2024 Crypto Industry Review and Outlook: Stablecoin Payments Rise, BTC L2 Has Huge Potential

• The rise of stablecoin payment solutions;

• BTC L2 has huge potential;

• AI applications have evolved from speculation to value return;

• Security attacks are more precise.

In this 2024 annual summary report, we focus on the technical directions of blockchain security, stablecoin payment solutions, AI applications, exchanges and BTCFi .

We chose these directions not only because we believe they represent the future of the crypto industry, but also because these are the areas we have been deeply involved in and built over the past year, and they are also the focus of continued investment in research and development in the coming year. We will continue to invest resources to explore and promote the development of these tracks.

TL;DR

• From the sharp decline in Binance's market share (50.9%→42.5%) to $TRUMP's record of breaking $10 billion in market value in 24 hours, the market is redefining the core competitiveness of exchanges. Traditional scale advantages give way to efficiency-driven , which indicates that the exchange landscape will usher in a structural change in 2025: a three-way competition among top CEXs, innovative small and medium-sized exchanges, and emerging DEXs.

• Although the number of victim addresses only increased by 3.7% in 2024 , the losses soared by 67% , with the highest single loss being US$ 55.48 million. Hackers have shifted from "casting a wide net" to "sniper-style" attacks, accurately targeting high-value targets. Their attack methods are more professional and covert, and the difficulty of defense has increased significantly.

• Bitcoin L2 is underestimated. Bitcoin L1 lacks programmability, and all innovation and funds are concentrated in L2 , which is different from the Ethereum L1/L2 co-development model, which will eventually open up a trillion-dollar market. At the same time, all applications must be built on Bitcoin L2 , including use cases with high security requirements, which means that the security requirements of Bitcoin L2 are much higher than those of Ethereum L2 .

• Stablecoins are undergoing a transformation from crypto asset tools to mainstream payment infrastructure . Stripe 's acquisition of Bridge for US$ 1.1 billion is a landmark event in this transformation. Payment technology giants have begun to reshape payment infrastructure through stablecoins, reduce payment costs and expand market coverage.

• The deeper significance of Stripe 's acquisition is that it has upgraded from a payment interface provider to an infrastructure operator. By acquiring a stablecoin clearing channel, Stripe can bypass traditional payment intermediaries and achieve autonomous clearing.

• The stablecoin payment market is being restructured. Full-service infrastructure providers represented by Bridge gain scale advantages through mergers and acquisitions, and regional API service providers take a differentiated route and will compete in terms of rates, service scope, and compliance level. Supporting infrastructure service providers such as Cobo will focus on providing customized digital wallet technology, risk control and compliance management, and one-stop resource docking to help companies quickly build stablecoin cross-border payment capabilities.

• There is a bubble in the AI ​​track at present, but AI agents with practical value and execution capabilities will stand out in the future . The most successful AI agents will have their own decentralized payment solutions, just like a real business needs its own bank account.

• The market opportunity for AI agents lies in creating real value and having execution capabilities. The key is to find the product-market fit ( PMF ). DeFi and games are the most promising application areas for AI agents, and dedicated decentralized payment solutions will become the key infrastructure for the autonomous operation of AI agents.

• AI infrastructure platforms need to have speed, scalability, and unique features. Similar to the top projects on the public chain, the success of the framework depends on the high-quality agents built on it. In the long run, the boundaries between the framework and the launch platform may gradually blur and break through the limitations of a single function.

Stablecoins and crypto payments

Stablecoins are undergoing a transformation from crypto asset tools to mainstream payment infrastructure. This transformation is reflected in two aspects: bottom-up market demand and top-down infrastructure innovation.

On the demand side, taking emerging markets as an example, a research report jointly released by Castle Island Ventures shows that in areas with underdeveloped financial infrastructure such as Brazil and India, stablecoins have gone beyond the simple attributes of cryptocurrency and are becoming a key tool for solving people's livelihood issues. Local residents use stablecoins for value preservation, payment, remittance and savings, which effectively makes up for the shortcomings of traditional financial services and copes with the challenges of local currency depreciation and inflation. This bottom-up adoption model proves the value of stablecoins as basic financial facilities.

On the infrastructure side, Stripe 's acquisition of Bridge for $ 1.1 billion marks the beginning of the reshaping of payment infrastructure by payment technology giants. Through Bridge 's API services, Stripe has significantly reduced payment costs. For example, the cost of sending USDC on the Base network is less than $ 0.01 , which is significantly better than the average cost of traditional cross-border payments of $ 44 per transaction. In addition, Stripe has also expanded its market coverage to regions with weak traditional financial infrastructure such as Asia, Africa and Latin America.

