a16z 2024 Crypto Assets Report Depth Interpretation: The Reality Behind Optimism

The annual "Crypto Assets Status" report recently released by a16z has attracted widespread attention in the industry. The report conveys a consistent optimistic message, but we need to take a more comprehensive look at the current state of the market.

Adoption of Crypto Assets

The report begins by stating that "the activity and usage of crypto assets have reached an all-time high." However, we need to interpret this data with caution. A crypto address does not always represent a real user, and sometimes it might not represent anyone at all.

To more accurately assess the actual adoption of Crypto Assets, we can refer to the monthly visit counts of platforms like CoinMarketCap and CoinGecko. Currently, CoinMarketCap has a monthly visit count of approximately 73.96 million, while CoinGecko has 22.8 million. Emerging platforms like DEXScreener and DEXTools have monthly visit counts of 13 million and 6 million, respectively.

This data indicates that although certain blockchains have indeed attracted new users, the overall number of retail investors has not significantly increased. On the contrary, long-term users seem to be building a more comprehensive infrastructure ecosystem.

The growth of mobile crypto asset wallet users also needs to be viewed in conjunction with the internet usage habits of emerging countries. For example, 86% of internet traffic in Nigeria comes from mobile devices, 79% in India, and 57% in Argentina. This reflects the widespread adoption of crypto assets in emerging countries, which has always been an important mission of Web3 and DeFi.

Killer Applications of Crypto Assets

The report views stablecoins as one of the most significant "killer applications" of crypto assets. Stablecoins indeed have advantages in terms of transfer speed and cost, and with the improvement of the legal framework, more and more users may choose stablecoins as an alternative to traditional remittance methods.

The trading volume of stablecoins surpassing Visa is a striking data point. However, it is worth noting that stablecoins are mainly used for large transfers, while daily small payments still rely on traditional payment methods.

Although the importance of stablecoins is undeniable, their designation as a killer application also reflects this year's shortcomings in innovation within the crypto industry. Compared to the groundbreaking developments in DeFi a few years ago, this year seems to lack the emergence of more exciting applications.

Infrastructure Development

The improvement of infrastructure lays the foundation for the next generation of dApps and high-load applications. However, these advances have not yet brought significant practical benefits to the average user. Currently, there are some blockchain games and consumer applications, but transaction processing capacity is not the main bottleneck.

The advancement of infrastructure undoubtedly creates possibilities for Web3 innovation and unknown new use cases. However, considering that the most popular applications this year might be games like Hamster Kombat, the development of the dApp space still has room for improvement.

Current Status of DeFi Development

Although the DeFi sector continues to grow, it has not yet recovered to the levels of 2022. The total locked value of DeFi in 2022 was close to 180 billion USD, and it is currently only around half of that. Even considering the price volatility of Ethereum, the scale of DeFi has not returned to its peak.

The industry's growth mainly comes from emerging fields such as liquidity staking, re-staking, and RWA. The influx of institutional capital into the DeFi ecosystem is a positive signal. However, in terms of user numbers, taking Lido as an example, its monthly active users are only about 6,000. This indicates that the recent growth of DeFi may be more attributed to the increase in average deposit value and overall market capitalization growth.

The Integration of AI and Crypto

The combination of AI and encryption technology holds great potential and is expected to drive the development of decentralized, community-centric AI. The correlation of traffic between the two fields may stem from the fact that they are both emerging, cutting-edge, and speculative technologies.

Decentralized computing, internet resource sharing, collaborative AI agents, and other innovative directions show great prospects. However, these technological innovations are currently mainly aimed at professional users and have not yet attracted a broad Web2 user base.

Summary

The development of the crypto industry in 2024 is mainly reflected in the behind-the-scenes technological advancements. These innovations have not yet attracted widespread attention from mainstream users due to high technical barriers or targeting specific user groups. For newcomers seeking short-term gains, memecoins and prediction markets may be more appealing.

The appeal of airdrops and incentive programs has declined, with users tending to view them as an additional form of income. The enthusiasm in the GameFi sector has also become more rational; although there are some successful cases, there has yet to be a blockchain game that can compete with mainstream AAA titles.

Overall, the prospects for the Crypto Assets industry remain optimistic, but we have not yet entered the true Web3 golden age. Innovation takes time to settle, and we are in a transitional period filled with opportunities and challenges.