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Author: Alana Levin Source: SUBSTACK Translation: Shan Ouba, Bitchain Vision Realm
Every six months, I will write an internal reflection on the status of cryptocurrencies and the future direction.I decided to release the most recent public.
The comments are divided into three parts: things that are working, other things that have happened (or are occurring), and new things I expect.I try to set up most of the analysis on the data, but it is undeniable that my personal opinion has also penetrated.Hope this is an interesting reading.If the response is positive or constructive, I will consider sharing more internal reflection in the future.
Currently play effectThings
The good news is that there are many things that are working, and the way to play a very serious way is very serious.These growth -Many of them are called “great creativity” because they can change the status quo that can make sense -it should create new opportunities for its successful secondary effect.
For clearing, I use the word “work” to refer to the projects or trends that show the sustainable product market fit, expanding the size of the cryptocurrency market, or both.
So, what seem to be working or growing at present?I chose a list (incomplete) list, which contains 10 things that I think show a significant “function”:
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Stable currency
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Bitcoin as an alternative asset
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Farcaster, an early but growing social network
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Asset creation
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Community creation and training AI model
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Solana
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Ethereum
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Zora
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Coinbase
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Chain exchange
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Extra nomination: Blackbird
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Under the technology.Examples include integrated chain and modular chain, or optimism and zero knowledge summary.
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Chain economics.CANTO is the chain of the first test (as far as I know) the first experiment that re -assigned the transaction cost to the developer in the ecosystem.Blast and BERACHAIN are now experimenting with the income generation and economic distribution of various types of other types.It is unclear to how much these are sustainable -whether it is general economic considerations or long -term competitive advantages.
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Brand and community.The culture and/or reputation of the chain can be used as a halo of attracting developers: it may strengthen developers to get more help (from the community or other developers) when building in the ecosystem.It provides reputation protection in the eyes (“No one is troublesome to choose MacBook” and the like), and the values advocated by the/or chain community may be consistent with the developer’s own ideology.
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The company can send the coupon directly to the wallet of its target customers (because each account has a related wallet).
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These coupons may be based on similar products mentioned in the posts created by consumers, or the user’s favorite posts.
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Enterprises can be convinced that the data will always be open and accessible (that is, don’t worry about the API being closed or the price is raised), so that it can invest in optimizing the effectiveness of this distribution channel.
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Only when consumers are converted to purchase, they will spend budgets (that is, use coupons).
Stable currency
The supply of stable currency on the chain has net inflow of about $ 25 billion to the present day.Since November 2023, the overall inflow has been positive.Unprofessional Global US dollar visits continue to enjoy a strong product market fit.
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Bitcoin as an alternative asset
In January, nearly twelve bitcoin spot ETF was approved.As of early June, the value of more than 80 billion US dollars was stored in Bitcoin spot ETF (I tracked data from Blockworks and The Block).Gold seems to be a good analogy that the agency is distributed by Bitcoin: Whether you recognize that this asset represents inflation hedging, it is a substitute for traditional stocks and enjoys a certain degree of social consensus.It can be said that Bitcoin is better than gold -it can be transferred easier to transfer, there is a knowing limit of the supply, and the asset is adopted on the asset liabilities of some companies and countries -therefore, one day may exceed gold that will exceed gold somedayMarket value.
In the private equity market, the characteristics of the first quarter are the influx of projects, which aims to expand the effectiveness of Bitcoin.This includes (many) Bitcoin smart contract layers, chain lending agreements, and methods to explore the use of Bitcoin economic security budgets to help protect other chains.I guess the results of these development may appear in the second half of this year.
Farcaster
Farcaster is a social network based on an open agreement and began to enjoy significant growth.
The inflection point occurred in late January, accompanied by the launch of Frames.Frames is a component similar to a mini application, and people can directly share and interact in the social Feed of the FarCaster client.
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Asset creation
The number of new token creation continues to increase.One way to track this trend is to view the number of new token appearing on the decentralized exchange (DEX).The event is mainly promoted by asset creation on Base and Solana.
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Especially in Solana, the number of tokens founded in the past few weeks has exceeded 10,000.
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Many of the new assets appear in the form of modular coin (tokenization).I am not active in the field of alcohol, but I admit that there is a very real and active user group that shows the enthusiasm of participation.
