Global blockchain industry overview and outlook（2018–2019）

Abstract

In 2018, crypto market became more rational. Secondary market stats fell dramatically and gradually influenced primary market side. Besides, active bitcoin addresses also decline sharply, however, core indicators such as hash rate and mining difficulty were still relatively healthy and increased steadily, with only a small decline caused by market plunge that led to the leave of some miners in late 2018.

2018 was also a year of transformation for crypto market: (1) Digital asset issuers have enlarged from private sector to state sector; (2) Digital asset issuance is also becoming more compliant, securities tokens currently is more accepted by market than DAICO; (3) Derivatives and indexed products flourish, crypto market financialization on the go; (4) Settlement gradually shifted to stablecoins; (5) More and more institutional participants have entered the market.

2018 was also a start for crypto market compliance: (1) Regulation became clear, and a supervision model of “licenses+ sandbox+ self-regulation” has emerged. (2) “Classified supervision” is gradually giving way to “indiscriminated supervision”. (3) Joint-supervision gradually appears, beginning from EU. And “compliance infrastructures” including compliant exchanges, custody solutions, securities token and stablecoins has developed rapidly.

For blockchain industry side: (1) Hardware and infrastructure layer: Sales of new ASIC mining hardware didn’t meet expectation, mining farms and mining pools face earning pressure. Some of the POW coins experienced a hash rate reduce, threatening network safety. (2) Platform layer: The mass fever of public chain had receded, and the market became more rational towards high TPS. (3) Middle layer: The improvement of public chain ecosystem drived the development of developer tools, especially in EOS.IO. (4) Application layer: “Blockchain+” gradually develops and has speed up practical use cases in trust construction, data autonomy and token incentives. (5) Services layer: Exchanges are exploring community management mode and many launch cloud exchanges; and wallet exchanges initially emerged.

For blockchain techs: (1) In 2018, blockchain scalability solutions flourish, forming a model of “Layer0, Layer1 and Layer2”. (2) For privacy solutions, blockchain projects that focus on privacy smart contracts and ciphertext data calculation emerge, anonymous cryptocurreny based on MimbleWimble, Grin and Beam, were quite popular in 2018. (3) Cross-chain has become a necessary function for public chain, and cross-chain asset swaps are shifting towards cross-chain asset transfers. (4) Other distributed ledger techniques, like DAG, are actively exploring the possibility of integrating programmable functions such as smart contracts.

We concluded Top 10 important events in 2018:(1) EOS.IO held Super Nodes Selection, DPOS became popular; (2) The rise and decline of “Transfee Mining” model; (3) EOS Ram inspiration, man-machine trading /IBO surface, but IBO failed to break out as expected; (4) Fomo3D triggered thoughts about game DApps; (5) Traditional giants started to step into blockchain industry; (6) Blockchain companies started to embraced traditional capital markets; (7) USDT faced with a crisis of confidence. Compliant stablecoins came into being, while algorithm stablecoins made a bad start; (8) Practical implementation of crypto regulation has been launched, with United States being a typical pioneer; (9) Who is the true believer? Thoughts on on-chain governance through the BCH hardfork debate; (10) Security and hacking incidents happened frequently, opportunities in blockchain security appeared.

We also made Top 10 predictions for 2019: (1) Wealth effect absent, blockchain projects failure rate increase, in 2019 the crypto market will consolidate and go wide sideways after bottoming; (2) The launch of crypto ETFs will not be easy task, but derivative products will continue to emerge; (3) The improvement of public blockchain will continue, but the pain point is not performance, rather, it is real use cases; (4) One-stop blockchian deployment may become a new hot topic, cross-chain interoperability may promote the diversity of blockchain applications; (5) Web 3.0 start, 5G and IPFS-based distributed storage will serve as an important driving force; (6) Financialization reform in mining industry will catalyze the reshuffle, and revolution pioneers will take the lead, while routineers leave the field; (7) Traditional Apps will gradually join the Dapp force, and a new world of internet traffic will surface; (8) Asset tokenization cases continue to emerge, and underlying assets tokenized will be enriched, yet scaling security tokens still face many obstacles; (9) Stablecoins will experience a paradigm shift from trading to usage, and a stablecoin based “PayPal” may be born; (10) Regulations in major countries will continue to optimize, followed by other countries seeing the demonstration effect. Licenses and sandboxe regulation will continue.

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