Bitcoin’s revival will continue next year due to three main catalysts: the fourth Bitcoin halving expected in April 2024, the potential Bitcoin spot ETF, and programmable functional enhancements, including on the base layer like Ordinals, as well as on layer two networks and other scalable layers like Stacks and Rootstock.
Veradttakit is optimistic about the development of layer two networks and other scalability layers in the Bitcoin ecosystem and expects the DeFi Summer trend to resurface within the Bitcoin ecosystem. Additionally, NFT-related tracks are likely to see rapid growth within the Bitcoin ecosystem.
Following friend tech, Veradttakit anticipates more experimental projects in the social sector next year. Tokenization, whether fungible or non-fungible, will play a key role in reinvented social applications. Homogeneous tokens are more likely to be used as new forms of points and loyalty systems, while non-fungible tokens (NFTs) may serve as personal profiles and social resources, both tradable on-chain and participating in the DeFi ecosystem.
In 2024, institutional adoption is expected to significantly increase, with institutions seeking not only ETFs but also tokenization of real-world assets (RWA) and traditional financial products. Veradttakit notes that stablecoins will play a significant role in this process.
Veradttakit points out that with the maturation of modular blockchains and zero-knowledge proofs (ZKPs), ZK development companies will introduce “modular” ZK solutions focusing on specific vertical markets, combining both technologies. For example, Axiom’s ZK coprocessor leverages ZKP to provide historical state proofs that developers can use for calculations in DApps. Veradttakit concludes, “As ZKPs become the universal interface between these various providers, we will enter a new era of composability for smart contracts. This will provide greater flexibility for developers building DApps and lower the barrier to entry into the blockchain stack. On the consumer side, ZKPs could see wider application as a means of protecting identity and privacy, such as through ZK-based decentralized identity proofs.”
Veradttakit believes that with the emergence of L2 and new public chains, high-cost applications (those using 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 whole-chain games and social networks, all of which could significantly transform the on-chain data economy, greatly improving user and developer experiences by removing heavy gas fees and computational constraints.
Examples of such applications include Hivemapper, Bittensor, Modulus Labs, The Graph, and Realmsverse.
The public blockchain ecosystem has seen significant development and integration in the past few years, especially in first-layer (L1) and second-layer (L2) technologies. Despite technical differences between L1 and L2, users may not perceive the distinction (such as Solana and Arbitrum).
Veradttakit states that with the development of this homogenization trend, liquidity has become a significant centralizing force in the public blockchain ecosystem, benefiting large existing participants like Arbitrum, Optimism, and Solana. Currently, the top four ecosystems occupy the majority share of total value locked (TVL).
In this context, small ecosystems must focus on specific vertical markets, such as social, gaming, or decentralized finance (DeFi), to remain competitive, effectively transitioning into “application chains” or “industry chains” focused on specific areas. For example, major L2 projects like dydx, Loopring, and Ronin have become application chains focused on a single domain. Smaller or newer L2 chains like Base and Blast have seen significant TVL growth largely reliant on specific killer applications, such as friend.tech and Blur.
Furthermore, most major general public blockchains have introduced application chain toolkits like OP Stack, Arbitrum Nitro, and StarkEx, enabling these application chains to leverage the liquidity of these public networks and be included in their ecosystem. Thus, a “hub-spoke” model is emerging, with a few general public blockchains acting as the “hub” surrounded by many specialized application chains or “spokes.” In 2024, attention should be paid to some Rollup service providers like Caldera, Conduit, and Eclipse, which may expand their business using this “hub-spoke” model.