Source: Cobo Global
In this 2024 annual summary report, we focus on blockchain security, stablecoin payment solutions, AI applications, exchanges, and BTCFi in these technology areas.
We have chosen these directions not only because we believe they represent the future of the crypto industry, but also because they are the areas we have been deeply involved in and building over the past year, and will continue to focus on R&D investment in the coming year. We will continue to invest resources to explore and promote the development of these tracks.
TL;DR
From Binance's significant market share decline (50.9% → 42.5%) to $TRUMP hitting a 24-hour market cap of over $10 billion, the market is redefining the core competitiveness of exchanges. Traditional scale advantages are giving way to efficiency-driven, presaging a structural change in the exchange landscape by 2025: a three-way competition between leading CEXs, innovative mid-small exchanges, and emerging DEXs.
Although the number of affected addresses only grew by 3.7% in 2024, losses soared by 67%, with a single largest loss of $55.48 million. Hackers have shifted from "casting a wide net" to "targeted" attacks, precisely targeting high-value targets, with more professional and stealthy attack methods, significantly increasing the difficulty of defense.
Bitcoin L2 is underestimated. Bitcoin L1 lacks programmability, and all innovations and capital are concentrated on L2, which is different from the Ethereum L1/L2 co-development model, and will eventually open up a trillion-dollar market. At the same time, all applications must be built on top of 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, and Stripe's $110 million acquisition of Bridge is a landmark event in this transformation, as payment tech giants begin to reshape payment infrastructure through stablecoins, reducing payment costs and expanding market coverage.
The deeper significance of Stripe's acquisition is that it has upgraded from a payment interface provider to an infrastructure operator. By acquiring the stablecoin clearing pipeline of Bridge, Stripe can bypass traditional payment intermediaries and achieve independent clearing.
The stablecoin payment market is being restructured. Full-service infrastructure providers like Bridge are gaining scale advantages through acquisitions, while regional API service providers are taking a differentiated path, competing on factors like fees, service scope, and compliance levels; infrastructure service providers like Cobo will focus on providing customized digital wallet technology, risk control and compliance management, and one-stop resource integration to help enterprises quickly build stablecoin cross-border payment capabilities.
The AI track currently has a bubble, 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 as a real business needs its own bank account.
The market opportunity for AI agents lies in creating real value and having execution capabilities, the key is to find the product-market fit (PMF). DeFi and gaming are the most promising application areas for AI agents, and specialized decentralized payment solutions will become the key infrastructure for AI agents to operate autonomously.
AI infrastructure platforms need to have speed, scalability and unique features. Similar to the leading projects on the public chain, the success of the framework depends on the high-quality agents built on it, and in the long run, the boundary between the framework and the launch platform may gradually blur, breaking the limitation of a single function.
Stablecoins and Crypto Payments
Stablecoins are undergoing a transformation from crypto asset tools to mainstream payment infrastructure. This transformation is manifested at two levels: bottom-up market demand and top-down infrastructure innovation.
On the demand side, in emerging markets, for example, a joint research report by Castle Island Ventures shows that in regions with underdeveloped financial infrastructure such as Brazil and India, stablecoins have already surpassed the simple attributes of cryptocurrencies and are becoming a key tool for solving livelihood issues. Local residents use stablecoins for value preservation, payments, remittances and savings, effectively filling the gaps in traditional financial services and addressing local currency devaluation and inflation challenges. This bottom-up adoption model proves the value of stablecoins as basic financial infrastructure.
On the infrastructure side, Stripe's $110 million acquisition of Bridge marks a milestone as payment tech giants begin to reshape payment infrastructure. Through Bridge's API services, Stripe significantly reduces payment costs, for example, the cost of sending USDC on the Base network is less than $0.01, compared to the average cost of $44 per transaction for traditional cross-border payments. In addition, Stripe is also able to expand its market coverage to regions such as Latin America, Africa and Asia where traditional financial infrastructure is weak.
For Stripe, this acquisition is not just about improving cost-effectiveness, but also a transformation from a payment interface provider to an "infrastructure operator".
From dependence to autonomy: Prior to the acquisition of Bridge, Stripe was essentially a payment interface provider, and all fund flows depended on traditional financial systems like Visa and Mastercard. This dependence incurred multiple layers of intermediaries (banks, payment networks, clearing houses), each adding costs and time. After acquiring Bridge, Stripe has obtained its own "pipeline" (backend infrastructure) and can now directly clear through stablecoins, bypassing the traditional intermediary system, transitioning from a "interface provider" to an "infrastructure operator".
