Banana Capital: Web3 Market Report for Q3 2024
Contents
- State of Ethereum in 2024: 4-13
- Venture Market Analytics: 14-21
- Zoom-out or a Look through the Macroeconomic Lens: 22-28
- Market Narratives: 29-39
- Information about Banana Capital: 40-45
Disclaimer
Notification for all interested parties who have received this material. This document has been prepared by Banana Capital LTD. PTE. and, unless otherwise specified, is provided solely for informational purposes. The opinions expressed in this document do not necessarily reflect the views of Banana Capital LTD. PTE. and its affiliates. Differences in opinions arise from various assumptions, sources, criteria, or valuation methodologies. The information and opinions expressed in this document may change without prior notice. Banana Capital LTD. PTE. or any of its branches are not obligated to update the information contained in the document.
This document does not constitute an offer or an invitation to engage in investment activities. It is not an advertisement or an offer of financial instruments. Descriptions of any company, project, or associations, their securities, coins or tokens, markets or developments mentioned in this document do not claim to be comprehensive. The opinions expressed in this document cannot replace individual judgment and are not intended to meet the specific investment objectives, financial situation, or particular needs of any specific investor. The sources used in this document and/or the information have not been independently verified. No guarantees are given regarding the accuracy, completeness, reliability, or suitability for any particular purpose of such information and opinions. The securities and commodities described in this document may not be available for sale in all jurisdictions or to certain categories of investors.
In accordance with ACRA rules and regulations, Banana Capital LTD. PTE. may engage in regulated activities only by its licenses. Financial instruments are subject to price fluctuations, interest rates, and exchange rates, which can negatively impact the value of investments or income derived from them. Please note that past performance is not indicative of future results. Banana Capital LTD. PTE. avoids conflicts of interest within the company or its relationships with clients, service providers, and other stakeholders.
This information cannot be used to create any financial instruments, products, or indexes. Banana Capital LTD. PTE. and its affiliates, directors, representatives, and employees are not liable for any direct or indirect losses or damages resulting from using any information contained in this document. Banana Capital LTD. PTE. operates in full compliance with its internal documents.
Banana Capital: State of Ethereum in 2024
Ethereum ETF: First Results
Since the start of trading, the Ethereum ETF has dropped in value by 29%, with a total outflow of $523 million from the product. This negative start came as a surprise to the market. The main reasons for this outcome include:
- Low market activity: Unlike the Bitcoin ETF, the Ethereum ETF was launched during summer, when market activity traditionally declined.
- Correction in the crypto market: At launch, the cryptocurrency market underwent a general correction, and its capitalization decreased by 6.7%.
- Macroeconomic and political instability: External economic and political factors in August also affected the decline in interest in high-risk assets, such as cryptocurrencies.
These factors combined led to the Ethereum ETF’s weak start. However, Ethereum’s performance was significantly worse than that of its competitors. Bitcoin decreased by 3% during the same period, and the inflow into the Bitcoin ETF reached $1.33 billion.
On a positive note, after a rate cut in September, the product began attracting its first positive inflows, amounting to $91 million. Nevertheless, this is still significantly lower than the expected 15-20% of the inflows into the Bitcoin ETF (during the same period, Bitcoin ETF inflows reached $1.4 billion).
ETH Performance Year-to-Date
Since the beginning of the year, ETH has underperformed compared to most smart contract platforms. The leaders in this category are TON, SUI, BNB, and its main competitor in business metrics – Solana.
Solana to Ethereum Ratio
At the same time, Ethereum’s price ratio to that of its main competitor, Solana, shows significantly higher returns year-to-date. This indicator reflects not only market fluctuations but also overall changes in how investors perceive the potential of each blockchain.
Ethereum can be compared to Nokia, which lost its leadership due to competition from more innovative companies like Apple. Could Ethereum follow a similar path, giving way to more rapidly developing blockchains like Solana?
Ethereum Dencun Update and Layer 2 Solutions
Investors and analysts are concerned about two key points:
First, Ethereum’s scaling strategy using Layer 2 solutions, such as Optimism, Base, Arbitrum, and ZkSync, raises serious questions. The multitude of L2 solutions, already more than 80, leads to liquidity fragmentation and inconveniences for users. This negatively affects the interface and user experience, as multiple bridges are required to switch between networks. Additionally, the current L2 solutions remain pretty centralized. While they help scale the network, their implementation is still not user-friendly.
