Marking the 10th anniversary of the Ethereum ICO, HTX Ventures' investment analysts attended the largest annual European Ethereum event, EthCC 2024, to gather insights from front-end developers and engage with VCs and ecosystem users. The conference highlighted several critical observations about the current market situation and the future of blockchain technology.
Vitalik Buterin, co-founder of Ethereum, delivered a keynote speech on hardening Ethereum's Layer 1 (L1) to ensure it remains a highly robust, dependable, and permissionless base layer for Layer 2 (L2) solutions. He outlined five main improvement directions for Ethereum, emphasizing decentralized DeFi, the need for increased data availability for L2 storage, security and privacy protection, the promotion of light clients like Helios, and protocol simplification to reduce technical debt.
One of the significant observations from HTX Ventures is the current slowdown in investment pace among VCs. This is attributed to market liquidity ambiguity, listing trends, and high Fully Diluted Valuation (FDV) VC rounds. However, as the market corrects itself and the political and economic landscape becomes clearer in the latter half of 2024, a resurgence in investment activity is anticipated.
A misalignment in investment direction was also noted. While strong consumer applications are deemed crucial for wider blockchain adoption, current VC funding is heavily skewed towards infrastructure, AI, security, privacy, and blockchains. This trend is pronounced within the Ethereum ecosystem, driven by a lack of innovative narratives among consumer applications.
Additionally, attention is being directed toward alternative blockchain ecosystems. Community-driven blockchains like Ton are focusing on user experiences and applications for non-crypto users. Parallel EVM blockchains and modular solutions such as Monad and Avail are leveraging Ethereum while offering enhanced functionalities. The Bitcoin ecosystem is also exploring user applications, broadening the scope of blockchain technology.
The macroeconomic environment is increasingly influencing the crypto market, with blockchain ETFs aligning it more with traditional financial systems. The upcoming US presidential election and the anticipated Federal Reserve rate cut are expected to impact crypto regulations, economic direction, and the liquidity of the U.S. dollar and related pegged currencies. The market holds an optimistic outlook for the crypto sector, especially with the increasing probability of a Trump victory in the presidential race.
HTX Ventures actively participated in EthCC 2024, sponsoring and speaking at various side events, including the LSDFI Summit and VC<>Start-Up Connect. Their researchers and Managing Partner shared insights on restaking development and launching a Web3 ecosystem. The conference underscored the enduring robustness of the Ethereum ecosystem and facilitated forward-looking technical discussions and application explorations.
HTX Ventures remains committed to supporting the long-term development of the Ethereum ecosystem and continuously seeks technologies and projects that will enhance the crypto user experience.
