May 2024 Public Chain Report: Regulatory Shifts and Market Trends

June2024, [e-mail] 
Data Source: Public Chain Research Page

May saw significant regulatory and political developments impacting the crypto market. The U.S. SEC's approval of initial filings for spot Ethereum ETFs boosted the performance of Ethereum and its Layer 2 solutions. The Trump campaign's announcement to accept cryptocurrency donations suggested potential market impacts from the upcoming U.S. presidential election. Solana continued its upward trajectory with key integrations and adoption by major platforms like PayPal. TON attracted significant attention with Pantera Capital's “largest investment” to date, alongside surging TVL and increasing on-chain activities.

Data for this report was obtained from Footprint Analytics’ public chain research page - an easy-to-use dashboard containing the most vital stats and metrics to understand the public chain industry\, updated in real-time.

Crypto Macro Overview

In May 2024, significant regulatory developments contributed to market dynamics, with the U.S. Securities and Exchange Commission (SEC) approving the initial filings for spot Ethereum ETFs. This breakthrough helped Ethereum outperform the broader crypto market, supported by a shift in regulatory attitudes towards cryptocurrencies.

Additionally, the political landscape influenced market sentiment as the Trump campaign announced it would accept cryptocurrency donations. This move suggests potential impacts of the upcoming U.S. presidential election on the crypto market, akin to shifts driven by Federal Reserve monetary policies.

Conversely, the ongoing resolution of Mt. Gox's bankruptcy slightly restrained Bitcoin's price. The exchange, which has been in bankruptcy for a decade, announced last September that creditor repayments would begin in October 2024, raising concerns about potential market impacts from coin sell-offs. 

Public Chain Overview

By the end of May, the total market cap of public chain cryptocurrencies rose 10.5% from April to $1.9 trillion. Bitcoin, Ethereum, BNB Chain, and Solana led with market shares of 62.9%, 21.4%, 4.1%, and 3.6%, respectively. Notably, Ethereum’s share increased from 19.7% to 21.4%, while Solana’s from 3.1% to 3.6%. 
Source: Public Chain Token Market Cap Share

In May 2024, Bitcoin rebounded from its April-end lows to register a gain, climbing from $60,653 at the start of the month to $67,606 by its close, an increase of 11.5%. Similarly, Ether showed a robust recovery, with its price moving from $3,011 to $3,778 over the same period, an uplift of 25.5%. 
Source: BTC Price & ETH Price

Supported by broader crypto market trends, public chain cryptocurrencies recovered from April's poor performance. Besides Bitcoin and Ethereum, Solana's market cap increased by 34.5%, NEAR by 19.0%, and Avalanche by 14.8%. 
Source: Public Chain Token Market Cap and Price

Toncoin's price rose by 23.0%, but its market cap fell by 14.6%. On May 30, The Open Network (TON) announced an update to the circulating supply of Toncoin on data aggregators, excluding Toncoin held by Telegram, The Open Network Foundation, and the TON Believers Fund. This update caused an immediate drop in Toncoin's market cap.

Total Value Locked (TVL) in the public chain sector reached $87.2 billion at the end of May, marking a 14.7% increase from April, with Ethereum, Tron, and BNB Chain leading the way. Notably, TON’s TVL surged by 106.4% within the month.
Source: Public Chain TVL Ranking

Solana continued its upward trend in May, driven by ongoing meme coin activities and significant developments. LayerZero added Solana to its cross-chain bridge network, connecting it to seven chains: Ethereum, Avalanche, Polygon, Arbitrum, BNB Chain, Optimism, and Base, with plans to expand to over 70 blockchains. Additionally, PayPal chose the Solana blockchain to expand its stablecoin, PayPal USD (PYUSD), marking its first move beyond the Ethereum ecosystem.

TON also attracted significant attention. In early May, Pantera Capital, managing over $5 billion in assets, announced its “largest investment ever” in TON. Moreover, Telegram gaming bot projects like Tapswap and Hamster Kombat are gaining traction amid the Notcoin hype, bringing more users to TON and increasing on-chain activities.

Developments within Major Layer 1 Blockchains in May 2024

Bitcoin

• Blackrock's Bitcoin ETF has become the fastest ETF to reach $20 billion. 
• Animoca Brands has announced its plans to enter the Bitcoin ecosystem by leveraging the Opal Protocol.

Ethereum

• Spot ETH ETFs could see 25% of the demand of BTC counterpart – Bloomberg analysts.
• A group of prominent Ethereum developers, including Vitalik Buterin, has proposed a new transaction type (EIP-7702) to enhance the functionality and security of Externally Owned Accounts (EOAs). 

BNB Chain

• BNB Chain announced 4 hardforks on opBNB testnet and the cas cost on opBNB will be 10x lower.
• BNB Chain introduced its latest trading volume incentive program. 

NEAR

• NEAR increased its shards from 4 to 6 to handle more transactions smoothly.
• NEAR announced the launch of NEAR AI, a new research and development lab.

Sui

• Sui refuted criticism of the tokenomics around the distribution and control of its SUI token.
• Sui's social login primitive zkLogin adds multi-signature recovery and support for Apple accounts.

