Original author: By Severin, MT Capital
TL;DR
In the report, Messari showed strong optimism on the Solana, DePIN, AI + Crypto and Perps tracks.
Judging from the distribution of analysts positions, the most promising ideas within Messari are still Solana and the AI + DePIN concept.
Key investment themes
Solana：
The rapid release of new products on Solana, the surge in on-chain liquidity, and the expanding availability of developer tools are always exciting.
From a technical perspective, upgrades such as Local Fee Markets, QUIC, and Stake-Weighted QOS have significantly reduced the occurrence of Solana outages, making Solanas operation more robust. The emergence of technologies such as cNFT has significantly reduced the cost of NFT casting and management on Solana, allowing protocols such as Helium and Render to use cNFT to significantly reduce costs and promote the prosperity of the Solana DePIN ecosystem.
The market’s expectations for Solana in 2024 focus on the following aspects:
Achieve more than 10x throughput and performance improvements with Firedancer and Sig clients. Firedancer enables Solana to process 1 million transactions per second. Improvements in user experience can attract more developers to participate in using and developing based on Solana, enriching Solanas prosperous ecosystem.
Developing light clients through Tinydancer allows verifiers to complete verification work at a lower cost and achieve a higher degree of decentralization.
Deploy token-22 standards to extend Solanas token functionality. For example, token-22 will support interest-bearing tokens, allowing complex contract logic to be triggered when token transfers are made, etc.
Solanas Local Fee Markets and state compression technology make the following applications only possible on Solana.
DePIN: Helium, Hivemapper, Render and other projects have been migrated to Solana. Render gave up its own blockchain and turned to Solana for compressible cNFTs, faster transaction speeds, and composable on-chain order books.
Payments: Solana has partnered with Visa, allowing users to use Solana USDC to trade on Shopify through the Solana Pay plug-in at a lower cost and faster speed.
Consumer apps: Extremely low-cost cNFT can boost emerging consumer adoption with NFT as the core. Take DRiP as an example, DRiP works with artists to distribute NFTs to subscribers for free. Since the end of March, it has minted more than 78 million cNFTs to 1.6 million wallets, at a cost of only about $0.00036 per NFT.
DeFi: Extremely low transaction fees and faster final status confirmation enable the DeFi protocol on Solana to create a full-chain order book model, providing users with a smoother user experience that other blockchain networks cannot support.
DePIN, DeSoc, DeSci
In the non-financial field, Messari is more concerned about the future development of DePIN, DeSoc and DeSci. The above three tracks have huge potential market sizes and can make more practical changes to the shortcomings of real-world business processes.
Messari pays special attention to the following four subdivided DePIN sub-tracks:
Decentralized Storage: The current cloud storage market has a market size of US$80 billion and continues to grow at an annual growth rate of 25%. Although the cost of decentralized storage services is 70% lower than that of cloud service providers such as Amazon S3, the current market share of decentralized storage is still less than 1%, and decentralized storage still has huge market opportunities.
Decentralized Databases: Decentralized databases have previously suffered from performance and latency problems, and these problems are expected to be solved in 2024. The emergence of DeSoc, games, dynamic NFT, ML, AL and other applications will greatly increase the demand for decentralized databases.
Decentralized Wireless Network: DePIN projects represented by Helium Mobile have gradually found their own PMF, causing user adoption to continue to grow. Take Helium Mobile as an example. In the early days, it attracted users by providing low-price services and tokens. The growth of users will further drive the growth of token prices, thereby attracting more users and paying, turning the growth flywheel.
Decentralized AI Machine: The development of artificial intelligence currently faces limitations from computing bottlenecks and lack of collaboration. The DePIN project, which focuses on the field of AI, can solve these two problems well. Gensyn can provide sufficient decentralized computing power support for AI model training, and Bittensor can enable individuals to participate in open source AI model training. DePIN and AI have a natural combination scenario.
