Welcome to the Crypto.comMonthly Research Roundup Newsletter!
1. Market Index
All indices increased in July. The price, volume, and volatility indices were all positive at +0.61%, +25.93%, and +0.06%, respectively.
2. Charts of the Month
Nine US spot Ethereum ETFs commenced trading on 23 July, marking another milestone for the cryptocurrency industry. The ETFs saw a net inflow of $107 million on the first day, but experienced net outflows mostly in the first two weeks. All the net outflows were from Grayscale’s converted fund, ETHE, with a total outflow of $2.1 billion. This surpassed the $1.6 billion net inflows from the remaining ETFs, which resulted in an overall net outflow of $511 million from 23 July to 2 August.
In comparison, US spot Bitcoin ETFs had a net inflow of $655 million on the first trading day and $797 million in the first nine trading days, according to data from Farside investors.
Solana has reached several milestones, marking a remarkable period of growth in the cryptocurrency space. Solana’s total value locked (TVL) has climbed to $5.6 billion, the highest level since January 2022. Additionally, its decentralised exchange (DEX) volume (30-day moving average) surpassed that of Ethereum’s and showed strong momentum in the past weeks.
In July, the NFT market saw a 1.9% month-over-month decline in trading volumes, yet the actual trading volume rose by 53%. Wash trading dropped significantly, from $206 million in June to $75 million in July, indicating a move towards more genuine market activity. Key contributors to NFT trading growth include the Immutable blockchain, which saw a 70% sales increase to $21 million, driven by popular collections like Gods Unchained and Guild of Guardians.
Global cryptocurrency owners increased by 6.4% in the first half of 2024, rising from 580 million in December 2023 to 617 million by June 2024.
Based on our on–chain estimates:
Bitcoin (BTC) owners grew by 5.9%, from 296 million in December 2023 to 314 million by June 2024, accounting for 51% of global owners.
Ethereum (ETH) owners grew by 9.7%, from 124 million in December 2023 to 136 million by June 2024, accounting for 22% of global owners.
There could be approximately 290,000 to 1.6 million people invested in BTC via US spot ETFs in addition to the above estimates.
The main catalyst behind BTC’s adoption growth was the launch of US spot Bitcoin exchange-traded funds (ETFs) and Bitcoin’s fourth halving.
ETH’s adoption growth was mainly driven by rallies of Ethereum Layer-2 (L2) networks after the Dencun upgrade, which significantly reduced the transaction fees on L2s and boosted the overall scalability of Ethereum.
Monthly Feature Report | L2 Interoperability — The Super Chains
Interoperability has been discussed for years and there are some notable solutions for achieving cross-chain communication. With the significant development of Ethereum Layer-2s (L2s), Ethereum L2 interoperability solutions have also gained traction.
This report touches on the established broader interoperability platforms while deep-diving into how the new Ethereum-based L2 interoperability solutions — ZKsync’s Elastic Chain, Polygon’s AggLayer, and Optimism’s Superchain — overcome the inherent limitations of scalability and interoperability. Read it now: L2 Interoperability — The Super Chains.
Key takeaways:
With the significant development of Ethereum Layer-2s (L2s), Ethereum L2 interoperability solutions have also gained traction, with ZKsync Elastic Chain, Optimism Superchain, and Polygon AggLayer as the notable players.
Ethereum L2 interoperability solutions offer highly optimised and secure options for connecting Ethereum-compatible networks, while general cross-chain solutions provide broader interoperability across diverse blockchain ecosystems at the cost of increased complexity.
ZKsync Elastic Chain: Built on ZKsync’s ZK Stack, the network of ZK rollups boasts a TVL of approximately $1.14 billion, attributed to zkSync Era, the primary operational chain.
Key features include native interoperability, shared liquidity, trustless validation, and horizontal scalability.
Notable upcoming L2 chains include Cronos zkEVM.
Optimism Superchain: Integrating with Optimism’s OP Stack, this is the largest Ethereum L2 ecosystem network, consisting of over 25 chains, with a TVL of around $20.4 billion.
Features include shared bridging, decentralised governance, secure transactions, and a permissionless proof system, offering horizontal scalability and compatibility with Ethereum standards.
