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VanEck Crypto Monthly Recap for December 2023

January 08, 2024

Read Time 10+ MIN

In 2023, Bitcoin had its best year since 2020 with a 154% increase.

In December, Bitcoin outperformed the S&P 500 for the fourth straight month (+9% vs. +4%) to end 2023 +154%, its best year since 2020 when BTC rose 305%. While Bitcoin ETN inflows slowed to $300M for the month, a significant deceleration from November’s $1B+, investors recycled previous BTC gains into more speculative alt-coins, especially Layer 1 smart contract platforms as represented by the MVIS Smart Contract Leaders Index, which rose 44% in December for its best month since mid-2021.

Simultaneously, the US dollar experienced another 2% decline for December following November’s 3% fall, after the Jerome Powell-led FOMC signaled US rate cuts as soon as Q1 and the BRICS group expanded to include Saudi Arabia, the UAE, Iran, Egypt and Ethiopia. The market also took cues from significant crypto policy support outside the US, where Bitcoin adoption is more apparent. For example, the Nigerian Central Bank made a major policy change in December by reversing the ban prohibiting banks from servicing virtual asset service providers. An influential 90-year-old Saudi cleric acknowledged Bitcoin as permissible (not haram) in a new fatwah. Argentina’s libertarian President Javier Milei’s new foreign minister said that contracts settled in Bitcoin would be legal under certain conditions. With 50% of the world population voting in national presidential or legislative elections in 2024, we see the prospect for more significant, pro-crypto policies to emerge.

Continuing the notable shift that began in November, small-cap tokens (+27%) dramatically outperformed large-caps (+12%) as crypto natives drove meme coins and less liquid tokens in the Solana ecosystem, particularly to outsized gains. However, as of January 2nd, funding rates are now quite elevated across many digital assets, driving an emerging “sell the news” narrative around the Bitcoin ETFs, which we are reluctant to embrace.

  December 2023
Coinbase 39% 391%
Bitcoin 11% 154%
MarketVectorTM Smart Contract Leaders Index 44% 149%
MarketVectorTM Infrastructure Application Leaders Index 25% 136%
MarketVectorTM Decentralized Finance Leaders Index 11% 94%
Ethereum 13% 92%
Nasdaq Index 6% 44%
MarketVectorTM Centralized Exchanges Index 32% 30%
S&P 500 Index 4% 24%
MarketVectorTM Media & Entertainment Leaders Index 27% -41%

Source: Bloomberg, as of 12/31/2023. Past performance is no guarantee of future results. Not intended as a recommendation to buy or sell any securities named herein.

The speculative scramble that gripped the crypto markets in November 2023 continued to unfold in December 2023. The fervor was unbound by fundamentals as speculators focused on memecoins and inscriptions across most smart contract platforms. The consequence of this activity is that L1 tokens ex BTC rose 44% in December. Despite the extremely positive price action, important fundamental metrics like daily active users and stablecoins did not increase in the aggregate. While usership is roughly flat compared to six months ago, stablecoins on-chain are up only +2% from six months ago and down -6% from a year ago. It is also difficult to attribute this broader rally to any new applications or killer use cases despite incrementally positive developments in DePIN and useability. But crypto prices are highly reflexive, and the rockets of mooning tokens often shine light on projects that were overlooked during negative price periods. It is also important to note that higher prices create positive feedback loops not only because they bring in new users looking to speculate or utilize crypto apps but also because they give teams the financial firepower to build the vision of their projects. In crypto, if enough people believe in something and are willing to financially back their beliefs, far-flung ideas can blossom into functioning, widely-used applications.

Smart Contract Platform + Bitcoin Daily Active Users

Smart Contract Platform + Bitcoin Daily Active Users

Source: Artemis XYZ as of 12/28/2023. Past performance is no guarantee of future results. Not intended as a recommendation to buy or sell any securities named herein.

Memecoins drove price action in early December, particularly on Solana, but they mostly crested in mid-December. However, the butterfly wings of memecoin activity on Solana led to a hurricane of inscriptions that raged on Bitcoin and popped up elsewhere. In tandem with Bitcoin, many other chains also saw a squall of inscriptions that caused a massive increase in fees and congestion. Arbitrum was a notable casualty on Friday, December 15th when its sequencer went down for several hours. Inscriptions are a mini hack within blockchain transactions that allow users to write any data within on top of a transaction that will be committed to the blockchain forever. The result is that images and other data pieces that could be considered collectible have been inscribed and this has spurned users to create and speculate on the inscriptions. The smart contract platform most affected by inscription activity, in terms of fee generation, was Avalanche where inscription activity resulted in a total of $39.9M spent on gas. That figure represents 76% of all the Avalanche fees in December. As a result of inscriptions activity, Avalanche’s AVAX token was one of the top performers in December, +79%.

