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Q2 2024 Crypto market sector snapshot

This is our Q2 2024 crypto market sector snapshot, a report from our Sygnum investment research. 

The Layer 1 sector has been dominating the headlines, with significant developments around the major tokens: Bitcoin, Ethereum and Solana. However, the Web3 sector has been the best performing decentralised application sector, with strong narratives and user growth supporting AI-linked projects and the DePIN niche, while there are signs of revival in the gaming sector.

As DeFi yields again trump fiat yields and the incidence of hacks continues to decline, established protocols are likely to see continued user and volume growth. A new breed of restaking protocols is growing significantly, with EigenLayer becoming the second largest DeFi protocol in terms to total valued locked, surpassing DeFi stalwarts Aave, Market and Uniswap. Other segments are also poised for growth, such as protocols linked to real-world asset tokenization and the potential rise of a Bitcoin DeFi ecosystem.

Meanwhile, tokenized investment products, such as the BlackRock-launched tokenized money market fund BUIDL or Ethereum’s tokenized yield arbitrage strategy USDe, have been well received by the market and quickly gathered substantial assets under management.

The Layer 2 sector has been the worst performer year-to-date, despite Ethereum’s successfully scalability upgrade catalysing strong growth in transaction volumes for Layer 2 protocols, on concerns about value capture by the tokens and due to the market’s continued preference for Solana’s integrated approach to scaling.

This 12-page report is available to qualified investors. Please find further insights and news from our team here.

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