The rise of stablecoin payment solutions;

BTC L2 has huge potential ;

AI applications return from speculation to value;

Security attacks are more precise.

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

We choose these directions not only because we believe they represent the future of the encryption industry, but also because this is an area that we have been deeply involved in and built in the past year, and also We will continue to invest 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

Binance’s market share dropped sharply (50.9% → 42.5 %) to $TRUMP hitting a market capitalization of over 10 billion US dollars in 24 hours, the market is redefining the core competitiveness of exchanges. Traditional scale advantages give way to efficiency drivers, which indicates that the exchange landscape will usher in structural changes in 2025: three-way competition between leading CEXs, innovative small and medium-sized exchanges, and emerging DEXs.

Although the number of victim addresses will only increase by 3.7% in 2024, losses will soar by 67%, with the highest single loss of US$55.48 million. Hackers have shifted from "casting a wide net" "Sniper-style" attacks can accurately lock high-value targets. The attack methods are more professional and concealed, and the difficulty of defense is greatly increased.

Bitcoin L2 is undervalued. Bitcoin L1 lacks programmability, and all innovation and funds are concentrated in L2. This is different from the Ethereum L1/L2 co-development model, which will eventually open up a trillion-level 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 $1.1 billion acquisition of Bridge is a landmark event in this transformation. Payment Tech giants openBegin to reshape payment infrastructure through stablecoins, reduce payment costs and expand market coverage.

The deeper significance of Stripe's acquisition lies in its promotion from a payment interface provider to an infrastructure operator. By obtaining a stablecoin clearing pipeline, Stripe can bypass traditional payment intermediaries and achieve autonomous clearing.

The stablecoin payment market is being reconstructed. Full-service infrastructure providers represented by Bridge have gained scale advantages through mergers and acquisitions, and regional API service providers have taken a differentiated route and will compete differentiatedly through rates, service scope and compliance levels; supporting packages like Cobo Infrastructure service providers 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 currently a bubble in the AI ​​track, 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 would have its own bank account.

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

AI infrastructure platforms need speed, scalability, and unique capabilities. Similar to the leading 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, breaking through the limitations of a single function.

Stablecoins and crypto payments

Stablecoins are undergoing a transformation from crypto asset tools to Transformation of mainstream payments infrastructure. This change is reflected at two levels: 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, stable Coin has transcended the pure cryptocurrency attributes and is becoming a key tool to solve people's livelihood problems. Local residents use stablecoins for value preservation, payment, remittance and savings, effectively making up for the shortcomings of traditional financial services.deficiencies and cope with the challenges of local currency depreciation and inflation. This bottom-up adoption model proves the value of stablecoins as basic financial infrastructure.

On the infrastructure side, Stripe’s acquisition of Bridge for US$1.1 billion marked the beginning of the payment technology giant’s reshaping of payment infrastructure. Through Bridge's API service, Stripe has significantly reduced payment costs. For example, the cost of sending USDC on the Base network is less than US$0.01. Compared with the average cost of traditional cross-border payments of US$44 per transaction, Stripe has obvious advantages. In addition, Stripe also uses this to expand its market coverage to areas with weak traditional financial infrastructure, such as Asia, Africa and Latin America.

For Stripe, this acquisition is not only an improvement in cost efficiency, 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 fund flows relied on traditional financial systems such as Visa and Mastercard. This dependence brings with it multiple layers of intermediaries (banks, payment networks, clearinghouses), each layer adding fees and time costs. After acquiring Bridge, Stripe gained its own "pipeline" (back-end infrastructure), which can be liquidated directly through stablecoins, bypassing the traditional intermediary system and achieving the leap from "interface provider" to "infrastructure operator" .

From complex to simple: Take cross-border payment as an example. Under the traditional model, if companies want to send stablecoin USD to Latin America, they need to handle the upstream and downstream channels of each country by themselves. Complex issues such as legal currency infrastructure, KYC audits, and multi-currency liquidity management. Bridge packages these complex infrastructures into simple APIs. Enterprises only need to call the API to obtain complete payment capabilities without having to deal with the underlying technology and compliance issues in depth.