Daily Amount of Gas Spent on Inscriptions by Blockchain

Daily Amount of Gas Spent on Inscriptions by Blockchain

Source: Dune @ hildobby as of 12/28/2023. Past performance is no guarantee of future results. Not intended as a recommendation to buy or sell any securities named herein.

Of course, no chain matched Bitcoin’s inscriptions activity which is estimated to have resulted in $81M in transaction fees for Bitcoin in December 2023. As a result of inscriptions activity on Bitcoin, the project $ORDI reached $1.6B in market cap at its peak on December 25th. At the same time, congestion clogging the Bitcoin network has spurred interest in scaling solutions such as Stacks whose STX token had an exceptional December (+81%). Because of spillover from activity on Bitcoin to Stacks, fees on Stacks exploded in December moving from a daily average of $261 to $15,640 per day. With the stand-up of Stack’s Neon testnet which enable 5-second block times, Stacks may continue to be a beneficiary of Bitcoin congestion since it is one of top Bitcoin L2s. Curiously, the massive pick-up in activity on the Bitcoin network has even spurred a team called GFX to fork and deploy Uniswap V3 onto Bitcoin scaling solution RootStock to trade inscriptions and other memecoins within Bitcoin.

One of the most interesting occurrences in December was the continued momentum of the Blur-related L2 chain Blast. While there is no mainnet, no testnet and Blast consists of a series of smart contracts that re-stake user deposited funds, it has been able to attract $1.14B in TVL. Most alarmingly, the developer, known only as Pacman, has access to move all the funds that users deposit. This puzzling phenomenon is attributed almost entirely to the notoriety of Pacman who is considered one of the most capable programmers in the blockchain space and the supposition that Blast will be dispersing high value token rewards. Others are so bold as to speculate that this type of model where user funds are re-hypothecated to earn yield while locked, will be replicated by other emerging Layer-2 blockchains.

Another big winner on TVL in December was Eigenlayer who increased the maximum of its re-staking contract to 500k ETH. As a result, Eigenlayer’s TVL increased from 114.5k ETH to 452k ETH (~$1B) in 10 days.

In December, many Ethereum L2 projects reported noteworthy news items amid speculation of airdrops and partnership deals. Starkware, who will release its token on January 22, 2024, announced that 10% of fees generated on chain will go to developers of Starkware dApps as well as Starkware’s team (80% to dApps, 20% to Starkware). Protocol-shared revenue is nothing new -- Canto has experimented with it since late 2022 -- but the topic is still contentious as some suppose this incentivizes developers to create less efficient contracts. Polygon, who is building towards an L2 chain of chains employing zero-knowledge tech, announced that it will be using Celestia for Data Availability (DA). This move by Polygon is intriguing given that Polygon recently spun out of its company a DA project called Avail. Polygon has also announced that Immutable X, who is building a Polygon zk L2 chain using the Polygon CDK, will be launching Passport which will allow users to port both assets and identities across many different blockchain-based games. Arbitrum, a strong competitor in the L2 space, has also announced that its L3 program called Orbit will be utilizing Celestia for DA. Manta network, a privacy-focused former Polkadot project, also announced it will be using Celestia for Data Availability.

TVL of Sui and Aptos

TVL of Sui and Aptos

Source: Artemis XYZ as of 12/28/2023. Past performance is no guarantee of future results. Not intended as a recommendation to buy or sell any securities named herein.

Rounding out the Alt-L1 chains, Solana’s SOL token had another impressive month by increasing (+56%). Amid the flurry of speculation on Solana including memecoins involving dogs with hats and dogs being bonked by bats, there were several important developments from more savory projects. Dominant re-staking and MEV project Jito airdropped tokens worth $160M to just under 10k users while DEX aggregator with 80% market share Jupiter announced its $JUP token airdrop for January 2024. Additionally, Trezor announced support for Solana and the SPL token. Also notable in December was that Solana’s mobile phone Saga sold out its initial run of 20k units. The move-language based systems, Sui and Aptos, have also been performing well in attracting TVL as Sui broke $200M in TVL while Aptos has surged to $120M. NEAR’s token also had a solid December (+90%) as NEAR partnered with Eigenlayer to create a finality layer for Ethereum L2s. This will be accomplished by transitioning the NEAR-Ethereum Rainbow bridge into an Eigenlayer actively validated service that will rely upon re-staked Ethereum for security. In concert with this new capability, NEAR is also targeting Ethereum L2s by unveiling its Data Availability layer to attract Ethereum L2 transaction data. NEAR’s DA project already boasts an impressive assortment of rollups including Fluent, Movement Labs, Caldera and Dymension. NEAR claims that its DA layer will be 8000x cheaper than Ethereum and combined with its new finality layer, may pose a challenge to Ethereum’s settlement business model going forward.

