- Read it directly on VanEck's website: https://www.vaneck.com/us/en/blogs/digital-assets/matthew-sigel-vanecks-15-crypto-predictions-for-2024/
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5. ETH L2s will capture the majority of EVM-compatible TVL and volume post-EIP-4844
Ethereum will implement EIP-4844 (proto-danksharding), which will reduce transaction fees and improve scalability for layer 2 chains such as Polygon, Arbitrum, Optimism, and others. Within 1 year of the upgrade, Ethereum L2s will consolidate down to 2-3 dominant players as measured by value and usage. One will achieve higher monthly DEX volume/TVL than Ethereum for the first time. Collectively, these chains may accumulate 2x the DEX volume of Ethereum (currently 0.8x) by Q4 of 2024 and 10x the number of transactions.
One of them will achieve higher monthly DEX volume/TVL (total valued locked) than Ethereum for the first time. This is because cheaper transaction fees enable tighter bid/ask spreads due to the high cost of DEX transactions on Ethereum. With stricter bid/ask spreads, there exists a greater number of arbitrage opportunities, which leads to more trading. Additionally, faster block times, only 0.25 seconds on chains like Arbitrum, enable more transaction throughput and more prospects for CEX/DEX and DEX/DEX arbitrage. As a result, DEXes and L2s should attract more volume due to the trading opportunities they enable. Collectively, these chains may accumulate 2x the DEX volume of Ethereum (currently 0.8x) by Q4 of 2024 and 10x the number of transactions.
Within 1 year of the upgrade, Ethereum L2s will consolidate down to 2-3 dominant players as measured by value and usage. This is due to the fact that liquidity fragmentation will accelerate the dominance of the dominant L2s. This has already occurred in DEXes, where the exchanges Uniswap, Pancake Swap, and Curve accounted for 78% of DEX volumes in 2023. The same market consolidation on will occur across L2s, with Arbitrum and Optimism looking to be the main contenders.
Ethereum Share of DEX Volume
Ethereum will implement EIP-4844 (proto-danksharding), which will reduce transaction fees and improve scalability for layer 2 chains such as Polygon, Arbitrum, Optimism, and others. Within 1 year of the upgrade, Ethereum L2s will consolidate down to 2-3 dominant players as measured by value and usage. One will achieve higher monthly DEX volume/TVL than Ethereum for the first time. Collectively, these chains may accumulate 2x the DEX volume of Ethereum (currently 0.8x) by Q4 of 2024 and 10x the number of transactions.
One of them will achieve higher monthly DEX volume/TVL (total valued locked) than Ethereum for the first time. This is because cheaper transaction fees enable tighter bid/ask spreads due to the high cost of DEX transactions on Ethereum. With stricter bid/ask spreads, there exists a greater number of arbitrage opportunities, which leads to more trading. Additionally, faster block times, only 0.25 seconds on chains like Arbitrum, enable more transaction throughput and more prospects for CEX/DEX and DEX/DEX arbitrage. As a result, DEXes and L2s should attract more volume due to the trading opportunities they enable. Collectively, these chains may accumulate 2x the DEX volume of Ethereum (currently 0.8x) by Q4 of 2024 and 10x the number of transactions.
Within 1 year of the upgrade, Ethereum L2s will consolidate down to 2-3 dominant players as measured by value and usage. This is due to the fact that liquidity fragmentation will accelerate the dominance of the dominant L2s. This has already occurred in DEXes, where the exchanges Uniswap, Pancake Swap, and Curve accounted for 78% of DEX volumes in 2023. The same market consolidation on will occur across L2s, with Arbitrum and Optimism looking to be the main contenders.
Ethereum Share of DEX Volume
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11. A breakout blockchain game will finally arrive.
Web3 Gaming Investment
Blockchain gaming will see at least one title surpass 1 million+ daily active users, demonstrating the long-awaited potential. Among candidates to achieve this milestone, IMX is most likely to become a top 25 coin by market cap (currently #42) with the release of Illuvium, Guild of Guardians, and other high-budget games in 2024 and a well-designed token that aligns interests better than most. According to a recent report from DappRadar, the WAX blockchain currently leads the gaming sector with 406k daily unique active wallets, of which ~100k are playing Alien Worlds, a metaverse with multiple simple games that reward players with the Trillium token. However, many of these players are likely bots farming the tokens due to the simplicity of the games. On the other hand, Immutable has multiple AAA games building on their platform that implement token models that cannot be simply farmed and are truly fun games to play. These titles, which have been building for years and received $100m+ in funding, are being released in 2024. They could attract players at the scale of traditional AAA games like Starfield, which was released earlier this year and reached 10 million players within its first two weeks.
