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December 14, 2023
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Crypto projects on 2024’s venture capitalist radar.

According to venture capitalists, the focus for 2024 cryptocurrency projects will be on infrastructure and technological advancements, including the processes known as restaking and fully homomorphic encryption. Despite slowness in 2023, investors hope to see higher returns from cryptocurrency startups in these sectors in the coming year.

  • 2024 is expected to see a new wave of investment in cryptocurrency, particularly infrastructure and projects using advanced cryptography
  • There’s a growing interest in restaking, fully homomorphic encryption, and other innovative developments
  • The crypto industry is working towards simplifying user interactions with blockchain technology without compromising security
  • While infrastructure is the current focus, venture capitalists predict a rotation into application layer products, particularly DeFi

Cryptocurrencies have experienced a mostly sluggish year of investment despite the sector’s total market capitalization almost doubling since January. However, co-founder of decentralized finance (DeFi) protocol Curvance, Chris Carapola, predicts an oncoming wave of venture capitalist investments. The focus areas are likely to be infrastructure projects as they present straightforward opportunities for investment and demonstrate their potential during the early stages of the cycle.

Innovative technologies such as restaking – staking the same assets across multiple networks to bolster trust – and fully homomorphic encryption, which allows developers to craft private smart contracts on open, permissionless blockchains, are anticipated to attract significant attention. Fresh technological developments such as intents, processes permitting blockchain users to outsource transaction creation to third parties while retaining control of the transaction, are also expected to pique investor interest.

The ultimate aim of these advancements is to simplify user interactions with permissionless smart contract applications. They are intended to make blockchain use more comparable to conventional payment apps, thereby reducing the possibility for human error. This simplification is a priority for the wider crypto industry, which has received criticism for its complexity and poor user experience.

While infrastructure is the current interest, the attention will eventually shift to application-layer products, particularly DeFi. These protocols are anticipated to gain popularity because they offer innovative solutions, such as staking, restaking, and yield-bearing stablecoins. However, the route to raising funds may become more challenging given the increase in the number of high-quality projects, which translates to more competition for the limited supply of venture capital cash.

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