OP (+111%)

Optimism DEX Volume vs. TVL

Optimism DEX Volume vs. TVL

Source: Artemis XYZ as of 12/28/2023. Past performance is no guarantee of future results. Not intended as a recommendation to buy or sell any securities named herein.

The best performing smart contract platform token for the month of December was OP token that governs the Optimism layer-2 blockchain. Optimism’s outperformance does not appear to be caused by the improvement of fundamental metrics as these were relatively weak for Optimism. Though fees generated by Optimism increased (+54%) month-to-month, TVL only increased +20%, and users were actually down -20.4%. This compares to chief competitor Arbitrum showing fees, TVL and usership changes of (+98.2%), (+17.2%) and (-9.7%) respectively. Earlier in the month, however, Optimism finished voting for its public good funding which has typically been a price catalyst in the past as users vie to gain access to some of the funding. Also, Optimism was able to gain adherents to its superchain in December with legacy project LISK announcing it will be building an Optimism chain. Another positive development is the release of Clearpool’s KYC pool on Optimism Mainnet which aims to bring private credit markets on-chain. Kraken also enabled the transfer of Tether USDT to Optimism and the upcoming post-Bedrock upgrade called Canyon. The Canyon release improves gas efficiency on chain under high transaction loads while also addressing many minor bugs that plagued Optimism. Though fundamental metrics of Optimism’s adoption look weak at the moment, Worldcoin who is building on Optimism, has integrated its World ID 2.0 “proof of personhood” with Shopify, Minecraft, Telegram and Reddit. World ID may spur usership on Optimism as it enables the companies that integrate it to add an identification layer that will separate real active users from bots. Bot activity alongside scams, have plagued social networks and video games and Worldcoin ID may offer a tangible solution to substantially curbing bot activity. This solution may become particularly important once AI bot start to make it difficult to distinguish real users from fakes ones.

Optimism, despite its performance, is still far away from its goals of decentralization. Vitalik Buterin, co- founder of Ethereum, has classified the stages of decentralization for Ethereum L2s and Optimism currently sits at the lowest level. Optimism is a Stage 0 rollup which means there is no validity proof system on Optimism chains nor a decentralized security committee to override potential chain issues. In practice, Optimism is still highly centralized with its founding team governing core functions and running its sequencer. This amounts to users of Optimism’s blockchain trusting Optimism’s team with user funds and hoping that Optimism’s team does not act maliciously. Though Optimism’s team is working diligently to reach Stage 1, it has not indicated when that threshold will be reached. Instead, Optimism focused on building the OP stack and Bedrock to enable others to build OP chains to join Optimism’s superchain. While uncertainty over decentralization is far from ideal, it is also a potential set of catalysts that could bring positive price action to the $OP in the future. 

Ethereum (+10%)

With the exception of Tron’s TRX, ETH was outperformed by every major smart contract platform’s token in December. The bear case for Ethereum is not new, but it is convincing and December’s price action demonstrates that many crypto investors are allocating away from ETH. Many have asserted that Ethereum’s roadmap has become divorced from the needs of Ethereum’s everyday users as the Ethereum Foundation focuses on esoteric concerns that do not scale Ethereum. Another common criticism is that Ethereum is discarding its primary use-case and business model, execution of user transactions, and moving towards the unproven and uncertain data availability and settlement “businesses.” To ETH bears, Ethereum’s new focus is a poor financial decision that pulls Ethereum away from blockchain’s most compelling value accrual mechanisms – execution of user transactions and MEV (ordering of those transactions). As a result, ETH has been plagued with sagging performance throughout the year. For example, ETH is down 24% against Bitcoin’s performance in 2023 and -80% versus Solana’s. To air more grievances, another concern is the growing threat to Ethereum’s credible neutrality posed by validators, blockbuilders and relays sanctioning certain addresses. In December, relay provider bloXroute noted that it will start rejecting non-OFAC compliant transactions. The accumulation of issues surrounding validators, blockbuilders and relays potentially throttling transactions is extremely concerning if we are to suppose that Ethereum is credibly neutral, and that ETH is truly a permissionless asset.

