The report highlights the relationship between developer activity and future market trends, suggesting that sectors with high developer engagement, as observed through hackathons, often lead the next market bull run. Historical data shows that sectors like DeFi and NFTs, which dominated hackathon submissions in 2020 and 2021, respectively, later experienced significant market growth. (The graphs below highlight hackathons from 2021-2022).

Currently, the social sector is receiving the most attention in hackathons, particularly with projects focused on social platforms within the Web3 space.

This trend is driven by substantial sponsorships and the growing importance of social protocols like Lens, which has seen a 110% increase in engagement since its launch. Social projects have also dominated hackathon awards, indicating a high level of innovation and developer interest.

The report notes that the recent ETHBogota hackathon saw a significant focus on social projects, with many finalists exploring new tools to enhance user experience and identity solutions, which are crucial for the next wave of applications. The introduction of features like on-chain identities and improved user experiences suggests that the social sector is laying the groundwork for more sophisticated Web3 applications in the future.

In conclusion, the report indicates that the social sector is poised to lead the next wave of Web3 innovations, with hackathon trends serving as a strong indicator of where market attention is likely to shift. The current focus is on establishing foundational user experiences and identity features, which are expected to evolve into more advanced native Web3 functionalities in the coming year.

Hackathons can be a low-noise indicator of developer activity within a sector. With that being said it might be important to tune into how devs have shifted their focus (social products) and what came after. A great example is Farcaster which has on January 26, 2024, daily active users on Farcaster surged following the launch of a new feature, Frames.

Frames effectively turn Farcaster-based posts into interactive mini-apps, allowing users to mint NFTs, play games, and use instant checkouts directly from their social feed without leaving the platform. [3]

The number of daily active users on the decentralized social protocol Farcaster surged to nearly 30,000 on February 4, 2024, according to on-chain data by Dune Analytics.

In early 2024 Eth Global hosted a Farcaster Hackathon basically focused on creating enhancements to the Frames feature released on Farcaster:

The three-day Farcaster Frames Hackathon "Frameworks" organized by ETHGlobal came to an end, and the winning project method was announced at the same time. . So what are Frames? It is a feature on Farcaster similar to social media embeds, with special properties of Open Graph markup that can display images and text as previews and also facilitate interactive elements via buttons, allowing for dynamic user response.

In short, Frames give posts richer interactive functions, such as NFT minting, voting, trading, subscription and other functions. Since the Frames feature was officially launched, it has inspired great enthusiasm and creativity among developers, and development activities have continued to flourish. This article compiles 10 winning projects in the ETHGlobal Frameworks Hackathon for readers to explore the infinite possibilities of Frames.

Lens Protocol is something that also must be closely studied due to its massive growth and continuous engagement with builders on social projects. They have found a way to focus heavily on UI/UX for Devs and users similar to Farcaster

NEAR Q2 2024 Recap

The NEAR Protocol summary highlights the platform's advancements and strategic focus areas in 2024, emphasizing its role as a smart contract platform utilizing Thresholded Proof of Stake (TPoS) consensus. The protocol's Nightshade Sharding mechanism enhances transaction throughput and scalability, supporting the ecosystem's growth.

Key points include:

Chain Abstraction Vision: NEAR aims to abstract blockchain complexities away from users and developers, creating a seamless experience across multiple chains. Key developments include Account Aggregation, NEAR Data Availability, and the Fast Finality Layer, all designed to simplify user interactions and improve network efficiency.

Market Performance: NEAR saw a significant price appreciation in the first half of 2024, followed by a market downturn in Q2. Despite this, NEAR's market cap ranking improved, with the network's activity levels increasing, particularly in the social sector, driven by platforms like KAIKAINOW and HOT Wallet.

Revenue and Supply: NEAR's revenue, primarily from network transaction fees, increased by 43.5% QoQ, with the network employing a fee-burning mechanism. The native NEAR token is used for staking, transaction fees, and storage fees, with a combination of inflationary and deflationary measures in place.

