Four Investor Year in Review: Who Was This Year's Biggest Winner? Who Had the Best Transformation?

Source: Unchained

Compilation: Yuliya, PANews

In this challenging yet opportunistic year of 2024, the cryptocurrency market has experienced a turbulent development journey. As the year draws to a close, the Chopping Block program invited four industry leaders: Dragonfly Managing Partner Haseeb Qureshi, Dragonfly General Partner Tom Schmidt, Superstate CEO Robert Leshner, and Robot Ventures Managing Partner Tarun Chitra, to reflect on the key moments of this year. PANews has compiled this podcast into text.

Biggest Winners

Haseeb:

I think the biggest winner this year is HyperLiquid. This decentralized perpetual contract trading platform conducted the most successful token airdrop of the season, marking this cycle's "Uniswap moment." Although there is still a long way to go in true decentralization, both the token distribution method and community response were exhilarating. As a VC, we are indeed regretful for not being able to participate—almost all VCs actually tried to invest in HyperLiquid, but they were all politely turned down. This "perfectly born" project is truly impressive, especially in its product capabilities, execution, and technical delivery.

Robert:

From my perspective, the biggest winner this year is all cryptocurrency founders and companies in the United States. We have witnessed a significant turning point: from the extreme hostility and resistance they previously faced to the favorable situation we see now. As a U.S. cryptocurrency founder, this transformation is exciting. Finally, no more worrying about operating a cryptocurrency business in the United States.

Tarun:

I would choose the entire field of DeFi (Decentralized Finance) as the winner. Do you remember the 36-month bear market forecast by Degen Spartan? DeFi was once seen as the black sheep of the cryptocurrency world, with the valuations of those yet-to-launch public chains often being ten times that of DeFi projects. However, now, DeFi has made a strong comeback. As someone who has been working in the DeFi space, seeing this development is truly gratifying.

Tom:

My choice may be a bit unexpected—it's Tether (USDT). They have performed extremely well this year, arguably being one of the most profitable companies globally. For years, many have been waiting for Tether to collapse or encounter major issues, but the opposite has happened. It has become increasingly successful and normalized. Tether has not only continued to grow but has also become a key case in the cryptocurrency industry, especially in the stablecoin application and the global dollarization trend.

Biggest Loser

Robert:

Undoubtedly, the anti-crypto camp is this year's biggest loser, including some members of both houses of Congress, certain individuals in the executive branch, especially some members of the SEC, and those advocating for 'DeFi 2.0 crackdown.' They mistakenly believed that suppressing the cryptocurrency industry would advance their political careers, but it has proven to be a completely failed strategy. I hope this can change the political landscape in the future, making political repression against cryptocurrency no longer a viable political tool.

Tarun:

I would say this year's biggest loser is the numerous second-tier Layer 2 projects and application chains. At the beginning of 2023, the market widely expected thousands of L2 projects to emerge, with each L2 tech stack giving rise to numerous purpose-built application chains. However, reality has proven this idea completely wrong. Just look at the ongoing turbulence in the Cosmos ecosystem. Previously, people thought successful applications like Blur could launch their own app chains or L2, such as Blast, but the actual results have been less than ideal. Instead, we see users more inclined to focus on a few top-tier L2 projects.

Haseeb:

I believe financial nihilism is this year's biggest loser. In the first half of this year, the view that everything in cryptocurrency was meme coins and all technology was meaningless briefly prevailed. However, the reality is that the proportion of meme coin trading volume to total volume has significantly dropped from the early 20-30% to now 10% or even lower. The market has shown more enthusiasm and confidence in real technological innovation and substantive progress. If you thought all technology was worthless, then you are indeed a big loser this year.

Tom:

I have to say the biggest losers are those who gave up on crypto this year to pivot to AI. This is a classic case of 'game over, we're back' scenario. When asset prices dropped, investors exited, developers switched careers, and the market sentiment was extremely negative, but cryptocurrency always makes a comeback in different ways. Personally, I know many people who either sold their cryptocurrency, closed their companies, or moved to other fields. It's very unfortunate because in this space, you really need strong conviction to succeed. Those lacking this conviction who pivoted to AI may be regretting it now.