Ethereum also underperformed in December due to comparatively lukewarm fundamentals. Average daily active users on Ethereum were up +10%, Solana and Avalanche usership was up +102% and +68.1% respectively. While Ethereum average daily fees were up 49% month-to-month, Ethereum’s fee growth ranks 11th of the 22 major blockchains we track and this ranking puts Ethereum behind fee growth of four of its own L2 blockchains. For monthly DEX volume growth, Ethereum was 15th, TVL growth has Ethereum placing 16th, and in stablecoin growth Ethereum ranks 11th.

Despite the demoralizing price action of ETH, we think Ethereum and ETH’s future is bright. ETH’s use cases are expanding with many more L2s being spun up that will require ETH for gas. Additionally, Eigenlayer is set to export ETH’s security to enable a flood of novel crypto services. Likewise, EIP 4844 and a host of other upgrades could prove material to Ethereum’s usage as a DA platform. Ethereum also retains the largest development and research community of any blockchain, and has grown their share of active developers from 38% in August 2022 to 50% at the end of December 2023. Ethereum intellectual leader Vitalik has also recently directed the discussion towards needed improvements to scale Ethereum’s execution environment. Finally, there is serious discussion about an ETH ETF on the horizon and the high-growth tech asset with yield narrative could prove convincing to many non-crypto investors.

Smart Contract Platform Developer Count

Smart Contract Platform Developer Count

Source: Artemis XYZ as of 12/28/2023. Past performance is no guarantee of future results. Not intended as a recommendation to buy or sell any securities named herein.

DeFi

The MarketVector Decentralized Finance Leaders index (MVDFLE) returned 11% in December, slightly underperforming $ETH due to the large drawdown in $RUNE, which fell 18% following its massive rally in previous months. Of the index components, $UNI showed the most strength in December returning an impressive 30% as investors sought to get more exposure to the largest decentralized exchange. The majority of the index performed more or less in-line with major tokens with $LDO, $AAVE, and $CRV returning 19%, 14%, and 15%, respectively. $MKR underperformed $ETH and $BTC, only rising 1% potentially due to investors favoring pure crypto exposure as the market has turned risk-on and MakerDAO’s decision to acquire real world assets (RWA) has limited its exposure to crypto assets.

Ethereum DeFi Returns

Ethereum DeFi Returns

Source: Coingecko as of 12/29/23. Past performance is no guarantee of future results. Not intended as a recommendation to buy or sell any securities named herein.

DeFi activity accelerated in December as the crypto rally continued, with decentralized exchange (DEX) volume rising 25%, thanks to the massive increase in activity on Solana. DEXs on Solana facilitated $29B of volume, representing a 256% increase from November, and established Solana as the second most active blockchain by DEX volume according to DefiLlama. The boost for Solana DeFi came as a result of $SOL’s outperformance and on-chain users seeking to participate in the many upcoming airdrops expected for DeFi protocols on Solana that have not yet released a token. This activity was catalyzed by the $JITO airdrop which saw the second largest liquid staking protocol on Solana distribute 90 million of its governance tokens to early users, worth over $200 million at time of writing.

Solana DEX Volume

Solana DEX Volume

Source: DefiLlama as of 12/31/23. Past performance is no guarantee of future results. Not intended as a recommendation to buy or sell any securities named herein.

Metaverse Tokens Outperform

Metaverse and gaming tokens had a strong month, with the MarketVector Media and Entertainment Leaders index (MVMELE) rising 26%, significantly outperforming $ETH and $BTC. $AXS and $SAND drove the index’s performance with each appreciating 43% and 40%, respectively. The massive returns these tokens experienced can be attributed to rising investor sentiment that blockchain gaming will have a breakout year in 2024 and that Axie Infinity and The Sandbox have established themselves as leaders in the space. Despite blockchain gaming’s low usership, these projects could see an increase in traffic as the rising crypto market gains the attention of the broader public.

NFT Market Speculation Increasing

NFT volume in December rose a staggering 81%, mainly due to rising BRC-20 trading on Bitcoin and a 328% increase in NFT volume on Solana, according to Cryptoslam!. Solana’s massive increase in NFT volume is representative of how drastically investor sentiment in the Solana ecosystem has shifted. In fact, December was the first month where Solana NFT volume exceeded that of Ethereum. Similar to the increase in DeFi activity on Solana, on-chain investors are hoping that acquiring the leading Solana NFT collections could result in them being included in future airdrops that occur. Additionally, since Solana NFTs are priced in $SOL, investors are hoping to generate increased returns by purchasing the most coveted collections, such as Mad Lads and Tensorians, which could outperform the market significantly if Solana’s momentum continues.