It is worth noting that the emergence of these new assets has led to some unexpected but effective by -products in a wider range of ecosystems.For example, we see more experiments on new tools, such as Solana’s tokens.A tokens called $ Bern used Solana’s new token expansion to innovate in the token economics: if someone sells their tokens, 5% of the transaction volume will be destroyed (as re -of -the -remaining holdersDistribution mechanism).The popularity of $ Bern forced wallets to adopt the tokens expansion standard -these standards help to achieve complex payment split and confidential transfer.There is no $ Bern, who knows how long it will take for the use of tokens.
In general, my main view is that asset creation seems to be a trend with a smooth wind.Regardless of your views on these assets, it is still two good positions in the flow of value flow.
Community creation and training AI model
Obviously, we are moving towards a world that can widely access large language models (LLM), and has a low cost and many options.Where will the value accumulate in such a world?
I think value will accumulate on scarce resources.So in a world with rich computing resources, rich content and rich tools, the problem has become: what is scarce?A answer is taste and attention.The difficulty is that taste and attention are quite intangible resources.Even if we can measure them (such as “screen time” as a measure of attention), it is difficult to set a US dollar value for this indicator.
We began to see some places, using encrypted tracks to help solve this problem by closely combining financial tracks and taste and attention activities.Specifically, the AI model created and trained in the community has some productive output -such as selling possible products or services (such as art, movies, intellectual property rights, etc.) -provide the ability to reward participants.For models with subjective output, community participants play the role of taste manufacturers through their cultural preference training models.Choose a good motivation for good taste: the more tasteful output, the higher the sales price.
We began to see some of them appearing in a real and active way.Botto is my favorite example.It is an autonomous artist, and the $ Botto token holder has the ability to help training models every week.
Botto’s artwork is getting better and better, which can be proven through the price of BOTTO works auctioned every week.At the same time, the network of owners participants is also growing:
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I think we will start to see more community creation and training AI models, especially instances of known and active effects like BOTTO continue to grow.
Some companies are solving the problem of belonging through litigation, data license agreements, or the combination of two.If we assume that the status quo represents the model output & lt; 1%of the model output in the next five years, there are obviously there are other spaces that try to solve the value of belonging and distribution value.The encrypted orbit provides a unique and valuable solution.Encryption not only strengthens the ownership of economic and creativity, but it is important that it also allows anyone and anywhere to participate.
Chris Dixon meditated in an old blog:
“[There is a sentence] The famous words:‘ the future has arrived -but the distribution is uneven. ’A obvious follow -up problem is: If the future is coming, where can I find it?”
The model of community creation and training is a small but growing project area we have, which point to a larger future.
Solana
The number of active addresses interacting with Solana every day is 2-3 times the same period last year, which is roughly comparable to the most activity in the 2021 cycle.The number of monthly active addresses increased by 3-4 times within the same time, reaching a new historical high in May 2024:
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The network also began to generate meaningful cost income, and it began to prove that Solana’s low costs will make up for the assumptions that make up for it through larger user activities/transaction volume.
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Conclusion: The development trajectory of Solana indicates that it works, and it works in a meaningful way.Solana will exist for a long time.
Ethereum
The Ethereum ecosystem has also made significant progress.There are two ways to measure this growth: pay attention to Ethereum itself, or treat it as a whole to look at the Ethereum chain system (that is, including the Ethereum roadmap).
Ethereum’s own monthly active address increased significantly.The average value of the past 30 days has increased by about 30%to the present, only about 10%lower than the peak in 2021.
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Looking at the Ethereum ecosystem more comprehensively, there are significant signs of growth.I summarized the daily active address of the five top Ethereum chains -Ethereum, Arbitrum, Base, Optimism, and Polygon -in the figure below.Choose these five parts because they have rich applications and developer ecosystems.
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Conclusion: Ethereum has always been and will continue to be one of the most important ecosystems in cryptocurrencies.
Zora
Zora chain (also known as Zora network) has been launched for about a year.During this time, the network continued to find its foothold.Since the beginning of the year, Zhou active users have increased by about 60%, which has recently exceeded a new high of 250,000.The chain also enjoys about 34% of profit margins, which means that Zora retains about one -third of ETH spent on transaction costs.
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The Zora chain helps verify the concept: applications with sufficient distribution capabilities can start vertical integration with other parts of the stack (such as block space) to unlock more attractive economic benefits.
Coinbase
Coinbase has a strong start this year.It is listed as 8 custodians of 11 Bitcoin spot ETFs.The exchange business has continued to make progress -the transaction volume reached a high point of $ 157 billion, which is a number that has never been reached since November 2021.
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The transaction fee still accounts for a large part of Coinbase’s income.In the first quarter, the platform generated more than $ 1 billion in transaction costs (about two -thirds of its quarterly revenue).
