HTX Ventures 2024 Crypto Market Review and 2025 Outlook: 5 Prominent Development Tracks

2024 is a milestone year for the encryption industry. From the approval of Bitcoin and Ethereum ETFs at the beginning of the year, to the booming bull market, and the influence of the U.S. elections, cryptocurrencies like Bitcoin are reaching record valuations and increasingly impacting the social and political landscape.

Looking ahead, five major tracks that show exciting progress in 2024 are worth closely monitoring in 2025. These tracks include the Bitcoin ecosystem, infrastructure (Infra), Meme, artificial intelligence (AI), and the TON ecosystem.

Bitcoin Ecosystem

market dominance

Over the past year, Bitcoin's market dominance has increased from 45.27% to 56.81%. This means that the majority of the current crypto market liquidity is primarily concentrated in the Bitcoin ecosystem, and it is still on the rise.

Bitcoin spot ETFs have accumulated 5.3% of the total existing Bitcoin supply, with holdings increasing from 629,900 coins at the beginning of the year to 1,243,608 coins, a growth of 613,708 coins. Over 12 months, the ETF holding percentage rose from 3.15% to 6.25%.

A new market centered around Bitcoin as the core asset, using ETFs and US stocks as funding inflow channels, has officially opened. This market utilizes US-listed companies represented by MSTR as vehicles to infinitely absorb US dollar liquidity. Therefore, the necessity for Bitcoin to further develop its ecosystem and improve capital utilization efficiency has become increasingly prominent, which will also be achieved by increasing BTC demand and enhancing its price.

Layer 2

In the past three years, a total of 77 Bitcoin Layer 2 projects have been launched or completed financing. In the first half of 2024, driven by the Bitcoin ETF concept boom, the trading volume and token prices of previous rounds of Bitcoin Layer 2 projects (such as the Lightning Network, Stacks, and Liquid Network) have surged significantly. These older Layer 2 projects have also witnessed further technological development. Various Layer 2 solutions have emerged for Bitcoin, including Spiderchain (Botanix), ZKRollup (Nexio and Critea), EVM-compatible chains (BOB and B Squared), sidechains (Merlin), and more. As of now, the total locked value (TVL) of Bitcoin Layer 2 has reached $3 billion, contributed by 19 projects. Assuming all Bitcoin Layer 2 projects are launched in the coming years, the total TVL is expected to grow by at least 2 to 4 times, reaching $6 billion to $12 billion.

Layer 1/Execution Layer

BRC-20, Ordinals, and Runes are the main new execution standards that emerged at the end of 2023. Despite the overall market downturn in the second quarter, activities on the BTC Layer 1 continued to grow steadily. However, while the Bitcoin market showed signs of recovery in the third quarter, this growth momentum failed to sustain.

other Bitcoin infrastructure

With the increase in Bitcoin usage, other infrastructures including interoperability solutions and security layers have also begun to emerge.

Interoperability: Bridges and WBTC are currently the mainstream interoperability solutions on Bitcoin. We expect more interoperability solutions, including Xlink, Atomiq, and Auran, to be launched in the coming year.

Security Layer: To address the security threats that may arise from interoperability solutions, security solutions related to Bitcoin have started to emerge. Babylon is a typical example, as it has developed a set of secure sharing protocols for Bitcoin.

In addition, with the emergence of new technologies, such as Data Availability Layer (DA Layer), the potential use value of Bitcoin has been further released. Nubit is a key player in the Bitcoin DA space.

Whether the upgrade in 2025 passes OP_CAT is the key.

The real game changer is OP_CAT. As long as OP_CAT is approved, developers will be able to use native advanced programming languages like sCrypt to achieve fully decentralized and transparent smart contract development on the Bitcoin mainnet. Currently, Bitcoin Layer 2 can also be converted to ZK Rollup, and the total scale of BTCFi is expected to be significantly enhanced.

With dual support from the macro market and infrastructure, we believe that Bitcoin will experience a further surge in market demand in the next two years.

Infrastructure (Infra)

In 2024, infrastructure remains one of the most attractive tracks in the encryption industry. The combination of capital and technology has driven the rapid development of projects such as Layer 1, Layer 2, and middleware.

Layer 1

Layer 1 projects continue to optimize their consensus mechanisms and performance, providing a solid foundation for on-chain applications.

• Ethereum: Launched EIP-4844, which reduces costs on Layer 2 networks.
• Solana and TRON: Benefiting from the development of Meme Coins and infrastructure projects like Pump.fun and SunPump, on-chain transactions are very active.
• Aptos and Sui: Applications in the GameFi and DeFi sectors drive active user growth.

Layer 2

Layer 2 continues to be a key path for scalability, with ZK Rollup and Optimistic Rollup each having their own developments.

• zkSync and StarkNet: Continuous iteration and upgrades, significantly enhancing the user experience of ZK Rollup.
• Base and Arbitrum: DeFi and NFT projects are thriving on these platforms, with significant growth in TVL.

Layer 0 and cross-chain middleware

Layer 0 and cross-chain middleware have made new breakthroughs in interoperability.

• LayerZero: Connecting over 40 chains, cross-chain transaction volume has significantly increased.
• Cosmos: IBC upgrade, cross-chain performance increased by 50%.

modular public chain

Modular public chains offer high performance and flexibility, attracting a diverse range of applications.