Despite the impressive growth in Bitcoin and Solana NFTs, Ethereum NFT volume only rose 1% in December. Blur maintained its position as the leading NFT exchange on Ethereum by volume, facilitating 74% of NFT volume on the chain. Blur’s governance token, $BLUR, underperformed the market significantly, falling 3% while the amount of $BLUR tokens staked rose to 373 million, representing 12.4% of the total supply. Deposits to Blur’s upcoming layer 2 network, Blast, continued to rise and the Blast contract achieved a TVL exceeding $1 billion this month. In a hypothetical scenario where the network is operational, it would rank as the second-largest Ethereum layer 2 platform by value locked. However, it is likely that a significant portion of this capital will be withdrawn following the $BLAST airdrop and the launch of the network as airdrop farmers collect their rewards and seek other opportunities.

December NFT Volume by Blockchain

December NFT Volume by Blockchain

Source: CryptoSlam! As of 12/31/23. Past performance is no guarantee of future results. Not intended as a recommendation to buy or sell any securities named herein.

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Index Definitions

S&P 500 Index: is widely regarded as the best single gauge of large-cap U.S. equities. The index includes 500 leading companies and covers approximately 80% of available market capitalization.

The MarketVector Centralized Exchanges Index (MVCEX) is designed to track the performance of assets classified as 'Centralized Exchanges'.

Nasdaq 100 Index: is comprised of 100 of the largest and most innovative non-financial companies listed on the Nasdaq Stock Market based on market capitalization.

MarketVector Decentralized Finance Leaders Index: is designed to track the performance of the largest and most liquid decentralized financial assets, and is an investable subset of MarketVector Decentralized Finance Index.

MarketVector Media & Entertainment Leaders Index: is designed to track the performance of the largest and most liquid media & entertainment assets, and is an investable subset of MarketVector Media & Entertainment Index.

MarketVector Smart Contract Leaders Index: designed to track the performance of the largest and most liquid smart contract assets, and is an investable subset of MarketVector Smart Contract Index.

MarketVector Infrastructure Application Leaders Index: is designed to track the performance of the largest and most liquid infrastructure application assets, and is an investable subset of MarketVector Infrastructure Application Index.

MarketVector Digital Assets 100 Large-Cap Index is a market cap-weighted index which tracks the performance of the 20 largest digital assets in The MarketVector Digital Assets 100 Index.

MarketVector Digital Assets 100 Small-Cap Index is a market cap-weighted index which tracks the performance of the 50 smallest digital assets in The MarketVector Digital Assets 100 Index.