From complex to simple: Take cross-border payments as an example, in the traditional model, a company needs to handle various issues such as on/off-ramp channels in different countries, fiat infrastructure, KYC verification, and multi-currency liquidity management when sending stablecoin dollars to Latin America. Bridge packages these complex infrastructures into simple APIs, and companies only need to call the APIs to obtain complete payment capabilities without having to deal with the underlying technology and compliance issues.
The market landscape of stablecoin payment infrastructure is being restructured. Full-service infrastructure providers like Bridge will gain scale advantages through integration with tech giants; API service providers focused on specific regions and industries will differentiate themselves in terms of fees, service scope and compliance levels; infrastructure service providers like Cobo will focus on providing customized digital wallet technology, risk control and compliance management, and one-stop resource integration to help enterprises quickly build stablecoin cross-border payment capabilities.
The Rise of DEXs and New Exchanges
The monopolistic advantages of leading exchanges are being challenged. In previous bull markets, leading exchanges have almost monopolized the profits brought by market growth due to scale effects. However, data shows that this monopoly position is being challenged.
Take Binance as an example, its listing advantages have diminished, according to the recent "2024 CEX Market Report" by 0x Scope, Binance's spot market share has shrunk from 50.9% to 42.5% year-over-year, and its average listing return has declined by about 10%, with an average return of -36%. This is due to Binance's shortcomings in its listing strategy, such as listing projects with generally higher market caps and later listing times, leading to weak price performance. Meanwhile, the rapid rise of flexible mid-small platforms and DEXs is changing this landscape.
Further analysis reveals that the competitive advantage of exchanges is shifting from "scale effects" to "efficiency-driven". Especially in emerging tracks like Meme coins and community-driven projects, exchanges that are the first to deploy and quickly capture market opportunities (Alpha) often see explosive trading volume growth within 24-48 hours. The virtuous cycle of "rapid deployment - word-of-mouth effect - user growth" is reshaping the competitive landscape of exchanges.
Here is the English translation of the text, with the specified terms retained and not translated:In addition to efficiency advantages, technological innovation is also constantly narrowing the gap between exchanges. The FTX incident exposed the counterparty risk, exacerbating market concerns about the asset security of exchanges. It is worth noting that the current bull market is mainly driven by institutional capital, and this type of investor is particularly sensitive to risk and security. Therefore, for security considerations, institutional users often tend to choose the top exchanges with compliant licenses.
However, with the emergence of solutions like Superloop, this assumption is being broken. Even without a huge compliance budget, small and medium-sized exchanges can obtain security guarantees equivalent to compliance through technical solutions. Superloop achieves complete asset isolation through an asset mapping system: the user's actual assets are custodied by a custodian, and the exchange can only operate the "mapped quota" of equivalent value, allowing institutional users to enjoy the liquidity of a centralized exchange while their assets are always custodied by a professional custodian, fundamentally eliminating the risk of asset misappropriation.
As the competitive landscape of traditional centralized exchanges changes, decentralized exchanges (DEXs) are on the rise. As on-chain trading infrastructure matures, more and more users and liquidity are flowing into the chain. DEXs not only have inherent advantages in transparency and self-custody of assets, but also begin to outperform traditional centralized exchanges in actual user experience such as transaction costs and liquidity. In particular, innovations like the hybrid order book-AMM model of HyperLiquid further blur the boundaries between CEXs and DEXs, driving the entire industry to evolve towards greater efficiency and transparency.
In certain niche areas, such as meme coin trading, decentralized exchanges (DEXs) have shown obvious advantages. The explosive launch of $TRUMP token issued by Trump is a vivid example. $TRUMP completely bypassed centralized exchanges and relied solely on the power of decentralized platforms and communities to achieve a market capitalization of billions of dollars within just a few hours. The $TRUMP case shows that DEXs can respond more agilely to rapidly changing market trends and provide users with a more convenient and efficient trading experience. The massive outflow of SOL and USDC from CEXs to purchase $TRUMP on chain-based DEXs is the strongest proof. This user behavior reveals the lagging nature of CEXs in the face of emerging market trends, as well as the advantages of DEXs at the operational level.