The developer-friendly OP Stack is the main driver for the expansion of Optimism’s ecosystem, which allows developers to deploy their customised L2s easily and cost-efficiently.
Polygon AggLayer: Unifies liquidity, user experience, and states across multiple blockchains using a unified bridge and Polygon Chain Development Kit (CDK). The ecosystem includes three chains, with Polygon zkEVM as the biggest with $122 million TVL.
Features include proof aggregation, fast optimistic confirmation, atomic interactions, and modular customisations through the Polygon CDK.
However, its network performance (e.g., throughput) could be lower than the above-mentioned two, casting doubts on the ecosystem’s development.
These interoperability solutions are expected to gain significant traction as they address the fragmentation issues in the L2 landscape. They will likely attract more developers and users by offering seamless cross-chain communication and improved scalability.
Monthly Feature Report | Exploration of Web3 Socials
We have seen a surge in interest in Web3 SocialFi protocols in 2024. These protocols are designed to give identity and content ownership back to users.
Announced in June 2024, Solana’s Actions and Blinks aims to “connect Solana to the entire Internet”. It enables blockchain actions to be embedded in links and then shared in social media posts; for example, on X. Use cases include DeFi, NFT, gaming, content subscription, and governance, allowing users to complete blockchain transactions without being redirected to other websites. Farcaster and Lens are the pioneers in decentralised social graph protocols that host multiple social network applications. The two protocols let users own their content, unlike centralised social media sites.
This report discusses Actions and Blinks on Solana, as well as the leading SocialFi protocols on Ethereum — Farcaster and Lens. Read it now: Exploration of Web3 Socials.
Key takeaways:
Social media platforms play an important role in web3. We have seen the surge in interest in decentralised Web3 socials in 2024. These social media protocols aim to give ownership of identity and content back to the users.
Solana’s Actions and Blinks in June 2024 led the discussion in web3 socials. The feature aims to “connect Solana to the entire internet” by enabling blockchain actions to be embedded in links in social media posts.
Actions and Blinks is a collaboration between Web2 and Web3, with future expansion to more Web2 social media sites besides X. However, users should be cautious of potential spam and fraud introduced by them.
Solana’s Actions and Blinks is not the first to embed ‘complex’ actions into social platforms. Previously, Farcaster and Lens were the pioneers of Web3 social platforms with exploration of new features in decentralised social media.
Farcaster and Lens are both decentralised social graph protocols on Ethereum that host multiple social network applications. Unlike centralised social media sites, the two protocols enable users to own their content. Users can switch between various decentralised applications (dapps) built on top of the protocols with the same user profile and relationships.
Frames was a major contributor to the popularity of Farcaster, which has a similar idea with Solana’s Actions and Blinks. Since Frames launched, daily unique casters (users who made a post) increased 14x to 39,000 in two weeks, while the number of casts (posts) increased 19x.
Lens’s Open Actions, which supports external smart contract actions, also saw a surge in early 2024, growing from an average of 12,500 daily transactions in January to 129,000 in July 2024.
Actions and Blinks is a plug-in to be integrated with existing Web2 websites. This is different from Farcaster and Lens, which integrated their Frames and Open Actions functions, respectively, into the dapps on their protocols. Another key differentiation is that Actions and Blinks currently does not work on mobile.
Actions and Blinks is a good intermediate phase to introduce users to the benefits of Web3 while leveraging the large user base of existing Web2 sites like X. We expect to see a growth in adoption in Actions and Blinks, introducing competition for Farcaster and Lens. However, despite the competition, it may not be a winner-take-all market. Ultimately, Web3 social platforms should focus on key success factors, including building network effect and growing user engagement, while also focusing on interoperability across chains and sites.
This institutional-focused report dives into macro trends, market-neutral pairs, style-factor screens, and events. Read the full Alpha Navigator report here.
Cryptocurrencies showed mixed performance in July, Fixed Income was up while Equities were down.
BTC’s price performance showed weak correlations with equities, and exhibited negative correlations with Fixed Income.
5. Crypto Conference & Economic Calendar from Market Pulse
We present to you our latest issue of Research Roundup, featuring our deep dives into latest crypto market sizing, L2 Interoperability and Web3 Socials.
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