⚡2024 Crypto Predictions

Plus top on-chain trends from 2023 and more

Jan 02, 2024

The Dynamo DeFi newsletter covers trends, on-chain analysis and tools in crypto each week. Be sure to also check out my YouTube for more regular content.

📈Trends and Narratives

2024 Predictions Abound

Happy New Year!

With a new year starting, BTC ETF approval likely coming any day, and hopes of a bull market high, the crypto industry was full of predictions this week. Here are a few of my favorite prediction threads from X:

Mippo:

The DeFi Investor:

ChainLinkGod:

Miles Deutscher:

My 2024 Predictions

I also have my own predictions of course. Here are 9 of my crypto predictions for 2024. These range from on-chain stats to larger industry trends, to specific sectors. Enjoy!

Ethereum Layer 2 and alt Layer 1 activity will dramatically outpace Ethereum mainnet. A year from now, the comparison won’t even make sense anymore. This already happened with transactions in 2023, where Layer 2 transactions now outpace Ethereum mainnet by a factor of 6.
Multiple airdrops will print 5 figures for early users. Most likely these airdrops will come from the Solana ecosystem, Cosmos staking, or restaking/data availability applications like EigenLayer.
A Web2 company will make a major acquisition in the Web3 space. As real businesses are built on-chain, Web2 giants are going to want a piece of this. I’m expecting them to do this via acquisition, rather than rely solely on their in-house teams.
DeFi exchanges will take major market share from centralized exchanges. On-chain infrastructure is significantly better than it was in 2021. We’ll see on-chain swaps and perp exchanges processing massive volume.
Modular architecture, combined with interoperability, will make it less obvious or relevant which chain you’re using. This prediction falls into two parts. First, modular architecture will mean that you can have a chain that settles onto Ethereum, uses Celestia for data availability, and uses the Solana virtual machine. In this case, that chain arguably sits in multiple ecosystems. Now throw in interoperability solutions which allow you to use cross-chain apps.
Solana will continue to be one of the largest, most-used Layer 1s.
A DePIN token will break into the top 15 by market cap. Using tokens to bootstrap a decentralized network is a great use-case of crypto. As more applications like Helium and Filecoin roll out into production and gain users, I expect this narrative to gain steam.
The first blockbuster crypto application will be developed. Most likely this will come from gaming, gambling, or payments. It will likely seem so simple and different from current offerings that many crypto users ignore it.
Cosmos dominance increases, both in terms of TVL and active users.

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🔢On-Chain Analysis

For today’s issue, I’ll focus on a recap of the most significant changes in 2023.

Total DeFi TVL Nearly Doubles

Total DeFi TVL (including liquid staking) nearly doubled from $45.9B to $89.4B in 2023. A strong comeback for an industry with a rough 2022.

DEX Volume Rebounds

In the final weeks of 2022, DEX volume hit a multi-year low of around $8B per week. In the final weeks of 2023, it had risen 4X from there to process over $33B per week.

Blockchain Daily Active Addresses Pushes Upward

Daily active blockchain addresses grew from around 4 million at the start of 2023 to over 8 million per day in the final days of the year.

Layer 2s Outpace Ethereum Mainnet in Transactions

The Layer 2 scaling thesis for Ethereum started to play out in 2023. At the start of the year, Layer 2s were processing about the same number of transactions as Ethereum mainnet. By the end of the year, they were averaging over 6 times more transactions.

Liquid Staking TVL Dominance

Liquid staking grew from the 5th largest category of DeFi by TVL to the largest, with a lead of over $10B over lending, its closest competitor.

Ethereum DEX Dominance Falls

Ethereum DEX volume dominance (light pink in the chart below) fell from 65% in January 2023 to 30% in December 2023. Solana and Arbitrum (orange and yellow) were the biggest gainers.

🛠️Tool Spotlight

Track Stablecoin Transfer Volume with Artemis

Stablecoin payments are a killer use-case of crypto. Track which networks stablecoin transfers are occuring on with Artemis’s stablecoin dashboard.

📅Key Events This Week

That’s all for this week. For more frequent content, follow me on Twitter and YouTube.

Until next time,

Patrick Scott

Dynamo DeFi