Coin Definitions

  • Bitcoin (BTC) is a decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.
  • Ethereum (ETH) is a decentralized, open-source blockchain with smart contract functionality. Ether is the native cryptocurrency of the platform. Amongst cryptocurrencies, Ether is second only to Bitcoin in market capitalization.
  • Solana (SOL) is a public blockchain platform. It is open-source and decentralized, with consensus achieved using proof of stake and proof of history. Its internal cryptocurrency is SOL.
  • Arbitrum (ARB) is a rollup chain designed to improve the scalability of Ethereum. It achieves this by bundling multiple transactions into a single transaction, thereby reducing the load on the Ethereum network.
  • Avalanche (AVAX) is an open-source platform for launching decentralized finance applications and enterprise blockchain deployments in one interoperable, scalable ecosystem.
  • Ordinals (ODI) is a decentralized finance project that uses blockchain technology to store text, images, and other data on the Bitcoin network.
  • Stacks (STX) is a Bitcoin Layer for smart contracts; it enables smart contracts and decentralized applications to use Bitcoin as an asset and settle transactions on the Bitcoin blockchain.
  • Uniswap (UNI) is a decentralized exchange built on Ethereum that utilizes an automated market making system rather than a traditional order-book.
  • Blur (BLUR) is the native governance token of Blur, a unique non-fungible token (NFT) marketplace and aggregator platform that offers advanced features such as real-time price feeds, portfolio management and multi-marketplace NFT comparisons.
  • Polygon (MATIC) is the first well-structured, easy-to-use platform for Ethereum scaling and infrastructure development. Its core component is Polygon SDK, a modular, flexible framework that supports building multiple types of applications.
  • Celestia (TIA) is the first modular blockchain network that enables anyone to easily deploy their own blockchain with minimal overhead.
  • Immutable (IMX) is a Layer-2 scaling solution for Ethereum that focuses on NFTs and game economies.
  • Manta Network (MANTA) is a plug-and-play privacy-preservation protocol built to service the entire DeFi stack.
  • Jito Network (JTO) is a major contributor to the Solana ecosystem through its JitoSOL liquid staking pool, and its collection of MEV products.
  • Jupiter (JUP) utilizes military grade encryption to secure user data and powers secure dApps on public and private networks.
  • Sui (SUI) is a Layer-1 smart contract platform developed by Mysten Labs, which utilizes an object-centric data model intended to scale network throughput.
  • Aptos (APT) is a Layer-1 blockchain network focusing on decentralization, speed, and scalability.
  • NEAR Protocol (NEAR) is a layer-one blockchain that was designed as a community-run cloud computing platform and that eliminates some of the limitations that have been bogging competing blockchains, such as low transaction speeds, low throughput and poor interoperability.
  • Optimism (OP) is a layer-two blockchain on top of Ethereum. Optimism benefits from the security of the Ethereum mainnet and helps scale the Ethereum ecosystem by using optimistic rollups.
  • Tether (USDT) is a fiat-collateralized stablecoin platform offering individuals the advantage of transacting on blockchains while mitigating price risk. USDT is their US dollar pegged stablecoin.
  • Worldcoin (WLD) is a cryptocurrency project that aims to distribute a global digital currency to every person on Earth. Their vision is to provide equal access to digital assets, making use of blockchain technology for financial inclusion.
  • Tron (TRX) is a multi-purpose smart contract platform that enables the creation and deployment of decentralized applications.
  • THORChain (RUNE) is an independent blockchain built using the Cosmos SDK that will serve as a cross-chain decentralized exchange (DEX).
  • Lido DAO (LDO) is a liquid staking solution for Ethereum and other proof of stake chains.
  • Aave (AAVE) is an open-source and non-custodial protocol to earn interest on deposits and borrow assets with a variable or stable interest rate. It also enables ultra-short duration, uncollateralized flash loans designed to be integrated into other products and services.
  • Curve (CRV) is a decentralized exchange optimized for low slippage swaps between stablecoins or similar assets that peg to the same value.
  • Maker (MKR) is the governance token of the MakerDAO and Maker Protocol — respectively a decentralized organization and a software platform, both based on the Ethereum blockchain — that allows users to issue and manage the DAI stablecoin.
  • Axie Infinity (AXS) is a blockchain-based trading and battling game that is partially owned and operated by its players.
  • The Sandbox (SAND) is a blockchain-based virtual world allowing users to create, build, buy and sell digital assets in the form of a game. By combining the powers of decentralized autonomous organizations (DAO) and non-fungible tokens (NFTs), the Sandbox creates a decentralized platform for a thriving gaming community.
  • Mythos (MYTH) is the interoperable utility token used in these decentralized efforts and provides opportunity for anyone to participate and contribute within the ecosystem - adding governance, and value to game developers, publishers, and content creators.

Risk Considerations

This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.

Index performance is not representative of fund performance. It is not possible to invest directly in an index.

The information, valuation scenarios and price targets presented on any digital assets in this commentary are not intended as financial advice, a recommendation to buy or sell these digital assets, or any call to action. There may be risks or other factors not accounted for in these scenarios that may impede the performance these digital assets; their actual future performance is unknown, and may differ significantly from any valuation scenarios or projections/forecasts herein. Any projections, forecasts or forward-looking statements included herein are the results of a simulation based on our research, are valid as of the date of this communication and subject to change without notice, and are for illustrative purposes only. Please conduct your own research and draw your own conclusions.

Investments in digital assets and Web3 companies are highly speculative and involve a high degree of risk. These risks include, but are not limited to: the technology is new and many of its uses may be untested; intense competition; slow adoption rates and the potential for product obsolescence; volatility and limited liquidity, including but not limited to, inability to liquidate a position; loss or destruction of key(s) to access accounts or the blockchain; reliance on digital wallets; reliance on unregulated markets and exchanges; reliance on the internet; cybersecurity risks; and the lack of regulation and the potential for new laws and regulation that may be difficult to predict. Moreover, the extent to which Web3 companies or digital assets utilize blockchain technology may vary, and it is possible that even widespread adoption of blockchain technology may not result in a material increase in the value of such companies or digital assets.

Digital asset prices are highly volatile, and the value of digital assets, and Web3 companies, can rise or fall dramatically and quickly. If their value goes down, there’s no guarantee that it will rise again. As a result, there is a significant risk of loss of your entire principal investment.

