• In this 2024 annual summary report, we focus on key areas such as blockchain security, stablecoin payment solutions, AI applications, exchanges, and BTCFi.
• We have chosen these areas not only because we believe they represent the future of the crypto industry but also because they are sectors we have deeply engaged with and built over the past year. These areas will continue to be a major focus of our research and development efforts in the coming year. We will keep investing resources to explore and promote the growth of these sectors.
• TL;DR:
• From the significant decline in Binance’s market share (50.9% → 42.5%) to $TRUMP reaching a $10 billion market cap within 24 hours, the market is redefining the core competitive strengths of exchanges. Traditional scale advantages are giving way to efficiency-driven models, signaling a structural shift in the exchange landscape in 2025: a three-way competition among leading CEXs, innovative mid-sized exchanges, and emerging DEXs.
• While the number of affected addresses in 2024 only grew by 3.7%, the losses skyrocketed by 67%, with the highest single loss reaching $55.48 million. Hackers have shifted from broad-based to targeted attacks, focusing on high-value targets with more professional and stealthy methods, making defense increasingly difficult.
• Bitcoin L2 is currently undervalued. Bitcoin L1 lacks programmability, and all innovations and funding are concentrated in L2. This is in contrast to Ethereum’s L1/L2 co-development model, and will ultimately unlock a trillion-dollar market. Furthermore, all applications will need to be built on Bitcoin L2, including use cases with high security requirements, meaning the security demands for Bitcoin L2 will far exceed 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 marks a key milestone in this transformation, as payment tech giants begin reshaping payment infrastructure using stablecoins to lower payment costs and expand market coverage.
• The deeper significance of Stripe’s acquisition is its upgrade from a payment interface provider to an infrastructure operator. By acquiring stablecoin settlement pipelines, Stripe can bypass traditional payment intermediaries and achieve self-settlement.
• The stablecoin payment market is undergoing a reconstruction. Full-service infrastructure providers like Bridge are gaining scale advantages through mergers and acquisitions, while regional API service providers are adopting differentiated strategies. These companies will compete based on fees, service range, and compliance levels. Infrastructure service providers like Cobo will focus on offering customized digital wallet technologies, risk and compliance management, and one-stop resource integration to help businesses quickly build cross-border stablecoin payment capabilities.
• Currently, the AI sector may have some bubble-like elements, 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 possessing execution capabilities. The key is to find a product-market fit (PMF). DeFi and gaming are the most promising fields for AI agents, and specialized decentralized payment solutions will become critical infrastructure for the autonomous operation of AI agents.
• AI infrastructure platforms need to offer speed, scalability, and unique functionality. Similar to top public chain projects, the success of the framework relies on the quality of the agents built on it. In the long run, the boundary between the framework and launch platforms may blur, breaking the limitation of single-function models.

Stablecoins and Crypto Payments

Stablecoins are undergoing a transformation from crypto asset tools to mainstream payment infrastructure. This shift can be observed on two levels: the bottom-up market demand and top-down infrastructure innovation.

On the demand side, take emerging markets as an example. A research report co-published by Castle Island Ventures reveals that in regions with underdeveloped financial infrastructure, such as Brazil and India, stablecoins have surpassed their role as simple cryptocurrencies and are becoming essential tools to address everyday financial needs. Local residents use stablecoins for wealth preservation, payments, remittances, and savings, effectively filling gaps left by traditional financial services and helping them cope with local currency depreciation and inflation. This bottom-up adoption model demonstrates the value of stablecoins as a foundational financial infrastructure.

On the infrastructure side, Stripe’s $1.1 billion acquisition of Bridge marks a significant step for payment technology giants in reshaping payment infrastructure. Through Bridge’s API services, Stripe has drastically reduced payment costs. For instance, sending USDC on the Base network costs less than $0.01, compared to the average cost of $44 per transaction in traditional cross-border payments. Moreover, Stripe has expanded its market coverage into regions with weak traditional financial infrastructure, such as Asia, Africa, and Latin America.