Second, the Dencun update, aimed at reducing fees in L2 networks, has indeed achieved its goal but has also led to a drop in fees on the Ethereum mainnet, which is now at a three-year low. This raises concerns about the motivation for validators to continue supporting the blockchain, as their fee income is decreasing, especially compared to Solana. The decline in activity on the mainnet also reduces opportunities for earning MEV (Maximal Extractable Value), as these revenues are absorbed by L2 solutions, which share little to none with validators.
Thus, Ethereum has essentially ceded its key advantages – fees, and MEV – to L2 solutions, from which validators gain minimal benefit. Meanwhile, Solana shows higher active user volume and more outstanding fees and MEV, making Ethereum’s position appear less attractive.
MEV (Maximal Extractable Value) – is the profit that a miner or validator can extract by manipulating the order of transactions in the blockchain to gain additional income.
The Volume of Earned Fees in the Ethereum Network
The first chart shows the negative trend in the earned fees within the Ethereum network.
The second chart reveals the reason for this – after the update, the volume of fees paid by L2 networks decreased by 90% despite increased activity during the same period.
Increasing Activity in the Solana Network
Over the past year and a half, Solana has shown impressive results, rapidly gaining momentum in launching new products and partnerships:
- Since the launch of the prediction platform BET, it has become a serious competitor to solutions like Polymarket, offering more advanced technology for prediction markets.
- The updates zk Compression and Blinks have significantly improved the network infrastructure, providing more accessible and user-friendly solutions.
- The meme coin product Pumpfun has become one of the most successful projects of 2024, already earning over $100 million.
- DePin projects, such as Helium, Render, Ionet, Aethr, and many others, have also chosen Solana, further confirming its market leadership.
- Partnerships with Visa, PayPal, Shopify, and Stripe and the attraction of institutional players like Vaneck, Franklin Templeton, and City – Solana have secured many high-profile deals over the last year and a half.
Additionally, in terms of active users and fee volume, Solana holds leading positions in the industry. Combined with a large-scale marketing campaign supported by influencers and major funds, this has shifted the narrative in favor of this blockchain. As a result, many major industry players have begun to perceive Solana as the market leader, while Ethereum is seen as lagging.
The Volume of Earned Fees in the Solana Network
The chart shows exponential growth in the network’s key metrics since November 2023.
What’s Happening with Ethereum?
Over the past three years, Ethereum has been actively working on scaling its network through Layer 2 solutions, and these efforts are starting to pay off. Solutions like Arbitrum, Optimism, and Base have emerged, significantly increasing user activity and reducing fees. This part of the task has been accomplished.
Innovations such as restaking protocols, like EigenLayer, continue expanding the network’s capabilities and opening new avenues for decentralized applications and DeFi. Ethereum remains a hub of innovation.
However, there are some challenges:
- Liquidity fragmentation across Ethereum’s Layer 2 solutions and difficulties in their interoperability temporarily inconvenience users. However, the anticipated industry growth in the next 2-3 quarters could provide competitors with an opportunity to gain ground.
- Unlike Solana, Ethereum suffers from excessive decentralization, even in development and decision-making. The lack of centralized management or an active marketing strategy makes promotion less agile. These two issues could threaten Ethereum’s dominance, especially in the coming year.
What’s Happening with Solana?
Solana’s success is based on technical achievements and active centralized management led by Anatoly Yakovenko. He effectively develops the business and responds promptly to the industry’s current demands.
Major venture funds like Multicoin Capital, Delphi Ventures, and Raoul Pal have launched a large-scale marketing campaign to promote the token. They have attracted a significant number of influencers and actively promote the project on key media platforms, including Twitter (X), popular YouTube podcasts, and major industry conferences.
However, it’s worth noting that hype around meme coins drove the primary surge in activity. Following its decline, the network’s revenues fell by 60% in September 2024. This indicates the presence of inflated metrics supported by bots.
Nevertheless, these metrics and smart marketing have attracted the attention of both developers and users, which may contribute to the network’s long-term development following the lull in the meme coin segment.