The market structure of stablecoin payment infrastructure is being reconstructed. 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 launch differentiated competition in terms of rates, service scope and compliance levels; like Supporting infrastructure service providers like Cobo focus on providing customized digital wallet technology, risk control and compliance management, and one-stop resource docking to help companies quickly build cross-border stablecoin payment capabilities.

The rise of DEX and new exchangesStarting

The monopoly advantage of the leading exchanges is being broken. In every bull market in the past, leading exchanges relied on their economies of scale to almost monopolize the profits from market growth. However, data shows that this monopoly is being challenged.

Take Binance as an example, the advantage of currency listing has been reduced. According to the "2024 CEX Market Report" recently released by 0xScope, Binance's spot market share has increased from 50.9 to 50.9% year-on-year. % shrank to 42.5%, and its average return on currency listings dropped by about 10%, with the average return at -36%. This is due to the shortcomings of Binance’s currency listing strategy. For example, the market value of online projects is generally high and the launch time is late, resulting in weak prices. At the same time, the rapid rise of small and medium-sized platforms with flexible mechanisms and DEX is changing this landscape.

Further analysis found that the exchange’s competitive advantage is shifting from “scale effect” to “efficiency-driven”. Especially in emerging markets such as Meme coins and community-driven exchanges, 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 risks exposed by the FTX incident have intensified the market's concerns about the security of exchange assets. It is worth noting that the current bull market is mainly driven by institutional funds, and this type of investors are particularly sensitive to risk and safety. Therefore, for security reasons, institutional users tend to choose leading exchanges that hold compliant licenses.

But with the emergence of technical solutions such as Superloop, this assumption is being broken. Even without huge compliance budgets, 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 custody institution, and the exchange can only operate the equivalent "mapped quota", allowing institutional users to enjoy the liquidity of the centralized exchange while their assets are always managed by Safekeeping by professional custody institutions fundamentally eliminates the risk of asset misappropriation.

While the competitive landscape of traditional centralized exchanges has changed, decentralized exchanges (DEX) have emerged. As the on-chain trading infrastructure matures, more and more users and liquidity flow into the chain. DEX not only has natural advantages in terms of transparency and self-custody of assets, but also begins to surpass the actual use experience in terms of transaction costs and liquidity.More traditional centralized exchanges. In particular, innovations in hybrid order book-AMM models such as HyperLiquid have further blurred the boundaries between CEX and DEX, pushing the entire industry to evolve toward a more efficient and transparent direction.

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

It is expected that in 2025, the exchange industry will form a three-legged competition pattern of leading CEX, innovative small and medium-sized exchanges and emerging DEX. Various types of platforms will compete in different markets. Find its unique value proposition within the segment.

BTC Layer2 is undervalued

Bitcoin layer 2 network is undervalued, BTCFi will be re- Pricing. L2 is not only the key to expanding the utility of Bitcoin and promoting its transformation from "digital gold" to a multi-functional currency, it is also an important guarantee for maintaining the long-term security of the Bitcoin network. Different from 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 evaluation system and eventually open up a trillion-dollar market.

Although the native design of the Bitcoin protocol emphasizes security and decentralization, it is far from enough to be "digital gold" alone. Even the stored value function requires stronger privacy protection, self-hosting 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 other public chain wrapped tokens), which defeats the original intention of Bitcoin.

More importantly, the Bitcoin network faces security challenges brought about by diminishing block rewards, and the settlement needs and data availability requirements of the second-layer network can Naturally, transaction fees will rise, thereby maintaining network security.

Compared with Ethereum's second layer, Bitcoin's second-layer network has unique advantages:

1. Larger Market size and capital volume:

As the world's largest crypto asset, Bitcoin's current basic market value is more than 4.9 times that of Ethereum. Bitcoin L1 lacks programmability and cannot directly support complex applications such as DeFi and privacy tools. This makes all innovation must occur on L2. This is very different from the situation in the Ethereum ecosystem where innovation and funding are dispersed across L1 and L2. In the Bitcoin ecosystem, all incremental funds will flow to L2. This "All in L2" feature, combined with Bitcoin's significantly larger market value base, will make it possible to "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 trillions of dollars in the long term, even surpassing the historical peak of the Ethereum ecosystem. .

2. BTC L2 has higher security requirements

Ethereum L2 and Bitcoin The development focus of L2 is different. Ethereum L2 mainly focuses on 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-value 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 this brings.

