In 2024, the cryptocurrency market is evolving with several key trends. Decentralized social networks like Farcaster and Lens Protocol are gaining traction, offering users control over their data. Restaking, as seen with EigenLayer, allows validators to earn rewards by securing networks with liquid staking tokens.
Data availability layers, such as Celestia, are enhancing blockchain scalability. Decentralized Physical Infrastructure Networks (DePINs) like Filecoin and Helium provide decentralized storage and computing.
Additionally, regulatory scrutiny is increasing, with significant actions from the SEC impacting major exchanges, and the tokenization of real-world assets is expanding, exemplified by BlackRock’s tokenized fund launch.
These trends highlight the growing focus on decentralization, scalability, and regulatory compliance in the crypto space.
Decentralized Social
Decentralized social networks offer platforms where users enjoy censorship-free environments and retain control over their data, interactions, and audience. Traditional platforms like Instagram can ban users, forcing content creators to rebuild their follower base from scratch on new platforms. In contrast, decentralized social protocols like Farcaster and Lens Protocol enable seamless migration between social apps, preserving followers, posts, and likes. These platforms, with no centralized operators, prevent user removal and post censorship.
In 2024, Warpcast, a Twitter-inspired platform based on Farcaster, gained popularity within the crypto community. Warpcast allows users to post, share content, buy and sell NFTs, play crypto games, and create token-gated content. Another notable decentralized social platform is Friend.tech (FRIEND), featuring paid chatrooms and trading options.
Restaking
Restaking, pioneered by EigenLayer (EIGEN) on Ethereum, involves validators locking up liquid staking tokens (LST) as collateral to secure the restaking network and earn rewards. Unlike traditional staking where native ETH is deposited, restaking uses LSTs like Lido’s stETH. This extends the cryptoeconomic security of the base blockchain (Ethereum) and allows token holders to earn extra yield.
In April 2024, EigenLayer launched its mainnet, and by June, it boasted significant total value locked (TVL), second only to Lido. The concept’s success has inspired several copycat protocols, including Karak, Pell Network, Octopus Network, and Repl.
Data Availability Layers
Blockchain’s future lies in modular systems, where specific blockchains handle distinct tasks such as settlement, execution, and consensus. Data availability networks offer an off-chain solution for storing and verifying transaction data, alleviating on-chain congestion and reducing hardware upgrade needs for nodes. These layers ensure historic transaction data availability and enhance the scalability and security of peer blockchains.
The concept gained traction in 2023 with Ethereum’s rollup-centric scaling roadmap. The demand for data availability solutions is expected to rise as more specialized rollups emerge. In October 2023, Celestia launched the first modular data availability blockchain mainnet, with NEAR, Avail, and EigenDA as other notable players in this space.
Decentralized Physical Infrastructure Networks (DePIN)
DePINs, which build, maintain, and operate physical infrastructure in a decentralized manner, saw increased interest in 2023, with continued growth expected in 2024 due to their AI compatibility. DePINs cover hardware such as hotspot routers for wireless connectivity, GPU chips for computing, and data centers for file storage.
Filecoin is a prominent example, providing a peer-to-peer storage network where suppliers earn FIL tokens for reliable storage services. Other DePIN networks include Render, Theta Network, and Akash for GPU computing power, and Helium for decentralized wireless networks. These networks offer open and permissionless marketplaces for various industries, including media, gaming, AI, information services, and life sciences.
Increased Regulation of Cryptocurrency and Exchanges
The regulatory landscape for cryptocurrencies is swiftly evolving, with major outcomes for the market. Cases such as the SEC’s stance on Coinbase and Binance have highlighted this shift. The U.S. is at the forefront of implementing crypto regulations. These changes are significantly affecting how crypto exchanges operate and impacting market dynamics internationally.
The Role of the SEC
The SEC significantly influences cryptocurrency regulation, deeming many offerings as securities. Consequently, these offerings require registration and specific disclosures to protect investors. In 2023, the SEC initiated 26 cryptocurrency enforcement actions. Gary Gensler, the Chair, has indicated that major exchanges should register with the SEC due to likely trading securities. Additionally, the SEC enhanced its Cyber Unit, now called the Crypto Assets and Cyber Unit, by 66%, aiming to strengthen enforcement efforts.
High-Profile Regulatory Actions
The Binance case, penalized $4 billion for fund mismanagement, underscores the SEC’s commitment to strict regulation. Conversely, legal actions against Coinbase for operating without proper registration since 2019 reflect enforcement priorities. These actions highlight the SEC’s dedication to enhancing transparency and accountability in the crypto industry.
