Business Market Status and Trends

2-1. Global Market Trends

1) Market Size

Based on information up to 2023, the size of the blockchain and NFT (NFTs) market continues to grow and change. Blockchain projects based on decentralisation provide financial services without central management, highlighting one of blockchain's core values. A wide range of financial services, including loans, deposits, and transactions, are offered on blockchains. The latest trend in services is to incorporate blockchain-based piecemeal investments, which are increasingly used in various fields such as real estate, finance, and advertising. There is also a positive outlook for the cryptocurrency market in 2024. With the listing of Bitcoin spot exchange-traded funds (ETFs), it is predicted that the blockchain ecosystem will rise and the entire industry will be revitalised by including local institutions and expanding service blockchain infrastructure. NFTs guarantee ownership of individual digital assets and are gaining traction in the arts, gaming, and entertainment sectors. Various forms of NFTs will be in service in 2024 and linked to artworks, game items, virtual land, and other digital industries.

The year 2022 was marked by the problems with algorithmic De-Fi that led to the Luna debacle. However, the market for decentralised finance has continued to grow and change in 2023 and 2024, with the market continuing to be tested by inflation. The staking system, which was created to control liquidity in the market, has presented many problems. Still, it has also attracted a lot of investment and is a significant investment source in the crypto market. The Luna project proved in 2022 that the extreme control of market liquidity and the algorithmic provision of that control is inefficient. More stable liquidity would be achieved if the right ratio of control and reward were in place rather than extreme control.

NFT market trends

1. Popularisation and diversity: The NFT market is becoming more accessible to the masses, covering creations from artists, creators, musicians, athletes, and more. Brand companies are also digitising their content and reaching a broader audience.

2. Convergence of gaming and entertainment industries: NFTs are also playing a significant role in the gaming industry. Virtual items, characters, land, and more are being traded as NFTs and made available for real-world ownership and trading within games.

3. Decentralised content ecosystems: NFTs are a reaction against centralised management systems, and there is a growing movement to build decentralised content ecosystems. NFTs also form their communities, creating an ecosystem for direct interaction and trading between creators and consumers.

De-Fi market trends

1. Popularisation and stability: Algorithmic DeFi's lack of stability has led to DeFi's emphasis on popularity and stability. The failure of various depository platforms, such as Klayswap and Lunar Project, which were responsible for the De-Fi market, has created a number of victims. Depository services that have overcome these failures and strengthened De-Fi logic and stability are being born.

2. Convergence of blockchain and financial industry: De-Fi also plays a big role in the Ce-Fi industry. Instead of a simple deposit form, there is one form that controls the market liquidity and guides the market value upwards. In recent years, various products other than Ce-Fi simple deposit products have been launched and operationally managed, inspired by De-Fi.

2) Service Status

NFT Service Status

1. Past NFTs: NFTs started as the "Etheria project" in October 2015 and were first unveiled at the Ethereum developer conference "Devcon" held in London, UK, in November. At Lava Labs, the market is being driven by the launch of "CryptoPunks", a platform that sells NFT characters developed by individuals using the Ethereum blockchain. The NFT market grew rapidly in Q3 2021, reaching approximately $10.7 billion in trading value, but since May 2022, trading volume and value have declined.

2. Current trends in NFTs: Since 2023, the NFT ecosystem has become active with the emergence of various NFT projects and companies, and several domestic subsidiaries, including Ripple, are entering the NFT business to secure a share of the domestic NFT market. In support of this, various examples of NFTs are used in industry, including certificates, games, mobile, sports, fashion and art.

3. Expectations of NFTs: As the NFT market using open source is rapidly growing globally, it is gradually expanding in Korea, but legal systems and regulations are weak. Even among other countries, few countries have directly designated NFTs as virtual assets yet, and research and analysis are underway to define and regulate NFTs. The market is expected to fluctuate depending on whether NFTs are designated as virtual assets and how the definition of NFTs is defined. So, the market is expected to fluctuate depending on the definition of NFTs. Expectations are high given that the concept of NFTs has been introduced to the public for less than a year and can act as the most compelling proof of ownership in the borderless ecosystem of the 'metaverse'.

The state of De-Fi services

Decentralised finance (De-Fi) refers to the disintermediated trading of crypto assets instead of centralised financial systems. It is based on blockchain and smart contracts and is characterised by lower transaction costs and the ability for anyone to participate. Types include deposit/loan, asset management, derivatives, insurance, and exchanges, and regulatory directions include interpretation, amendment, and enactment of existing laws. Ethereum implemented smart contracts by introducing the concept of 'accounts', a form of programming code, and 'transactions', which can send and receive data and ultimately solved the problem of lack of trust in counterparties without the need for a centralised intermediary. Building on these technologies, De-Fi took off in earnest in 2017 and has seen a steep growth trend in recent years. For the foreseeable future, De-Fi will continue to provide new options for users in relatively simple areas where the role of a centralised intermediary is not critical.

Current services include "identity verification, wallet services, asset tokenisation, stablecoins, mortgages, staking services, decentralised exchanges, derivatives/prediction markets, insurance, and data analytics", and De-Fi coins such as Compound, Chainlink, Uniswap, Raptbitcoin, and Aave have been issued as utility tokens to build the De-Fi ecosystem.

