Footprint Analytics: 2023 Public Chain Development Report
Author: stella, footprint.network
In 2023, the public chain sector demonstrated strong resilience and continuous innovation. This year, the robust return of Bitcoin, the steady growth of Ethereum, and the astonishing rise of Solana collectively painted a vivid picture of market recovery. Against this backdrop, the market capitalization of public chain cryptocurrencies reached $1.3 trillion, revealing the intense competitive landscape among leading public chains and the vast prospects of Layer 2 solutions.
Overview of Public Chains
Key Metrics Overview
This year, we witnessed the initial recovery of the cryptocurrency market after experiencing a "winter." Led by Bitcoin, its price and market capitalization both achieved over 150% growth. Ethereum followed closely with an increase of 80%. Solana also saw a significant rebound after the decline in 2022.
As an important infrastructure for cryptocurrencies, the development status of public chains has a profound impact on the entire industry. According to data from Footprint Analytics, in 2023, the total market capitalization of public chain cryptocurrencies reached $1.3 trillion. Bitcoin accounted for 62.2%, Ethereum for 20.6%, and BNB Chain and Solana accounted for 3.6% and 3.3%, respectively. Notably, in this year, the market capitalization growth of Solana, Avalanche, ICP, Bitcoin, and Cardano all exceeded 100%, showcasing strong growth momentum.
Data Source: Chain Overview
In terms of Total Value Locked (TVL), Ethereum still maintains its leading position, with a TVL of $55 billion, accounting for 72.4% of the $76 billion TVL market share. Tron ranks second with $7.6 billion, followed by BNB Chain and Solana with $3.4 billion and $2.1 billion, respectively. Compared to 2022, the TVL of Solana, Bitcoin Arbitrum, and Tron grew by over 80%, while Polygon and BNB Chain experienced declines of over 20%.
Data Source: Chain Overview
Overview of Layer 2
In terms of Ethereum Layer 2 solutions, Arbitrum leads the market with a 50.8% share and a TVL of $8.5 billion. Following closely is Optimism, which holds a 32.1% market share with a TVL of $5.4 billion. Notably, the rising star Blast achieved a TVL of $1.1 billion in just 40 days, capturing 6.7% of the market share. Other notable projects like Base and zkSync Era hold market shares of 3.7% and 3.4%, respectively. In this diversified ecosystem, the gap between small players and traditional giants is narrowing, resembling a vibrant coral reef—diverse, competitive, and ever-evolving. (Here, "TVL" refers to the cumulative amount stored and locked in Layer 2 smart contracts.)
In the development of Layer 2, user-centric strategies have begun to surpass purely technology-driven approaches. Once leading zkSync Era, Starknet, and Polygon zkEVM lagged behind in TVL and growth speed in 2023.
Data Source: Layer 2 Overview
Financing
In terms of financing, the cyclical nature of cryptocurrency remains—public chain projects raised $539 million in 70 rounds of financing in 2023, a decrease of 85.5% compared to the peak of $3.7 billion in 2022. However, despite shaken confidence, investors remain optimistic about Layer 2 infrastructure. In the 70 rounds of financing in 2023, Layer 2 financing accounted for 41.4%, up from 34.5% in 2022. The average financing amount for Layer 2 in 2023 was 15% higher than that of Layer 1. These figures indicate that despite the cryptocurrency market being in a winter, investors are increasingly valuing professional builders and technological innovation over chasing fleeting hype and bubbles.
Top ten financing projects ranked by amount raised (Data Source: crypto-fundraising.info)
Blockchain Games and NFTs
Blockchain Games
In 2023, the blockchain gaming market continued to expand, with the number of games increasing from 2,110 to 2,878. However, only 6.4% of games had monthly active users (wallets) exceeding 1,000, down from 10% in 2022. Among active games, dominant blockchains like BNB Chain, Polygon, and Ethereum accounted for over 80% of the market share, significantly impacting the market.
Data Source: Yearly Active Games - Blockchain Game Annual Report
Additionally, Layer 2 has made significant progress in the blockchain gaming sector. For example, SUI achieved breakthroughs in throughput, with SUI 8192's daily transaction volume reaching 20 million. Base integrated social and entertainment elements through friend.tech, attracting market attention. Ronin Network also experienced rapid growth in November, thanks to its association with the games Axie Infinity and Pixels.
NFTs
In the NFT sector, although the market trading volume reached $13.1 billion, it saw a decline compared to the previous year's peak. Ethereum still dominates, with a market share of 97.8%, though slightly down, indicating market diversification. The number of users on Polygon grew by 231.0%, reaching 1.3 million, while Ethereum's user count fell by 45.2%. Meanwhile, BNB Chain saw a user growth of 280.7%, reaching 353,000. This year also witnessed significant changes in the market due to Bitcoin's Ordinals transactions and the increase in Solana's NFT trading volume.