Digital assets are not generally backed or supported by any government or central bank and are not covered by FDIC or SIPC insurance. Accounts at digital asset custodians and exchanges are not protected by SPIC and are not FDIC insured. Furthermore, markets and exchanges for digital assets are not regulated with the same controls or customer protections available in traditional equity, option, futures, or foreign exchange investing.

Digital assets include, but are not limited to, cryptocurrencies, tokens, NFTs, assets stored or created using blockchain technology, and other Web3 products.

Web3 companies include but are not limited to, companies that involve the development, innovation, and/or utilization of blockchain, digital assets, or crypto technologies.

All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future performance.

© Van Eck Associates Corporation.

DISCLOSURES

Index Definitions

S&P 500 Index: is widely regarded as the best single gauge of large-cap U.S. equities. The index includes 500 leading companies and covers approximately 80% of available market capitalization.

The MarketVector Centralized Exchanges Index (MVCEX) is designed to track the performance of assets classified as 'Centralized Exchanges'.

Nasdaq 100 Index: is comprised of 100 of the largest and most innovative non-financial companies listed on the Nasdaq Stock Market based on market capitalization.

MarketVector Decentralized Finance Leaders Index: is designed to track the performance of the largest and most liquid decentralized financial assets, and is an investable subset of MarketVector Decentralized Finance Index.

MarketVector Media & Entertainment Leaders Index: is designed to track the performance of the largest and most liquid media & entertainment assets, and is an investable subset of MarketVector Media & Entertainment Index.

MarketVector Smart Contract Leaders Index: designed to track the performance of the largest and most liquid smart contract assets, and is an investable subset of MarketVector Smart Contract Index.

MarketVector Infrastructure Application Leaders Index: is designed to track the performance of the largest and most liquid infrastructure application assets, and is an investable subset of MarketVector Infrastructure Application Index.

MarketVector Digital Assets 100 Large-Cap Index is a market cap-weighted index which tracks the performance of the 20 largest digital assets in The MarketVector Digital Assets 100 Index.

MarketVector Digital Assets 100 Small-Cap Index is a market cap-weighted index which tracks the performance of the 50 smallest digital assets in The MarketVector Digital Assets 100 Index.

Coin Definitions

  • Bitcoin (BTC) is a decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.
  • Ethereum (ETH) is a decentralized, open-source blockchain with smart contract functionality. Ether is the native cryptocurrency of the platform. Amongst cryptocurrencies, Ether is second only to Bitcoin in market capitalization.
  • Solana (SOL) is a public blockchain platform. It is open-source and decentralized, with consensus achieved using proof of stake and proof of history. Its internal cryptocurrency is SOL.
  • Arbitrum (ARB) is a rollup chain designed to improve the scalability of Ethereum. It achieves this by bundling multiple transactions into a single transaction, thereby reducing the load on the Ethereum network.
  • Avalanche (AVAX) is an open-source platform for launching decentralized finance applications and enterprise blockchain deployments in one interoperable, scalable ecosystem.
  • Ordinals (ODI) is a decentralized finance project that uses blockchain technology to store text, images, and other data on the Bitcoin network.
  • Stacks (STX) is a Bitcoin Layer for smart contracts; it enables smart contracts and decentralized applications to use Bitcoin as an asset and settle transactions on the Bitcoin blockchain.
  • Uniswap (UNI) is a decentralized exchange built on Ethereum that utilizes an automated market making system rather than a traditional order-book.
  • Blur (BLUR) is the native governance token of Blur, a unique non-fungible token (NFT) marketplace and aggregator platform that offers advanced features such as real-time price feeds, portfolio management and multi-marketplace NFT comparisons.
  • Polygon (MATIC) is the first well-structured, easy-to-use platform for Ethereum scaling and infrastructure development. Its core component is Polygon SDK, a modular, flexible framework that supports building multiple types of applications.
  • Celestia (TIA) is the first modular blockchain network that enables anyone to easily deploy their own blockchain with minimal overhead.
  • Immutable (IMX) is a Layer-2 scaling solution for Ethereum that focuses on NFTs and game economies.
  • Manta Network (MANTA) is a plug-and-play privacy-preservation protocol built to service the entire DeFi stack.
  • Jito Network (JTO) is a major contributor to the Solana ecosystem through its JitoSOL liquid staking pool, and its collection of MEV products.
  • Jupiter (JUP) utilizes military grade encryption to secure user data and powers secure dApps on public and private networks.
  • Sui (SUI) is a Layer-1 smart contract platform developed by Mysten Labs, which utilizes an object-centric data model intended to scale network throughput.
  • Aptos (APT) is a Layer-1 blockchain network focusing on decentralization, speed, and scalability.
  • NEAR Protocol (NEAR) is a layer-one blockchain that was designed as a community-run cloud computing platform and that eliminates some of the limitations that have been bogging competing blockchains, such as low transaction speeds, low throughput and poor interoperability.
  • Optimism (OP) is a layer-two blockchain on top of Ethereum. Optimism benefits from the security of the Ethereum mainnet and helps scale the Ethereum ecosystem by using optimistic rollups.
  • Tether (USDT) is a fiat-collateralized stablecoin platform offering individuals the advantage of transacting on blockchains while mitigating price risk. USDT is their US dollar pegged stablecoin.
  • Worldcoin (WLD) is a cryptocurrency project that aims to distribute a global digital currency to every person on Earth. Their vision is to provide equal access to digital assets, making use of blockchain technology for financial inclusion.
  • Tron (TRX) is a multi-purpose smart contract platform that enables the creation and deployment of decentralized applications.
  • THORChain (RUNE) is an independent blockchain built using the Cosmos SDK that will serve as a cross-chain decentralized exchange (DEX).
  • Lido DAO (LDO) is a liquid staking solution for Ethereum and other proof of stake chains.
  • Aave (AAVE) is an open-source and non-custodial protocol to earn interest on deposits and borrow assets with a variable or stable interest rate. It also enables ultra-short duration, uncollateralized flash loans designed to be integrated into other products and services.
  • Curve (CRV) is a decentralized exchange optimized for low slippage swaps between stablecoins or similar assets that peg to the same value.
  • Maker (MKR) is the governance token of the MakerDAO and Maker Protocol — respectively a decentralized organization and a software platform, both based on the Ethereum blockchain — that allows users to issue and manage the DAI stablecoin.
  • Axie Infinity (AXS) is a blockchain-based trading and battling game that is partially owned and operated by its players.
  • The Sandbox (SAND) is a blockchain-based virtual world allowing users to create, build, buy and sell digital assets in the form of a game. By combining the powers of decentralized autonomous organizations (DAO) and non-fungible tokens (NFTs), the Sandbox creates a decentralized platform for a thriving gaming community.
  • Mythos (MYTH) is the interoperable utility token used in these decentralized efforts and provides opportunity for anyone to participate and contribute within the ecosystem - adding governance, and value to game developers, publishers, and content creators.