Banana Capital: Venture Market Analytics
Analytics of Activity in the Venture Market
The summer period is traditionally considered a low season for venture investments; however, contrary to expectations, the volume of investments has not decreased since the beginning of the year. Nevertheless, the number of funding rounds has halved. This can be explained by the shift in focus during the summer towards larger investments in mature projects and token buybacks in the OTC market.
The most notable examples of such deals include:
- The buyback of TON tokens involves major companies such as Kingsway Capital, Wintermute, and Bitget.
- Additional funding rounds. Projects like Morpho, Celestia, and Drift have received further investments despite the seasonal decline in activity.
- Significant investments have been made in projects at the intersection of blockchain technologies and artificial intelligence, the largest of which are Story Protocol ($80 million) and Sentient ($85 million).
Largest Venture Deals
- Celestia – Raised $100 million. Investors: Bain Capital Crypto (Lead), 1kx, Placeholder Ventures, Robot Ventures, and Syncracy Capital.
This modular blockchain separates the consensus and transaction processing layer from the data storage layer. It offers a new architecture that allows for the creation of specialized blockchains utilizing a shared network infrastructure.
- Sentient – Raised $85 million. Investors: Pantera Capital (Lead), Framework Ventures (Lead), Founders Fund (Lead), HashKey Capital, The Spartan Group, Delphi Ventures, and others.
This research organization is developing the Open AGI Economy ecosystem for AI creators. The platform and protocols allow open-source developers to monetize their models and data while collaboratively working on creating powerful AI.
- Story Protocol – Raised $80 million. Investors: a16z crypto, Polychain Capital, and angel investors.
This is a decentralized platform for creating, managing, and licensing intellectual property on the blockchain. It streamlines the entire IP development process, ensuring content provenance tracking, automatic licensing, and fair revenue distribution.
- Infinex – Raised $65.29 million. Investors: Framework Ventures, Solana Ventures, Wintermute, Eden Block, Moonrock Capital, Bankless Ventures, and others.
This is a decentralized derivatives exchange developed by the founder of Synthetix. The platform offers users a familiar interface, similar to centralized exchanges, but with enhanced security due to private key storage in the browser and the inability to withdraw funds.
Comparison with the Previous Growth Cycle of 2020-2021
Comparing the investment volumes in crypto projects with the previous growth cycle of 2020-2021, we observe that the current funding levels are closer to the beginning of the last cycle and significantly lower than the peak values of 2021. This may be an important indicator of the market stage. Based on this data, one might suggest that we are in the early phase of a new bull cycle, similar to the situation in 2020.
However, there is another interpretation of this data. In the current cycle, many venture projects show significantly lower returns than expected. This table collects exciting data that supports this thesis. The main reason lies in the inflated valuations characteristic of this cycle compared to the previous one.
As a result, venture funds have incurred losses or faced insufficiently high profits that do not justify the long capital lock-up periods. Consequently, they reevaluate their strategies, reduce investment volumes, and become more selective about new projects. This cautious approach reflects investors’ concerns that current inflated valuations may not yield expected returns in the future, especially given the lengthy payback periods.
Projects Anticipate Positive Changes in Q4 2024
According to the infographic, there has been a decline in the number and volume of funds raised through IDOs and IEOs. These mechanisms are typically used in the later fundraising stages and serve as marketing tools before a token’s listing at TGE. The decrease in this metric can be explained by token launches since the beginning of 2024, which have shown only a downward trend. Retail investors lack the motivation to make purchases. Examples include:
- Starknet: -84% since TGE.
- Wormhole: -82% since TGE.
- ZkSync: -52% since TGE.
- Aevo: -89% since TGE.
Projects are aware of this situation and are not eager to launch in the current weak market. They hope to achieve better results by awaiting Q4 2024, when an increase in liquidity is anticipated against a backdrop of positive macroeconomic changes.
Total Amount of Funds Raised and The Number of Public Sales
Expectations for the Venture Investment Market in Q4 2024
Due to summer delays, we anticipate mass token generation events of first – and second/third-level projects by the end of the year. However, our estimates suggest that their launches will not be successful. The main issues for most projects are the lack of liquidity in the market and the significantly inflated valuations at early funding stages, making them less attractive to retail investors.