It is predicted that by 2025, the exchange industry will form a tripartite competitive landscape of leading CEXs, innovative small and medium-sized exchanges, and emerging DEXs, with each type of platform finding its unique value positioning in different market niches.
BTC Layer 2 is Underestimated
The Bitcoin second-layer network is underestimated, and BTCFi will be repriced. L2 is not only the key to expanding the utility of Bitcoin and driving its transformation from "digital gold" to a multi-functional currency, but also an important guarantee for the long-term security of the Bitcoin network. Unlike Ethereum L2, Bitcoin L2 has a larger market scale and capital volume ("All in L2"), as well as higher security requirements. These factors will completely reshape its value assessment system, ultimately opening up a market worth trillions of dollars.
Although the native design of the Bitcoin protocol emphasizes security and decentralization, being just "digital gold" is far from enough. Even the store-of-value function requires stronger privacy protection, self-custody, 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 wrapped tokens on other blockchains), which goes against the original intention of Bitcoin.
More importantly, the Bitcoin network faces security challenges due to the decreasing block rewards, while the settlement demand and data availability demand of the second-layer network can naturally drive the increase of transaction fees, thereby maintaining network security.
Compared to Ethereum's second layer, the Bitcoin second-layer network has unique advantages:
1. Larger market scale and capital volume:
As the world's largest cryptocurrency asset, Bitcoin's current base market value is more than 4.9 times that of Ethereum. However, the lack of programmability in Bitcoin L1 means that all innovations must occur on L2. This is in stark contrast to the Ethereum ecosystem, where innovation and capital are dispersed across L1 and L2. In the Bitcoin ecosystem, incremental capital will flow entirely to L2, and this "All in L2" characteristic, combined with Bitcoin's significantly larger market capitalization base, could make "BTC L2 flips ETH L2" a possibility.
Shenyu predicts that the total market value of the BTCFi sector is expected to reach hundreds of billions of dollars in the short term and may break through trillions of dollars in the long term, even surpassing the historical peak of the Ethereum ecosystem.
2. BTC L2 has higher security requirements
The development focus of Ethereum L2 and Bitcoin L2 is different. Ethereum L2 is mainly committed to solving the problems of rapid delivery and low transaction fees, while Bitcoin L2 is more focused on security. Due to the lack of programmability in Bitcoin L1, almost all applications occur on L2, including use cases with extremely high security requirements such as large-value transactions. This means that Bitcoin L2 must bear all the high-security use cases and the associated security responsibilities.
Especially for risk-sensitive traditional institutional users, they tend to choose solutions with well-verified security. To meet this demand, some companies are actively developing and deploying more robust security infrastructure to support the development of Bitcoin L2. For example, Cobo provides enhanced security guarantees for Bitcoin L2 through MPC multi-signature technology and the Babylon BTC Staking API, helping developers and users reduce risks and enhance trust in BTC L2 solutions.
Crypto Security: Attackers Shift to Targeted High-Value Strikes
In 2024, a single theft amounted to $55.48 million, highlighting the severity of the security situation in the crypto industry. Although the number of affected addresses grew by only 3.7%, the total annual loss increased significantly by 67% to $494 million. This indicates that hackers have shifted to precisely targeting high-value targets, making security threats more targeted.
Scam Sniffer data shows that in 2024, losses caused by Wallet Drainer (a type of malware deployed on phishing websites) attacks reached $494 million, an increase of 67% year-over-year. Security threats have shifted from dispersed attacks to precise targeting, with 30 major theft cases exceeding $1 million in losses throughout the year, totaling $171 million. The largest single theft amounted to $55.48 million, while the number of affected addresses grew by only 3.7% to 332,000, indicating that attackers are more inclined to target high-value targets.
Attackers' methods have also become more professionalized. Attackers continue to innovate, using various means such as wallet normalization processes, legitimate contracts, and XSS vulnerabilities to bypass security detection. In terms of signing methods, they have expanded from a single Permit to multiple methods including setOwner. Meanwhile, the application of AI technology makes phishing content more deceptive. It is worth noting that in the second half of 2024, the number of Wallet Drainer attacks decreased, which may indicate that attackers are shifting to more covert attack methods, such as malware.