Sectoral Growth: The social sector led NEAR's activity, followed by infrastructure and gaming. Significant applications driving this growth include KAIKAINOW, Sweat, and Playember. The network also saw notable NFT sales volume increases, with MITTE emerging as the leading NFT marketplace on NEAR.

Governance and Security: NEAR's governance framework is being redesigned in partnership with Gauntlet, focusing on a stake-weighted governance structure. On the security front, NEAR's Nightshade sharding mechanism and the upcoming Stateless Validation are expected to enhance network throughput and scalability.

AI Focus: NEAR is heavily investing in AI development, aiming to become the home for User-Owned AI. This includes the NEAR Horizon AI Incubator and R&D efforts through NEAR.AI, alongside partnerships to boost AI application growth within the ecosystem.

Technical Developments: NEAR continues to advance its technical infrastructure, with significant funding secured for projects like the Nuffle Fast Finality Layer, designed to reduce transaction finality times and costs significantly.

In conclusion, NEAR is positioning itself as a leading network through continued technical innovation, strategic investments in AI, and a focus on chain abstraction to improve user and developer experiences. Despite market challenges, NEAR's growth across key performance indicators underscores its resilience and forward-looking approach.

Important metrics

• NEAR’s stablecoin market cap ended Q2 2024 at $567 million, up 164% QoQ and 717% over six months. This increase was driven by USDC, which reached a market cap of $330 million (+303% QoQ), and USDT, which reached $187 million (+117% QoQ).

• Daily active addresses hit 1.9 million, up 51% QoQ and 620% YoY. Since mainnet, NEAR has surpassed 100 million addresses and averaged over 11 million daily transactions in April 2024.

• Nuffle Labs secured $13 million and announced the Nuffle Fast Finality Layer AVS. This layer, built on NEAR DA, aims to reduce block finality times to three to four seconds and decrease transaction costs by 4000 times.

• The NEAR Foundation is heavily investing in AI development, focusing on core infrastructure and R&D. Partnering with NEAT Protocol, the foundation granted 1 million NEAR tokens for staking to boost AI application growth and announced plans to develop an AI agent.

• Grayscale launched a new public NEAR Trust. Additionally, Grayscale's first actively managed fund, GDIF, includes nine crypto assets, including NEAR, and focuses on multi-asset staking.

Closer Look at their Chain abstraction updates:

Chain Abstraction

The NEAR ecosystem’s focus for 2024 is expanding chain abstraction across more chains and ecosystems, with the goal of abstracting the blockchain away from the user and developer experience. The vision for chain abstraction is that apps should work seamlessly with all chains, onboarding should be effortless, and elements like gas fees and bridging should become invisible to end users. To achieve this, NEAR is focusing on several key developments outlined below.

Account Aggregation

NEAR's Account Aggregation aims to offer users the ability to transact on any blockchain through a single account and interface. It simplifies user interactions across multiple blockchains by integrating three core technologies:

NEAR Account: Account abstraction for smooth onboarding and recovery of accounts. In Q2 2024, the NEAR Foundation partnered with D3 to introduce NEAR Name Tokens, which offer simplified wallet addresses, cross-platform usernames, verifiable credentials, and a potential NEAR domain integration.

Chain Signatures: Enabling the NEAR network to have MPC nodes that jointly sign transactions and messages. This eliminates asset bridging, enhances security, and improves the user experience across DAOs, NFT minting, and airdrops, promoting mainstream crypto adoption. Chain Signatures launched on mainnet on March 26th.

Intent Relayers: Parties in the ecosystem that can execute the user's intent on different chains.

This approach enables a unified, non-custodial account experience, significantly reducing the barriers to accessing and navigating the decentralized web.

Data Availability

The NEAR Data Availability (NEAR DA) layer is designed to enhance data availability for Ethereum rollups in a cost-efficient manner. Partnerships include Arbitrum Orbit, Polygon CDK, Madara by StarkNet, Caldera, Fluent, OP, Gateway, and AltLayer. NEAR DA aims to substantially reduce developer costs by offering a cheaper alternative for call data.