Biggest Surprises

Tarun:

Undoubtedly, the biggest surprise for me this year has been the Pump.fun and BonkBot projects. I remember discussing Pump.fun on the show back in January and February this year when it was just starting out, providing users with an innovative way to create assets. I believe that without Pump.fun, the development of meme coins would not have been as rapid. Another one is BonkBot, a Telegram bot focused on meme coin trading. In terms of revenue, BonkBot can be considered a dark horse. Like Pump.fun, both companies achieved $100 million in revenue in their first year. The speed of development of meme coin infrastructure really took me by surprise.

Tom:

I have two aspects of surprises to share. The first is the launch of World Liberty Financial, where a presidential candidate became associated with a DeFi token, and Trump even holds a wallet, this situation is truly unbelievable. But what is even more unexpected is its sales performance. Normally, ordinary meme coins or NFTs sell out quickly, but this DeFi token associated with a president only sold 25%, and sales have been declining. Both of these points have greatly exceeded my expectations.

Furthermore, regarding Tarun's point, I would like to add something. I predicted back in early 2024 that the application layer would generate a significant amount of revenue. For example, Photon, Banana Gun, and even Uniswap, the revenue of these applications has reached hundreds of millions of dollars, surpassing most DeFi protocols. Although I did not specifically predict the meme coin infrastructure, applications indeed performed well, with revenue and profitability surpassing many protocols.

Haseeb:

My two biggest surprises are: First, the unexpected rise of the "Tap to Earn" model, although there has been little news lately, such as the Hamster Combat game even drawing military attention in Iran. Second, there hasn't been a major cryptocurrency security incident (L1/DeFi) this year, indicating a significant improvement in industry security. Despite the significant increase in TVL (Total Value Locked), we have not seen the massive losses as in previous years, which is a positive sign.

Robert:

What I would like to add is the changes at the infrastructure level. The emergence of Solana and Base as meme coin infrastructures is surprising. These two platforms have excelled in onboarding new users due to low transaction fees and a convenient token issuance mechanism, exceeding expectations in terms of speed and scale.

Best New Mechanism

Tom:

I believe it must be the Pump's bonding curve and LP locking mechanism. I'm glad to be the first to speak because I had a hunch that this would be a popular choice.

Robert: I believe the best mechanism is the "Yield Amplification" model, which can be seen in several stablecoin projects such as Ethena and Usual. Its core is to distribute the earnings generated by a target asset (which can be any asset such as arbitrage trades, government bonds, etc.) only to a portion of users, significantly amplifying the yield rate. For example, if the underlying strategy's annualized yield is 5% and only a quarter of the users participate in the distribution, the actual yield rate for these users will be amplified to 20%. This mechanism has played a crucial role in the development of Ethena, and I believe we will see more projects adopting similar mechanisms in the coming months.

Tarun:

From my perspective, there have been two prominent mechanism innovations this year. The first is the liquidity bootstrapping mechanism for meme coins; the second is innovations related to basis trading, especially Market Maker Lending Pools. This type of lending pool can be traced back to the launch of GMX's GLP pool in late 2021, and now it has evolved into pools like Solana's Jupiter JLP and HyperLiquid's HLP on Solana.

The innovation of this mechanism lies in addressing a key issue of decentralized exchanges: in centralized exchanges, exchanges can offer collateral loans directly to market makers, a mechanism lacking in decentralized exchanges before. Through these lending pools, users seeking yields can deposit assets into the pool, while perpetual contract traders can borrow these assets for market making and pay fees to the depositors. This significantly improves the capital efficiency of decentralized perpetual contract trading and is one of the key reasons for the historic high trading volume of decentralized perpetual contracts.

It is worth mentioning that projects like HyperLiquid have been able to grow rapidly, largely thanks to this lending pool mechanism. Currently, Jupiter's JLP pool has reached a scale of $1.5 billion, providing crucial support for on-chain basis trading. Although decentralized perpetual contract trading may never be as capital efficient as centralized exchanges, this mechanism has indeed significantly narrowed that gap.

Haseeb:

This is indeed a significant innovation. So, regarding the specific operation of these lending pools, such as JLP or HLP, is there any particular third party involved in the operation?

Tarun:

It depends on the specific project. For example, GMX's liquidity provision is programmatic, with the target weights determined by governance or multisig. On the other hand, HyperLiquid's HLP is managed directly by the project team. JLP and GLP are similar to AMMs (Automated Market Makers), allowing anyone to perform arbitrage. The key is that this mechanism effectively connects LP users seeking returns with traders in need of liquidity to provide market-making.

