Author: Colleen Sullivan, Peter Johnson, etc., compiled by: Songxue, Golden Finance
Looking back at 2023
At the end of 2022, we made 12 predictions involving games and NFTs and digital commodities as well as areas such as Ethereum and blockchain infrastructure.
Based on our own assessment, we were (mostly) right, with seven correct predictions, two misses and three partially true/partially false. Our analysis on OpenSea market share, Polygon NFTs, OTC custody, deflationary ETH, reduced hacking attacks, continued regulatory uncertainty, and Apple’s pesky 30% tax rate (after Epic Games’ big win over Google on December 11, 2023 , which looks increasingly fragile) are both correct in terms of predictions.
Our biggest mistake was the transaction volume and revenue related to brand NFTs. While optional royalties and bear volumes almost certainly did not meet our expectations, we see brands continuing to lean toward Web3 in 2023 and expect this trend to continue in 2024. We also missed stablecoin trading volume surpassing Visa trading volume this year (it didn’t happen, but we expect it to happen in 2024), and Uniswap surpassing Coinbase in annual trading volume (although Uniswap was the winner in trading volume in March) ), and ETH liquid pledge share.
2024 Forecast
Entering 2024, we are full of expectations for the future of this industry. 2023 is going to be a roller coaster of ups and downs, with sentiment fluctuating throughout the year, as well as risk appetite and regulatory stances in specific regions.
Amidst it all, builder excitement and activity is constant, as dedicated founders and teams continue to build amid the noise. Those who have remained committed to the industry have been rewarded by massive price increases for Bitcoin, Ethereum, and other assets. We now believe we are on the eve of several significant developments in the Web3 space, including those predicted below in multiple categories.
Games and Brands
1. Web3 game distribution increased by more than 2-3 times< /strong>
As of December 19, 2023, Web3 games overall have grown at least 2x (currently 1,037 according to Jon Jordan's Big Blockchain Games List).
As of December 19, 2023, the number of fully on-chain games has grown at least 3x (currently 54 according to Jon Jordan’s Big Blockchain Games List).
2. By 2024, more of the world’s largest Web2 game companies will embrace Web3
Among them, we have already seen Nexon, Netmarble, Krafton, Companies such as Come2uS, Square Enix, Konami, Ubisoft, CCP Games, Scopely, EA and Zynga have entered the field.
3. More Web3-enhanced games in the Apple App Store, Google Play Store, and Epic Games Store Now we have clarified their respective policies related to games that implement Web3 technology
We also expect that some mobile games in the Apple App Store and Google Play Store will add stablecoins as native in-app payment options (for the benefit of European gamers on the Apple App Store and Google Play Store, This service may also be available to US gamers on the Google Play Store thanks to the EU Digital Markets Act and thanks to Epic's victory over Google).
4. We predict that the market value of game tokens will grow to US$40 billion
Currently, the market value of game tokens is approximately US$18 billion. Based on recent gaming industry growth rates, we predict this number could reach $40 billion or more by 2024.
5. “Forever Brands” continue to rise in Web3
We will see the continued adoption of “Forever Brands” Web3 in 2024. Following the events of 2022, Forever Brands such as Nike, Starbucks, Gucci, Adidas, Dior, Louis Vuitton, Balmain and Prada have all launched or doubled down on their Web3 initiatives. We predict that Forever Brand activations will at least triple in 2024.
Stablecoins
6. The trading volume of stablecoins will indeed exceed that of Visa in 2024
Last year, we predicted that stablecoins Coin transfer volume will exceed Visa (approximately $12.3 trillion in fiscal year 2023). While that didn't quite happen, the annualized rate in November was about $10 trillion. We believe we are only a year early and are very confident that in 2024 on-chain stablecoin transaction volume will exceed Visa transaction volume.
7. Stablecoin transaction volume percentage doubles on Solana
As of November 2023, Solana accounts for approximately 3% of stablecoin transfer volume. We expect this to at least double to over 6% in 2024 due to the resurgence of the Solana ecosystem and Solana starting to take some share from Tron as the blockchain of choice for fast, cheap stablecoin payments .
8. The TVL of decentralized synthetic USD stablecoins (ETH LST and short-term perpetual contracts) will exceed US$1 billion in 2024
The The industry has long been looking for suitable alternatives to today’s popular centralized stablecoins. We think 2024 could be one of those years where that happens with the right mechanism.