Evolving Regulations Globally
Worldwide, cryptocurrency regulation is advancing to address risks and improve market efficiency. Studies indicate unregulated ICOs are less efficient than regulated Initial Exchange Offerings (IEOs). The SEC’s approval of bitcoin and Ether ETFs marks a significant step in global compliance. These developments hint at strengthening regulatory frameworks, possibly leading to market stabilization.
A cooperative effort among the SEC, CFTC, DoJ, and the Department of the Treasury illustrates a comprehensive strategy for managing cryptocurrency risks. Binance’s initiative to increase market efficiency and investor protection corresponds with international regulatory trends.
| Authority | Role | Key Actions |
|---|---|---|
| SEC | Regulates securities offerings | 26 enforcement actions in 2023, approval of bitcoin and Ether ETFs |
| CFTC | Deters market manipulators | Regulating Bitcoin and digital currencies for a decade |
| DoJ | Targets illicit activities | Prosecutes criminals using cryptocurrencies |
| Department of the Treasury | Enforces tax laws | Addresses challenges in tracking decentralized assets |
Real World Asset Tokenization (RWA)
Tokenizing real-world assets (RWA) like real estate, fine art, and precious metals onto blockchain allows for fractional ownership, increased liquidity, and transparent property rights. This process lowers entry barriers for small investors and facilitates seamless and instantaneous trading of property rights on blockchain. Tokenization also benefits intangible assets like copyrights, trademarks, and patents by making them tamper-proof, traceable, and verifiable in real-time.
In March 2024, BlackRock, the world’s largest asset manager, launched its first tokenized fund, BUIDL, investing in RWAs such as cash, US Treasury bills, and repurchase agreements. This endorsement highlighted the ongoing trend of RWA tokenization, with investors now able to remotely buy US treasuries, bonds, and cash-equivalent tokens, earning yields from tokenized private credit loans and other exotic products like carbon credits.
Artificial Intelligence (AI)
AI’s disruptive potential continues to grow in 2024, influencing both equity and crypto markets. Crypto investors are keen on projects that either support AI operations or create AI solutions and services. AI-focused DePINs, like Akash and Render, provide decentralized marketplaces for data storage and GPU power required by AI applications.
Fetch.ai exemplifies the second category, offering a platform for developers to create and sell autonomous AI software and services. Bittensor is another project aiming to decentralize the AI industry by creating new AI frameworks and decentralized markets for compute resources, data storage, and oracles within one ecosystem.
Political Memecoins
Cryptocurrencies and speculation go hand in hand, with memecoins being a prime example. Despite their high-risk nature, memecoins remain popular among crypto investors seeking quick returns. Political memecoins, in particular, are trending in 2024 as the US Presidential elections approach. Memecoins satirizing political figures like Donald Trump and Joe Biden have gained traction. For instance, Trump-inspired memecoin $TRUMP has seen a 5,400% year-to-date return, while $BODEN, a memecoin misspelling Joe Biden’s name, has increased by nearly 600% since its launch.
Crypto’s Growing Climate Impact
The advent of cryptocurrency has incited substantial debate over its environmental effects. Its swift expansion boosts energy demands significantly. This uptick poses critical challenges to ongoing sustainability initiatives.
Since 2018, the global crypto sector’s electricity use has skyrocketed, possibly doubling or quadrupling. Mining, notably of Bitcoin, consumes vast amounts of energy. This is chiefly because it depends on the proof-of-work (PoW) algorithm. As per the latest figures, crypto assets may use between 120 to 240 billion kilowatt-hours globally each year.
Bitcoin alone might be responsible for 60% to 77% of this figure. In the U.S., the crypto sector uses about 0.9% to 1.7% of the nation’s electricity. This highlights the need for regulatory oversight and innovation in energy usage within the industry.
Impact on Carbon Emissions
The carbon emissions from cryptocurrency are alarming, with major coins potentially releasing 140 million metric tons of CO2 globally every year. In the U.S., this activity contributes about 25 to 50 million metric tons annually. That’s 0.4% to 0.8% of the country’s greenhouse gas emissions.
The energy demand for crypto mining rivals that of all U.S. home computers or residential lighting. Such extensive consumption further magnifies serious climate concerns related to cryptocurrency.
Future of Eco-Friendly Crypto Solutions
In light of these issues, the industry is shifting towards sustainable blockchain technologies. Incorporating green energy sources like solar and wind into mining operations could lessen the carbon footprint. Impressively, around 76% of Bitcoin mining now uses renewable energy. This marks a crucial step towards mitigating environmental impacts.
Projects like SolarCoin present innovative ways to encourage the use of renewable energy. They reward solar energy producers with cryptocurrency, promoting clean energy within the blockchain community. Also, Ethereum is moving to a less energy-intensive proof-of-stake consensus model.
