There’s a lot to unpack as we look back at 2023 and even more promise as we look ahead to a pivotal 2024. 2023 started in the depths of “Crypto Winter” but by the end we were seeing signs of a Bitcoin ETF, new EIP standards, protocol innovation and new Web3 consumer apps gaining traction. Starting 2024 with the Bitcoin ETF approval brings expected price action and staying power to the emerging industry. Consumer adoption across next-gen social applications, DeFi 2.0, Web3-enabled games, brand experiences and utility driven NFTs will be at the forefront of this next year of Web3 adoption.
2023 lessons learned: A year of turbulence and growth in Web3
In order to understand the 2024 tide of Web3, let's take a look at the seeds planted in 2023:
Core protocol upgrades
- One of the most impactful new standards was released in 2023, Account Abstraction (ERC-4337) a revolutionary underlying change that will simplify on-boarding and broaden adoption.
- Massive innovation across zero-knowledge proofs brought enhanced privacy, security and trust across a number of emerging blockchains.
DeFi regains ground
- 2023 was a rollercoaster of a year but strong signs of positive momentum — $15B+ total value locked on Layer 2s like Arbitrum One, Base, and Polygon zkEVM
- TradFi integrations gained steam via crypto bonds and mortgages
Balancing regulation
- $2B+ lost to hacks highlighted consumer protection needs
- Global regulatory initiatives signal oversight shift and additional consumer protection
Web3 gaming advances
- Major gaming studio, Zynga, launched inaugural Web3 game Sugartown
- Over $800M funding flowed to Web3 gaming in 2023
- Migration towards EVM chains
NFT utility expands
- Projects created phygital goods, toys, upcoming metaverse integrations
- Top communities pursued brand collabs like Doodles and Crocs
- Virtual fashion blurred digital/physical like RTFKT and Nike
- Media franchises leveraged NFT drops such as Endstate and BAIT
- Pudgy Penguins sold 20,000 Penguin toys during their Amazon debut
Beyond the hype: Web3 builds the future in 2024
2024: Web3's breakout year? Market maturity, proliferation of AI, NFT utility, DeFi resurgence, Bitcoin ETF approval, and emerging global regulatory clarity can create the perfect storm for Web3’s comeback.
Hyper-personalization: AI tailors your Web3 experience
- Intelligent NFTs: AI Algorithms will help personalize and augment the utility of NFTs. Imagine NFTs dynamically changing appearance based on user preferences or market conditions or AI-powered avatars learning and evolving based on user interaction.
- DAOs (Decentralized Autonomous Organizations) are exploring ways to own and leverage AI models collectively. This could lead to the development of community-owned AI tools and services in Web3
- Generative AI models will empower individuals to create unique and personalized art, music and even in-game avatars.
- No-code/low-code AI tools: User friendly AI tools will allow anyone to incorporate AI into their Web3 projects and experiences, lowering the barrier to entry to create AI powered workflows
2024 DeFi: Trends reshaping the DeFi landscape
2023 witnessed a significant correction in the cryptocurrency market, impacting DeFi protocols and token values. However, the underlying promise of decentralized finance remains strong, and many experts predict a resurgence in 2024 driven by key trends:
Tokenization explosion
- Assets beyond cryptocurrencies are being tokenized, including stocks, bonds, real estate, treasuries and even carbon credits
Liquid staking takes center stage
- With Ethereum's shift to proof-of-stake, liquid staking tokens (LSTs) have gained traction
DeFi beyond speculation
- The focus is shifting from yield farming and speculative trading to real-world applications of DeFi.
- Lending and Borrowing protocols are becoming more sophisticated, offering competitive rates and innovative loan structures
Regulatory clarity on the horizon
- Regulatory uncertainty has been a major hurdle for DeFi adoption
- However regulators are increasingly engaging with the industry, seeking to create frameworks that encourage innovation while mitigating risks
Interoperability and cross-chain bridges:
- Breaking down barriers between different blockchain networks is crucial for DeFi to reach its full potential.
- Cross-chain bridges are enabling users to move their assets seamlessly between different protocols and ecosystems.
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App chain expansion—led by Cosmos' strong growth and growing app chains like Osmosis—we anticipate app chains to proliferate in 2024, spanning use cases across DeFi, gaming, social applications, and more.
NFTs and DeFi convergence
- NFTs are evolving beyond collectibles and finding new applications in DeFi
- NFT-based collateralized loans and fractional ownership of NFTs are examples of this convergence.
NFTs evolve: Utility takes center stage in 2024
We expect NFT projects focused on delivering real-world value and benefits to gain traction. While NFTs exploded initially as digital collectibles and profile pictures, 2024 saw increased traction for projects delivering tangible real-world value beyond just digital ownership. We expect this utility-driven trend to continue gaining momentum in 2024.
- Digital wearables for metaverse avatars and real-world clothing authenticated by NFTs. Early examples of real-world clothing can be seen with Cryptokicks by RTFKT and Nike
- More brands are leaning into NFTs for VIP experiences, exclusive communities, and more.
- Self-sovereign identity management using NFTs could give individuals more control over their personal data. Imagine storing your passport or driver's license as an NFT on your phone.
- NFTs can provide secure and unique tickets for events, offering exclusive benefits while preventing counterfeiting. Imagine an NFT concert ticket granting backstage access to meet-and-greets.
