2024 crypto market annual summary: Bitcoin ETF approved, Solana ecosystem rises, AI agents explode

1. Market Overview

1.1 Cryptocurrency Market Fundamentals

In 2024, the total market capitalization of the cryptocurrency market grew from $2.31 trillion to $3.33 trillion, an increase of 44.2%. This growth was supported by several key events, including the approval of the spot Bitcoin ETF and Trump's victory in the election. Bitcoin's dominance rose to 56.8%, mainly due to the doubling of the asset management scale of Bitcoin ETFs.

Despite the launch of the Ethereum ETF, its performance has been relatively flat. Solana has performed well, with the SOL price rising by 29.3% and a net inflow of $2 billion into its ecosystem.

The market share of DeFi has further expanded, with the total locked value growing more than double. The ratio of DEX to CEX trading volume has increased to 11.05%, with an annual trading volume reaching 2.67 trillion USD. Solana and Base have both more than doubled their market shares in DeFi TVL.

The market value of stablecoins has grown by 26.8%, exceeding $205 billion. Looking ahead, the potential approval of ETFs for other institutions that prefer assets will bring positive catalysts.

1.2 Macroeconomic Environment and Politics

In terms of politics, Trump has been re-elected as President of the United States, and the Republican Party has won a majority in Congress. The Trump administration may promote more crypto-friendly policies. In Europe, the influence of right-wing parties has clearly strengthened due to the Russia-Ukraine war. The situation in the Middle East is tense, and many countries in South America are advancing cryptocurrency legislation.

In terms of the economy, global GDP growth is projected to be 2.6% in 2024, with an inflation rate of 2.5%. The US economy is landing steadily, while the Eurozone is experiencing slow growth due to geopolitical conflicts, and China and emerging market countries are facing challenges. The three major US stock indices have risen significantly, with the Nasdaq increasing by over 28%. The development of AI technology has become an important driving force.

2. Bitcoin

2.1 Product and Agreement Design

In the second half of 2024, Bitcoin underwent some important software upgrades, including Bitcoin Core 28.0 and the BOLT12 of the Lightning Network. Discussions about protocol layer design are ongoing, mainly focusing on soft fork proposals such as OP_CTV, OP_CAT, and LNHANCE, among others. However, consensus has not yet been reached.

The implementation of BitVM is still progressing steadily, with a focus on the design and implementation of cross-chain bridges. Some test versions of cross-chain bridges based on BitVM have already started running.

2.2 Layer 2 - Lightning Network

The number of publicly accessible Lightning Network channels has not changed significantly, remaining at around 5000 BTC. The number of nodes has basically remained stable, but the number of channels continues to decrease. BOLT12 has been adopted by many clients and can support static payment methods.

Some Layer 1 networks are actively developing Layer 2 solutions that comply with the BOLT specifications. The feasibility assessment of business models remains a primary focus. Service-oriented projects, especially those utilizing the Lightning Network as a settlement layer for cross-border transactions, may receive more attention.

2.3 Layer 2 - Side Chains

The performance of Layer 2 sidechains varies significantly. Some projects have seen a decline after their peak, while others continue to grow. The challenges faced by BTCFi include reliance on unsustainable TVL surges and airdrop incentives. Protocols that can more flexibly mobilize Bitcoin liquidity and support a wider range of asset classes will have a better chance of success.

On-chain Assets 2.4

On-chain assets of Bitcoin can generally be divided into two categories: meta-protocols and CSV. Overall, these assets have not shown significant appreciation alongside the rise in Bitcoin prices, and their activity is relatively low.

BRC20, Runes, and other meta-protocol assets have recently underperformed. RGB is still being promoted, and there are some technical implementations that can support integration with the Lightning Network. Taproot Assets enable the minting of stablecoins at lower costs and facilitate instant settlement on Bitcoin.

2.5 BTCFi

BTCFi can provide Bitcoin holders with additional yields denominated in Bitcoin. With the continuous improvement of infrastructure, the overall locked value is expected to grow. The type of yields pursued by BTC assets has shifted from L2 to staking, liquid staking, and liquid restaking.

After several phases of control testing, Babylon has attracted a large amount of TVL measured in Bitcoin. Various LST projects have also emerged one after another to unlock liquidity and promote DeFi activities. Protocols that can flexibly mobilize Bitcoin liquidity and support a wider range of asset classes will have a better chance of success.

3. Ethereum

Despite the launch of the ETH ETF in the United States on July 23, 2024, its performance has not replicated the success of the Bitcoin ETF. The ETH/BTC ratio has fallen from 0.054 in January to 0.037 in December. Since the Dencun upgrade, gas fees on Layer 2 have significantly decreased compared to Ethereum, leading to more funds flowing into Layer 2 projects such as Base.

3.1 L2s

Since the Dencun upgrade, the transaction fees for rollups have decreased by over 90%, resulting in net inflows of $3.5 billion, $2.1 billion, and $1.7 billion for leading Layer 2s such as Base, OP Mainnet, and Arbitrum, respectively. The daily transaction volume for Layer 2 has increased from 5.18 million to 16.86 million, and the number of daily active addresses has risen from 989,000 to 2.18 million.