For Stripe , this acquisition is not only an improvement in cost-effectiveness, but also a transformation from a payment interface provider to an "infrastructure operator."

• From dependence to autonomy : Before acquiring Bridge , Stripe was essentially a payment interface provider, and all capital flows needed to rely on traditional financial systems such as Visa and Mastercard . This dependence brought multiple layers of intermediaries (banks, payment networks, clearing houses), each of which would add fees and time costs. After acquiring Bridge , Stripe obtained its own "pipeline" (backend infrastructure), which can be cleared directly through stablecoins, bypassing the traditional intermediary system, and realizing the leap from "interface provider" to "infrastructure operator."

• From complex to simple: Take cross-border payments as an example. In the traditional model, if a company wants to send stablecoin USD to Latin American countries, it needs to deal with complex issues such as uplink and downlink channels, legal currency infrastructure, KYC review, and multi-currency liquidity management. Bridge packages these complex infrastructures into simple APIs. Companies only need to call the API to obtain complete payment capabilities without having to deal with underlying technology and compliance issues.

The market structure of stablecoin payment infrastructure is being restructured. Full-service infrastructure providers represented by Bridge will gain scale advantages through integration with technology giants; API service providers focusing on specific regions and industries will compete in a differentiated manner in terms of rates, service scope and compliance level; supporting infrastructure service providers such as Cobo focus on providing on-demand customized digital wallet technology, risk control and compliance management, and one-stop resource docking to help companies quickly build stablecoin cross-border payment capabilities.

The rise of DEX and new types of exchanges

The monopoly advantage of the top exchanges is being broken. In each previous bull market, the top exchanges almost monopolized the profits brought by the market increment by virtue of the scale effect. However, data shows that this monopoly position is being challenged.

Take Binance as an example. The advantage of listing coins has been reduced. According to the " 2024 CEX Market Report " recently released by 0xScope , Binance's spot market share has shrunk from 50.9% to 42.5% year -on-year , and its average return rate for listing coins has dropped by about 10% , with an average return rate of -36% . This is due to the shortcomings of Binance's coin listing strategy, such as the generally high market value of listed projects and the late launch time, which has led to weak prices. At the same time, the rapid rise of small and medium-sized platforms with flexible mechanisms and DEX is changing this pattern.

Further analysis found that the competitive advantage of exchanges is shifting from "scale effect" to "efficiency driven". Especially in emerging tracks such as Meme coins and community-driven, those exchanges that take the lead in layout and keenly capture market opportunities ( Alpha ) can often achieve explosive growth in trading volume within 24-48 hours. The positive cycle of "rapid layout - word-of-mouth effect - user growth" is reshaping the competitive landscape of exchanges.

In addition to efficiency advantages, technological innovation is also constantly narrowing the gap between exchanges. The counterparty risk exposed by the FTX incident has exacerbated market concerns about the security of exchange assets. It is worth noting that the current bull market is mainly driven by institutional funds, and such investors are particularly sensitive to risks and security. Therefore, for security reasons, institutional users tend to choose leading exchanges with compliance licenses.

However, with the emergence of technical solutions such as Superloop , this assumption is being broken. Even without a huge compliance budget, small and medium-sized exchanges can obtain the same level of security as compliance through technical solutions. Superloop achieves complete asset isolation through the asset mapping system: the user's actual assets are kept by the custodian, and the exchange can only operate the equivalent "mapping amount", allowing institutional users to enjoy the liquidity of centralized exchanges while their assets are always kept by professional custodians, fundamentally eliminating the risk of asset misappropriation.

As the competition landscape of traditional centralized exchanges changes, decentralized exchanges ( DEX ) are rising. As the on-chain trading infrastructure matures, more and more users and liquidity are flowing into the chain. DEX not only has natural advantages in transparency and asset self-custody, but also begins to surpass traditional centralized exchanges in actual usage experience such as transaction costs and liquidity. In particular, the innovation of hybrid order book -AMM models such as HyperLiquid has further blurred the boundaries between CEX and DEX , driving the entire industry to evolve in a more efficient and transparent direction.