The paradigm shift caused by many unsuccessful listings will mean we will not see such explosive growth in investment volumes as in 2021. Instead, venture funds will focus on purchasing liquid tokens from the market as the risk-to-reward ratio for public tokens approaches levels that funds can achieve from venture investments.
Thus, projects will be forced to lower their valuations to reasonable limits. Otherwise, they will be unable to attract investments, ultimately stabilizing the venture investment market.
Promising Projects from Banana Capital
In Q3 2024, our venture division received inquiries for potential investments from 750+ projects. We decided to highlight the most promising among them:
- Drosera Network – a company that has developed the only decentralized security automation technology in Web3, which automatically responds to smart contract exploits and risk events. The project has received investments from Arrington Capital, Anagram, and others.
- ZeroGravity (0G) – a decentralized data accessibility layer that combines a general-purpose storage system, providing infinite scalability for blockchain databases. The project has received investments from Hacke VC, Banlless, Alumni VC, Delphi Digital, DAO5, and others.
- Maxer – a company that uses AI models to read user intentions based on browsing activity and natural language, helping users optimize transactions of all types. The project has received investments from Hashkey Capital, Cointelegraph, DWF, IOBC, and others.
- Lorenzo – the financial layer of Bitcoin liquidity. The infrastructure tokenizes Bitcoin staking into unified standards for liquid staking tokens (LST), providing liquidity for BTC LST across all ecosystems. The project has received investments from Binance Labs, Portal Ventures, DHVC, and others.
If you are interested in the listed projects, for more detailed information about investment opportunities in the venture market, please get in touch with the manager: https://t.me/bananacap_bot
Investment in the Seed Round of the Ditto
Ditto – a platform for automating blockchain transactions, allowing users to set conditions for their activation. Transactions are executed automatically when specified parameters, such as asset price, time, or other metrics, are met.
- Expected Return: 600%–15000%
- Project Valuation: $25 million
- Investment Horizon: 1–3 years
- Segments: B2B; B2C
- TGE Date: January – June 2025
- Acquisition Type: Equity + Tokens
- Website: dittonetwork.io
If you are interested in the investment proposal, for more detailed information, please get in touch with the manager: https://t.me/bananacap_bot
Banana Capital: Zoom-out or a Look through the Macroeconomic Lens
Dollar Weakening and Crypto Market Outlook
An aggressive entry into a rate easing cycle (the first decrease of 50 basis points) is historically often accompanied by a decline in the DXY index. We believe the priority scenario will involve a break below the strong support level and the round figure of “100” on the DXY, followed by a lower movement in the fourth quarter of 2024. Realizing this scenario, all else being equal, will create a positive momentum for high-risk assets.
Liquidity in the System – All Systems Go
The state of the money supply largely determines the markets’ resilience to external shocks, such as economic weakness and geopolitical threats. It is worth noting that the current level of liquidity in the global financial system is on an upward trend. This factor indicates that the markets have additional support as a “cash cushion,” which will help smooth out potential corrections. With this dynamic, the magnitude of corrective movements may be limited.
The Rate Cut Has Happened. But Is There a Catch?
We would like to draw your attention to the context of the rate cut in 2024. It differs from previous instances in that the “pain level” in the markets is extremely low. There are no serious liquidity issues, as evidenced by the performance of the S&P 500 and NASDAQ this year – the stock indices are hitting historic highs.
This situation is essentially reminiscent of 1992. It is important to note that back then, the markets relatively painlessly navigated the rate cut cycle, limited to a correction of 6% (the lagging impact of high rates often has a more severe negative effect).
Below the graph, in smaller light font, you could include a note: the last time such a sharp rate cut occurred under similar ample liquidity conditions was 32 years ago.
But We Prefer Not to Ride Without a Seatbelt…
Despite moderate optimism, the current market phase still contains several unrealized risks that should be considered in scenario analysis. Among them:
- Seasonal turbulence before elections and risks of political competition: the struggle among politicians can lead to extreme scenarios, and unfortunately, we will have to accept any outcome.
- Signals of weakness in the U.S. economy: the American labor market faces serious challenges, compounded by absolute uncertainty regarding future incomes for consumers (the ultimate drivers of economic growth) and small businesses.