Ethereum and transaction process
9. The ratio of pledged liquidity to pledged ETH exceeded 50 %
Last year, we predicted that this number would be 60%, and while this number is optimistic (currently 37.5%), we still think this number will increase significantly to 50% in 2024 %. We believe a large portion of the growth will come from institutions that continue to adapt to staking and liquidity staking.
10. The total amount of ETH in circulation reaches 119,600,000
The current total amount of ETH in circulation is 120.21 million. This number has decreased by approximately 318,000 ETH since the beginning of 2023, when the outstanding supply stood at approximately 120.52 million. We predict that with a significant increase in activity across the ETH ecosystem, the amount burned will be equivalent to approximately 600,000 ETH by 2024.
11. The number of private transactions included in blocks will be twice as high (currently around 11%).
The verticalization of the transaction supply chain will continue as we predict that MEV-focused block builders (i.e. searcher builders) will lose market share to neutral builders (Among the current largest builders, searcher builders account for about 54% of built blocks, and neutral builders account for about 24% of built blocks).
12. Gas-free transactions become more common in cryptocurrencies
As consumers engage in different verticals such as gaming, they will Use products that abstract complexity as much as possible. Whether through EIP-4337 or otherwise, transactions from smart accounts and wallets will grow significantly in 2024.
13. Rollups step on the gas pedal
We predict that the total transaction volume of Ethereum Layer 2 and Rollup will reach 10 times the number of Layer 1 transactions, and by 2024 By the end of the year, the total TVL of Layer 2 and Rollup will be greater than Ethereum Layer 1.
Market
14. Token issuance window remains open
After experiencing the new generation of major centralized exchanges After a relatively slow year for coin listings, the number of new listings picked up significantly at the end of 2023. We expect this activity to continue strongly into 2024 as backlogged projects take advantage of the market momentum to launch tokens and list them on major exchanges. As this new capital market continues to mature, we expect to see a variety of token types (layer-1/layer-2, DeFi, games, etc.), as well as innovative new token value accumulation mechanisms. Unfortunately, we believe that this capital markets evolution will largely occur outside the purview of U.S. investors, as we believe projects will become increasingly hesitant to list tokens on U.S. exchanges or market to U.S. investors Provide services.
15. Abu Dhabi leans further towards cryptocurrencies, and founders gravitate further towards Abu Dhabi
Last year, we predicted Savvy Games in Saudi Arabia Will enter Web3 games. This happened indirectly after Savvy acquired Scopely, an investor in Polygon.
While we do expect to see more Web3 action from Savvy in 2024, we are also keeping a close eye on more mundane Web3 activity in the immediate United Arab Emirates. Earlier this year, our own Brevan Howard - one of the world's largest hedge fund managers with over $35 billion in assets under management as of October 20, 2023 - opened a flagship office in the UAE capital, Abu Dhabi. The movement of traditional financial institutions into Abu Dhabi has been nothing short of explosive in 2023, and we expect this to continue in 2024. We believe the same applies to Web3, and we expectAbu Dhabi to become the primary destination of choice for Web3 founders.
Abu Dhabi Global Market (ADGM) is an international financial center and free zone established in 2013. Its legal system is based on English common law. Since 2017 It took a forward-looking attitude towards digital assets when ADGM first announced that it would establish a framework for virtual assets. In 2018, ADGM followed suit, with its financial services regulator introducing and implementing a comprehensive and unique framework for regulating exchanges, custodians, brokers and other intermediaries engaged in virtual asset activities.
Coinbase recently announced Project Diamond, a smart contract-powered platform for institutions to create, buy and sell digitally native assets. Given that Coinbase is located in a jurisdiction that does not have a dedicated regulatory framework for Web3 and no formal regulatory sandbox to test Web3 innovations, it is not surprising that Coinbase's Project Diamond will enter ADGM's RegLab sandbox, which can be used without "da Create and test critical Web3 infrastructure with the Sword of Mercles hanging overhead. Fortunately for ADGM, we predict that more Web3 founders will follow Coinbase’s lead and take advantage of the clear rules ADGM provides, including its RegLab. Unfortunately for the US, this will mean that Web3 talent will continue to flee to a jurisdiction that created the framework for Web3 builders before anyone else, and is now reaping the benefits of that proactive regulatory approach.
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