Crypto Assets Market Outlook 2024: Optimistic but Not Just That

The annual "Crypto Assets Status" report released by a16z has attracted wide attention in the industry, with the data and charts presented conveying a positive and optimistic signal. However, the highlights in the report alone are not enough to fully grasp the current market situation. This article will provide some additional background and data analysis, so that readers can have a more comprehensive understanding of the development trends in the Crypto Assets market.

![\Stable Dog Original] Supplementary Analysis Behind Optimism: a16z's 2024 Annual Crypto Report

Adoption of Crypto Assets

The report opens by stating that "Crypto Assets activities and usage have reached an all-time high," and shows the correlation between the number of monthly active Crypto Assets addresses and the growth of internet users. However, it is important to note that one address does not always correspond to a real user, and sometimes it may not represent any real individual at all.

Analysis shows that transfers between wallets are one of the most common types of transactions. It is worth noting that the growth in the number of on-chain addresses, such as those on Solana and Base, is closely related to meme coin trading activity. Active meme coin traders often hold multiple wallet addresses. Additionally, there are automated trading behaviors such as arbitrage bots in the market. On the Pumpdotfun platform alone, an average of 25,000 new tokens are issued daily, each counted as an active address.

![\Stable Dog Original] Supplementary Analysis Behind Optimism: a16z's 2024 Annual Crypto Report

In comparison, tracking the traffic of Crypto Assets market websites may be a better adoption indicator. Currently, CoinMarketCap has a monthly visit count of approximately 73.96 million, while CoinGecko has 22.8 million. Even considering that some users have shifted to emerging platforms like DEXScreener, the overall number of retail users does not seem to have significantly increased.

Although some blockchains have indeed attracted new users, they have not yet entered the large-scale popularization stage of Web3. Existing users are developing more comprehensive infrastructure to address the current fragmentation issues of liquidity and user experience.

![\Stable Dog Original] Supplementary Analysis Behind Optimism: a16z's 2024 Annual Crypto Report

The data in the report regarding the growth of mobile encryption wallet users looks optimistic, but it is necessary to consider the high proportion of mobile device traffic in emerging countries. For example, Nigeria is at 86%, India at 79%, and Argentina at 57%. As mobile wallets become more user-friendly, their market share is increasing. Furthermore, users often need to install multiple different wallets to adapt to the current blockchain ecosystem.

These data reflect that Crypto Assets are gradually being more widely adopted in emerging countries, which is precisely the goal that Web3 and DeFi have always pursued.

Killer Applications of Crypto Assets

The report considers stablecoins to be one of the most obvious "killer applications" of Crypto Assets, a viewpoint that is worth agreeing with. Stablecoins have advantages such as fast transfer speeds and low costs. As the legal frameworks in various countries improve, more and more users may choose stablecoins as an alternative to traditional remittance methods.

![\Stable Dog Original] Supplementary Analysis Behind Optimism: a16z's 2024 Annual Crypto Assets Report

The trading volume of stablecoins surpassing that of Visa is remarkable, but it should be noted that stablecoins are primarily used for large transfers rather than daily small expenses. While stablecoins are indeed an important application, it is somewhat regrettable to see the annual report place such emphasis on stablecoins. A few years ago, DeFi was the real breakthrough application, but now it seems that there is a lack of more innovative killer applications emerging.

Infrastructure Development

Improving infrastructure is crucial for the next generation of dApps and high-load applications. However, everyday users have not yet seen significant benefits from this. While some games and local applications have been launched, transaction performance is not the main bottleneck. For example, the primary demands in games are asset tokenization and open markets, which do not require extremely high TPS.

![\Stable Dog Original] Supplementary Analysis Behind Optimism: a16z's 2024 Annual Crypto Report

The advancement of infrastructure undoubtedly creates opportunities for Web3 innovation and unknown new use cases. However, considering that the most popular application this year may be Hamster Kombat, the development of the dApp space still has room for improvement.

Current State of DeFi Development

The report states that "DeFi is still popular and growing." This is indeed the case for 2023, but it has not yet reached the levels of 2022. The total value locked in DeFi in 2022 was close to $180 billion, and it is currently only about half of that. Even considering the price volatility of Ethereum, we have not yet returned to peak levels.

![\Stable Dog Original] Supplementary Analysis Behind Optimism: a16z's 2024 Annual Crypto Assets Report

The industry's growth is mainly attributed to emerging areas such as liquid staking, re-staking, and RWA. Institutional capital has begun to enter the DeFi market. For example, Lido, which leads in DeFi locked assets, currently has nearly 6,000 monthly active users. This indicates that the recent growth in DeFi can be attributed to an increase in average deposit value and the overall market cap, rather than a significant increase in the number of users.

![\Stable Dog Original] Supplementary Analysis Behind Optimism: a16z's 2024 Annual Crypto Assets Report

The Integration of AI and Crypto Assets

The combination of artificial intelligence and Crypto Assets has enormous potential to drive the development of decentralized economies and promote more cost-effective and community-oriented advancements in the AI field.

![\Stable Dog Original] Supplementary Analysis Behind Optimism: a16z's 2024 Annual Crypto Report

The correlation between AI and Crypto Assets traffic may stem from their common characteristics: both are emerging, promising technological fields with speculative value. Web3 is at the forefront of technological innovation, naturally attracting the interest of AI users, and vice versa. There are many similarities in the user bases and points of interest between these two industries.

![\Stable Dog Original] Supplementary Analysis Behind Optimism: a16z's 2024 Annual Crypto Report

Decentralized computing, internet resource sharing, collaborative AI agents, and other innovative applications show great potential. However, these technological innovations have not yet attracted the attention of a broader Web2 user base, as they tend to be highly technical or targeted at specific user groups.

Summary and Outlook

In 2024, significant developments in the Crypto Assets field mainly occur behind the scenes. These innovations are often highly technical or specifically targeted at institutional investors, and thus have not yet attracted widespread attention from ordinary Web2 users. For newcomers to Crypto Assets seeking quick profits, these advancements may lack appeal, which also explains why many are still drawn to the hype of meme coins and prediction markets.

![\Stable Dog Original] Supplementary Analysis Behind Optimism: a16z's 2024 Annual Crypto Assets Report

With the return of realistic perceptions, people's enthusiasm for airdrops and points programs has gradually faded. Users now see it as a form of additional yield. Similarly, the excitement around GameFi has also become more rational. Although some games have successfully attracted users, there has yet to be a blockbuster that can compete with mainstream AAA titles. This is a normal innovation process, and maturity takes time.

![\Stable Dog Original] Supplementary Analysis Behind Optimism: a16z's 2024 Annual Crypto Report

Overall, the Crypto Assets market is still full of hope, but we have not yet entered the golden age of Web3. The industry is developing steadily, and there is still great potential to be explored in the future.

![\Stable Dog Original] Supplementary Analysis Behind Optimism: a16z's 2024 Annual Crypto Report