- The lagging effect of high interest rates: we analyzed data from 1992 and assessed the market’s reaction to rate cuts. On average, 120-250 trading days after a rate cut, the S&P 500 lost 13%.
Thus, a balanced portfolio requires hedging the risks above. One could consider putting options or opening short positions, but given the overall upward trend, we believe it is more prudent to bet on buying VIX – the volatility index. Realizing any negative (and unexpected) scenario for the markets will lead to sharp reactions, turbulence, and, consequently, an increase in volatility.
Stock Market Arbitrage Strategy at Banana Capital
In this strategy, we exploit inefficiencies in the stock market. The approach enables earning a monthly return on dollar capital while remaining market-neutral (profitability does not depend on the direction of asset price movements). Therefore, arbitrage is a trading strategy that allows for risk-free profit by simultaneously buying and selling assets on different markets when price differences create such opportunities.
Essentially, we act as a “market maker,” eliminating these inefficiencies and aligning asset prices.
Strategy Yield for Q3 2024
The overall yield of this strategy reached 10.54% for the third quarter of 2024:
- July 2024 – 3.29%.
- August 2024 – 3.55%.
- September 2024 – 3.7%.
For more detailed information about the strategy, please get in touch with our manager: https://t.me/bananacap_bot
Liquidity Provision Strategy in DeFi Protocols
At Banana Capital, we employ a liquidity provision strategy within DeFi protocols. Yield is generated through trading fees on decentralized exchanges, maximizing efficiency, especially in volatile markets.
Unlike traditional methods, we utilize hedging to protect positions, ensuring stability and consistent returns. This approach addresses the issue of the underlying asset’s devaluation deposited in the liquidity pool.
Strategy Yield for Q3 2024
The total yield for this strategy reached 2.63% for the third quarter of 2024:
- July 2024 – 0.5%.
- August 2024 – 1.12%.
- September 2024 – 1.01%.
Currently, the strategy actively involves increasing the base asset in ETH. For more detailed information about the strategy, please get in touch with our manager: https://t.me/bananacap_bot
Banana Capital: Market Narratives
The TON Ecosystem in the Spotlight
Since the beginning of the year, the TON ecosystem has been demonstrating impressive growth and attracting market attention. Key drivers include a significant increase in TVL (Total Value Locked) and activity in the DeFi sector following the official announcement of integration with Telegram and the launch of an incentive program for DeFi projects. Additionally, the excitement among retail investors has been fueled by a new phenomenon – tap-and-play games – which has further heightened interest in the ecosystem.
However, TON faces several limitations. For example, major decentralized exchanges (DEXs) remain inconvenient and expensive, while the leading lending protocol falls short of its competitors in functionality. Several promising announcements were made at the recent Token2049 conference, including integration with Curve and BNB Chain and the creation of a bridge with BTC, but their implementation remains uncertain.
With the end of the incentive program approaching by the end of the year and the expected decline in interest in tap-and-play games following the recent small airdrops, the ecosystem’s future will depend on its actual achievements. If significant improvements and new solutions do not follow, combined with large unlocks expected to begin in May 2025 (with our data indicating ~$500 million at an average purchase price ranging from $2.5 to $4), it could lead to a substantial revaluation of the token in the market.
Prediction Protocols Show Growth
This year, the prediction market has demonstrated impressive growth, reaching a betting volume of around $3.5 billion. The leader in this space is Polymarket, which has captured 93% of the market and integrated its data into the Bloomberg terminal, strengthening its legitimacy and attracting media attention. Polymarket accurately predicted several key events, such as Biden’s exit from the presidential race with Kamala Harris as his replacement and the dates of various airdrops.
Polymarket’s success can be attributed not only to its predictions’ accuracy but also to its platform’s user-friendliness. Operating on the Polygon network, it offers familiar onboarding methods that lower barriers for new users. Trading volume on Polymarket has already reached $3 billion, and its recent acquisition of $50 million in investments and plans to launch its token could further solidify its leadership.
Meanwhile, a new competitor has emerged on Solana—the BET platform, which was launched in August of this year. BET lags significantly behind in key metrics, with a trading volume of just $27 million. The project is still in alpha with four prediction markets. A lackluster interface and complicated onboarding are hindering its development.
