The “2024 State of Crypto” report from a16z Crypto, the cryptocurrency-focused arm of the venture capital firm Andreessen Horowitz (a16z), presents an in-depth look at the significant advancements in the cryptocurrency space, revealing an industry that has not only grown but also evolved in key areas like political relevance, infrastructure, and user adoption.
One of the report’s headline findings is that crypto activity and usage have reached all-time highs, with a total of 220 million monthly active crypto addresses as of September. This marks a tripling in growth since the end of 2023, largely driven by the explosive rise of Solana, which accounted for nearly 100 million active addresses. Other prominent networks include NEAR, Coinbase’s Layer 2 Base, and Ethereum.
In addition to usage metrics, the report introduces the Builder Energy dashboard, which tracks the interest and activity of crypto developers across various blockchain networks. While Ethereum continues to hold the largest share of developer interest at 20.8%, Solana and Base have seen significant growth, with Solana’s share of developer interest more than doubling to 11.2% in the past year. This surge reflects the increasing traction of Layer 2 solutions and high-throughput blockchains, which are drawing builders with their scalability and reduced transaction costs.
Another critical theme is the role of crypto in politics, particularly as the U.S. election approaches. The report highlights that swing states like Pennsylvania and Wisconsin have seen the fourth- and fifth-largest increases in crypto search interest since 2020, signaling that digital assets have become a key political issue. The VC firm sees the listing of spot Bitcoin and Ethereum exchange-traded products (ETPs) in the U.S., which together hold roughly $65 billion in assets, as a significant regulatory achievement and could lead to further mainstream adoption. They say that the U.S. SEC’s approval of these ETPs marks a major step forward and that they expect bipartisan momentum to build, with more crypto-related legislation anticipated soon.
Stablecoins, which have become one of crypto’s “killer apps,” are also a key focus of the report. The report states that with their ability to facilitate fast, low-cost global payments, stablecoins are now considered a critical part of the financial system. In the second quarter of 2024 alone, stablecoins apparently processed $8.5 trillion in transaction volume, more than doubling the $3.9 trillion handled by Visa in the same period. The report emphasizes that the product-market fit of stablecoins is undeniable, and with infrastructure improvements drastically reducing transaction fees, they are expected to continue their upward trajectory. For example, they point out that the cost of sending USDC on Base, a Layer 2 solution, has dropped to less than one cent per transaction.
The report also explores how infrastructure improvements have dramatically increased blockchain capacity and reduced transaction costs. Blockchains now process 50 times as many transactions per second as they did four years ago, thanks to innovations like Layer 2 scaling solutions on Ethereum and other high-throughput networks. It claims that Ethereum’s “Dencun” upgrade, implemented earlier this year, has significantly lowered the fees paid by Layer 2 networks while increasing the value transacted on them.
Furthermore, the report explores the growing overlap between crypto and AI. It says that about one-third of crypto projects are now utilizing AI, a sharp increase from the previous year and that synergies between the two technologies present new opportunities, particularly in areas like decentralized AI computing and digital media authenticity verification.
Finally, the report reminds us that DeFi (decentralized finance) remains a major growth area within crypto. It says that since its breakout in 2020, DeFi has grown to account for 10% of the spot crypto trading market and 34% of daily active addresses, showing its resilience and popularity among users. It goes on to add that more than $169 billion is currently locked in various DeFi protocols.
