Research Summary
The report provides an in-depth analysis of the blockchain and cryptocurrency sectors in 2023, focusing on HTX Ventures’ investment strategy, Ethereum’s development roadmap, Layer 2 networks, application chains, DeFi growth, Bitcoin’s resurgence, and the rise of SocialFi and GameFi. It also highlights the potential of modular blockchain technology and account abstraction in expanding the user base for Web 3.0.
Key Takeaways
Ethereum’s Development and Layer 2 Networks
- Ethereum’s Progress: Ethereum’s network remained stable and experienced growth after the ‘The Merge’ transition from PoW to PoS in mid-2022. The Shanghai upgrade in 2023 allowed stakers to withdraw their staked ETH and rewards. The upcoming ‘Cancun Upgrade’ in Q1 2024 is set to advance Ethereum towards sharding.
- Layer 2 Networks: Layer 2 networks saw significant development in 2023, with 32 active networks and a nearly threefold increase in total value locked (TVL). Arbitrum One and OP Mainnet, both using Optimistic Rollup solutions, dominated the Layer 2 market share.
DeFi Growth and Real-World Assets
- DeFi Stability: DeFi has shown stable growth in 2023, with a 23.6% increase in Total Value Locked (TVL) to $47 billion from the previous year’s $38 billion. Ethereum continues to lead in DeFi with a 56% share of public chain dominance.
- Real-World Assets: Real-World Assets (RWA) in DeFi have gained traction in 2023, with MakerDAO’s U.S. Treasury Bonds RWA reaching $2.8 billion. The Federal Reserve’s interest rate hikes have made RWAs an attractive proposition for DeFi.
Bitcoin’s Resurgence
- Bitcoin’s Recovery: Bitcoin has shown a resurgence, breaking the $40K barrier for the first time in a year. The sustainability of Bitcoin’s growth and whether it is driven by short-term hype or fundamental drivers remains a question for the future outlook.
- Bitcoin as Digital Gold: Investors are increasingly viewing Bitcoin as “digital gold,” using it as a hedge against geopolitical and economic instability, reinforcing its status as an alternative asset class.
SocialFi and GameFi Growth
- SocialFi Development: The SocialFi sector has seen growth since 2021, with mainstream projects accumulating nearly 4 million+ wallet interactions in 2023 and new projects like Galxe, Friend.Tech, and Sismo gaining traction.
- GameFi Stability: The GameFi sector, after a surge in 2021 and a cooldown in 2022 due to a decline in ‘play-to-earn’ models, has shown more stability in 2023, with already-tokenized blockchain games consolidating during the bear market.
Actionable Insights
- Monitor Ethereum’s Development: Keep a close eye on Ethereum’s ongoing development roadmap, particularly the upcoming ‘Cancun Upgrade’ and its potential impact on the network’s scalability and efficiency.
- Assess Layer 2 Networks: Evaluate the performance and market share of Layer 2 networks, especially Arbitrum One and OP Mainnet, to understand their potential for future growth and dominance.
- Explore DeFi and RWAs: Research the growth of DeFi and the increasing role of Real-World Assets (RWAs) within this sector, particularly in the context of MakerDAO’s U.S. Treasury Bonds RWA.
- Understand Bitcoin’s Position: Analyze Bitcoin’s resurgence and its increasing perception as “digital gold” to understand its potential as an alternative asset class and hedge against geopolitical and economic instability.
- Investigate SocialFi and GameFi: Investigate the growth of the SocialFi and GameFi sectors, focusing on the performance of key projects and their potential to drive user engagement and adoption of blockchain technologies.