It is also worth noting that Coinbase continues to diversify its source of income and surpass transaction -based costs.Blockchain revenue revenue and custody fees have doubled more than a year ago.The stable currency income is close to 200 million US dollars, and the growth of USDC circulation supply slightly offsets the decline in interest rates.Coinbase One, Coinbase’s member kit has more than 400,000 subscribers.Coinbase’s Layer-2 protocol Base will generate millions of chain costs per month.
Coinbase’s success proves (until recently) Many people are just hypothesizing the real situation: Around the original words of encryption, many meaningful new business models can be established.
Chain exchange
On the main Ethereum chain, the number of independent users (traders) of UNISWAP has doubled within six months.
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A definition of a successful agreement is an agreement that can build a successful business on it.We saw this in the chain exchange. The income growth generated by the Uniswap Labs through its interface is an example:
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The 7 -day movement average of the 7 -day movement promoted by Uniswap has recently exceeded Coinbase:
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The important thing is that not only in Ethereum, we also see the growth of the exchange on the chain on Solana.
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ORCA and Raydium -two leading decentralized exchanges (DEX) -also significantly increased:The agreement on these chains promotes the value exchange of billions (if it is not tens of billions) per month, and it is by no means a play.Both the agreement itself and the interface business represent a very real and income project.In the case of a centralized institution (such as interface business), I hope we can see that some profits have been re -invest in improving security, stability and user experience.
Extra nomination: Blackbird
Blackbird is a loyalty and reward plan for the catering industry, with cryptocurrencies behind it.When the user is signed in a restaurant connected to Blackbird, the application will cast a NFT for them -the digital evidence they access, and the data point of the restaurant network to understand their customer meal habits.Today, Blackbird is mainly in New York City.
Blackbird users continue to increase daily.
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For me personally, Blackbird changed my dining habit: I used to let my friends decide where we can eat, and now I have more actively recommended places (mostly using Blackbird applications to guide where it may be an interesting dining place).
What happened
Other significant trends in the past two quarters include the rise of Social-Fi and the surge in the new chain (mainly L2 and L3 in the Ethereum ecosystem).Although I think it is too early to say whether they are determined to play a role, it is worth noting that these trends are meaningfully affecting the user’s behavior on the chain and how developers have evolved their business model.
Social-Fi application growth
Many wealthy social (“Social-Fi”) appeared.Some of them have already incur millions of costs.The two most popular I know are Friendtech and FantasyTop.Obviously, some users find these applications very interesting and willing to participate.I am glad to see that the user has new things on the chain.
I have a doubt about some sustainability of these business models.It seems not enough to support long -term success by speculative.But that’s okay.Some applications may find more sustainable business models only need to be adjusted slightly.Even the attention driven by speculation provides opportunities to monetize the interest through multiple other ways.Of course, the key second is the hardest part.
The surge in the new chain
We also saw many new chains -especially L2 and L3 — launch.For these chains in the Ethereum ecosystem, it seems that the underlying technology is not a substantial difference.On the contrary, brands and communities are better than everything.L2 Base, launched by Coinbase, may be a model of powerful brands.Even if there are no other chains to attract talents to attract talents, the chain also enjoys a (said) developer ecosystem that is constantly growing.
So far, we see the three ways of trying to differentiate chain:
The mature chain has all the above elements.Take the two “functional” chains I mentioned above as an example: Ethereum and Solana.Ethereum created EVM and implemented an EIP-1559 (destroying some transaction costs as a re-distribution mechanism to ETH holder), and developed a powerful developer community and spirit around its technology.Solana promoted integrated blockchain, took the lead in achieving low-cost commercial feasibility, and truly refined a community during the low valley of 2022-2023.
My assumption is that the differentiation of the next wave of chain will come from external integration.Examples may include seamless access to the source of additional funds (such as the CoinBase account), the KYC screen of the wallet, or verify that someone is human.This is a very extensive design space, and I am looking forward to exploring this field in deeper.
Look forward to the future
Looking back at the past six months, my main view is that we are still mainly discussed 6-12 months ago, but we are more mature in the aspect of “functional”.With these maturity, many of them should be transformed into platforms as opportunities for its successful by -products.Growth will bring growth troubles, and these troubles provide a solution space for third parties.
The growth of these major platforms can also provide the foundation for thinking about our future.I am most concerned about the new distribution form and the new construction block.
New distribution and better building blocks
In terms of distribution, I am excited about some growth vectors, including: larger Farcaster, Telegram applications with stronger wallet functions, and interfaces like World App to continue to attract more people (it already has 10 million users).