In addition to DePIN, Messari also pays additional attention to the DeSoc and DeSci tracks. Similarly, creators have contributed US$230 billion in revenue in the social media field, but only a small number of creators can obtain the corresponding revenue share. andFriend.tech has shared $50 million in revenue with its creators after only a few months of being online. Messari believes that DeSoc is expected to replicate the wave of the 2020 DeFi Summer.
In terms of DeSci, blockchain can effectively optimize key processes such as peer review and funding of scientific research, and can promote research and development in key scientific fields through DAO and token sales.
Although DeSoc and DeSci have not yet reached the out-of-circuit capabilities of DePIN, Messari is still optimistic about them and expects that the DeSoc and DeSci fields will also produce applications that bring Mass Adoption.
AI & Crypto：
Messari believes that the advancement of AI will increase the demand for cryptocurrency solutions, and cryptocurrencies represented by Bitcoin are also naturally suitable as payment currencies for AI.
AI and Crypto have the following combination scenarios:
AI Agents can leverage cryptographic infrastructure for payments and autonomous access to digital resources.
Innovations such as zkML enable smart contracts to securely schedule AI Models to support more complex application logic.
Tokens provide a way to reward individuals for fine-tuning models and collecting valuable real-world data, making them a natural fit for integration with DePIN.
Perps
Messari clearly stated in his report that if you want to pay attention to a sub-track of DeFi this year, it should be Perp DEX.
As dYdX migrates to the customized Cosmos application chain, dYdXs central limit order book can better provide a trading experience similar to CEX. And considering the regulatory pressure faced by CEX, the distance between dYdX and CEX may further narrow.
In addition to the Perp DEX (Drift and Jupiter) of the Solana ecosystem, Synthetix also deserves additional attention. With the launch of Synthetix Andromeda version, Synthetix will introduce cross-margin functionality, support for multiple new collateral types, and a series of improvements in trading, clearing and other aspects. Synthetix also removes years-long token inflation and potentially moves into token deflation. In terms of currency price, Synthetix is also the fourth best-performing DEX so far this year.
ETH
ETH is currently in a dilemma. It is not as attractive to institutions as the narrative of BTC digital gold, and other L0, L1, and L2 competing products are also gradually eroding the transaction volume on Ethereum. Although ETHs investment performance-to-price ratio is currently low, ETHs Cancun upgrade is still worthy of attention. Ethereums Cancun upgrade can reduce the transaction cost of Rollup by 90% -99%, making Rollup as cheap as other Alt L1s. The delivery date for the Cancun upgrade is one of the most noteworthy.
Analyst positions
The most interesting thing is Messaris disclosed analyst positions. The picture below shows the distribution of currencies with the largest gains in positions of Messari analysts in 2023. It can be seen that the main profits of analysts come from the Solana ecosystem and the AI + DePIN concept. This also reflects that analysts have captured the top narrative of this round of rising prices very well.
The picture below shows the current distribution of token positions held by Messari analysts (currencies that appear only once have been removed). The main holding currencies of analysts are similar to the holding currencies with the largest increase in 2023, and are still concentrated in the concepts of Solana and AI + DePIN. Interestingly, for other tracks that analysts are strongly optimistic about, such as DeSoc, DeSci, Perps, etc., analysts do not hold any related tokens.
The picture below shows the tracks that Messari analysts like (tracks that appear only once have been removed). Similar to the previous situation, Solana and DePIN concepts still dominate. However, decentralized derivatives have surpassed AI and become one of the favorite tracks of analysts, and the ZK concept has also reached an important level on par with AI.
Reference
https://messari.io/crypto-theses-for-2024
MT Capital
MT Capital, headquartered in Silicon Valley, is a crypto-native fund focusing on Web3 and related technologies. We have a global team, and our diverse cultural backgrounds and perspectives allow us to have an in-depth understanding of the global market and to seize investment opportunities in different regions. MT Capitals vision is to become the worlds leading blockchain investment firm, focused on supporting early-stage technology companies that can generate significant value. Since 2016, our investment portfolio covers Infra, L1/L2, DeFi, NFT, GameFi and other fields. We are not just investors, we are the driving force behind the founding team.
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