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Author: TANAY VED & Amp; Matías Andrade Source: Coin Metrics Translation: Good Oba, Bit Chain Vision Realm
Brief introduction
In this special version of the “network overview”, we will use data -driven methods to review major events that affect the digital asset industry in the first quarter of 2024.
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Source: coin metrics reference exchange rate
Thanks to the United States finally approved the ten -year efforts of the spot Bitcoin exchange trading products. In the first quarter of 2024, the digital asset market increased significantly.In sharp contrast to uncertainty in the past few quarters, the first quarter marked a turning point in the industry in the first quarter.During this period, we saw that the total market value of digital assets climbed to more than 2 trillion US dollars. Bitcoin (BTC) reached a historical $ 73,000, an increase of 66%during the year.
This strong momentum is also reflected in other various encrypted assets and fields, such as solana (SOL +92%) and NEAR (Near +90%) and other Layer 1 blockchain, PEPE (PEPE +527%), etc.And render network (RNDR +141%) and other projects combined with artificial intelligence and computing applications.In addition, we also saw various forms of tools, infrastructure and applications settled one after another, injecting the motivation and optimism of innovation into the entire blockchain ecosystem.In the following, we will focus on the main development trend of shaping the digital asset pattern in the first quarter of 2024.
Bitcoin a record history
In this quarter, the launch of the spot Bitcoin ETF became an important catalyst in the digital asset market. This is a highly anticipated event that expands the investment channels of Bitcoin.This development has attracted retail investors and traditional investors, providing them with a familiar investment tool with competitive costs and cost structures, allowing them to reach the largest digital assets.11 publishers, including giants such as BlackRock and Fidelity, joined the competition. The launch of this launch marks that digital assets are more widely accepted.
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Source: Coin Metrics Atlas Coin Metrics Atlas
Bitcoin exchanges have a strong demand for trading products and unprecedented flow of funds, which surprised many people and make it the fastest growing ETF in history.Since launching, it took only one quarter, and about 12 billion US dollars have flowed into these tools, holding about 4%of the current supply of Bitcoin.Among the 11 publishers, BlackRock’s IBIT is a well -deserved winner. Since its establishment, it has accumulated nearly 250,000 Bitcoin (about 17 billion US dollars). Several other publishers have also obtained market share.Instead, Grayscale’s GBTC has a large amount of capital outflows due to high costs and the influence of GENESIS and FTX bankruptcy events.
Although the investment flow occasionally fluctuates, there will be extremely high activities in some days, there is no doubt that the launch of the spot Bitcoin ETF is the basis for the widespread increase in the entire digital asset market.In the first quarter, we saw the market’s strong demand for these products. However, participants will eager to see the persistence and influence of the derivative category ETF.
Ethereum Dencun upgrade and go online
With the successful completion of Dencun hard fork on March 13, Ethereum realized another important milestone on the roadmap and completed the upgrade of major infrastructure to improve the scalability of the blockchain.This upgrade is not only expected by Ethereum users. They have faced high trading costs during the online congestion, but also received the expectations of Layer 2 (L2) solution.Related costs rise, these data will eventually return to Layer 1 of Ethereum.However, the “BLOB” introduced through EIP-4844 relieves these bottlenecks and lays the foundation for improving the economic feasibility of all stakeholders’ economic feasibility.
Blobs landing in Ethereum main network
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Source: Coin Metrics Network Data Professional Edition, Dencun Metrics
EIP-4844 solves the scalability problem of Ethereum by creating a data “blob” space.Compared with CALLDATA, Blob is a more effective form of data storage. Layer 2 can use Blob space to settle transactions to Layer 1 of Ethereum, which acts as data availability and settlement layer.Since the upgrade, as of March 31, the Internet has handled more than 209,000 BLOB.This is achieved through the “BLOB transaction”, which is a new type of transaction, involving BLOB, which can be preserved for about 18 days -this is different from the permanent storage CALLDATA.The temporary nature of BLOB enables them to pricing at lower costs, which significantly reduces the cost (DA) cost of L2’s data availability (DA).
BLOB adopts the impact
Several Rollup, including Arbitrum, Optimism, and ZKSYNC, began to use BLOB shortly after the upgrade, and data costs decreased sharply.The average cost (that is, the corresponding L2 sequencer (responsible for sorting and processing the transaction on the L2 and submitting them to the L1 for settlement) spent ETH) from 0.15 ETH to about 0.0005 ETH, which meansTo 90%.With the decrease in cost and increased transaction volume (such as applications such as the decentralization exchange (DEX)), L2 may benefit from higher profit margins.