Additionally, Immutable has been working to resolve many of the technical pain points that have inhibited the success of Web3 gaming so far, such as wallet management. Immutable’s “Passport” allows users to log in to games and manage their blockchain-based game items through a familiar single sign-on process while abstracting away blockchain interaction. The increased simplicity that Immutable provides gamers combined with large distribution partners such as the Epic Games Store and GameStop could finally allow a blockchain-based game to become a mainstream hit.
Web3 Gaming Investment
Blockchain gaming will see at least one title surpass 1 million+ daily active users, demonstrating the long-awaited potential. Among candidates to achieve this milestone, IMX is most likely to become a top 25 coin by market cap (currently #42) with the release of Illuvium, Guild of Guardians, and other high-budget games in 2024 and a well-designed token that aligns interests better than most. According to a recent report from DappRadar, the WAX blockchain currently leads the gaming sector with 406k daily unique active wallets, of which ~100k are playing Alien Worlds, a metaverse with multiple simple games that reward players with the Trillium token. However, many of these players are likely bots farming the tokens due to the simplicity of the games. On the other hand, Immutable has multiple AAA games building on their platform that implement token models that cannot be simply farmed and are truly fun games to play. These titles, which have been building for years and received $100m+ in funding, are being released in 2024. They could attract players at the scale of traditional AAA games like Starfield, which was released earlier this year and reached 10 million players within its first two weeks.
Additionally, Immutable has been working to resolve many of the technical pain points that have inhibited the success of Web3 gaming so far, such as wallet management. Immutable’s “Passport” allows users to log in to games and manage their blockchain-based game items through a familiar single sign-on process while abstracting away blockchain interaction. The increased simplicity that Immutable provides gamers combined with large distribution partners such as the Epic Games Store and GameStop could finally allow a blockchain-based game to become a mainstream hit.
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12. Solana will continue to outperform ETH as DeFi TVL returns.
Solana Total Value Locked
Solana will become a top 3 blockchain by market cap, Total Value Locked (TVL), and active users. Fueled by this rise, Solana will join the spot ETF wars thanks to a flurry of asset managers submitting filings. Related to Solana's continued market share gains, we see a legitimate possibility that Solana-based price oracle Pyth flips Chainlink in Total Value Secured (“TVS”). For reference, Chainlink today stands at ~$15bn TVS vs. Pyth’s <$2bn, with that dominance driven primarily by blue-chip DeFi protocols on Ethereum mainnet. As TVL continues to grow across high-throughput chains (like Solana) and Chainlink struggles to find institutional adoption of its LINK token, we expect Pyth to gain meaningful market share on the back of several genuine innovations, including its "pull" architecture and confidence interval system.
Solana Total Value Locked
Solana will become a top 3 blockchain by market cap, Total Value Locked (TVL), and active users. Fueled by this rise, Solana will join the spot ETF wars thanks to a flurry of asset managers submitting filings. Related to Solana's continued market share gains, we see a legitimate possibility that Solana-based price oracle Pyth flips Chainlink in Total Value Secured (“TVS”). For reference, Chainlink today stands at ~$15bn TVS vs. Pyth’s <$2bn, with that dominance driven primarily by blue-chip DeFi protocols on Ethereum mainnet. As TVL continues to grow across high-throughput chains (like Solana) and Chainlink struggles to find institutional adoption of its LINK token, we expect Pyth to gain meaningful market share on the back of several genuine innovations, including its "pull" architecture and confidence interval system.
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13. DePin networks see meaningful adoption.
Hivemapper Unique Km Mapped
Multiple decentralized physical infrastructure (DePin) networks will see meaningful adoption that captures the public's attention.
Hivemapper, the decentralized mapping protocol aiming to bootstrap a community-owned competitor to Google Streetview, will map its 10 millionth unique KM, surpassing 15% of global roads capacity. Hivemapper uses its native token, $HONEY, to incentivize thousands of drivers worldwide to mount dashboards to their cars and contribute to its growing database. This global network of permissionless contributors may give Hivemapper a meaningful speed and cost-of-capital advantage relative to the incumbent Google. Google Maps is projected to make more than $11bn in revenue in 2023, representing a meaningful opportunity for Hivemapper if the experiment is successful.
Helium, the decentralized network of wireless hotspots, will reach 100k paying subscribers for its nationwide US 5G plan, up from 5k currently. Hotspots can be set up by anyone, and hotspot operators are paid through crypto rails in Helium’s native tokens. This powerful system of incentives gives Helium some key advantages relative to incumbent wireless infrastructure:
It is capital-light (from Helium’s perspective).
