HashKey Capital H1 Crypto Analysis: AI Integration, TON's Potential To Challenge WeChat

The cryptocurrency industry has seen immense growth in the past decade, breaking barriers for unbanked individuals, and creating opportunities for the new digital economy.

In its first half 2024 analysis of the crypto industry, leading crypto investment firm and platform HashKey Capital laid bare the top trends that showed significant promise for the future of finance.

Highlights of the HashKey H1 Crypto Sector Analysis:

• A surge in Ethereum-based projects – HashKey analysts saw an increasing number of zkEVM (zero-knowledge Ethereum Virtual Machine) projects shifting to a zkVM (zero-knowledge Virtual Machine) with the PSE team under Ethereum Foundation in the frontline. Furthermore, the launch of EigenLayer's restaking feature triggered an emergence of new DeFi products, with TVL peaking at $20 billion.
• Messaging mainstream – The TON (The Open Network) blockchain saw a whopping 200% growth in the first half of the year, leveraging popular messaging app Telegram's 900 million monthly active users. The H1 growth is also "attributed to the slew of mini apps developing on TON that are vying for the huge user base on Telegram," the report noted. HashKey sees a lot of potential for TON to "mirror the success of WeChat" in terms of large-scale monetization.
• AI x Crypto – HashKey also observed increased demand for decentralized AI infrastructure in the first six months of 2024. Projects are emerging across data, computing, and verification networks. "These developments underscore the growing focus on data-driven AI ecosystems and the importance of both privacy and decentralized infrastructures in the future of AI applications," the report said.
• Tokenization IRL – Tokenization of real world assets (RWAs) continue to gain traction, as exemplified by BlackRock's BUIDL fund surpassing $500 million in assets under management (AUM). While there is an apparent increase in appetite among institutional investors to leverage blockchain to tokenize financial products, "regulatory risks remain at the top of mind for most executives and hence exposure to public blockchain remains limited," the report noted.
• Gaming is Maturing – Outside the expanding mini games ecosystem on TON, several other blockchain gaming networks have also been on the rise. For instance, the Ronin network led Tier 1 gaming, backed by strong gaming communities such as Pixels.

HashKey expects many of the top trends in the first quarter to continue building momentum in the second half of the year. In an exclusive with International Business Times, Jeffrey Hu, Head of Research at HashKey Capital, shared his thoughts on the trends that will likely retain momentum throughout the rest of 2024.

AI x Crypto to Sizzle Hot Through Year-End 2024

Hu believes the convergence of crypto and AI will likely "stay red hot" in the second half of the year. Already in the third quarter, HashKey is seeing AI and crypto projects accounting for many new projects in the space.

AI has cemented its status on top as it blossomed into various specialized areas such as data decentralized autonomous organizations (DAOs), decentralized inference, decentralized model training and fine-tuning, and more.

"This popularity stems partly from all the buzz and innovation happening in AI broadly. But it's also because blockchain can enhance AI with more privacy, verifiability, and flexible compute power. So in a nutshell, AI looks poised to remain a major theme through year-end and beyond," Hu said.

TON's Potential to Go by the WeChat Playbook

Telegram is popular worldwide and many crypto communities use the platform due to blockchain integration and its encrypted offering. Integration with TON has only driven the blockchain's popularity. However, growth was specifically apparent in Asia in H1.

Chinese instant messaging app WeChat is one of the top platforms in Asia due to its various offerings such as WeChat Pay, e-commerce, and mini games. Can TON flip the script and become a top messaging platform in Asia?

"There's huge potential for TON to follow WeChat's playbook and achieve massive monetization through mini apps. Gaming is the top mini app category, followed by e-commerce and everyday services. So there's still tons of room to run there," Hu said.

He also revealed that there has been a gradual shift in the industry from hype-driven narratives "to caring more about real business metrics." Hu expects that factors such as user numbers, revenue, and other related metrics "will carry more weight than pure narratives" moving forward.

At this point, crypto exchanges and other institutions are eager to partner with projects boasting many active users. "This should motivate projects to double down on building real businesses and user bases, creating a positive feedback loop," he said.

Crypto in 10 Years

While Hu believes it is "tricky" to make projections for the next decade, he is "confident" that the broader crypto industry will see broader institutional "and even national adoption."

He pointed to the approval of spot Bitcoin and Ethereum exchange-traded funds (ETFs) in the U.S. and Hong Kong as just the catalyst for adoption beyond enthusiasts and advocates.

He is looking forward to how El Salvador's Bitcoin strategy will play out in the next 10 years, as well as that of Argentina, whose Vice President recently told Salvadoran leader Nayib Bukele that she's interested in El Salvador's BTC bonds.

"Based on blockchain's fundamental nature, I think we'll see renewed focus on some core use cases. Payments are already trending this year. We'll likely see more development around asset custody, cross-border settlement and related applications," he projected.

Crypto has gone a long way since Satoshi Nakamoto introduced the world's first decentralized digital currency. Based on HashKey's analysis of the state of crypto in H1, it is safe to say that the burgeoning sector is poised for a good run throughout the rest of the year.