• Celestia: Supports multiple modular execution layers, becoming a benchmark project for modular public chains.
• Monad: Attracts a large number of developers and DApp deployments with ultra-high TPS performance.

Bitcoin Layer 2

Bitcoin Layer 2 has become an emerging hotspot in this year's primary market, with several related projects such as Babylon, Taro, BounceBit, and Corn completing financing this year, mainly bringing smart contract and scalability features to the Bitcoin network.

• Taro: Expands the payment and contract capabilities of Bitcoin through the Lightning Network.
• Stacks and RSK: Driving the growth of Bitcoin smart contract applications.

Restaking

Restaking has improved capital utilization efficiency, and this year it has also received good development and market attention, including projects like EigenLayer and Satori, which have both received tens of millions in investment from top capital this year.

Infrastructure remains a key focus in investment and financing this year. Layer 1, modular public chains, and infrastructure related to the Bitcoin ecosystem have all attracted capital interest. Layer 1 currently represents the most concentrated technical development and exploration in the crypto field, and this track will continue to be a domain of concentrated development resources and capital in the future.

Meme

Important retail funding entry after the implementation of the encryption loose monetary policy

In 2024, the Meme sector once again became a hotspot in the crypto market. As an ecological stronghold, it not only promotes community consensus but also integrates with DeFi, GameFi, and other fields, creating new use cases. Solana has successfully stimulated the activity and vitality of the ecosystem by vigorously promoting the innovation and development of Meme projects. From the Bome and Slerf at the beginning of the year to Pump.fun in the middle of the year, these projects have demonstrated strong "lottery attributes" with their Bonding Curve pricing model and low market cap opening mode, attracting widespread attention.

Meme projects have become important tools for attracting new users to the crypto market due to their simplicity and low entry barriers. The launch of Moonshot allows users to purchase Meme assets with fiat currency, while the post-election political-related Meme craze provides a strong sense of involvement for new players. Looking ahead, the Trump administration's encryption policies and related governance trends will bring potential news impacts to the market and may give rise to new Meme hotspots.

As the crypto market environment becomes more relaxed, it is expected that more retail investors will enter the market, and Meme projects will become an important channel for capital inflow.

Meme Infrastructure

As the demand for fair issuance among market users further increases, this year has seen a high level of market attention and participation in the Meme fair launch track. Infrastructure projects such as Pump.fun and SunPump have become top cash flow projects this year, injecting new momentum into the development of Meme.

Pump.fun is a meme project issuance platform built on Solana. By providing simple and intuitive creation tools and strong community support, it adopts a fair distribution model and has designed a mechanism for automatically adding liquidity to DEX. Coupled with Solana's successful market operations, community operations, and low transaction costs, Pump.fun was recognized by the market as soon as it was launched, successfully incubating several well-known meme projects.

The success of Pump.fun has not been perfectly replicated on other chains, mainly due to the following reasons:

• Solana has become one of the ideal launch platforms for Meme projects due to its low transaction costs and high throughput.
• The Solana community has shown great enthusiasm for new projects, driving the rapid growth of startup Meme projects.
• Other ecosystems such as Ethereum face high Gas fee problems, and Meme projects on other high-performance chains like BSC and Avalanche have also performed relatively poorly, mainly limited by their community size and low user retention.

Platforms like Pump.fun and SunPump have become important infrastructure for the development of Meme projects. In the future, Meme projects may exhibit more diversified and practical trends, and the infrastructure may add integrations with other application scenarios such as games, NFTs, and social interactions in terms of product functionality. As the multi-chain ecosystem gradually improves and practical use cases become richer, Meme infrastructure will continue to inject more vitality into the entire sector.

Artificial Intelligence (AI)

In 2024, the Crypto+AI track has been exploring viable directions, with dozens of AI sub-tracks emerging, including ZK/OPML that helps with AI on-chain, AI data crowdsourcing, decentralized computing power leasing, AI data trading, AI games, and AI agents.

encryption project expands focus to capture AI narrative

This year, a large number of blockchain infrastructure and applications have expanded their focus on AI. The centralization of resources and ownership is one of the key challenges in the long-term expansion of AI infrastructure, while the decentralized nature of blockchain networks offers a viable solution to the centralization issues of AI. One of the main examples of traditional crypto projects shifting towards AI is Near. Since the beginning of this year, it has encouraged AI to run on open-source protocols on the chain.

Data Labeling/Management

Currently, the limitation of data resources is one of the main challenges in expanding AI development. Most of the useful data used for AI models is monopolized by large technology companies. Due to the limited jurisdiction of these companies, there is inefficient coverage of languages and cultures. Existing centralized AI data labeling companies are unable to comprehensively scale their datasets due to insufficient financial incentives and operational jurisdictional constraints.

Blockchain technology can effectively address these issues. Multiple projects are being launched, such as Kiva, Sapien, Bagel, etc., aimed at improving data sources and incentivizing more efficient data labeling tasks across jurisdictions.

decentralized reasoning and machine learning

Currently, people mainly use centralized service providers like Hugging Face to run inference on open-source models, which may raise privacy or censorship issues. Decentralized inference allows users to run machine learning models without relying on centralized services, while