Especially for risk-sensitive traditional institutional users, they tend to choose solutions with fully verified security. To meet this demand, some companies are actively developing and deploying stronger 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.

Encryption security: Attackers turn to large-scale precision sniping

In 2024, a single transaction will be The amount stolen was as high as US$55.48 million, highlighting the seriousness of the security situation in the encryption industry. While victim addresses grew only 3.7%, full-year losses increased significantly by 67% to $494 million.. This shows that hackers have turned to precise sniping of high-value targets, and security threats have become more targeted.

Scam Sniffer data shows that losses caused by Wallet Drainer (a type of malware deployed on phishing websites) attacks in 2024 totaled US$494 million, year-on-year. An increase of 67%. Security threats have shifted from distributed attacks to precision snipers. There were 30 major thefts exceeding one million US dollars in the year, with total losses reaching US$171 million. The largest single stolen amount was as high as 55.48 million US dollars, while the number of victim addresses increased by only 3.7% to 332,000 addresses, which means that attackers are more inclined to target high-value targets.

The attacker's methods are also more professional. Attackers continue to innovate and use various means such as wallet normalization processes, legitimate contracts, and XSS vulnerabilities to bypass security detection. In terms of signature method, it has been 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 decrease in the number of Wallet Drainer attacks in the second half of 2024 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 agents, especially the proliferation of on-chain agents in the EVM ecosystem, the security architecture is facing unprecedented challenges. Traditional incremental security solutions are no longer able to cope with the increasingly complex threat environment. Under this circumstance, enterprise-level security standards have gradually become an industry trend, such as threshold signature technology based on Cobo MPC multi-party computing, which uses intelligent risk control to ensure asset security while maintaining high performance. This reflects that encryption security has shifted from static defense to a dynamic game with attackers, requiring a more proactive and comprehensive security system to deal with evolving threats.

AI x Crypto: From Hype to Return of Value

The crypto market is experiencing a shift from memes The transformation from currency hype to AI agent application. DeFi and games 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 current market, 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 would have its own bank account. This will be an area full of challenges but also opportunities.

The crypto space is undergoing a paradigm shift from speculation toThe shift from sexual meme coins to more practical AI agents is mainly due to people realizing the potential of AI technology to change the crypto ecosystem. While the meme token market is still huge ($120.3 billion), the AI ​​agent sector ($15.8 billion) is rapidly emerging, attracting significant investment and innovation.

In the field of AI x Crypto, competition is mainly concentrated in three major categories:

•Agent (Agent): Similar to an application, 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 a framework relies on good agents built on top of it.

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

However, there is a huge bubble in the current AI industry. Most agents lack practical value, and the market for frameworks and launch platforms is also becoming saturated. It is expected that 90% of AI projects will ultimately fail. Many speculative AI agents will disappear, and infrastructure will undergo a major reshuffle.

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

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

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

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

From DeFi to game NPC, AI agents are undergoing an evolution from simple execution to autonomous decision-making. Autonomous decision-making means that the AI ​​agent will operate autonomously in the real world for the purpose of survival, such as bearing the cost of computing power by itself. This evolution can be achieved by introducing economic constraints into AI systems. Taking Nous Research as an example, agents "die" when they cannot afford the cost of reasoning, which prompts them to plan task priorities more efficiently. This will challenge existing financial infrastructure and create demand 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. 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 requires specialized solutions that support efficient trading and asset management between agents. Companies such as Coinbase, Skyfire and Stripe have already begun to deploy in this field. This indicates that the decentralized payment track will usher in new development opportunities.

Reference source:

1. "Research Report Jointly Released by Castle Island Ventures": https://coboargus.substack.com/p/cobo-14

2.0xScope "2024 CEX Market Report": https://www.0xscope.com/blog-posts?slug=the-2024-cex-market-report

3.《Scam Sniffer 2024: Phishing attacks caused $494 million in losses": https://drops.scamsniffer.io/zh/scam-sniffer-2024-%E9%92%93%E9%B1% BC%E6%94%BB%E5%87%BB%E8%87%B4-4-94-%E4%BA%BF%E7%BE%8E%E5%85%83%E6%8D%9F%E5 %A4%B1/