It turns hotspot providers into advocates & supporters (given their ongoing stake in the network).
It gives Helium the ability to respond to real-time data & improve the network by adjusting its incentives (i.e., boosting rewards in areas with poor coverage).
Wireless infrastructure is a $200B, relatively mature market. We see significant scope for disintermediating legacy providers (Towers) as end-users tend towards low-cost solutions with a differentiated brand (“user-owned”). Helium claims they can deliver data at less than 50% of the cost of legacy networks. As crypto adoption becomes more mainstream, and if that claim is true, they will likely join a significant share.
Hivemapper Unique Km Mapped
Multiple decentralized physical infrastructure (DePin) networks will see meaningful adoption that captures the public's attention.
Hivemapper, the decentralized mapping protocol aiming to bootstrap a community-owned competitor to Google Streetview, will map its 10 millionth unique KM, surpassing 15% of global roads capacity. Hivemapper uses its native token, $HONEY, to incentivize thousands of drivers worldwide to mount dashboards to their cars and contribute to its growing database. This global network of permissionless contributors may give Hivemapper a meaningful speed and cost-of-capital advantage relative to the incumbent Google. Google Maps is projected to make more than $11bn in revenue in 2023, representing a meaningful opportunity for Hivemapper if the experiment is successful.
Helium, the decentralized network of wireless hotspots, will reach 100k paying subscribers for its nationwide US 5G plan, up from 5k currently. Hotspots can be set up by anyone, and hotspot operators are paid through crypto rails in Helium’s native tokens. This powerful system of incentives gives Helium some key advantages relative to incumbent wireless infrastructure:
It is capital-light (from Helium’s perspective).
It turns hotspot providers into advocates & supporters (given their ongoing stake in the network).
It gives Helium the ability to respond to real-time data & improve the network by adjusting its incentives (i.e., boosting rewards in areas with poor coverage).
Wireless infrastructure is a $200B, relatively mature market. We see significant scope for disintermediating legacy providers (Towers) as end-users tend towards low-cost solutions with a differentiated brand (“user-owned”). Helium claims they can deliver data at less than 50% of the cost of legacy networks. As crypto adoption becomes more mainstream, and if that claim is true, they will likely join a significant share.
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14. New accounting treatment will rejuvenate the case for corporate crypto holdings.
Base Weekly Fees
Coinbase will become the first publicly traded company to break out and report Layer 2 blockchain revenues in its quarterly filings as its Base Protocol crosses $100M+ in annualized revenues and becomes a meaningful contributor to the business. The additional disclosure may be catalyzed by corporate adoption of new FASB guidelines that allow corporates to book mark-to-market gains on crypto, which will favorably impact corporate preference for holding Bitcoin and other crypto as treasury assets. Due to these accounting changes, which take effect in 2025 but can be adopted by corporates earlier, a major, non-crypto financial entity (bank, exchange) may announce the creation of a quasi-public blockchain like an L2, with the possible bridging capability to public blockchains by authorized participants.
Base Weekly Fees
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15. DeFi Reconciles with Know Your Customer (KYC)
KYC-enabled and walled garden apps like those using Ethereum Attestation Service or Uniswap Hooks will gain significant traction, approaching or even flipping non-KYC applications in user base and fees. Uniswap will lead other protocols in enabling this functionality, which will drive institutional liquidity and volume to the protocol. The additional volume from KYC-gated hooks will significantly bolster protocol fees by allowing new entrants to participate in DeFi without the fear of interacting with OFAC-sanctioned entities. The addition of hooks will help Uniswap reinforce its moat and competitiveness, which should drive token appreciation, especially once the DAO finally votes in favor of turning on the Uniswap Protocol fee switch to allow value to accrue to the token. If so, we expect such fees to be no higher than 10bps.
Decentralized Exchange Market Share
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KYC-enabled and walled garden apps like those using Ethereum Attestation Service or Uniswap Hooks will gain significant traction, approaching or even flipping non-KYC applications in user base and fees. Uniswap will lead other protocols in enabling this functionality, which will drive institutional liquidity and volume to the protocol. The additional volume from KYC-gated hooks will significantly bolster protocol fees by allowing new entrants to participate in DeFi without the fear of interacting with OFAC-sanctioned entities. The addition of hooks will help Uniswap reinforce its moat and competitiveness, which should drive token appreciation, especially once the DAO finally votes in favor of turning on the Uniswap Protocol fee switch to allow value to accrue to the token. If so, we expect such fees to be no higher than 10bps.
Decentralized Exchange Market Share
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