Binance Research 2024 Semi-Annual Report: Summary of 6 Key Points

Translation: Blockchain in Vernacular

After a significant 109% growth in 2023, the crypto market continued to rise in the first half of 2024, with the total market capitalization increasing by 37.3%. This growth was mainly driven by a 60.2% gain in the first quarter of the year, before giving back some gains in the second quarter, with the market value falling by 14.3%.

The successful launch of a U.S. spot Bitcoin exchange-traded fund ("ETF") in January marked a pivotal moment for the industry and triggered a period of bullish sentiment and positive inflows. While the initial price reaction was muted, subsequent months saw strong gains as the market digested the impact of ETFs in attracting new capital, increasing investor accessibility, and strengthening the acceptance of cryptocurrencies as mainstream investments.

It’s worth noting that there were several narratives that gained momentum in the first half of the year – for example, the points meta, restaking hype, memecoins mania, and airdrop season, to name a few. While some of these narratives may have died down, they were certainly strong drivers of on-chain activity and transactions in the first half of the year.

Looking ahead, we’ll be keeping a close eye on the Fed’s interest rate policy, spot Ethereum ETF approvals and developments, as well as watching for the emergence or resurgence of crypto-specific narratives by monitoring on-chain metrics. We recognize the structural drag from the large number of tokens set to be unlocked in the coming months and years and urge investors to conduct their own research. The good news is that in the past few months, the valuations of many tokens have corrected and returned to more reasonable levels.

The following is a summary of some key points of this report:

1. Layer1 & Layer2 of Public Chains

Layer1 (“L1”) performed strongly at the beginning of the year, with Bitcoin’s fourth halving, the launch of the Runes protocol, and the U.S. Spot ETFs continue to gain market dominance following their approval (attracting over $14 billion in inflows to date). Ethereum went through the reset outbreak and EIP-4844 update, the BNB chain continued to work on opBNB and Greenfield, and Solana excelled in the memecoin space and launched blockchain links ("blinks").

The first half of 2024 is the airdrop season in the Layer2 ("L2") field, especially zero-knowledge ("zk") projects. The promise of incentives attracted massive capital inflows into the L2 chain, bringing L2’s total value locked (TVL) to $43 billion, a 90% increase in the first 6 months alone.

2. DeFi

2024 witnessed a large influx of capital into decentralized finance ("DeFi"), driving TVL year-to-date ("YTD") growth by 72.8%, from US$54.4 billion at the beginning of the year to US$94.1 billion. This growth has benefited nearly all DeFi sectors, whether major markets or niche markets, prompting some protocols to bring original elements of finance on-chain that were previously unachievable.

3. Stablecoins

The stablecoin market has rebounded significantly and is currently only 14.5% below the peak before the collapse of TerraUSD (UST) in April 2022. As of June 30, 2024, the stablecoin market capitalization was $161 billion, a two-year high. While Tether’s USDT continues to dominate, Circle’s USDC and Ethena’s USDe have also increased their market share.

4. NFT

The NFT market experienced turmoil in the first half of the year, with sales declining and floor prices of major projects falling by more than 50%. Blur continues to dominate, driven by the BlastToken airdrop, while Pudgy Penguins has seen some success with its physical toys. Bitcoin NFTs also continue to perform well.

5. SocialFi

SocialFi continues to develop, and the Lens protocol announced the upcoming launch of its zk chain, Lens Network. Farcaster continued user growth after the launch of Frames, while friend.tech released their token and v2. The Fantasy.top trading card game is also a notable highlight.

6. GameFi

The Web3 gaming sector performed strongly in the first quarter, but the market capitalization of gaming project tokens fell sharply in the second quarter along with other altcoin markets. Despite the price drop, user growth metrics are healthier than ever, with projects like Pixels and Hamster Kombat attracting large numbers of players through token airdrops.

Other areas of note include memecoins, artificial intelligence (“AI”), and decentralized physical infrastructure networks (“DePIN”). These sectors continue to receive strong interest from investors and the wider community in the first half of 2024.

7. Looking ahead to the second half of the year

As we enter the second half of 2024, we continue to be particularly interested in six key themes and expect significant progress in these areas throughout the year. These topics cover a variety of narratives and sectors, such as those related to the macro environment, the Bitcoin ecosystem, economic applications of ownership, real-world assets (“RWAs”), and more.

Full version link: https://public.bnbstatic.com/static/files/research/half-year-report-2024.pdf

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