May 2024 Public Chain Research Report: Regulatory Adjustments and New Market Trends

Author: [email protected]

Data Source: Public Chain Research Page

In May, the cryptocurrency market experienced significant regulatory and political dynamics. The U.S. Securities and Exchange Commission (SEC) approved the preliminary application documents for a spot Ethereum ETF, a move that boosted the market performance of Ethereum and its Layer 2 solutions. The Trump campaign team announced it would accept cryptocurrency donations, indicating that the upcoming U.S. presidential election could have a potential impact on the market. Solana continued to see strong growth as it was adopted by more mainstream platforms like PayPal. TON attracted considerable attention due to Pantera Capital's "largest investment to date" and its growing on-chain TVL and activity.

The data for this report comes from Footprint Analytics' Public Chain Research Page. This page provides an easy-to-use dashboard that includes the most critical statistics and metrics in the public chain space, updated in real-time.

Cryptocurrency Market Overview

In May 2024, market dynamics were significantly influenced by major regulatory developments, with the SEC approving the preliminary application for a spot Ethereum ETF. This milestone not only helped Ethereum stand out in the broader cryptocurrency market but also marked a shift in regulatory attitudes towards supporting cryptocurrencies.

Additionally, the political landscape also affected market sentiment. The Trump campaign team announced it would accept cryptocurrency donations, suggesting that the upcoming U.S. presidential election could have a profound impact on the cryptocurrency market, potentially comparable to adjustments in Federal Reserve monetary policy.

Conversely, the ongoing resolution process of the Mt. Gox bankruptcy case has exerted some downward pressure on Bitcoin prices. The exchange, which has been in bankruptcy for nearly a decade, announced last September that creditor repayment would begin in October 2024, raising concerns in the market about the potential impact of a large token sale.

Public Chain Overview

By the end of May, the total market capitalization of public chain cryptocurrencies had increased by 10.5% from April, reaching $1.9 trillion. Bitcoin, Ethereum, BNB Chain, and Solana led the market shares at 62.9%, 21.4%, 4.1%, and 3.6%, respectively. Notably, Ethereum's market share increased from 19.7% to 21.4%, while Solana rose from 3.1% to 3.6%.

Data Source: Public Chain Token Market Share

In May 2024, Bitcoin rebounded strongly from its late April low, climbing from $60,653 at the beginning of the month to $67,606 by the end, an increase of 11.5%. Meanwhile, Ethereum also showed a robust recovery, with its price rising from $3,011 to $3,778 during the same period, a surge of 25.5%.

Data Source: Bitcoin and Ethereum Price Trends

Driven by broader cryptocurrency market trends, public chain cryptocurrencies rebounded from their lackluster performance in April. Besides Bitcoin and Ethereum, Solana's market capitalization grew by 34.5%, NEAR increased by 19.0%, and Avalanche saw a growth of 14.8%.

Data Source: Public Chain Token Prices and Market Capitalization

The price of Toncoin increased by 23.0%, but its market capitalization fell by 14.6%. This was due to an announcement on May 30 by The Open Network (TON) that updated the circulating supply of Toncoin on data aggregators, excluding portions held by Telegram, the TON Foundation, and the TON Believers Fund. This update led to an immediate decline in Toncoin's market capitalization.

By the end of May, the overall TVL of public chains reached $87.2 billion, a 14.7% increase from April. Ethereum, Tron, and BNB Chain led the way. Notably, TON's TVL surged by 106.4% within a month.

Data Source: Public Chain TVL Comparison

In May, Solana continued its upward trend, primarily driven by the ongoing meme coin hype and a series of significant developments. Among these, LayerZero integrated Solana into its cross-chain network, connecting it with seven chains: Ethereum, Avalanche, Polygon, Arbitrum, BNB Chain, Optimism, and Base, with plans to expand this network to over 70 blockchains. Additionally, PayPal chose to expand its stablecoin PayPal USD (PYUSD) on Solana, marking the company's first foray into public chains outside the Ethereum ecosystem.

TON also attracted considerable attention. At the beginning of May, Pantera Capital, managing over $5 billion in assets, announced it had made its "largest investment ever" in TON. Furthermore, Telegram's gaming bot projects like Tapswap and Hamster Kombat gained popularity in the Notcoin craze, drawing more users to TON and driving increased on-chain activity.

Major Layer 1 Public Chains Developments in May 2024

Bitcoin

• BlackRock's IBIT broke records, becoming the fastest ETF to reach $20 billion in assets.

• Animoca Brands announced its entry into the Bitcoin space through the OPAL Protocol.

Ethereum

• Bloomberg analysts predict that demand for spot Ethereum ETFs could reach 20% to 25% of that for spot Bitcoin ETFs.

• Vitalik Buterin and other core Ethereum developers proposed EIP-7702.

BNB Chain

• BNB Chain announced four hard forks on the opBNB testnet, with gas costs on opBNB expected to decrease by tenfold.

• BNB Chain launched its latest trading volume incentive program.

NEAR

• NEAR: The number of mainnet shards has increased from 4 to 6, further enhancing network performance.

• NEAR announced the launch of a new R&D lab, NEAR AI.

Sui

• Sui denied allegations related to manipulating token supply.

• Sui's social login foundational tool zkLogin added multi-signature recovery features and support for logging in with Apple accounts.

Polygon

• Polygon Labs announced it would use SP1 to create pessimistic proofs for AggLayer.

