a16z 2024 Encryption Report Depth Analysis: Balancing Optimism and Reality

The latest annual "State of Cryptocurrency" report released by a16z has sparked widespread attention and discussion in the industry. The report conveys a positive and optimistic message, but we also need to examine the current development status of the cryptocurrency market from a more comprehensive perspective.

Cryptocurrency Adoption Status

The report begins by stating that "cryptocurrency activity and usage have reached an all-time high." However, we need to note that the number of active addresses does not necessarily equate to the actual number of users. A single user may have multiple addresses, and some addresses may belong to automated programs rather than real individuals.

From a more objective perspective, although certain blockchains have indeed attracted new users, the overall number of retail investors has not significantly increased. The liquidity and user experience of the current encryption ecosystem still need improvement.

The growth in the number of mobile encryption wallet users mainly comes from emerging market countries, where the usage rate of mobile devices is already high. This reflects that encryption technology is being applied more widely in these countries, which has been one of the visions of Web3 and DeFi all along.

Killer Applications of Encryption Currency

The report views stablecoins as the most obvious "killer application" at present. Stablecoins have indeed shown advantages in scenarios such as cross-border remittances, with their transaction volume surpassing that of Visa. However, it is worth noting that stablecoins are primarily used for large transfers, while daily small payments still rely on traditional payment methods.

Compared to the groundbreaking innovations in DeFi a few years ago, this year seems to lack the emergence of more exciting killer applications. This also reflects that the entire industry is still searching for broader application scenarios.

Progress of Infrastructure

The improvement of infrastructure lays the foundation for future innovations, but ordinary users have yet to see significant benefits from it. Although some games and applications have emerged, transaction processing capacity is not the main bottleneck. Currently, the most popular applications are still focused on relatively simple scenarios, such as in-game asset tokenization.

Current Development Status of DeFi

The total locked value of DeFi ( TVL ) has increased, but it has not yet recovered to the highs of 2022. The growth mainly comes from emerging fields such as liquid staking, re-staking, and tokenization of real-world assets ( RWA ), with institutional capital beginning to enter. However, in terms of active user numbers, DeFi is still in a relatively early stage.

The Integration of AI and Encryption

The combination of AI and encryption technology shows great potential. Both are cutting-edge technological fields that attract similar user groups. Innovations in directions such as decentralized computing and resource sharing are worth paying attention to, but most projects are still in the early exploration stage.

Summary

The development of the encryption industry in 2024 is mainly reflected in the technology and infrastructure level, and these advancements may not immediately attract ordinary users. For newcomers seeking short-term gains, memecoins and prediction markets may be more appealing.

The popularity of airdrop and points programs has decreased, and users are starting to view them as another form of income. Although there has been progress in the GameFi sector, no phenomenal products have emerged yet.

Overall, the encryption industry is still full of hope and opportunities, but we have not yet entered the true golden age of Web3. Technological innovation takes time to mature, and finding broader application scenarios remains an important challenge facing the industry.