Comparative data highlights the cost efficiency of NEAR DA compared to other solutions. As of December 2023, 231 kB of calldata costs $0.0016 on NEAR, significantly lower than $140.54 on Ethereum L1 and $0.046 on Celestia for the same amount.

Fast Finality Layer

In Q2 2024, information on the Fast Finality Layer was revealed with the announcement by Nuffle Labs, formerly known as NEAR Modular, about the development of the Nuffle Fast Finality Layer (NFFL) AVS. This finality layer, built on top of NEAR DA, aims to enhance block finality across L2s, reducing transaction times to three to four seconds and decreasing transaction costs by a factor of 4000. The NFFL feature is currently in the testnet. Additionally, Nuffle Labs announced securing $13 million in funding led by Electric Capital.

Pagoda, the NEAR ecosystem development team, leads the collaboration to transition the NEAR-Ethereum Rainbow Bridge to an actively validated service (AVS). This effort aims to improve composability with Ethereum Layer 2s and reduce liquidity fragmentation within the rollup ecosystem. The partnership aims not only to benefit projects on Ethereum but also to enhance the bridging experience between NEAR and Ethereum, enabling faster transaction finality with increased security and decentralization.

zkWasm

The NEAR Foundation and Polygon Labs partnered to develop zkWasm, a zero-knowledge prover designed for Wasm blockchains. The collaboration focuses on providing a customizable development environment for Wasm chains to integrate more effectively with Ethereum's liquidity and network capabilities. As part of this collaboration, the NEAR Foundation has become a core contributor to Polygon's Chain Development Kit (CDK).

The report highlights the relationship between developer activity and future market trends, suggesting that sectors with high developer engagement, as observed through hackathons, often lead the next market bull run. Historical data shows that sectors like DeFi and NFTs, which dominated hackathon submissions in 2020 and 2021, respectively, later experienced significant market growth. (The graphs below highlight hackathons from 2021-2022).

Currently, the social sector is receiving the most attention in hackathons, particularly with projects focused on social platforms within the Web3 space.

This trend is driven by substantial sponsorships and the growing importance of social protocols like Lens, which has seen a 110% increase in engagement since its launch. Social projects have also dominated hackathon awards, indicating a high level of innovation and developer interest.

The report notes that the recent ETHBogota hackathon saw a significant focus on social projects, with many finalists exploring new tools to enhance user experience and identity solutions, which are crucial for the next wave of applications. The introduction of features like on-chain identities and improved user experiences suggests that the social sector is laying the groundwork for more sophisticated Web3 applications in the future.

In conclusion, the report indicates that the social sector is poised to lead the next wave of Web3 innovations, with hackathon trends serving as a strong indicator of where market attention is likely to shift. The current focus is on establishing foundational user experiences and identity features, which are expected to evolve into more advanced native Web3 functionalities in the coming year.

Hackathons can be a low-noise indicator of developer activity within a sector. With that being said it might be important to tune into how devs have shifted their focus (social products) and what came after. A great example is Farcaster which has on January 26, 2024, daily active users on Farcaster surged following the launch of a new feature, Frames.

Frames effectively turn Farcaster-based posts into interactive mini-apps, allowing users to mint NFTs, play games, and use instant checkouts directly from their social feed without leaving the platform. [3]

The number of daily active users on the decentralized social protocol Farcaster surged to nearly 30,000 on February 4, 2024, according to on-chain data by Dune Analytics.

In early 2024 Eth Global hosted a Farcaster Hackathon basically focused on creating enhancements to the Frames feature released on Farcaster:

The three-day Farcaster Frames Hackathon "Frameworks" organized by ETHGlobal came to an end, and the winning project method was announced at the same time. . So what are Frames? It is a feature on Farcaster similar to social media embeds, with special properties of Open Graph markup that can display images and text as previews and also facilitate interactive elements via buttons, allowing for dynamic user response.