3) NFT, De-Fi Market Trends

NFTs and De-Fi meet

First, De-Fi, like the rest of the crypto industry, is maturing as users become more engaged and experienced. As such, it has reached a point where fungibility is no longer sufficient, especially as users get a taste of what it's like to have their asset ownership personalised and significantly optimised.

In other words, using NFTs is the optimal next step. Meanwhile, the world of NFTs is also rapidly evolving into De-Fi. This is because it is driven by multiple protocols that gain financial utility through division and representation, as they increasingly need to be connected to DEX (Decentralised EXchanges) based liquidity. De-Fi and NFTs gravitate towards each other because they solve the challenges and highlight the advantages of their respective businesses. The convergence of the two is creating something new. On the negative side, the convergence of the two types of crypto assets is disrupting both sectors.

This gives rise to De-Fi/NFT hybrids, which attempt to bridge the two segments of crypto and engage both De-Fi and NFT users. Meanwhile, their potential and ability to combine attributes have caught the eye of both new and experienced crypto users alike. While it is currently impossible to assess the potential of this market if the converged De-Fi/NFT business reaches maturity, their convergence opens up a whole new world of possibilities in the crypto sector, giving users exposure to traditional assets, works of art, real estate, and more.

While the market is still uncertain, the community involved is optimistic rather than sceptical. With this mood dominating the industry, the development and combination of trends will continue, giving birth to a whole new line of assets and products that will change the entire industry mix as we know it today.

2-2. Target Analysis

1) NFT Users

1. Growth potential: The global non-fungible token (NFT) market size was $153.6 million in 2021 and is expected to reach $142.829 million by 2031 at a compound annual growth rate (CAGR) of 24.2% during the forecast period. NFTs stand for financial security. This security consists of digital data stored on a blockchain. It's a form of distributed ledger and can be considered an encrypted digital stock certificate that can't be copied, divided, or tampered with. NFTs are a trusted form of proof of authenticity and store and hold virtual assets, including music, images, game props, and more. Additionally, they are physical assets such as event tickets and physical collections.

The increasing influence of celebrities in NFT adoption, which is revolutionising the gaming industry, is fuelling market growth. The growing demand for digital artworks is expected to accelerate the adoption of the service. At the same time, the increasing use of NFTs in supply chain management across industries is estimated to drive market growth. Increasing demand for music, video, sports, and especially gaming services is speculated to propel the market growth over the forecast period. Growing investments by major market players propel the NFT market growth.

2. Latest Trends: The NFT (non-fungible token) market size has rapidly expanded. It will expand from $30.54 billion in 2023 to $43.32 billion in 2024, a CAGR of 41.5 per cent. The expansion seen in the historical period is attributed to the boom in digital art, endorsements from celebrities and brands, and active participation by crypto enthusiasts.

The evolution of new platforms for NFTs is shaping the NFT market. Major players in the space are focusing on building innovative platforms, with one model, Tapinator NFT500, offering a premium casting service and collection platform based on blue-chip NFTs. This trend reflects the industry's tacit agreement to provide customisable open source through unique programs. Similarly, companies are also focusing on introducing innovative marketplaces for NFTs, such as Binance NFT, a groundbreaking market and trading platform launched by Binance Holdings Ltd. The marketplace functions as a digital platform for users to create, buy, sell, and trade NFTs and contributes to the overall revenue growth of the NFT market.

North America was the largest region in the NFT market in 2023. Asia-Pacific is expected to be the fastest-growing region during the forecast period. The NFT market report covers Asia-Pacific, Western Europe, Eastern Europe, North America, South America, the Middle East, and Africa.

2) De-Fi users

The De-Fi market continues to expand, especially in total deposits over the past year, and is used in areas such as lending, decentralised exchanges, asset management, and derivatives. According to De-Fi Pulse, as of March 2021, global De-Fi deposits (Total Value Locked) reached $41.8 billion, up nearly 75 times from $5.6 billion in March 2020. Unique Active Wallets have also increased from 20,000 in August 2020 to 40,000 as of March 2021.

De-Fi services are currently dominated by lending (47%), followed by decentralised exchange (DEX) (36%), and are gradually diversifying into asset management (Assets) and derivatives (Derivatives). As for lending, there are two representative platforms, MakerDAO and Compound, which provide lending services using crypto as collateral, and these platforms are responsible for issuing stablecoins such as DAI as collateral for loans. Decentralised exchanges are systems that use smart contracts to hold property and enforce trading rules for all participating individuals to execute transactions, with services offered by SushiSwap and Uniswap, among others.

While overseas-based platforms dominate the current share of De-Fi services, domestic De-Fi companies have been established in earnest and providing services since 2019, mostly lending services. Delio, which started its service in July 2019, is the largest De-Fi company in Korea, holding KRW 1.9 trillion ($1.69 billion) in deposits as of March and partnering with crypto exchange Bithumb to provide lending and deposit services for crypto assets. In recent years, big tech firms such as Kakao and Naver have expanded into De-Fi through subsidiaries that work on blockchain projects.