With the widespread adoption of technologies like account abstraction and automatic proxies, especially the surge of on-chain proxies in the EVM ecosystem, security architectures are facing unprecedented challenges. Traditional incremental security solutions are no longer adequate to cope with the increasingly complex threat environment. In this context, enterprise-level security standards are gradually becoming an industry trend, such as the threshold signature technology based on Cobo's MPC multi-party computation, which ensures asset security while maintaining high performance through smart risk control. This reflects that crypto security has shifted from static defense to a dynamic game with attackers, requiring a more proactive and comprehensive security system to address the evolving threats.
AI x Crypto: From Hype to Value Return
The crypto market is experiencing a transition from meme coin speculation to AI agent applications. DeFi and gaming are the most promising application areas for AI agents, and specialized decentralized payment solutions will become the key infrastructure for the autonomous operation of AI agents. Although there is currently a bubble in the 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 as a real business needs its own bank account. This will be an area full of challenges but also full of opportunities.
The crypto field is undergoing a paradigm shift, from the speculative meme coins to the more practical AI agents, mainly due to people's awareness of the potential of AI technology to transform the crypto ecosystem. Although the market size of meme tokens is still huge (120.3 billion USD), the AI agent sector (15.8 billion USD) is rising rapidly, attracting a lot of investment and innovation.
In the field of AI x Crypto, the competition is mainly concentrated in three categories:
Agents: Similar to applications, they perform specific tasks, such as trading, data analysis or content generation.
Frameworks: Provide tools and environments for the development and deployment of agents, like a "factory". The success of frameworks depends on the excellent agents built on them.
Launchpads: Provide funding and exposure opportunities for agent projects, like a "casino". In the long run, the boundaries between frameworks and launchpads may gradually blur.
However, the current AI industry has a huge bubble, and most agents lack practical value, while the framework and launchpad markets are also tending to be saturated. It is expected that 90% of AI projects will ultimately fail. Many speculative AI agents will disappear, and the infrastructure will also undergo a major reshuffle.
To succeed in the competition, AI infrastructure platforms need to have speed, scalability and unique features. In addition, similar to the top projects on the public chain, each successful framework may nurture one or two top agents, which will give value to the framework and drive up the price of its tokens.
The market opportunity for AI agents lies in creating real value and having execution capabilities, and the key is to find the product-market fit (PMF).
If practical utility and value accumulation are used as the criteria for consideration, DeFi may be the first category of AI applications to achieve PMF. DeFi agents can solve the complex problems of cryptocurrency operations by converting natural language intentions into executable commands, simplifying user interaction with DeFi protocols. The evolution of DeFi agents will go through three stages: from simple interaction to autonomous execution, and then to smart research, ultimately becoming professional investment advisors, providing data-driven decision support for users.
Game NPCs also provide an ideal testing ground for AI agents. By endowing NPCs with independent economic identities, autonomous decision-making capabilities and social interaction attributes, AI agents can enhance the immersion and playability of games.
From DeFi to game NPCs, AI agents are evolving from simple execution to autonomous decision-making. Autonomous decision-making means that AI agents will operate autonomously in the real world for the purpose of survival, such as self-bearing the cost of computing power. This evolution can be achieved by introducing economic constraints into the AI system. For example, in the case of Nous Research, when agents cannot afford the cost of reasoning, they will "die", which prompts them to plan their task priorities more efficiently. This will pose challenges to the existing financial infrastructure and give rise to the demand for decentralized payment solutions.
To support the autonomous decision-making and operation of AI agents, decentralized payment will become the next important AI agent infrastructure. The 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 needs specialized solutions that support efficient transactions and asset management between agents. Companies like Coinbase, Skyfire and Stripe have already started to layout in this area. This indicates that the decentralized payment track will usher in new development opportunities.
Finally, I would like to recommend our "Exchange Boss Internal Reference". It provides two key pieces of information:
Daily AI-driven data analysis: Supported by the GMGN API, it tracks wallet activity, meme coin hype, and which tokens are heating up in real-time. It's automatically updated daily, so you won't miss any market dynamics.
In-depth insights from seasoned analysts: Our team (who have accurately predicted multiple 200%+ early opportunities) will release exclusive research and analysis on emerging fields from time to time.
In the ever-changing crypto market, information is an advantage. I hope this daily report can help exchanges better understand the market and seize opportunities.