For Stripe, this acquisition is not just about cost savings; it represents 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, relying on traditional financial systems like Visa and Mastercard to process all transactions. This reliance involved multiple intermediaries (banks, payment networks, clearinghouses), each adding layers of fees and time delays. After acquiring Bridge, Stripe gained its own “pipeline” (back-end infrastructure) to directly settle payments using stablecoins, bypassing traditional intermediaries. This allowed Stripe to make a leap from being a “interface provider” to an “infrastructure operator.”

• From Complexity to Simplicity

  Take cross-border payments as an example. Under the traditional model, companies sending stablecoin USD to Latin American countries would need to manage complex issues like cross-chain channels, local fiat infrastructure, KYC verification, and multi-currency liquidity management. However, Bridge simplifies these complex infrastructures into easy-to-use APIs. Companies only need to call the API to gain complete payment functionality, without dealing with the underlying technology or compliance issues.

The stablecoin payment infrastructure market is being restructured. Full-service infrastructure providers like Bridge will gain scale advantages through integration with tech giants. API service providers focusing on specific regions or industries will engage in differentiated competition based on fees, service scope, and compliance levels. Infrastructure service providers like Cobo, on the other hand, will focus on offering customized digital wallet technology, risk and compliance management, and one-stop resource integration to help businesses quickly establish cross-border stablecoin payment capabilities.

The Rise of DEX and New Exchange Models

The monopoly advantage of leading exchanges is being broken. In previous bull markets, top exchanges leveraged their economies of scale to almost monopolize the profits brought by market growth. However, data shows that this monopoly position is now facing significant challenges.

Taking Binance as an example, its listing advantage has been reduced. According to the 2024 CEX Market Report recently released by 0xScope, Binance’s spot market share has decreased from 50.9% to 42.5% year-on-year, with the average return on listed tokens falling by about 10%, and the average return rate at -36%. This is due to shortcomings in Binance’s listing strategy, such as listing projects with high market caps and delayed listing times, which have led to weaker token prices. Meanwhile, the rapid rise of more flexible mid-sized platforms and DEXs is changing the market dynamics.

Further analysis reveals that the competitive advantage of exchanges is shifting from “economies of scale” to “efficiency-driven” models. This is particularly evident in emerging sectors like meme coins and community-driven projects. Exchanges that can quickly seize market opportunities (alpha) and move fast tend to experience explosive growth in trading volume within 24-48 hours. The positive cycle of “fast deployment—word-of-mouth effects—user growth” is reshaping the competitive landscape of exchanges.

Beyond efficiency advantages, technological innovations are narrowing the gap between exchanges. The FTX collapse exposed counterparty risks, intensifying concerns about the security of exchange assets. It’s important to note that the current bull market is largely driven by institutional capital, and these investors are highly sensitive to risk and security. Therefore, for safety reasons, institutional users tend to favor leading exchanges that hold regulatory licenses.

However, with the emergence of technical solutions like Superloop, this assumption is being challenged. Even without massive compliance budgets, mid-sized exchanges can now obtain security guarantees equivalent to those of licensed exchanges. Superloop achieves full asset isolation through an asset mapping system: user assets are custodied by a third-party institution, and the exchange can only operate equivalent “mapped amounts,” ensuring that institutional users can enjoy centralized exchange liquidity while their assets remain safeguarded by professional custodians, fundamentally eliminating the risk of asset misappropriation.

As the competitive landscape of traditional centralized exchanges changes, decentralized exchanges (DEXs) are rising. With the maturation of on-chain trading infrastructure, more and more users and liquidity are moving on-chain. DEXs not only have inherent advantages in transparency and asset self-custody but are also beginning to surpass traditional centralized exchanges in terms of transaction costs and liquidity, further improving user experience. The innovation of hybrid order book-AMM models, such as HyperLiquid, is blurring the lines between CEX and DEX, pushing the industry towards a more efficient and transparent direction.

In specific niches, such as meme coin trading, decentralized exchanges (DEXs) have shown clear advantages. A vivid example of this is the explosive launch of the $TRUMP token. $TRUMP bypassed centralized exchanges entirely and, relying solely on decentralized platforms and community support, reached a market cap exceeding billions of dollars within hours. The case of $TRUMP demonstrates that DEXs can more swiftly respond to rapidly changing market trends and offer users a more convenient and efficient trading experience. A large amount of SOL and USDC flowed out of CEXs and into on-chain DEXs to purchase $TRUMP, providing strong evidence of DEXs’ operational advantages. This user behavior reveals the lag of CEXs when responding to emerging market trends and the practical operational benefits of DEXs.

