Noteworthy Narratives in the Crypto Market in 2024

2024 will be a vibrant and diverse year with the unfolding of multiple narratives, including spot Ethereum ETFs, Ethereum’s Cancun upgrade, Ethereum’s LSD sector, Bitcoin halving, AI developments, Ethereum’s restaking, modular blockchain, parallel EVMs, and decentralized sequencers.

Spot Bitcoin ETFs, a key narrative driving the market rebound since October 2023, are finally approved by the SEC, marking a significant shift after a decade of rejections. The market anticipates that spot Bitcoin ETFs will attract tens of billions of dollars. With the approval of the first cryptocurrency ETFs, let’s explore some noteworthy sectors in the market.

Spot Ethereum ETFs

Ethereum has depreciated against Bitcoin since last October, with the ETH/BTC exchange rate dropping to below 0.05 from above 0.064 and oscillating between 0.05 and 0.055. However, the exchange rate rebounded after the approval of spot BTC ETFs, reaching above 0.06. Spot ETH ETFs are now gaining attention, as the SEC is set to decide on five Spot ETH ETFs by the end of May, although the final decision could be delayed until August. Three Spot ETH ETFs — VanEck Ethereum ETF, Ark 21Shares Ethereum ETF, and Hashdex Ethereum ETF — have submitted applications, with decision deadlines on May 23, May 24, and May 30. According to Cointelegraph, the SEC must also decide on Grayscale’s application by June 18 and Invesco’s by July 5. Applications from Fidelity and BlackRock need decisions by August 3 and 7. Bloomberg’s ETF analyst, Eric Balchunas, estimates a 70% chance of approval for Spot ETH ETFs in May. Coinbase also suggests that Spot ETF ETFs could receive approval soon.

Strong momentum for L2 as Cancun upgrade approaches

While narratives around Ordinals and ETFs fueled Bitcoin’s surge in 2023, Ethereum’s narratives of Dencun and ETFs are starting to take shape in 2024. According to the latest news, Ethereum is set to activate the Dencun upgrade on the Goerli testnet on January 17, 2024, at 14:32. If no significant issues are found, the upgrade will run on the Sepolia and Holesky testnets from late January to early February. Upon successful testing, Dencun will be activated on the mainnet, signaling the long-awaited arrival of the post-Cancun era. On the Layer 2 front, ARB has surpassed 2.3 USDT (as this article was published), setting consecutive all-time highs. Since December 21, ARB’s price has surged 100%, making it a prominent leader in the Layer 2 sector. Tokens built on the ARB ecosystem, MAGIC and RDNT, have also shown significant gains. Other L2 projects are also performing well: OP exceeded 4 USDT again; IMX has multiplied several times since October 20, soaring to above 2.2 USDT from below 0.6 USDT; SKL briefly surpassed 0.1 USDT, with a 20% increase over 24 hours.

Resurgence of LSD amid Ethereum’s surge

Concurrently, the LSD sector is making a strong comeback. Notably, the leading LDO briefly exceeded 4 USDT, marking a new high since its listing on OKX and accumulating a 100% increase since December 20, 2023. Other LSD projects are also displaying exciting trends: RPL went beyond 37 USDT, gaining nearly 50% in four days; SSV touched 38.62 USDT, more than tripling its price on October 22 (12.22 USDT); PENDLE, witnessing a robust recovery after joining LSD, set another record high by surpassing 1.7 USDT; LBR exceeded 1.4 UST, soaring nearly 40% within 48 hours.

Halving and PoW

OKLink data indicates that there are about 100 days left until Bitcoin’s fourth halving, scheduled for April 23, 2024. This event will reduce miners’ block reward to 3.125 BTC from 6.25 BTC. As one of the most significant narratives in the crypto industry, Bitcoin’s halving has consistently been a highly anticipated event. Remarkable price surges were observed in the 12 months following the previous three halvings:

Bitcoin surged 8,256% in the 12 months after its 2012 halving;

Bitcoin surged 287% in the 12 months after its 2016 halving;

Bitcoin surged 542% in the 12 months after its 2020 halving.

What narratives are worth our attention after the ETF approval?

Additionally, BCH and ETC, which will also undergo halving this year, may attract equal attention. Interestingly, ETC, often referred to as “Doomsday Chariot”, climbed to 28.888 USDT today, surging 35% within 24 hours and reaching a new high since October 2022.

AI continues to lead innovation

The AI sector has seen significant developments, with OpenAI launching two new products in early 2024 — GPT Store, an online marketplace, and ChatGPT Team, a product tailored for corporate clients. GPT Store allows users to explore popular and trending GPT products on the community leaderboard, covering DALL·E and categories such as writing, research, programming, education, and lifestyle. ChatGPT Team, a new enterprise-level product for teams of various sizes, provides access to advanced models and tools, enterprise-level data privacy, security features, and the capability to create and share customized GPT solutions. As a prominent player in the tech industry in 2023, ChatGPT has thoroughly swept through the entire sector. Despite the CEO drama of OpenAI at the end of the previous year, ChatGPT’s impact on future lifestyles, work, and even production is expected to evolve in 2024. In the Web3 industry, closely intertwined with AI, AI-related projects are likely to experience a surge this year, potentially accompanied by increased capital and attention. This can give rise to remarkable projects in terms of growth and size.

