Dive into Binance Research's detailed report summarizing the 2023 cryptocurrency landscape and projecting 2024 trends.
From Bitcoin's resurgence to AI's role in crypto, discover insights into the evolving world of digital assets and blockchain technology.
Contents
Comprehensive Report on Cryptocurrency Released by Binance Research
Binance Research, the research division of BINANCE, released a comprehensive 140-page report on January 15, 2024, summarizing the year 2023 and themes for 2024.
This report encompasses a broad range of analyses related to cryptocurrencies and blockchain, addressing various topics, including:
- Prospects of Layer 1 Blockchains: Bitcoin, Ethereum, BNB Chain, Solana, Avalanche, Cosmos, other L1 chains, TradFi, Ordinals, Inscriptions, BRC-20 tokens, physical ETFs, halving events, and more.
- Outlook for Layer 2 Blockchains: Arbitrum, Optimism, Base, opBNB, Zero-Knowledge Proofs, zkSync, StarkNet, Polygon zkEVM, Linea, Scroll, Taiko, and others.
- Decentralized Finance (DeFi): Decentralized Finance (DeFi), liquid staking, lending, decentralized exchanges (DEX), tokenization, Real-World Assets (RWA), and more.
- Stablecoins: Stablecoins, USDT, USDC, DAI, TUSD, emerging categories, Collateralized Debt Positions (CDP), Liquidity Staking Tokens (LST), centralization, and others.
- Non-Fungible Tokens (NFTs): NFTs, NFT marketplaces, OpenSea, Blur, Tensor, other NFT markets, innovation in NFT goods, major NFT products, Bitcoin NFTs, and more.
- Gaming & Social: Gaming, full on-chain games, major game developers entering blockchain, social, the rise of Friend.tech boosting SocialFi, Farcaster’s permissionless transition spurring growth, Lens V2 leading a profile-based paradigm shift, and more.
- Fundraising Activities and Organizational Technology Adoption: Fundraising activities, organizational technology adoption, presence expansion, physical Bitcoin ETFs, cross-chain interoperability solutions, and more.
- Others: Themes for 2024, references, links to Binance Research reports, about Binance Research, resources.
Insights into 2023's Cryptocurrency Market and Themes for 2024
Cryptocurrency Market in 2023
In 2023, the cryptocurrency market saw a 109% increase in market capitalization, fueled by significant upsurges in both the first and fourth quarters.
The final quarter's surge was driven by optimism towards the approval of physical Bitcoin ETFs and anticipation for Bitcoin's halving.
Additionally, the broader financial environment, characterized by strong global GDP growth and moderate inflation rates, provided a favorable setting for risk assets like cryptocurrencies.
Layer 1 (L1) Developments
L1 blockchains remained strong in 2023, with Bitcoin regaining dominance in both market cap and attention.
Significant highlights included flows into physical ETFs, Bitcoin's halving, ongoing development in Inscriptions and BRC-20, and scaling solutions. The report also spotlights Ethereum, BNB Chain, Solana, Avalanche, Cosmos, and several other L1s.
Layer 2 (L2) Advancements
L2s experienced remarkable growth in 2023, with Total Value Locked (TVL) increasing by 321.3% and L2 dominance rising by 77.2% since the beginning of the year.
Optimistic Rollup maintained over 80% market share, while the entire L2 sector made important strides from technology stack improvements to notable partnerships. Developments like EIP-4844 are expected to influence the future evolution of L2.
Decentralized Finance (DeFi) Growth
DeFi saw robust growth in 2023, with TVL increasing by 38.9% compared to the previous year.
Noteworthy contributions to DeFi's growth include the significant rise of Liquidity Staking Tokens (LST) and LSTfi, increased adoption of Real-World Assets (RWA), and the emergence of intent-focused architectures.
Stablecoins Dynamics
The market capitalization of stablecoins decreased by 5.2% year-over-year amidst market fluctuations.
Centralized stablecoins continue to hold 92% of the market share. Despite the emergence of newcomers like CDP-backed and LST-backed stablecoins, USDT's dominance has risen to 70.6%.
Non-Fungible Tokens (NFTs) Trends
NFTs showed a remarkable recovery in the fourth quarter.
December's trading volume reached $1.7 billion, the highest in 2023, with Bitcoin NFTs demonstrating significant growth.
Competition among NFT marketplaces remains a key theme, with developments in 'Blast', an L2 initiated by Blur's founders, drawing attention. The response of OpenSea to its declining market share is also noteworthy.
Blockchain Gaming Revival
The gaming sector showed signs of revival towards the end of the year, as indicated by on-chain metrics.
In the final week of the year, the number of unique active wallets per week more than doubled from 5.8 million at the beginning of the year to 12.6 million.
Several major games by prominent developers are scheduled to launch in 2024, suggesting a year rich in events.
Social Sector Highlights
In the social domain, the launch of 'friend.tech' in August 2023 brought attention to SocialFi.
The success of friend.tech and its forks highlighted the potential of the SocialFi space and the appeal of monetizing content for creators.
However, activity on SocialFi platforms has decreased, and whether interest will reignite remains uncertain.
Fundraising Developments
In terms of fundraising, Web3 projects garnered a total of 1173 investments throughout 2023, raising a combined $9 billion.
36.5% of this was invested in infrastructure projects, 13.3% in Centralized Finance (CeFi), and 8.6% in Decentralized Finance (DeFi).
Despite a notable decrease in both investment amounts and overall valuations, the market's recovery trend and significant funding in infrastructure development are encouraging signs.
Themes for 2024
Binance Research identifies eight particularly intriguing themes for 2024, expecting significant progress in these areas throughout the year:
- Bitcoin Ecosystem
- Ownership Economy Applications
- Artificial Intelligence (AI)
- Real-World Assets (RWA)
- On-Chain Liquidity
- Institutional Technology Adoption
- Security
- Account Abstraction
The full report by Binance Research can be accessed here.