Web3 games liftoff
After a breakout year of hype and investment in 2023, the Web3 gaming industry is poised for major launches and increased gameplay in 2024. While much of the past year focused on funding, conceptualization, and backend development, studios are getting ready to bring their titles to market and put the games in players’ hands.
- A host of anticipated Web3 titles across genres will launch, with more focus on core gameplay loops than crypto elements
- The industry narrative will focus less on presales and funding, and more on shipping fun games aimed at driving mass user retention and engagement
- Fully on-chain titles like Dark Forest and Pirate Nation will continue expanding their game and user base
- Beyond Axie Infinity: Diverse P2O models emerge, offering deeper gameplay mechanics, richer social experiences, and sustainable tokenomics.
- Breaking the metaverse wall: Cross-chain compatibility allows players to move assets and avatars between different blockchain games, expanding the possibilities.
- Mainstream adoption on the horizon: Big names like Zynga, Ubisoft, Square Enix, and Take-Two Interactive explore Web3, integrating NFTs and blockchain mechanics into their games.
- Hybrid models: Games offer both Web2 and Web3 features, allowing players to choose their level of engagement with blockchain elements.
New vs. halted Web3 games. Source: Game 7
Bitcoin ETF approved: The tide is rising
The long-awaited approval of Bitcoin ETF by the SEC in January 2024 marked a watershed moment for mainstream crypto adoption. The Bitcoin ETF provides access to the convenience of accessing Bitcoin through traditional investing channels that could unlock trillions of dollars to enter the space.
Key impacts we expect from this regulatory opening:
Price volatility
- Spot Bitcoin ETFs are expected to bring significant volatility to the crypto market. While some predict a longer-term price surge due to increased demand, others caution about potential price corrections.
Expanding legitimacy
- The regulatory stamp of approval could cement crypto’s staying power and role in the future of finance
The Bitcoin halving
- Scheduled for April 2024, this event will cut the Bitcoin mining reward in half, further limiting supply and potentially boosting the price.
Tightening Web3 regulations
Based on the numerous conversations we’ve been a part of, in 2024 we expect expanded regulations around Web3 designed to improve protections for users. As adoption continues to grow, regulators seem motivated to establish stronger guardrails, which will likely emphasize compliance around security, transparency, and accountability.
Global regulatory balance
Learning from the EU's MiCA framework, there might be a push towards coordinated global regulations, promoting cross-border collaboration and consistency in legal treatment of Web3 projects.
National approaches: Different countries will adopt diverse approaches
- China is expected to continue its cautious stance, favoring blockchain technology while clamping down on cryptocurrencies.
- US regulators like the SEC will likely focus on protecting investors and combating fraud, possibly approving spot Bitcoin ETFs but scrutinizing DeFi protocols.
Focus on specific areas
- Regulators will likely take a sector-specific approach, targeting areas like:
- DeFi: addressing risks like flash loans and rug pulls.
- DAOs: defining legal structures and governance guidelines.
- NFTs: tackling authenticity, copyright, and market manipulation.
No-code innovation in 2023 positions Esprezzo for industry-shaping advances in 2024
Massive shoutout to our community! You helped Esprezzo make huge inroads into simplifying Web3 alerts and automations in 2023.
Esprezzo 2023 recap
- Welcomed a diverse set of teams into the Dispatch beta, spanning multiple industries and protocols.
- Launched our Web3 Mavericks and Dispatch Demos series diving into Web3 insights and Dispatch tutorial videos
- Integrated Base, Arbitrum, and Optimism to support evolving Web3 projects
- Added webhooks for simplified Web3 to Web2 connections
- Streamlined alert creation for smart contract events and functions, including unverified smart contracts
Now with even a robust core infrastructure, deeper monitoring capabilities and instant cross-platform experiences, Dispatch is poised to help more builders ship products faster and monitor mission-critical on-chain activity in just a few clicks.
Growing adoption of Dispatch
In 2023, Dispatch became a time-saving lifeline for project founders, managers, and developers in Web3. Teams were able to cut through the repetitive, manual work by automating data reporting for key events like NFT drops, team wallet changes, gameplay milestones, betting activity, and more.
More than just saving time, Dispatch makes it easier for you to react swiftly to both opportunities and unexpected events, as well as keeping your team and community members informed every step of the way. We’ve been talking to hundreds of teams across Web2 and Web3 about new ways to use Dispatch and we can’t wait to meet with more of you in 2024.
How Endstate saves time on NFT sneaker drops with Dispatch
Endstate, an apparel and tech brand pushing the boundaries of NFT sneakers, used Dispatch to transform their drops into streamlined experiences. How? Dispatch automated tedious tasks like monitoring and refreshing block explorers, saving the team tons of time and effort. With accurate, instant updates, that kept everyone in the loop. The result? More hype, smoother launches, and reduction in manual monitoring.
Create alerts and automations for key on-chain activities with Dispatch 🚀
Content to help you stay ahead
Web3 Mavericks
- Setoros Founder on Valuable Lessons from Building a Web3 Startup
- Web3 Mavericks: Exiled Racers on Creating Fun Games with Better Onboarding
- Web3 Mavericks: Bringing unparalleled experiences to fans with Endstate
Dispatch Demos
Closing
The road ahead promises to be an eventful one for Web3. From surging DeFi and NFT utility to major gaming releases and increased clarity through regulation, 2024 is poised for significant industry growth and consumer adoption.
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