There are also many new and exciting buildings.Coinbase launched a smart wallet allowing users to pay directly from the CoinBase account.Reservoir’s Relay protocol helps eliminate the user experience of cross -chain bridge receipt funds, making the “one -click” checkout experience on the chain finally possible.World ID continues to grow, hoping to provide a method of authentication between humans and agents.There are more.
This may sound vague.I sometimes feel frustrated when reading some more abstract hope rather than reality, so I will try to avoid this through a specific example, explaining the role of these construction blocks and new distribution channels.
Taking modern advertising as an example, this is a billions of dollars that involve almost every business.My guess is that despite decades of improvement in attribution and positioning, it is still full of inefficiency.Now imagine what the “advertisement” on Farcaster may look like:
Overall, this seems to be a win -win situation for enterprises and consumers, uniquely benefited from open social maps, embedded payment tracks, and verified digital identities.
The mature chain refers to the future
Another noticeable point of view from the part of the “role” is that there are now several credible and growing ecosystems (Ethereum, Solana, Bitcoin).These three ecosystems compete in unique differentiation, and the unique advantages of each ecosystem have positively put positive pressure on other ecosystems, prompting them to continuously improve.For example, Solana’s success in low costs and high throughput prompted Ethereum to continue to innovate on basic layers and L2.Similarly, Ethereum has multiple clients, which may create a goal for Solana to achieve client diversity (such as the upcoming Firedancer client).Bitcoin is the first to realize the real institution, but it has begun to test new programmable elements (such as Ordinals, Runes, and potential OP_CAT upgrades).In general, I will summarize that each ecosystem is constantly trying to achieve rough functional parity with other ecosystems.Observe the position where each ecosystem is now -and the positive relative characteristics of its peer display -can be used as a guide for each ecosystem to try to implement improvement.
This feels very positive.I am a tennis fan, so I will use a loose tennis analogy.Federer, Nadal, and Djokovic may not reach the same level of exercise without competing with each other.Everyone promoted others to improve their level, and the result was really excellent tennis.I think the same is true in different chains in the field of cryptocurrencies today.Each chain is making greater progress, because productive pressure has promoted them to improve.As a result, the entire industry should have better net benefits.
Some new ideas
There are also many infrastructure and applications worth constructing.Some areas that I am interested in and have potential to be fully explored:
Different forms of vouchers
The voucher (certification, certificate, etc.) is valuable resources. There are many benefits to placed on the chain: the ability of timestamp issuance and verification issuer has benefited from public ledger.An example of such vouchers may be verification of the workplace -the receipt from the employer proves that someone has worked in a company for a while.In the encryption industry, I have seen some proof attempts.I think the key is to identify vouchers with real economic value -such as employment verification -and focus on these markets.
Differentiated Assets (PDAS) (PDAS)
These are products with real economic value but the willingness to pay for market participants.Restaurant booking is a good example.A recent article on the underground booking market in New York has become popular: popular reservations have been attacked by robots, and are sold for thousands of dollars in the proprietary secondary market.In my opinion, if a person thinks that this is inevitable, it seems that these “assets” are as transparent as much as possible and accessible to diners and restaurants.Restaurants can be easier to check the history of reservations, and more potential consumers can participate.The booked tokens can even realize the upper limit of a procedural price, or share with the revenue of the restaurant.This is just an example.There are also many other markets that have basic economic value, because market access is opaque or limited, and is misclapsed or inefficient pricing.
New form of tokens distribution
There are many opportunities to promote people’s existing behaviors through token awards as by -products that they can have done activities.Blackbird is the first and most obvious example: Dining out is a wide range of activities, but the existence of Blackbird rewards may change some users to choose the dining place and frequency.This can be used in areas where people have spent time and money but consumer activities are not consistent or loyal.In particular, I will find a category that merchants can benefit from a certain cooperative effect (to a greater extent to understand the consumer behavior of cross -merchants) and have a great opportunity to improve customer loyalty (through promoting incentives).
Whether these ideas have a unique “why the present” are indeed an unspeakable question.Most of them make me think that it has been good thoughts for a long time, but it has not been fully explored (therefore deserves more attempts).
Conclusion
This reflection represents many things that I think have recently happened in the field of cryptocurrencies, but not all.It has not touched some areas -but may (or should) -s, including the growth of permanent storage solutions (such as Arweave), decentralized financial agreement to a real financial platform (such as MORPHO), and the order of Telegram and TONPeople impressively advance.