Best Meme

Haseeb:

I vote for Justin Sun's birthday photo. You may all remember, this entrepreneur who is widely followed in our industry and reportedly beloved by his employees, posted a photo on his birthday. The photo is clearly AI-generated because he surprisingly has 14 fingers in the picture. This may be one of the most awkward moments for one of the most successful entrepreneurs in the crypto industry, but this meme really left an impression on me, and I think I will remember it for a long time.

Robert:

Strictly speaking, this may not be considered a typical meme, but I'm awarding the Best Meme to Pudgy Penguins. Perhaps it's because they just launched the PENGU token, which debuted with a fully diluted valuation of $5 billion. Although I don't hold any Pudgy Penguins or PENGU tokens, I have to admit their achievement: continuing to build during a bear market, turning an ordinary meme into a huge success through persistent promotion and deep operations. Now they have released penguin plushies, meme coins, and other related products, with a thriving community.

Tarun:

I would like to choose Bonk. Mainly because BonkBot is a genius marketing tactic that helped Bonk go from near-zero growth to a multi-billion dollar market cap within a year. If we were to talk about the most successful "blue-chip" meme coin in the Solana ecosystem, it would be Bonk.

Tom:

That's indeed a tough choice, but I'd like to nominate Hugo Martingale. The operation of this Polymarket intern's Twitter account is outstanding. Their content is creative and engaging, with witty remarks often seen in the comment section, making it a very high-quality account.

Haseeb:

I'm glad to see not everyone has chosen a meme coin. To be honest, we might have had too many discussions about meme coins this year, and I hope next year we can have fewer topics related to meme coins.

Best / Worst Transformation

Robert:

I want to merge the "Best Transformation" and "Best Comeback Story" awards and present them to MicroStrategy. Although their transition from a mediocre business intelligence software company to a Bitcoin-leveraged ETF was made five years ago, 2024 was the year when this transformation truly received market recognition. Not only did they surpass the historical highs of the dot-com bubble era, but they also created a stunning business model: by issuing convertible bonds to raise funds at a premium to Bitcoin, they continued to buy Bitcoin, establishing a perpetual funding loop.

Tarun:

I would like to nominate the Babylon Protocol. While their transformation technically began in 2023, it was truly realized in 2024. Babylon initially only provided Bitcoin timestamping services for the Cosmos chain, but later they developed "remote staking" technology, allowing users to stake Bitcoin as collateral. Now their Total Value Locked (TVL) has reached $6 billion. Transforming from a single timestamp service to a business of this scale is one of the most successful business model transformations I have seen.

Tom:

I want to nominate the Democratic Party for the "Worst Transition" award. From Trump's event at Mar-a-Lago, to Biden's release of an executive statement related to digital assets, to Kamala's vague stance on cryptocurrency investment, the whole process seems very chaotic. In contrast, Trump took a simple and direct strategy, saying what people wanted to hear and doing what people wanted, such as "Free Ross," etc. The Democratic Party's performance on this issue is disappointing, like missing a shot on goal from two inches away.

Haseeb:

The best transition I've chosen is the NFT community's transition to meme coins. For example, Miladys launched the CULT token, Pudgy Penguins launched PENGU, and the market value of these meme coins even exceeded that of the original NFT projects. Interestingly, this transition did not face community backlash, no one accused them of deviating from NFT. Although these tokens seem to have little practical use, this transition strategy has been surprisingly successful. This may be related to the choice of public chains, as many high-quality NFT projects are on Ethereum, while meme coins are more developed on Solana, and this natural friction may explain why this transition came relatively late.

Tom:

Interestingly, we find that in the cryptocurrency field, sometimes the simple "vibe coins" are more popular than tokens that try to create serious value. This seems to prove a point: when issuing new tokens, there is no need to overly complicate things; people prefer to have multiple simple tokens rather than a complex conversion mechanism.

Most Disappointing Project

Tom:

I believe the most disappointing project is MakerDAO's rebranding to Sky. The most obvious evidence of this failure is that even after the rebranding, people still refer to it as Maker instead of Sky. Although DAI's scale compared to USDS is still significant, it is said that they are considering reversing this rebranding, which is clearly an unnecessary and ineffective decision.

Haseeb:

I choose the Bitcoin L2 project as the biggest failure. At the beginning of the year, the market had high hopes for Bitcoin L2, expecting to reach billions of dollars in TVL and believing that the Bitcoin ecosystem would embrace DeFi. However, the reality is that even though multiple projects were launched, they all turned into "ghost towns." Hardly anyone discusses these projects, and founders are rarely heard expressing plans to launch projects on Bitcoin L2.