Risk Considerations

This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.

Index performance is not representative of fund performance. It is not possible to invest directly in an index.

The information, valuation scenarios and price targets presented on any digital assets in this commentary are not intended as financial advice, a recommendation to buy or sell these digital assets, or any call to action. There may be risks or other factors not accounted for in these scenarios that may impede the performance these digital assets; their actual future performance is unknown, and may differ significantly from any valuation scenarios or projections/forecasts herein. Any projections, forecasts or forward-looking statements included herein are the results of a simulation based on our research, are valid as of the date of this communication and subject to change without notice, and are for illustrative purposes only. Please conduct your own research and draw your own conclusions.

Investments in digital assets and Web3 companies are highly speculative and involve a high degree of risk. These risks include, but are not limited to: the technology is new and many of its uses may be untested; intense competition; slow adoption rates and the potential for product obsolescence; volatility and limited liquidity, including but not limited to, inability to liquidate a position; loss or destruction of key(s) to access accounts or the blockchain; reliance on digital wallets; reliance on unregulated markets and exchanges; reliance on the internet; cybersecurity risks; and the lack of regulation and the potential for new laws and regulation that may be difficult to predict. Moreover, the extent to which Web3 companies or digital assets utilize blockchain technology may vary, and it is possible that even widespread adoption of blockchain technology may not result in a material increase in the value of such companies or digital assets.

Digital asset prices are highly volatile, and the value of digital assets, and Web3 companies, can rise or fall dramatically and quickly. If their value goes down, there’s no guarantee that it will rise again. As a result, there is a significant risk of loss of your entire principal investment.

Digital assets are not generally backed or supported by any government or central bank and are not covered by FDIC or SIPC insurance. Accounts at digital asset custodians and exchanges are not protected by SPIC and are not FDIC insured. Furthermore, markets and exchanges for digital assets are not regulated with the same controls or customer protections available in traditional equity, option, futures, or foreign exchange investing.

Digital assets include, but are not limited to, cryptocurrencies, tokens, NFTs, assets stored or created using blockchain technology, and other Web3 products.

Web3 companies include but are not limited to, companies that involve the development, innovation, and/or utilization of blockchain, digital assets, or crypto technologies.

All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future performance.

© Van Eck Associates Corporation.