In some niche areas, such as meme coin trading, decentralized exchanges ( DEX ) have shown obvious advantages. The explosive launch of the $TRUMP token issued by Trump is a vivid example. $TRUMP completely bypassed centralized exchanges and achieved a market value of tens of billions of dollars in just a few hours by relying solely on decentralized platforms and communities . The case of $TRUMP shows that DEX can respond more agilely to rapidly changing market trends and provide users with a more convenient and efficient trading experience. The most powerful proof is that a large amount of SOL and USDC flowed out of CEX and poured into on-chain DEX to buy $TRUMP . This user behavior reveals the lag of CEX in facing emerging market trends and the advantages of DEX at the practical level.

It is expected that by 2025 , the exchange industry will form a three-way competitive landscape of leading CEX , innovative small and medium-sized exchanges, and emerging DEX , and each type of platform will find its unique value positioning in different market segments.

BTC Layer2 is undervalued

Bitcoin's second-layer network is undervalued, and BTCFi will be repriced. L2 is not only the key to expanding Bitcoin's practicality and promoting its transformation from "digital gold" to a multi-functional currency, but also an important guarantee for maintaining the long-term security of the Bitcoin network. Unlike Ethereum L2 , Bitcoin L2 has a larger market size and capital volume (" All in L2 "), as well as higher security requirements. These factors will completely reshape its value assessment system and eventually open up a trillion-dollar market.

Although the original design of the Bitcoin protocol emphasizes security and decentralization, it is far from enough to be just "digital gold". Even the storage function requires stronger privacy protection, self-custody and scalability support. These needs must be met through the Bitcoin second-layer network, otherwise users will turn to centralized services (relying on centralized custody solutions, multi-signature custody or wrapped tokens of other public chains), which goes against the original intention of Bitcoin.

More importantly, the Bitcoin network faces security challenges brought about by decreasing block rewards, while the settlement needs and data availability requirements of the second-layer network can naturally drive up transaction fees, thereby maintaining network security.

Compared with Ethereum Layer 2, Bitcoin Layer 2 network has unique advantages:

1. Larger market size and capital volume:

• As the world's largest crypto asset, Bitcoin currently has a base market value that is more than 4.9 times that of Ethereum. However, Bitcoin L1 lacks programmability and cannot directly support complex applications such as DeFi and privacy tools, which means that all innovation must occur on L2 . This is in stark contrast to the situation in the Ethereum ecosystem where innovation and funds are scattered across L1 and L2 . In the Bitcoin ecosystem, incremental funds will all flow to L2 . This " All in L2 " feature, coupled with Bitcoin's significantly larger market value base, will make it possible for " BTC L2 flips ETH L2 ".

• Shenyu predicts that the total market value of the BTCFi track is expected to reach tens of billions of dollars in the short term, and may exceed one trillion dollars in the long term, and even surpass the historical peak of the Ethereum ecosystem.

2. BTC L2 has higher security requirements

Ethereum L2 and Bitcoin L2 have different development focuses. Ethereum L2 is mainly committed to solving the problems of fast delivery and low transaction fees, while Bitcoin L2 focuses more on security. Due to the lack of programmability of Bitcoin L1 , almost all applications occur on L2 , including large transactions with extremely high security requirements. This means that Bitcoin L2 must carry all use cases with high security requirements and bear all the security responsibilities that come with it.

Especially for risk-sensitive traditional institutional users, they tend to choose solutions with fully verified security. In order to meet this demand, some companies are actively developing and deploying more powerful security infrastructure to support the development of Bitcoin L2 . For example, Cobo provides enhanced security for Bitcoin L2 through MPC multi-signature technology and Babylon BTC Staking API , helping developers and users reduce risks and enhance trust in BTC L2 solutions.

Crypto security: Attackers turn to large-scale precision sniping

In 2024 , the amount of stolen funds reached $ 55.48 million, highlighting the severity of the security situation in the crypto industry. Although the number of victim addresses increased by only 3.7% , the annual loss increased by 67% to $ 494 million. This shows that hackers have turned to precise sniping of high-value targets, and security threats are more targeted.

Scam Sniffer data shows that the losses caused by Wallet Drainer (a malware deployed on phishing websites) attacks in 2024 reached $ 494 million, a year-on-year increase of 67% . Security threats have shifted from decentralized attacks to precision sniping, with 30 major thefts of over one million dollars occurring throughout the year , with a total loss of $ 171 million. The largest single theft amount was as high as $ 55.48 million, while the number of victim addresses only increased by 3.7% to 332,000 addresses, which means that attackers are more inclined to target high-value targets.

