Binance Research Annual Report: 8 major priorities for 2024
Written by: Binance Research
Compiled by: Odaily Planet Daily Nan Zhi
2023 Review
2023 marks a year of recovery for the crypto market, with the global crypto market capitalization growing by approximately 1,091 TP3T. This impressive growth is mainly due to the significant progress made in the first and fourth quarters, which achieved growth of 48.31 TP3T and 54.41 TP3T respectively. This is in stark contrast to the difficult period in 2022, when the market fell by approximately 641 TP3T driven by a series of turbulent events such as UST depegging, the bankruptcy of multiple lending institutions, and the collapse of FTX.
The key factors for a strong performance in 2023 include a number of major developments. The most critical of these is the optimism brought by the spot Bitcoin ETF and the expectation of the upcoming Bitcoin halving. The strong macroeconomic background (resilience of global GDP growth and slowing inflation) also supports the strong performance in 2023.cryptocurrencyCreated a favorable environment.
Despite the significant gains, 2023 was not without its challenges. In March, disruptions in the banking sector affected the crypto market, causing the USDC stablecoin to temporarily de-peg. In August, traders suffered losses of up to $1 billion due to liquidations due to macroeconomic uncertainty related to the Chinese economy and signs that the Federal Reserve was considering further rate hikes. But the crypto market showed resilience, quickly recovered and regained momentum in the following months.
As we look to the future of the crypto market, the lessons of 2023 highlight the crypto industry’s ability to adapt, innovate, and grow in the face of challenges. A strong recovery in 2023 provides the foundation for more breakthroughs, growth, and possibilities in the crypto space.
Outlook for 2024
Looking ahead, we are pleased with the market’s strong performance over the past year and are looking forward to the following themes.
The Bitcoin narrative remains at the forefront
Throughout 2023, Bitcoin has been in the spotlight thanks to various narratives such as Ordinals/BRC-20, the approval of spot Bitcoin ETFs, and the 2024 halving. Ordinals and BRC-20 mark the 0 to 1 innovation in Bitcoin’s evolution, introducing homogeneous tokens on the Bitcoin network for the first time.Tokendeployment, casting and transfer of theseTokenIt has also quickly become an Alpha investment target for investors in the Bitcoin ecosystem. At the same time, the recently approved spot ETF may introduce a large amount of liquidity to the crypto market and mark the mainstream recognition of Bitcoin as a legal asset.
Moving into 2024, momentum is likely to continue. The final decision from the SEC is out and is likely to be positive. Historically, crypto markets have outperformed in the year following Bitcoin halving events. Therefore, the recent approval of spot ETFs and optimism ahead of the April halving could spark significant market volatility.
Additionally, due to the small market cap and meme properties of Ordinals and BRC-20, we may witness more dramatic price fluctuations if Bitcoin rises rapidly under the corresponding events. It is expected that the Ordinals and BRC-20 ecosystems will develop further. Most notably, the launch of more Bitcoin scaling solutions, such as Stacks’ sBTC, will be an interesting development that will help enhance Bitcoin’s functionality.
Ownership economy applications gain further momentum
BlockchainTechnology enables users to recapture the power traditionally held by large entitiesXiaobai NavigationSovereignty over resources that users control, including personal data, creative content, and computing resources. For example, centralized storage services may require users to give up control of their data, exposing them to the risk of privacy leaks and single points of failure. Various projects are exploring alternative solutions that give users greater control over their assets and information. Two notable areas in this regard are decentralized physical network infrastructure (DePin) and decentralized social media (DeSoc).
Although the concepts of DePin and DeSoc have been around for some time, they did not begin to gain significant traction until 2023. This shift can be attributed to maturing infrastructure development, increased awareness, and the growth of the user base in the crypto space. For DeSoc, Friend.tech was the main growth driver in 2023, generating huge revenues comparable to some of the top protocols. Friend.tech demonstrated the potential of decentralized social media, enabling users to monetize their creations without the restrictions imposed by centralized platforms. In 2024, we may see similar applications exploring various forms of social media, including music, video, and written content.
Meanwhile, DePin becomes a hot narrative in late 2023. These protocols are seen as having high growth potential due to their large markets and ability to scale rapidly through bottom-up growth strategies. In 2024, we are likely to witness accelerated adoption of DePin and DeSoc projects, leveraging their potential for growth and market penetration.