The significant influx of funds into Base can be attributed to several factors, including a seamless consumer experience, a strategic partnership with Coinbase, and the launch of popular consumer applications. The number of daily active users has skyrocketed from 68,324 to 1.6 million.

The launch of Arbitrum Stylus enables developers to write smart contracts using a variety of developer-friendly languages. Upgrades such as ArbOS 32 and Nitro v3.2.0 further enhance the network's security.

The OP Superchain continues to gain strong momentum, with the total number of chains based on the OP-Stack reaching 56 by the end of the year, accounting for 43% of all L2/3 chains. The number of active developers on OP Stack chains has also surged from fewer than 900 to 3,446.

3.2 Re-staking

In 2024, the amount of staked Ethereum shows an overall upward trend, reaching a peak of 34.5 million coins as of November 10; meanwhile, the yield has been declining, dropping to 3% by the end of the year. Re-staking protocols like Eigenlayer attracted a large amount of TVL, although the growth momentum weakened in the second half of the year. The TVL of Symbiotic experienced significant growth, surging from $307 million to $2.12 billion.

3.3 Ethereum's Future Roadmap and EIP Proposals

A significant upgrade to Pectra will take place in 2025, expected to be completed in the first quarter. Key EIP proposals include:

• EIP-7691: Expand Blobs target capacity, reduce L2 fees
• EIP-7702: Implement smart contract functionality for EOA accounts
• EIP-7251: Optimize validator management, reduce network load

In other infrastructure aspects, the concept of decentralized shared ordering aims to enhance network resilience. The data availability track is still dominated by Ethereum Blobs, Celestia, Avail, and EigenDA. Chain abstraction remains an important narrative, and the introduction of the ERC-7683 proposal is a significant milestone for cross-chain interoperability.

4. Solana

In 2024, Solana's price is expected to grow by approximately 75%, mainly due to its enhanced competitiveness with Ethereum. Developments in DeFi include the launch of cbBTC on Solana, incentive programs for PYUSD usage, and the Solana liquidity re-staking model. The market capitalization of stablecoins has increased more than threefold, reaching $5.1 billion. Institutional adoption is also becoming more evident, with partnerships with Shopify and Visa further strengthening the network's growth.

In 2024, the focus of the Solana ecosystem is mainly on areas such as DePIN, meme, and PayFi.

DePIN: Major projects like Helium and Render Network are migrating to Solana, driving ecosystem development.

The launch of Meme: Pump.fun has become a milestone in the crypto industry, significantly driving up the trading volume of Meme coins on Solana.

PayFi: Solana Pay is used as an integrated plugin option in Shopify-supported storefronts, opening up offline payment channels.

Looking to the future, the activation and application of Firedancer will further enhance network performance and security. The release of the Solana plugin provides greater flexibility for token issuance. The potential approval of the Solana ETF, the growth of the stablecoin market, institutional adoption, and the increasing DeFi activity will all have a positive catalytic effect on the Solana ecosystem.

5. Alt-L1s

Alt-L1 continues to receive strong attention in 2024, providing investors with a different experience from Ethereum. Here are some important and emerging Alt L1s to watch in 2025.

Berachain: Ensures incentive alignment between validators, dApps, and users through a unique liquidity proof mechanism. After launch, the TVL has exceeded $1.5 billion.

TON: With over 900 million monthly active users on Telegram, TON has attracted significant attention in 2024. Daily active users grew from 27,725 to 293,539, and DeFi TVL increased more than tenfold.

Kaia: Formed by the merger of Klaytn and Finschia, seamlessly integrated with LINE and KakaoTalk. Since its independent online launch, the TVL has grown from $37 million to $60 million.

Move ecosystem: The number of monthly active developers has increased from 1,014 to over 1,500. Sui and Aptos are the two main blockchains, with Sui significantly outperforming Aptos on several key metrics.

MegaETH: An EVM-compatible blockchain with a transaction throughput of up to 100,000 TPS, strong computing power, and millisecond block times.

Monad: Achieves optimistic parallel transaction execution across multiple EVM instances while maintaining compatibility with Ethereum bytecode. Capable of processing up to 10,000 transactions per second, providing a 1-second block time and 1-second finality.

6. Other Tracks

6.1 Meme

The overall increase in the Meme sector reached 218%. Ethereum, Base, and Solana are the three most active public chains in the Meme ecosystem. The launch of Pump.fun has become a milestone in the crypto industry, greatly unleashing retail demand. New tools like Kaito, Photon, and GMGN.AI are constantly emerging, helping users capture market opportunities more efficiently.

6.2 AI

The AI field is one of the hottest areas in 2024. From infrastructure at the beginning of the year to the explosion of agents in the second half of the year, the development of AI in crypto encompasses the upstream and downstream industries of AI. The successful transformation of Virtuals Protocol in the second half of 2024 catalyzed the explosion of Agents. Currently, the functional categories of Agents cover dozens of types, with social media bots, on-chain execution, and VC agents being particularly popular in the crypto market.

![A Comprehensive Review of the Cryptocurrency Market in the Second Half of 2024 from Macro Environment to Vertical Tracks](