Polygon

• Polygon Labs announced SP1 would be used to create pessimistic proofs for the AggLayer to help guarantee the security of an aggregated network.

Core Chain

• Core DAO’s Gaming Summer Jam - Summer 2024 began on May 20. 

GalaChain

• An unidentified hacker breached Gala Games' internal controls, minting 5 billion new GALA tokens on May 20. The Gala Games team detected the breach and deployed their blocklist functionality to isolate the attacker’s address.

Layer 2

In May, the SEC’s approval of initial filings for spot Ethereum ETFs boosted the performance of Ethereum Layer 2s. Arbitrum led the market with a 44.8% share and a 19.6% increase in TVL. Optimism followed with a 22.2% market share and a 13.1% increase in TVL. Blast saw a 22.3% increase in TVL, and Base experienced a 27.2% rise.

Linea’s TVL surged by 82.9% due to its DeFi event, Linea Surge, which attracted more DeFi enthusiasts and significantly increased TVL on the network. Manta Pacific’s TVL increased by 17.4% following the successful launch of Manta CeDeFi, a new product offering rewards from both CeFi and DeFi yields.
Source:  Layer 2 Overview

Developments within Major Layer 2 Blockchains in May 2024

Arbitrum

• Arbitrum is the first Layer 2 to pass $150B in swap volume according to Uniswap Labs.
• Injective plans to launch its own layer-3 network "inEVM " based on Arbitrum's Orbit toolkit.

Optimism

• Layer 3s can join the Superchain by building on the OP Stack and sharing revenue with the Collective.

Starknet

• StarkWare has introduced a new scaling framework based on ZK execution sharding called ZKThreads.

Blast

• Blur launches on Blast, offering Blast Points and 2 million in GOLD rewards. 

Taiko

• Taiko goes live on mainet on May 27.

Rootstock

• Rootstock founder said Bitcoin's Ethereum-style programmability could come in 12 months.

Merlin Chain

• Merlin’s Seal was available to unstake according to Merlin Developer Update on May 10th. 

Web3 Gaming

In April, 1,525 games were active across various blockchains, with BNB Chain, Polygon, and Ethereum leading with market shares of 23.3%, 19.7%, and 15.7% respectively.

Among the 3.3 million DAUs in May, Ronin, Polygon, and Near continued to lead the sector, similar to the previous month. Ronin maintained its dominance with approximately 29.0% market share. Near saw its share increase from 12.1% at the beginning of May to 14.8% by the end of the month. Flow also experienced growth, with its share rising from 0.7% to 3.3%. Conversely, BNB Chain's share declined from 8.0% to 5.9%.
Source: Daily Active Users by Chain

On May 24th, the Arbitrum community initiated voting on the 200 million ARB Gaming Catalyst Plan, set to conclude on June 8th, aimed at bolstering gaming on the network. At the time of this report, the proposal has secured majority support, with 80.6% in favor. Concurrently, Arbitrum is developing a Layer 3 game-specific chain ecosystem, with the multi-chain NFT game ecosystem Polychain Monsters announcing a similar initiative through Altlayer.

The Starknet Foundation awarded a 2 million STRK grant to the on-chain metaverse game, Realms.World, as part of a broader strategy to distribute 50 million STRK tokens to enhance Starknet’s gaming ecosystem, announced in March.

The iconic Web2 soccer game Captain Tsubasa debuted on Oasys in May, developed by Mint Town, Co., Ltd. and BLOCKSMITH&Co., subsidiaries of mobile gaming giant KLab Inc. Oasys is actively pursuing further collaborations with Mint Town and other developers to integrate premium intellectual properties(IP) into blockchain games.

For more data insights, you can get it from the May Web3 gaming report: May 2024 Web3 Game Report: Growth Trends and Evolving User Engagement.

Investment & Funding

In May, the public chain sector recorded 17 funding events totaling $89.7 million, a 14.3% decrease from April. However, 7 of these events did not disclose detailed funding amounts. Notably, Pantera Capital announced its investment in TON as its “largest investment ever.” Previously, Pantera's largest investment was $250 million, used to purchase Solana (SOL) at a discount from the estate of the bankrupt FTX exchange.
Public Chain Funding Events in May 2024 (Source: crypto-fundraising.info）

Technology advancement remains a key focus within the blockchain infrastructure sector, drawing significant investor interest. One of the key advancements is the integration of Real World Assets (RWA) in crypto applications. In May, Layer 1 blockchain E Money Network and Ethereum Layer 2 Plume Network both secured new funding rounds to integrate RWA with their networks.

Humanity Protocol is another notable example, having raised $30 million at a $1 billion valuation. The startup is developing a blockchain-based identity system that uses palm scans to recognize individuals, aiming to verify online identities in an era of artificial intelligence deepfakes. This funding event propelled Humanity Protocol to unicorn status in less than a year.

Interestingly, identifying a Layer 2 as specifically a Bitcoin or Ethereum Layer 2 is becoming more challenging, as many Layer 2 solutions are now building on multiple Layer 1s or supporting the scaling of multiple chains. For instance, Lumoz, a modular compute layer and ZK-RaaS platform, simplifies ZK-Rollup usage and promotes wider adoption. It supports several networks, including those built on Ethereum, Bitcoin, and BNB Chain.

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