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Source: Coin Metrics Atlas
In this context, the impact of network demand on BLOB cost pricing dynamics will be a vital monitoring indicator.EIP-4844 has created a new BLOB GAS market. Its operating method is similar to EIP-1559, and the cost will change according to supply and demand.At present, the goal of the network is 3 blocks per block, with the maximum of 6 BLOB.Therefore, when the number of blobs in a block exceeds this goal, Blob’s basic costs increase.We have seen this situation several times, proving that it is the importance of stress testing the network in the case of high use of BLOB space.For example, as the currency boom sweeps solana has also spread to Base, Coinbase’s L2 Base has experienced a surge in transaction costs.
In addition, on March 27, the influx of a large number of BLOB data inscriptions (“BlobScriptions”) caused the average Blob cost per hour to soar, from almost no cost to more than 60 US dollars.This increased BLOB activity also led to a decline in the number of blocks of Ethereum network.Therefore, with the increase of the Rollup adoption rate and its BLOB capacity, monitoring cost dynamics and network health will become crucial.Despite some early problems, it is clear that Dencun has brought higher access to users, Rollup and applications.
The growth and pattern of stablecoin
With the increase in the valuation of the digital asset market, the stable coins also resumed expansion in the first quarter.The supply of stable currency in the U.S. dollar in the United States exceeded US $ 135 billion, and the cumulative increase of 13.5%throughout the quarter.The stable currency giant Tether (USDT) has exceeded 100 billion US dollars, of which the circulation on the Ethereum network has increased by 16%, and the circulation on the TRON network has increased by 11%.Circle’s USDC started strongly in the first quarter, with a supply of 22% to $ 27 billion, close to the level during the regional bank crisis last year.Although USDT has always dominated the transaction volume of the centralized exchange, as the liquidity improves, USDC transactions have also received increasingly in the spot market.In addition, the shutdown of BUSDs issued by PAXOS and the increase in overall demand for digital assets also explains the growth of these two leading stable currency market share.
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Source: Coin Metrics Network Data
At the same time, MakerDao’s token supply fell 13%in the first quarter to 3.2 billion.Due to the interest rate of the United States nearly peak, the demand for cryptocurrency mortgage loans exceeds the attractiveness of yields provided by the US Treasury voucher, and the US treasury vouchers account for most of the mortgages that support DAI.Competition from the newly joined by high returns, such as the USDE of Ethena (mortgage mortgage by the pledged ETH and the permanent futures position of the derivative market), also prompted the interest rate of the entire ecosystem.In order to prevent DAI from impacting demand and improving its reserve liquidity, MAKER has increased the DAI savings rate from 5% to 15% to motivate DAI.Affected by these factors, the stable currency interest rate of the entire decentralized financial market has soared to nearly 15%, and the cost of borrowing and leverage in the entire ecosystem borrowing and leverage.
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With the increase of liquidity, the pattern of stablecoin has become more diverse.For example, PayPal’s Pyusd faces challenges at the beginning of this year, and the supply has decreased by 28%since January; EurCV supported by the euro issued by French Industrial Bank; and protocol native stablecoins, such as AAVE’s GHO.Recently, we have also seen the launch of the “BlackRock USD -level Digital Llerance Fund” (Buidl), which is based on Ethereum’s tokened currency market fund.These products are not only different in terms of mortgage support and risks, but also a variety of issuers, including financial institutions and DEFI agreements.In addition, stable currency issuance and transfer volume also expanded to the Layer 1 network such as Solana, and the Layer 2 network of TRON and Ethereum, showing their usage in the entire ecosystem.
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in conclusion
With the end of the first quarter, the digital assets have gone through profound growth and key development, marking the increasingly mature and diversified market.Although the market is full of speculation and excitement, many aspects of progress have been made. From the launch of the spot Bitcoin ETF to infrastructure upgrades and the use of Layer 1 and Layer 2 ecosystemsThe use case paved the road.
As SBF was sentenced, in the first quarter, it also marked a major change in market emotions. We are getting rid of the shadow of the industry.Looking forward to the future, various development may affect the digital asset industry.The COINBASE case and the US Securities and Exchange Commission (SEC) case restart, the potential launch of Ethereum ETF and the fourth halving of Bitcoin will undoubtedly keep participants pay attention.