AI(AI）集成增加
Since OpenAI's ChatGPT sparked strong interest in AI applications around the world in 2023, AI x Crypto has become one of the main narratives in recent months, with numerous projects continuing to emerge. We believe that the integration of AI and crypto is a growth area worth paying attention to. Although it is still in its early stages, integrating AI in the crypto ecosystem opens up a range of possibilities regarding potential use cases and provides an alternative to existing solutions.
Projects that have begun integrating AI are already providing services such as transaction automation, predictive analytics, generative art, data analytics, and DAO Looking ahead, there are many more use cases to be discovered.
For example, training AI models requires a large amount of data input, which requires a lot of resources, often limiting this activity to tech giants. This leads to reduced transparency and closed development. However, by leveraging decentralized storage for data management, we can achieve greater transparency andSafetyThis democratizes the AI model training process, allowing for broader participation, which could lead to a surge in innovation and development in the field.
Real World Assets (RWA) Growth
RWA tokenization showsBlockchain技术的强大用例。通过将链下资产引入Blockchain，RWA 代币化提供了更高的透明度和效率，并在组合性和潜在用例方面开辟了新的可能性领域。
As we head into 2024, we expect RWAs to benefit from expectations of rising interest rates. Tokenized treasuries remain a bright spot, offering crypto investors an alternative and attractive source of yield. In addition, as institutional adoption of RWAs accelerates, the development of related infrastructure, such as decentralized identity, oracles, and interoperability solutions, is also expected to gain momentum. These elements are critical to building a comprehensive RWA ecosystem.
The on-chain liquidity landscape is booming
Liquidity is critical to the on-chain ecosystem, especially for DeFi. Since Uniswap introduced the AMM model, it has evolved significantly. This evolution has spawned a multi-layered liquidity model that supports a variety of on-chain activities, including token swaps, derivatives trading, and yield management.
As the market gradually gains momentum, the scale of on-chain liquidity and financial activities is expected to increase. Two categories worth paying attention to are liquidity management and request for quote (RFQ) systems. The centralized liquidity market makers (CLMMs) popularized by Uniswap V3 address the problem of capital inefficiency. However, issues such as impermanent loss (IL) and just-in-time liquidity (JIT), which require active position management, still pose a problem for less experienced participants. This has led to the emergence of liquidity protocols that utilize various strategies to optimize the positions of CLMM liquidity providers. Currently, the TVL of Uniswap V3 alone has reached $2.4 billion, but the combined value managed by these liquidity management protocols is only $400 million. This gap highlights the growth potential, especially with the upcoming launch of Uniswap V4, which may introduce more advanced liquidity optimization features.
RFQ systems, represented by projects such as Uniswap X, CoW Swap, and 1inch Fusion, facilitate matching between traders and market makers, often using mechanisms such as Dutch auctions to ensure competitive pricing. The advantages of the RFQ model include competitive pricing, MEV protection, zero slippage, and gas-free order processing. As on-chain trading infrastructure continues to advance, the likelihood of adopting this efficient model is likely to increase.
Institutional adoption accelerates
2023 has witnessed the arrival of institutions, and we can expect more institutions to join the crypto space. During the bear market of the past year, prestigious traditional asset management giants such as BlackRock and Fidelity entered the crypto space, proving their confidence in the long-term potential of the industry.
SafetyStill vital
In the crypto industry, security plays a vital role in building and maintaining user trust. According to DeFiLlama, DeFi attacks caused losses of more than $1 billion in 2023. This is in contrast to the approximately $3.28 billion in 2022.stealThe amount has improved significantly.
Given the importance of security, we expect to see continued focus on this area in 2024. This focus may take various forms, such as product innovation, educational initiatives, and improvements to the user experience.
Account abstraction becomes more important
为了吸引下一个十亿用户并加速Blockchain的采用，可访问性和包容性至关重要。在理想的情况下，用户应该能够轻松使用 DApp and conduct any on-chain activity. However, there is still a lot of room for improvement. For example, most transactions still take place on centralizedexchangeEven at its peak in May 2023, decentralizedexchangeStill only accounts for 20% of total CEX trading volume.
There are several innovations that make us excited about the future. For example, account abstraction facilitates smartcontractwallet的实现，具备社交恢复等功能，显著提升了整体用户体验。鉴于wallet提供商之间的激烈竞争，或将看到其迅猛的发展。
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