Furthermore, Celebrity Coins have also been a significant failure. There was a time when people thought celebrity tokens would fare better than the typical meme coin because of celebrity endorsements. For example, MOTHER falls into this category. However, these are essentially social tokens, and over time, their performance has been extremely poor. The market initially saw this as a huge opportunity, but now it seems that this expectation has completely fallen flat.

Robert:

I would like to nominate Friend.tech and the downfall of the Social Fi trend it led. Earlier this year, Friend.tech was once considered the hottest startup in the crypto space, but its development cycle was extremely short-lived. From its initial concept to hype, to the launch of the V2 version and the Friend token, it quickly faded into obscurity. The value of the product and token is now almost zero, making it one of the few truly self-destructive projects. While projects like Farcaster are still in development, the entire crypto social sector faces significant challenges.

2024 Best Comeback Story

Tom:

I would like to nominate Coinbase. During cryptocurrency price declines, Coinbase has often been the market's "punching bag." In 2023, they underwent massive layoffs, leading many to believe they might go under. However, with the launch of the Bitcoin ETF, Coinbase seized new opportunities as the custodian of the ETF. While their international business is not particularly prominent, it is steadily growing. Additionally, they obtained a stay of enforcement in their lawsuit with the SEC, marking a series of significant wins in 2024. It is worth noting that this is the second consecutive year Coinbase has been named the best comeback story, and this "double resurrection" is indeed impressive.

Haseeb:

I would like to nominate Magic Eden. They were once seen as the "second-tier" NFT marketplace after OpenSea and Blur. However, through their foray into the Bitcoin ecosystem, especially in BRC-20 tokens and Ordinals, they have achieved remarkable trading volume. Their performance in the Solana ecosystem has also been quite good. They recently launched a platform token, marking a perfect transformation.

Robert:

In addition to MicroStrategy mentioned earlier, I also want to nominate the entire Bitcoin ETF ecosystem. After years of rejections and failures, this year finally saw a breakthrough. This can be credited to Grayscale suing the SEC and winning, paving the way for a successful Bitcoin ETF and subsequently an Ethereum ETF. The performance of these ETF products has been quite impressive, representing a resurrection from the "dead." While some may argue that this is more of a "winner" than a "resurrection" story, institutions like BlackRock have indeed demonstrated their strong presence throughout this process.

Tarun:

I choose the Move ecosystem as the top comeback story. Sui's market cap has reached $500 billion, Movement has raised over $50 billion in funding, and many DeFi protocols have also launched on these public chains. In the third and fourth quarters of 2023, when Solana gained significant attention, the Move ecosystem seemed to have been overlooked. But now, through improved user experiences and other feature optimizations, they have clearly achieved a strong resurgence.

Host: From these examples, we can see that in the cryptocurrency market, even projects that have experienced lows can achieve a strong comeback as long as they have the right strategic positioning and execution. This also reflects the resilience and innovation of this industry.

2025 Predictions

Haseeb:

I have three predictions. First, Bitcoin will touch $150,000 and then experience a pullback. Second, DeFi tokens will see explosive growth. Third, AI-related token prices will see a significant increase, but the actual application of underlying protocols may be relatively limited.

Robert:

I am more optimistic about Bitcoin, expecting it to reach $180,000 without a sharp decline. Secondly, I believe the United States will enact its first dedicated cryptocurrency legislation, which will be a significant milestone for the industry. Finally, I predict there will be a media-highlighted AI crypto scam event.

Tarun:

My predictions are mainly focused on three areas. Firstly, there will be a wave of consolidation in the application chain and L2 track, possibly seeing multiple merger cases, mainly due to high operating costs and transaction volume centralization issues. Secondly, the total market value of AI agent-related tokens will increase by at least 5 times from the current $100 billion significantly. Lastly, Solana's inflation rate will be reduced by at least 25%.

Tom:

I also have three predictions. First, money games like Farcaster or "The Button" will become mainstream, achieving viral spread on platforms like TikTok. Second, a new cryptocurrency ETF will be approved, but it may be for relatively traditional assets like XRP or Litecoin, rather than the emerging assets the crypto community is expecting. Third, we may see a major application-layer security incident, possibly stemming from a supply chain attack or library vulnerability.

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