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  • The crypto market staged a significant turnaround in 2023 with a 109% increase in total market cap, fueled by substantial gains in Q1 and Q4. The surge in the final quarter was driven by the optimism around Bitcoin ETF approvals and anticipation of Bitcoin’s upcoming halving. The broader financial environment, marked by resilient global GDP growth and moderated inflation rates, also contributed to a conducive environment for risk assets such as cryptocurrencies.

  • Layer-1s (“L1s”) had a strong 2023, with Bitcoin regaining its dominance, both in market capitalization and attention. Key narratives to follow include spot ETF flows, Bitcoin halving, continued Inscriptions / BRC-20 developments, and scaling solutions. We also take a close look at the top alt-L1s; Ethereum, BNB Chain, Solana, Avalanche, Cosmos, and a few others. 

  • Layer-2s (“L2s”) had a notably eventful 2023, marked by a 321.3% increase in total value locked (“TVL”) and 77.2% rise in L2 dominance, both year-to-date (“YTD”). While optimistic rollups retained over 80% market share, the L2 sector as a whole made significant strides, ranging from improved technology stacks to forming notable partnerships. EIP-4844, among a series of upcoming developments, are set to impact the progression of L2s further. 

  • Decentralized Finance (“DeFi”) saw robust growth in 2023 with TVL rising 38.9% year-on-year (“YoY”). The remarkable ascent of liquid staking tokens (“LSTs”) and LSTfi, the rising adoption of real-world assets, and the emergence of intent-centric architecture are notable developments that have contributed to growth of the sector.

  • Despite a rebound in October 2023, the global stablecoin market capitalization saw a 5.2% decline YTD, accompanied by shifts in market dynamics. Centralized stablecoins continue to command 92% of the market, with Tether's USDT increasing its dominance to 70.6%, even as new entrants such as Collateralized Debt Position (“CDP”) and LST-backed stablecoins emerged.

  • Non-Fungible Tokens (“NFTs”) rebounded impressively across Q4. December’s volumes of US$1.7B was the highest of 2023, with Bitcoin NFTs showing the most impressive growth. The NFT marketplace wars has been another key theme, with the upcoming Blur-aligned L2, Blast, an interesting upcoming development. It will be important to see OpenSea’s continued response to their dwindling market share numbers. 

  • Looking at on-chain metrics, there has been a resurgence in gaming activity going into the year-end. There were 12.6M weekly unique active wallets in the final week of the year, more than double the start of the year at 5.8M. 2024 is looking set to be an eventful year with the upcoming launches of several games by notable gaming giants.

  • The launch of in August 2023 catapulted SocialFi to the center of the dominant narrative. The success of and its forks demonstrated the sector’s potential and its appeal to creators by allowing them to monetize content. However, activity on SocialFi platforms has declined, and it remains to be seen if we will see a resurgence in interest going forward. 

  • Throughout 2023, Web3 projects attracted a total of 1173 investments, amassing a collective capital of US$9.0B. Of this, a substantial 36.5% was invested in infrastructure projects, followed by CeFi’s 13.3% and DeFi’s 8.6%. Despite the noticeable reduction in both investment volume and overall valuations in 2023, it is encouraging to see signs of market recovery and substantial capital being allocated towards building infrastructure.

  • Moving into 2024, eight key themes are particularly exciting to us, and we anticipate significant progress in these areas throughout the year. These themes span various narratives and sectors, such as those related to the Bitcoin ecosystem, ownership economy applications, artificial intelligence (“AI”), real-world assets (“RWAs”), on-chain liquidity, institutional adoption, and more.


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