Outlook on Development Trends in the Web3 Field for 2024

1. Ethereum Layer 2 Networks Embrace a New Wave

Ethereum and its layer 2 network ecosystem have become the largest isomorphic cross-chain ecological group. With the successive launch of projects such as Starknet, zkSync, Scroll, and Blast, competition in the layer 2 network market will become increasingly fierce. The dual drive of technological innovation and market demand will further promote the rapid development of this field.

Notable projects include Starknet, zkSync, Scroll, Blast, and Manta.

2. Modularization of Blockchain Becomes an Inevitable Trend

The launch of Celestia marks the beginning of the data availability layer market breaking free from Ethereum's monopoly. Currently, mature smart contract architectures such as OP Stack and Polygon CDK are providing new options for the industry. At the same time, the industry is exploring the application of Bitcoin's cutting-edge BitVM technology to the data availability layer.

The rapid development of niche areas such as shared sequencers, decentralized sequencers, and RaaS (Runtime as a Service) signifies that blockchain is quickly iterating towards a modular direction.

Notable projects include Celestia, Altlayer, Dymension, Avail, Fuel, and Espresso.

3. Bitcoin Finance (BTCfi) is expected to unleash great potential

The combination of Bitcoin fundamentalism and market hotspots is unleashing unimaginable energy. The release value of Bitcoin liquidity is comparable to an undeveloped gold mine. Following the inscription narrative, Bitcoin's second-layer networks and applications are stirring up a new wave.

It is expected that over 10% of Bitcoin liquidity will be released, and BTCfi is expected to support a market exceeding $100 billion.

Notable projects include Stacks, Merlin, B² Network, and Chainway.

4. Restaking Opens a New Chapter in Consensus

In the narrative of modular blockchains, projects exploring consensus layers are relatively limited. The consensus security provided by Bitcoin and Ethereum is still recognized as the benchmark in the industry. The introduction of restaking technology offers a solution for emerging blockchain projects to attain appropriate security during the launch phase, helping to avoid excessive token inflation issues.

In the Bitcoin ecosystem, Babylon is at the forefront. The Ethereum ecosystem is led by EigenLayer, which has derived the concept of liquidity re-staking derivatives (LRD) based on liquid staking derivatives (LSD).

Notable projects include EigenLayer, Babylon, ether.fi, Puffer, and Pendle.

5. Game Finance (GameFi) Enters the Second Development Cycle

The widespread use of MPC wallets has expanded the user base. The game project, which has undergone three years of iteration, has stronger playability and user appeal. The rich game content has increased the complexity of the economic system, gradually breaking away from the purely Ponzi attributes of the previous cycle.

Notable projects include Illuvium, Space Nation, Lumiterra, and Matr1x.

6. The Integration of AI and Web3: A Long-term Exploration of Algorithms, Computing Power, and Verifiability

Artificial intelligence, as the main narrative in the technology field, continues to inject vitality into the cryptocurrency sector. On-chain AI can achieve automation and dynamism of machine learning and artificial intelligence through smart contracts. Blockchain technology provides transparent and verifiable solutions for various aspects of AI, such as zero-knowledge machine learning (zkML) and open machine learning (opML).

Key elements such as AI models, GPU computing power, data supply, and data labeling can all be integrated into the blockchain.

Notable projects include TAO, OLAS, and JANCTION.

7. Decentralized Physical Infrastructure (DePIN): A New Model of DeFi for Exponential Growth

DePIN is a new model of token distribution and service provision that combines online and offline elements. As infrastructure continues to improve, cryptocurrency applications will drive exponential growth in the DePIN network.

Notable projects include Mobile, Io.net, Meson, and POKT.

8. Social Currency Experiment Ongoing

Although Friend.tech's attempt was unsuccessful, the potential for social monetization has been fully demonstrated. Resistance to censorship and security have become core demands of Web3 social platforms. Social protocols like Lens and Farcaster still carry the industry's hopes.

Notable projects include Farcaster, Lens, and Nostr.

9. The DeFi Derivatives Market is Poised for Growth

The financial scenario has always been the most suitable high-value, high-yield application area for blockchain. GMX's globally shared liquidity pool and Gains' efficient capital utilization synthesis plan continue to lead the market. In this round of the bull market, futures protocols such as Aevo and Whales have also led to the explosion of the presale market.

The derivatives market is considered one of the highest quality narratives in the long-term fundamentals.

Notable projects include GMX, Gains, Drift, Apex, Aevo, and Whales.