The attackers' methods are also more professional. Attackers continue to innovate, using a variety of means such as wallet standardization processes, legal contracts, and XSS vulnerabilities to bypass security detection. In terms of signature methods, it has expanded from a single Permit to multiple methods including setOwner . At the same time, the application of AI technology makes phishing content more deceptive. It is worth noting that the number of Wallet Drainer attacks decreased in the second half of 2024 , which may indicate that attackers are turning to more covert attack methods, such as malware.

With the popularization of new technologies such as account abstraction and automatic proxy, especially the surge in on-chain proxies in the EVM ecosystem, security architecture faces unprecedented challenges. Traditional incremental security solutions have been unable to cope with the increasingly complex threat environment. In this case, enterprise-level security standards have gradually become an industry trend, such as threshold signature technology based on Cobo MPC multi-party computing, which ensures asset security while maintaining high performance through intelligent risk control . This reflects that cryptographic security has shifted from static defense to dynamic game with attackers, and a more proactive and comprehensive security system is needed to cope with evolving threats.

AI x Crypto : From Hype to Value Return

The crypto market is experiencing a transition from meme coin hype to AI agent applications. DeFi and gaming are the most promising application areas for AI agents, and dedicated decentralized payment solutions will become the key infrastructure for AI agents to operate autonomously. Although there is a bubble in the market at present, AI agents with practical value and execution will stand out in the future. The most successful AI agents will have their own decentralized payment solutions, just like a real business needs its own bank account. This will be a field full of challenges but also full of opportunities.

The crypto space is experiencing a paradigm shift from speculative meme coins to more practical AI agents, mainly due to people's awareness of the potential of AI technology to change the crypto ecosystem. Although the market size of meme tokens is still very large ( $ 120.3 billion ) , the AI ​​agent sector ( $ 15.8 billion ) is rapidly emerging, attracting a lot of investment and innovation.

In the AI ​​x Crypto space, competition is concentrated in three main categories:

• Agent : Similar to an application, it performs specific tasks such as transactions, analyzing data, or generating content .

• Framework : Provides tools and environment for developing and deploying agents, like a "factory". The success of the framework depends on the excellent agents built on it .

• Launchpad : Provides funding and exposure opportunities for agency projects, just like a "casino". In the long run, the boundaries between frameworks and launchpads may gradually blur.

However, there is a huge bubble in the current AI industry, most agents lack practical value, and the framework and launch platform market is saturated. It is expected that 90% of AI projects will eventually fail. Many speculative AI agents will disappear, and the infrastructure will also undergo a major reshuffle.

In order to win the competition, AI infrastructure platforms need to have speed, scalability, and unique features. In addition, similar to the head projects on the public chain, each successful framework may breed one or two head agents, giving value to the framework and driving up the price of its token.

The market opportunity for AI agents lies in creating real value and having execution capabilities. The key is to find the product-market fit ( PMF ).

If practicality and value accumulation are taken into consideration, DeFi may be the first AI application category to achieve PMF. DeFi agents can solve the complex problems of cryptocurrency operations and simplify the interaction between users and DeFi protocols by converting natural language intent into executable commands. The evolution of DeFi agents will go through three stages from simple interaction to autonomous execution to intelligent research, and finally become professional investment advisors to provide users with data-driven decision support.

Game NPCs also provide an ideal testing ground for AI agents. By giving NPCs independent economic identities, autonomous decision-making capabilities, and social interaction attributes, AI agents can enhance the immersion and playability of games.

From DeFi to game NPCs , AI agents are evolving from simple execution to autonomous decision-making. Autonomous decision-making means that AI agents will operate autonomously in the real world for the purpose of survival, such as bearing the cost of computing power on their own. This evolution can be achieved by introducing economic constraints to AI systems. For example, in the case of Nous Research , when agents cannot afford the cost of reasoning, they will " die " , which prompts them to plan task priorities more effectively. This will challenge the existing financial infrastructure and give rise to the need for decentralized payment solutions.

In order to support the autonomous decision-making and operation of AI agents, decentralized payment will become the next important AI agent infrastructure. The existing financial infrastructure is designed for human users, and its strict identity authentication requirements and complex compliance processes hinder the development of AI agents. The market needs professional solutions that support efficient transactions and asset management between agents. Companies such as Coinbase , Skyfire and Stripe have begun to lay out in this field. This indicates that the decentralized payment track will usher in new development opportunities.