It is expected that by 2025, the exchange industry will see a competitive landscape with three major players: leading CEXs, innovative mid-sized exchanges, and emerging DEXs. Different platforms will find their unique value propositions in different market segments.

Underrating Bitcoin Layer 2

Bitcoin’s Layer 2 network is being underestimated, and BTCFi will be revalued. Layer 2 (L2) is not only the key to expanding Bitcoin’s utility and driving its transition from “digital gold” to a multi-functional currency, but also a vital safeguard for the long-term security of the Bitcoin network. Unlike Ethereum L2, Bitcoin L2 benefits from a larger market scale and financial volume (“All in L2”), as well as greater security requirements. These factors will completely reshape its value assessment system and ultimately unlock a trillion-dollar market.

While the native design of the Bitcoin protocol emphasizes security and decentralization, being solely “digital gold” is far from sufficient. Even for its store of value function, Bitcoin requires stronger privacy protection, self-custody, and scalability. These needs must be met through Bitcoin’s Layer 2 network; otherwise, users will turn to centralized services (relying on centralized custodial solutions, multi-signature custodial schemes, or wrapped tokens from other blockchains), which contradicts the very essence of Bitcoin.

More importantly, Bitcoin faces security challenges due to the gradual reduction in block rewards, and the settlement and data availability needs of Layer 2 networks can naturally drive transaction fees upward, thereby maintaining network security.

Advantages of Bitcoin L2 Over Ethereum L2:

1 - Larger Market Scale and Financial Volume

Bitcoin, as the largest cryptocurrency by market cap, currently has a base market cap over 4.9 times that of Ethereum. However, Bitcoin L1 lacks programmability and cannot directly support complex applications like DeFi or privacy tools, meaning all innovation must take place on L2. This differs significantly from Ethereum’s ecosystem, where innovation and funding are distributed across both L1 and L2. In the Bitcoin ecosystem, incremental funds will flow entirely into L2. This “All in L2” characteristic, combined with Bitcoin’s substantially larger market cap base, makes it highly likely that “BTC L2 will flip ETH L2” in the future.

According to Shenyu’s prediction, the BTCFi sector could see its total market cap reach several billion dollars in the short term and potentially surpass a trillion dollars in the long term, even exceeding Ethereum’s historical peak.

2 - Bitcoin L2 Has Higher Security Requirements

The development focus of Ethereum L2 and Bitcoin L2 differs. Ethereum L2 primarily focuses on fast delivery and low transaction fees, whereas Bitcoin L2 places a stronger emphasis on security. Since Bitcoin L1 lacks programmability, almost all applications occur on L2, including high-value transactions that require high security. This means Bitcoin L2 must handle all use cases requiring high security and bear all associated security responsibilities.

For risk-sensitive traditional institutional users, the tendency is to choose solutions with thoroughly validated 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 is enhancing Bitcoin L2 security with MPC (Multi-Party Computation) multi-signature technology and the Babylon BTC Staking API, helping developers and users reduce risks and build trust in BTC L2 solutions.

Crypto Security: Attackers Shift to Large-Scale, Precision Strikes

In 2024, the amount stolen in a single attack reached as high as $55.48 million, highlighting the severe security challenges facing the crypto industry. Although the number of affected addresses only grew by 3.7%, total losses surged by 67%, reaching $494 million for the year. This indicates that hackers are shifting toward precision-targeting high-value assets, making security threats more targeted.

According to Scam Sniffer data, losses from Wallet Drainer attacks (a type of malware deployed on phishing sites) reached $494 million in 2024, a 67% increase compared to the previous year. The nature of security threats has transitioned from distributed attacks to precision strikes, with 30 major thefts exceeding $1 million each, totaling $171 million in losses. The largest single theft amounted to $55.48 million, while the number of affected addresses only grew by 3.7%, reaching 332,000 addresses. This suggests that attackers are increasingly focusing on high-value targets.