However, given the Solana ecosystem’s growth and its network’s convenience, BET has a good chance of success. The platform has already attracted $25 million from Multicoin Capital, reflecting investor confidence in the project. In the long run, BET could become a serious competitor to Polymarket if it improves its product and capitalizes on the advantages of the Solana network.
Our Ranking of the Best and Worst Projects in 2024
Disclaimer
This material is provided for informational purposes only and does not constitute investment advice. All information in this material should not be considered a recommendation or offer to buy or sell financial instruments. It is advisable to consult a qualified financial advisor before making investment decisions.
Removing the Magic: Crypto Projects Are Also Businesses
When a new industry emerges, the project’s valuation is often inflated. This is because few genuinely understand how to properly assess such projects: classic business models are lacking, and behind complex terminology usually lie ideas with ineffective monetization. We are convinced that this is happening in the crypto market. However, the bubble will burst sooner or later, and it will become clear which projects will lead in their niches. Our task is to distinguish those who generate revenue and can scale it as the segment grows from those whose ideas fail due to monetization issues.
AAVE: The Leader in DeFi
The undisputed leader among lending protocols in DeFi. The total value locked (TVL) reaches $19 billion, representing the platform in all major networks. The company’s annual revenue amounts to $300 million. In addition to its core activities related to deposits and lending, the project is actively expanding its product line, developing its stablecoin, and planning to launch its network.
Due to its dominant position in the DeFi sector, any growth and expected influx of real-world assets (RWA) into the network will inevitably be accompanied by partnerships with AAVE, as the platform already possesses the necessary liquidity and infrastructure. We expect exponential revenue growth for the project in the coming years. This forecast is further supported by the fact that even Trump’s project is being developed in collaboration with AAVE.
It is also worth noting that 92% of all tokens are already in circulation, and a burning mechanism funded by a portion of the profits upon DAO approval exists.
ChainLink: The Leader in RWA
ChainLink is the leading oracle in the industry, processing 80% of all market requests. In 2023, the company introduced a new product, CCIP, which allows for the tokenization of assets and facilitates their interaction across various blockchains. This makes it attractive to large banks, funds, and governments. Since then, ChainLink has partnered with financial giants such as JP Morgan, Morgan Stanley, and Bank of America.
It was recently announced that ChainLink will integrate with SWIFT, granting banks within this ecosystem access to blockchain technology and the ability to transfer assets there. With the growth of the real-world assets (RWA) sector and the entry of major players like BlackRock and Franklin Templeton, the potential for this market to reach $3 trillion within the next five years is becoming increasingly realistic. In this context, ChainLink is one of the key infrastructure beneficiaries of this growth.
It is also worth noting that the project has been operating since 2018, and 94% of its tokens are already in circulation.
Optimism: The Leader in Layer 2
One of the leading Layer 2 (L2) scaling solutions for the Ethereum blockchain, effectively addressing this challenge. Unlike its competitors, who focus on developing their networks, Optimism has chosen a different business model. It was one of the first to create an L2 blockchain network called Superchain, offering its technology for rent in exchange for a percentage of the fees earned by its clients. This is just the first phase; a unified bridge will be added in the next stage, where the token will become a key element.
To demonstrate the success of this model, here are examples of clients:
- Base – the blockchain from Coinbase, a leader among all L2 blockchains in TVL, number of users, and fees.
- Soneium – the blockchain Sony is developing, which will also operate on the Optimism stack (currently in the testnet).
- Mode Network – ranks in the top 5 L2 blockchains based on key metrics.
- Bob – one of the leaders in L2 solutions for scaling Bitcoin.
And this is just part of the list. The strategy to shift focus to Superchain has proven successful, as industry leaders are being built on the Optimism platform.
Starknet: The Underdog
An L2 solution on Ethereum that uses zk-technology to scale the network. The team started development as one of the first in this area, allowing them to attract investments as early as 2018 from major funds, including Vitalik Buterin.
But here’s the problem. While Starknet developed a blockchain incompatible with the Ethereum Virtual Machine (EVM), other projects focused on integrating zk-technology with EVM compatibility. As a result, their product was technologically outdated by the time it launched.