Liquidity restaking driven by EigenLayer

Restaking, a concept introduced to Ethereum by EigenLayer in June 2023, has become a widely discussed topic. It allows users to restake their already-staked ETH or liquid staking tokens (LSTs) to provide additional security to the decentralized services on Ethereum and earn extra rewards. Following EigenLayer’s increase in LST staking limits at the end of last year, restaking has become a focal point in the Ethereum ecosystem. Within a month, EigenLayer attracted over 500,000 $ETH TVL, surpassing $1 billion. It is now worth a market value of $1.4 billion, securing the 12th rank in Ethereum’s dominant projects. Meanwhile, the first AVS-EigenDA using EigenLayer’s verification service is set to launch soon, bringing attention to DA services with the skyrocketing token $TIA of Celestia. Furthermore, EigenLayer has introduced a new sector — Liquid Restaking Defi (LRD)/ Liquid Restaking Token (LRT). LRD projects aim to release the liquidity of LST (stETH, swETH, and ETHx) stored in EigenLayer. By issuing liquid restaking tokens (LRTs), these projects help users release liquidity, forming a new cycle of token nesting.

Modular blockchain

The rise of Celestia has ignited widespread discussions about modular blockchain. The concept originated from two whitepapers, including Data Availability Sampling and Fraud Proofs, co-authored by Mustafa Albasan and Vitalik in 2018. The paper explains how to enhance blockchain scalability while maintaining security and decentralization. This is achieved by enabling light clients to receive and verify proof of fraud from full nodes and by designing proof of data availability systems that minimize the tradeoff between on-chain capacity and security. As the pioneer of mudular blockchain, Celestia stands out as the most renowned and earliest project in this space. Its vision is to address the challenges of blockchain scalability and modularity. Celestia provides users with greater flexibility, making it easier for them to deploy and maintain blockchain applications. Additionally, it lowers the cost and complexities of deploying blockchains, offering DApp creators and blockchain developers a modular, scalable blockchain architecture to meet the needs of various applications and services. TIA, the native token of Celestia, has skyrocketed over 1,000% since its launch, suggesting that modular blockchain might become a crucial concept in 2024.

New narrative of parallel EVM

Parallel Ethereum Virtual Machines (EVMs) is a concept designed to enhance the performance and efficiency of EVMs, the core of Ethereum responsible for executing smart contracts and processing transactions. Currently, EVMs have a crucial feature — transactions are executed sequentially. The original design is analogous to a one-way street, where each transaction must follow the preceding one’s speed. If one transaction encounters an issue, it can block the entire process. Parallel EVMs, on the other hand, expand this one-way street into a multi-lane highway, allowing numerous transactions to run simultaneously. From a technical perspective, parallel EVMs enable the simultaneous execution of different independent transactions or smart contracts, significantly improving EVM processing speed and system throughput. Following the official launch of Pacific-1, Sei’s public mainnet, on August 16, 2023, the plan for Sei-V2 was unveiled on November 29, 2023, which supports the first parallel EVM. Sei currently allows the use of Cosmwasm smart contracts written in Rust. As Sei continues to attract more developers and expand its ecosystem, the key demand from developers is increased flexibility for the execution environment supported by Sei. Leveraging parallel EVMs, Sei becomes accessible for EVM developers from around the world.

Decentralized sequencers

Decentralized sequencers have become a central narrative for nearly all Layer 2 Rollups. In Layer 2, sequencers organize hundreds or thousands of transactions and compress them into a single transaction, subsequently submitted to Layer 1 for confirmation. Essentially, sequencers facilitate the high performance and low transaction fees of Layer 2. However, if something crucial is centralized, there could be a risk of malicious behavior or a single point of failure. Currently, most Layer 2 sequencers are centralized and operated by project teams like the OP Foundation and Arbitrum Foundation. The failure or compromise of centralized sequencers could pose a threat to the entire Layer 2 ecosystem. Therefore, decentralizing Layer 2 sequencers is inevitable. Metis has taken the lead by testing a decentralized PoS sequencer on the Holesky testnet on December 27, 2023, and initiating community tests on January 2, 2024. Users could earn points through various methods, such as testing DApps and participating in the Learn to Earn program. Different point levels allowed users to obtain diverse NFTs, based on which they received airdrops in the community test. The first testing phase last for two weeks, from January 3 to 17, 2024. METIS’ recent surge in TVL and price is largely fueled by the anticipated airdrop of its sequencer testing. In the first quarter of 2024, Metis will focus on the release of its decentralized PoS sequencer. The second quarter will witness an acceleration in the launch of its Hybrid Rollup on the testnet. By the third quarter, the dual-layer governance structure, consisting of Common and Eco Node, will officially go live. In 2024, METIS will upgrade to a Hybrid Rollup, combining the Optimistic Rollup architecture with zero-knowledge proofs.

In summary, the crypto market is expected to emerge from the bear market in 2024, embracing a vibrant and diverse year marked by the unfolding of multiple narratives.