a16z has shared the State of Crypto Report 2024, which examines data on swing states, stablecoins, AI, builder energy, and offers other key insights.
Daren Matsuoka, Robert Hackett, and Eddy Lazzarin noted that when they launched their very first annual State of Crypto report two years bac, the world looked “very different.”
According to the update shared by a16z, crypto wasn’t “high” on policymakers’ agendas. But this is not entirely accurate because considerable focus and attention had been given to the evolving crypto and blockchain space even as far as back 2017 – which was at the time of the historical bull market that saw Bitcoin surge from around $1,000 in January 2017 to around $20,000 by December 2017.
As state in the update from a16z, Bitcoin and Ether exchange-traded products (ETPs) weren’t yet SEC approved. While this is true, there were many other financial products such as the launch of futures contracts that began to shape the course of the evolving crypto and DLT sector as far back as late 2017 as well as the extended bear market of 2018-2019.
The a16z team added that Ethereum had not yet switched to the “energy-minimizing” proof-of-stake. Layer two (L2) networks, designed to increase capacity and “lower transaction costs,” were largely inactive — and the transactions that did occur on them cost “a lot more than they do today.” Although this is the case in general, there are many other challenges that the Ethereum network has been facing, even according to its co-founder Vitalik Buterin who has consistently maintained a fairly objective/unbiased approach towards ongoing crypto and blockchain developments.
According to the a16z reporrt, times have changed, as their 2024 State of Crypto Report makes “clear.”
Their report covers crypto’s rise as a “hot policy topic,” the many recent tech enhancements to blockchain networks, and the latest crypto and blockchian industry trends among the ecosystem’s builders and users.
The 2024 State of Crypto report also reveals “all-time highs” in crypto activity. Although this may not necessarily reflect real growth an ecosystem that remains highly speculative due to the rise of many speculative and risky ventures such as meme-coins, NFTs, and high questionable crypto initiatives, even extremely controversial projects like Worldcoin.
Neverthelss, the a16z report attempts to analyze just how blockchain and/or DLT infrastructure has “matured” — particularly after recent scaling upgrades decreased onchain transaction costs alongside the rise of Ethereum L2s and other “high-throughput” blockchains.
This year, they are introducing a tool: the a16z crypto Builder Energy dashboard.
They are now claiming to be sharing proprietary data based on their view of the crypto landscape, including where the “builder energy” is.
The dashboard reportedly incorporates numerous data points — aggregated and anonymized — that are drawn from investment team research, their CSX startup accelerator program, and other “industry-wide” tracking.
Via this tool, anyone can explore what crypto builders are saying about their activity and interests — “everything from which blockchains they’re building on, to what types of applications they’re building, as well as which technologies they’re building with, and where they’re based.”
They intend to update the data each year as part of their annual State of Crypto.
Some takeaways from the report:
- Crypto activity and usage hit all-time highs
- Crypto has become a key political issue ahead of the U.S. election
- Stablecoins have found product-market fit
- Infrastructure improvements have increased capacity and drastically reduced transaction costs
- DeFi remains “popular” — and it’s growing
- Crypto could solve some of AI’s most pressing challenges
According to the a16z update, there have never been more monthly active crypto addresses. But this could also potentially be attributed to a single entity using the same set of addresses to carry out transactions. In addition, the vast majority of crypto-related activity remains quite speculative in nature without much utility.
Nevertheless, the a16z update pointed out that in September, 220 million addresses interacted with a blockchain “at least once, a figure that has more than tripled since the end of 2023.”
The research report added that the explosion of activity is primarily due to Solana, which accounted “for about 100 million active addresses.” Indeed, Solana (SOL) appears to have emerged a high potential blockchain network, but it has faced serious technical issues on numerous occasions in the past.
Following were NEAR (with 31 million active addresses), Coinbase’s popular L2 network Base (22 million), Tron (14 million), and Bitcoin (11 million). Of Ethereum Virtual Machine (EVM) chains, the “second-most” active after Base was Binance’s BNB Chain (10 million), followed by Ethereum (6 million).
These trends are also reflected in their Builder Energy dashboard.
The blockchain that saw the biggest change in total share of builder interest is Solana.
Specifically, the total share of founders who told them they either “are, or are interested in, building on Solana grew to 11.2% this year from 5.1% last year.”
Base saw the next “biggest jump,” its total share growing “to 10.7% from 7.8% last year, followed by Bitcoin, which bumped to a total share of 4.2% from 2.6% last year.”
On an “absolute” basis, Ethereum (ETH) is still attracting the “greatest” share of total builder interest at 20.8%, followed by Solana and Base.
After that are Polygon (7.9%), Optimism (6.7%), Arbitrum (6.2%), Avalanche (4.2%), Bitcoin (4.2%), and so on.
Meanwhile, the report pointed out that number of “monthly mobile crypto wallet users” reached an all-time high of 29 million in June 2024.
Although the U.S. makes up the largest share of monthly mobile wallet users at 12%, its share of the “total” mobile wallet user base has reportedly “declined in recent years” as crypto adoption grows internationally and as more projects seek regulatory compliance by “excluding the U.S.” through geofencing.