This situation and an overvalued market capitalization even before the token launch (the company’s latest funding rounds valued at $8 billion) make the token less attractive to investors.
- Monthly commission revenues: $22,000
- Competitors: Arbitrum: $2 million | Optimism: $1.5 million | ZkSync: $400,000
- Number of active users per month: 22,000
- Competitors: Arbitrum: 3 million | Optimism: 1.2 million | ZkSync: 1 million
These numbers speak for themselves. Additionally, only 10% of the tokens are currently in circulation, which could increase selling pressure in the future.
Polkadot: The Underdog
Despite initial expectations, Polkadot has become one of the biggest disappointments in the market. Led by Gavin Wood, the project aimed to create a network of blockchains (parachains) connected by a central hub. The idea seemed promising, but after three years of development, it has become clear that the market doesn’t need it. Why?
- Limited flexibility for developers. To become part of the Polkadot ecosystem, developers must win a parachain auction, which is extremely expensive and grants access to the ecosystem for only a limited time. This complicates and slows down the development process. Now, they have an alternative: creating L2 solutions on Ethereum and integrating them into its already developed ecosystem. As evidence, the TVL (Total Value Locked) of Polkadot’s central DeFi hub, Acala, is only $9 million – a telling sign.
- There is a lack of user-friendliness, strong teams, and exciting projects. The absence of a user-friendly interface, wallet, and in-demand applications makes the Polkadot network empty—users simply have no reason to engage with it. Throughout the platform’s existence, no successful product has emerged. Moreover, teams initially built on Polkadot are moving to other ecosystems (e.g., Manta Network).
The numbers confirm the problem:
- Monthly commission revenues: $32,000
- Competitors: Ethereum: $100 million | Avax: $1.2 million
- Number of active users per month: 64,000
- Competitors: Ethereum: 6.5 million | Avax: 500,000
These figures show how far Polkadot is lagging behind its competitors.
Atom: The Underdog
Cosmos (ATOM) has become one of the industry’s most disappointing failures. Initially, the project aimed to create developer-friendly SDKs to accelerate and reduce the cost of blockchain development and connect them via the Cosmos Hub, which was supposed to bring value to the ATOM token. The talented team successfully achieved the first goal, being one of the first to implement the concepts of Delegated Proof of Stake and Shared Security on the ATOM blockchain.
Developers actively use Cosmos SDK, building blockchains such as BNB, Akash, Tia, DYDX, and over 100 others. Cosmos has done an excellent job of creating a convenient platform for blockchain development. However, the second part – uniting these blockchains into a single network – has failed. Out of 104 blockchains, only 54 are connected to the hub for liquidity exchange, and the largest ones, such as BNB, remain outside the network. After six years of operation, the results are as follows:
- Developers appreciate the convenient, free SDK, which significantly simplifies their work.
- No, most projects are not interested in integrating with the Cosmos Hub for cross-chain operations.
Figures:
- Monthly commission revenues: $80,000 – and importantly, there are no signs of growth.
- Number of users: 250,000.
These numbers speak for themselves. Despite a solid technical foundation and ambitious goals, the project has failed to create value for the ATOM token and unite the ecosystem into a cohesive network. The lack of interest from significant projects in integrating with the Cosmos Hub casts doubt on the ecosystem’s future development and growth potential.
Crypto Summit 2024 in Moscow
Participating in conferences has long become strategically important for marketing and business development, as it helps expand networks, increase brand recognition, attract clients, and secure investors.
This is why, in September 2024, we attended one of the largest Web3 conferences in the CIS – Crypto Summit 2024. The event featured 70 speakers, and the number of participants exceeded 8,900 people. The conference brought together leading experts to discuss key trends, innovations, and the industry’s prospects.
Our team from Banana Capital showcased an updated booth, and our COO, Vlad Alexandrov, gave a keynote speech on the main stage. Additionally, our analytics department prepared an exclusive report with our vision for the cryptocurrency market in Q4 2024, available in print format. We were thrilled to meet with our clients, partners, and the Banana Crypto community!
What Is Banana Capital?
Ключевые Метрики
Экосистема Banana Crypto
Our Partners
Наша Команда
Contact Information
For more detailed information, please get in touch with our manager: https://t.me/bananacap_bot
к нам?