Attackers’ methods have also become more specialized. They continue to innovate, bypassing security detection using wallet normalization processes, legitimate contracts, and XSS vulnerabilities, among other techniques. In terms of signing methods, they have expanded from the single “Permit” method to a range of approaches, including “setOwner.” Additionally, the use of AI technology has made phishing content even more deceptive. It is worth noting that in the second half of 2024, the number of Wallet Drainer attacks decreased, which may signal that attackers are shifting to more covert attack methods, such as malware.

With the widespread adoption of new technologies like account abstraction and automated agents, especially the rapid increase of on-chain agents in the EVM ecosystem, the security architecture faces unprecedented challenges. Traditional incremental security solutions are struggling to keep up with the increasingly complex threat landscape. As a result, enterprise-level security standards are gradually becoming the industry trend. For example, threshold signature technology based on Cobo’s MPC (Multi-Party Computation) is now being used to provide high-performance security with intelligent risk control, ensuring asset safety while maintaining high performance. This shift reflects that crypto security is moving from static defense to dynamic interaction with attackers, requiring a more proactive and comprehensive security system to deal with the ever-evolving threats.

AI x Crypto: From Hype to Value Realization

The crypto market is undergoing a transformation, shifting from meme coin speculation to the application of AI agents. Decentralized Finance (DeFi) and gaming are seen as the most promising fields for AI agent applications, while specialized decentralized payment solutions will become the critical infrastructure for autonomous AI agent operations. While the market is still speculative, AI agents that offer real utility and execution capability will stand out in the future. The most successful AI agents will have their own decentralized payment systems, much like a real enterprise needs its own bank account. This will be a challenging yet opportunity-rich space.

The crypto sector is undergoing a paradigm shift, moving from speculative meme coins to more practical AI agents. This shift stems largely from the growing recognition of AI’s potential to transform the crypto ecosystem. Despite meme tokens still having a massive market size of $120.3 billion, the AI agent sector ($15.8 billion) is rapidly emerging, attracting substantial investment and innovation.

Within the AI x Crypto space, competition is mainly divided into three categories:

• Agents: Similar to applications, these perform specific tasks like trading, analyzing data, or generating content.
• Frameworks: Provide tools and environments for developing and deploying agents, essentially functioning like a “factory.” The success of a framework depends on the quality of the agents built on top of it.
• Launchpads: Provide funding and exposure opportunities for agent projects, similar to a “casino.” Over time, the boundaries between frameworks and launchpads may blur.

However, the AI industry currently has a significant bubble, with most agents lacking practical value, and the markets for frameworks and launchpads becoming saturated. It is expected that 99% of AI projects will ultimately fail, with many speculative AI agents disappearing and infrastructure undergoing major restructuring.

For an AI infrastructure platform to succeed, it must possess speed, scalability, and unique functionalities. Moreover, similar to the leading projects on public blockchains, each successful framework could spawn one or two top-tier agents, giving value to the framework and driving up the value of its associated token.

The market opportunity for AI agents lies in creating real value and demonstrating execution ability, with the key being finding the product-market fit (PMF).

If practicality and value accumulation are the criteria, DeFi may be the first AI application category to achieve PMF. DeFi agents can simplify the complex operations of cryptocurrencies by converting natural language intentions into executable commands, making interactions with DeFi protocols easier for users. The evolution of DeFi agents will move from simple interactions to autonomous execution and ultimately intelligent research, evolving into professional investment advisors that provide data-driven decision support.

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

From DeFi to gaming NPCs, AI agents are evolving from simple execution to autonomous decision-making. Autonomous decision-making means that AI agents will operate independently in the real world with the goal of survival, such as by covering the cost of computing power themselves. This evolution can be achieved by introducing economic constraints into the AI system. For instance, with Nous Research, when an agent cannot afford the cost of reasoning, it “dies,” prompting the agent to prioritize tasks more effectively. This will challenge existing financial infrastructure and create a demand for decentralized payment solutions.

To support the autonomous decision-making and operation of AI agents, decentralized payment will become the next critical infrastructure for AI agents. Existing financial infrastructure is designed for human users, and its stringent identity verification requirements and complex compliance processes hinder the development of AI agents. The market needs specialized solutions that support efficient trading and asset management between agents. Companies like Coinbase, Skyfire, and Stripe are already laying the groundwork in this space, signaling new opportunities for the decentralized payment sector.

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