Core Chain

• Core DAO's "Game Summer Contest - Summer 2024" began on May 20.

GalaChain

• An unknown hacker attacked Gala Games' internal control account, minting 5 billion new GALA tokens on May 20. The Gala Games team quickly detected the attack and used their blacklist feature to isolate the attacker's address.

Layer 2

In May, the SEC approved the preliminary application documents for a spot Ethereum ETF, boosting the performance of Ethereum Layer 2. Arbitrum led the market with a 44.8% market share and a 19.6% TVL growth. Optimism followed closely with a 22.2% market share and a 13.1% TVL growth. Blast's TVL grew by 22.3%, while Base saw a growth of 27.2%.

Due to its DeFi activity Linea Surge, Linea's TVL surged by 82.9%, attracting more DeFi enthusiasts and significantly increasing TVL on the network. Manta Pacific's TVL increased by 17.4% due to the successful launch of its new product Manta CeDeFi, which offers rewards from both CeFi and DeFi yields.

Data Source: Ethereum Layer 2 Overview

Major Layer 2 Public Chains Developments in May 2024

Arbitrum

• Uniswap: Arbitrum is the first Layer 2 to surpass $150 billion in total trading volume on DEX.

• Injective plans to launch its own Layer 3 network inEVM based on Arbitrum Orbit.

Optimism

• The Optimism team welcomed Layer 3 to join Superchain, building on OP Stack and sharing revenue with the Optimism Collective.

Starknet

• StarkWare announced the launch of a ZK-based execution sharding scaling framework, ZKThreads.

Blast

• Blur launched Blast, offering Blast Points and 2 million GOLD rewards.

Taiko

• Taiko went live on the mainnet on May 27.

Rootstock

• Rootstock founder: Bitcoin programmability may emerge within 12 months.

Merlin Chain

• Merlin Chain announced that all assets of Merlin's Seal can be unstaked.

Blockchain Games

In May, a total of 1,525 games remained active across multiple blockchain platforms, with BNB Chain, Polygon, and Ethereum leading the market shares at 23.3%, 19.7%, and 15.7%, respectively.

Among the 3.3 million daily active users in May, Ronin, Polygon, and NEAR remained at the forefront, similar to the previous month. Ronin continued to dominate with approximately 29.0% market share. NEAR's share increased from 12.1% at the beginning of May to 14.8% by the end. Flow also showed growth, with its share rising from 0.7% to 3.3%. Meanwhile, BNB Chain's share declined from 8.0% to 5.9%.

Data Source: Daily Active Users of Public Chain Blockchain Games

On May 24, the Arbitrum community initiated a vote on a 200 million ARB game catalyst program, which will end on June 8, aimed at strengthening the gaming ecosystem on the network. As of the writing of this report, the proposal has received majority support, with a support rate of 80.6%. Meanwhile, Arbitrum is developing a Layer 3 gaming-specific chain ecosystem, and the multi-chain NFT gaming ecosystem Polychain Monsters announced the launch of a Layer 3 gaming-specific chain based on Arbitrum Orbit through Altlayer.

The Starknet Foundation granted a funding of 2 million STRK to the on-chain metaverse game Realms.World, as part of its strategy announced in March to enhance the Starknet gaming ecosystem by allocating 50 million STRK tokens.

The classic soccer game "Captain Tsubasa," developed by Mint Town Co., Ltd., a subsidiary of mobile gaming giant KLab Inc., officially launched on Oasys in May. Oasys is actively seeking further collaborations with Mint Town and other developers to integrate high-quality intellectual properties (IPs) into blockchain games.

For more data, see the May Blockchain Game Report: "May 2024 Blockchain Game Research Report: Market Capitalization Growth, Player Participation Changes, and the Rise of Mini-Games".

Public Chain Financing Situation

In May, there were a total of 17 financing events in the public chain sector, with a total financing amount of $89.7 million, a decrease of 14.3% from the previous month. However, 7 of these financing events did not disclose specific amounts. Notably, Pantera Capital announced its investment in TON, calling it "the largest investment ever." Previously, Pantera's largest investment was $250 million to purchase Solana at a discount from the bankrupt FTX exchange.

May 2024 Public Chain Financing Events (Data Source: crypto-fundraising.info)

In the blockchain infrastructure sector, technological advancements continue to be a focal point, attracting significant investor interest. One notable technological advancement is the integration of real-world assets (RWA) into crypto applications. In May, Layer 1 blockchain E Money Network and Ethereum Layer 2 Plume Network both successfully secured new rounds of financing aimed at merging their networks with RWAs.

Humanity Protocol is undoubtedly another eye-catching case, successfully raising $30 million at a valuation of $1 billion. The company focuses on developing a blockchain-based identity system that utilizes palm scanning technology to identify individuals, aiming to provide verification services for online identities in an era dominated by deepfake AI technology. This financing event quickly propelled Humanity Protocol into the ranks of unicorn companies, achieving this milestone in less than a year.

Interestingly, it is becoming increasingly difficult to clearly define Layer 2 as Bitcoin or Ethereum's Layer 2, as many Layer 2 solutions support scaling across multiple chains. For example, Lumoz, as a modular computing layer and ZK-RaaS platform, simplifies the use of ZK-Rollups and promotes their wider adoption. The platform supports multiple networks, including Ethereum, Bitcoin, and BNB Chain.