Data Source: Yearly Unique User by Chain - NFT Research
Highlights of 2023
As the cryptocurrency industry enters a mature phase, 2023 brought both challenges and new opportunities. Speculations in various aspects are changing, while real-world adoption is accelerating. As the market enters a phase dominated by skeptics and pragmatism, several key trends are leading the way this year.
Gradual Regulation After Industry Turmoil
The collapse of FTX and its $8 billion financial hole triggered ripples in early 2023, prompting global policymakers to strengthen coordination to avoid regulatory gaps. Following this, Binance paid $4.3 billion to settle investigations by U.S. regulators regarding anti-money laundering procedures. After years of prosperity turning into a downturn in cryptocurrency, consecutive shocks triggered responses to balance greater protection without stifling progress. Through clearer and improved regulations, barriers have been lowered, allowing mainstream users to access a more user-friendly Web3 experience.
Layer 2 at the Forefront of Development
In 2023, Layer 2 solutions rose to prominence, with chains like Base, Linea, and Blast becoming very popular. By reducing user costs, Rollups gained widespread recognition, especially zero-knowledge (zk) Rollups. However, despite the attention on Layer 2, challenges remain. Scalability still feels more like a slogan than a reality, with most chains unable to achieve their advertised throughput. Seamless interoperability between Layer 2 solutions remains an ideal rather than the norm. Additionally, many hyped Layer 2 projects lack breakthrough dApps or vibrant, diverse ecosystems.
Accelerated Mass Adoption Across Various Fields
The application of cryptocurrencies and blockchain technology in the real world is becoming increasingly widespread, covering finance, media, gaming, and more. In finance, Visa utilized Solana's blockchain capabilities for settlement transactions in September 2023, expanding support for stablecoins. Previously, Visa had integrated with USDC, providing a more convenient way to use cryptocurrencies. The gaming sector is also building platforms aimed at players, offering Web3 experiences (such as virtual worlds and true ownership of assets), bringing new users to Web3. However, despite the promising technological outlook, consumer skepticism about the collapsing token prices due to poor market conditions has slowed the pace of mass adoption, falling short of industry expectations.
Bitcoin Finds a New Narrative
In 2023, Bitcoin's narrative has transcended its traditional role as a digital gold equivalent. The emergence of unique digital collectibles Ordinals on the Bitcoin blockchain has reshaped discussions about Bitcoin's utility. This innovation marks Bitcoin as a foundational layer for emerging applications, enhancing its relevance in a volatile market. Driven by Ordinals transactions, December saw record trading volumes, marking an expansion of Bitcoin's market scope. This trend positions Bitcoin not just as a store of value but as a multifunctional asset with an expanding range of applications.
Outlook for 2024
In 2024, Bitcoin will become the focal point of cryptocurrency narratives, especially with the upcoming halving event. Additionally, other key themes such as Ethereum's Dencun upgrade, the advancement of decentralization, and progress in artificial intelligence (AI) will also attract significant attention.
Layer 2 Will Continue to Prosper
In 2024, with the implementation of EIP-4844, Ethereum and its Layer 2 tokens are expected to surge under the impetus of reduced fees and renewed focus on scalability. Key issues include the decentralization of Sequencers and the debate over the superiority of modular versus monolithic development, as well as interoperability. This growth is not limited to Ethereum; Layer 2 solutions for Bitcoin and BNB Chain are also expected to experience a surge, reflecting market interest in comprehensive scaling strategies.
Game-Focused Public Chains Further Develop
In 2024, the popularity of gaming NFTs is expected to surpass that of art and collectible NFTs. The crypto gaming industry is poised for maturation, intermittently attracting mainstream players' interest while primarily solidifying its position among professional gamers. With advancements in AI-generated technology, Web3 gaming will make positive strides. Continuous improvements in gaming blockchain platforms like ImmutableX, Ronin Network, and Oasys, which aim to enhance the blockchain gaming experience, will further drive this growth.
The Convergence of AI and Blockchain
In 2024, the convergence of artificial intelligence and blockchain will emerge as a new field with disruptive potential. Although the core infrastructure surrounding computational power and reliable data needs to mature for large-scale applications, incentives for trading AI resources through crypto tokens are steadily increasing, and strong growth is expected. Issues of regulatory alignment and product-market fit in this field are merely temporary obstacles rather than fundamental barriers. With substantial speculative hype and funding, the foundation for blockchain AI has been solidified, and more complex blockchain AI applications are expected to gradually emerge.
Conclusion
This year, despite relatively mild price fluctuations, significant progress has been made in the public chain sector regarding practical applications. Enhanced infrastructure has paved the way for broader applications, while new use cases in gaming, NFTs, artificial intelligence, and other areas herald the arrival of disruptive waves in the industry. These transformations lay the groundwork for technological advancements and market dynamics across various blockchain platforms.