In short, Frames give posts richer interactive functions, such as NFT minting, voting, trading, subscription and other functions. Since the Frames feature was officially launched, it has inspired great enthusiasm and creativity among developers, and development activities have continued to flourish. This article compiles 10 winning projects in the ETHGlobal Frameworks Hackathon for readers to explore the infinite possibilities of Frames.

Lens Protocol is something that also must be closely studied due to its massive growth and continuous engagement with builders on social projects. They have found a way to focus heavily on UI/UX for Devs and users similar to Farcaster

NEAR Q2 2024 Recap

The NEAR Protocol summary highlights the platform's advancements and strategic focus areas in 2024, emphasizing its role as a smart contract platform utilizing Thresholded Proof of Stake (TPoS) consensus. The protocol's Nightshade Sharding mechanism enhances transaction throughput and scalability, supporting the ecosystem's growth.

Key points include:

Chain Abstraction Vision: NEAR aims to abstract blockchain complexities away from users and developers, creating a seamless experience across multiple chains. Key developments include Account Aggregation, NEAR Data Availability, and the Fast Finality Layer, all designed to simplify user interactions and improve network efficiency.

Market Performance: NEAR saw a significant price appreciation in the first half of 2024, followed by a market downturn in Q2. Despite this, NEAR's market cap ranking improved, with the network's activity levels increasing, particularly in the social sector, driven by platforms like KAIKAINOW and HOT Wallet.

Revenue and Supply: NEAR's revenue, primarily from network transaction fees, increased by 43.5% QoQ, with the network employing a fee-burning mechanism. The native NEAR token is used for staking, transaction fees, and storage fees, with a combination of inflationary and deflationary measures in place.

Sectoral Growth: The social sector led NEAR's activity, followed by infrastructure and gaming. Significant applications driving this growth include KAIKAINOW, Sweat, and Playember. The network also saw notable NFT sales volume increases, with MITTE emerging as the leading NFT marketplace on NEAR.

Governance and Security: NEAR's governance framework is being redesigned in partnership with Gauntlet, focusing on a stake-weighted governance structure. On the security front, NEAR's Nightshade sharding mechanism and the upcoming Stateless Validation are expected to enhance network throughput and scalability.

AI Focus: NEAR is heavily investing in AI development, aiming to become the home for User-Owned AI. This includes the NEAR Horizon AI Incubator and R&D efforts through NEAR.AI, alongside partnerships to boost AI application growth within the ecosystem.

Technical Developments: NEAR continues to advance its technical infrastructure, with significant funding secured for projects like the Nuffle Fast Finality Layer, designed to reduce transaction finality times and costs significantly.

In conclusion, NEAR is positioning itself as a leading network through continued technical innovation, strategic investments in AI, and a focus on chain abstraction to improve user and developer experiences. Despite market challenges, NEAR's growth across key performance indicators underscores its resilience and forward-looking approach.

Important metrics

• NEAR’s stablecoin market cap ended Q2 2024 at $567 million, up 164% QoQ and 717% over six months. This increase was driven by USDC, which reached a market cap of $330 million (+303% QoQ), and USDT, which reached $187 million (+117% QoQ).

• Daily active addresses hit 1.9 million, up 51% QoQ and 620% YoY. Since mainnet, NEAR has surpassed 100 million addresses and averaged over 11 million daily transactions in April 2024.

• Nuffle Labs secured $13 million and announced the Nuffle Fast Finality Layer AVS. This layer, built on NEAR DA, aims to reduce block finality times to three to four seconds and decrease transaction costs by 4000 times.

• The NEAR Foundation is heavily investing in AI development, focusing on core infrastructure and R&D. Partnering with NEAT Protocol, the foundation granted 1 million NEAR tokens for staking to boost AI application growth and announced plans to develop an AI agent.

• Grayscale launched a new public NEAR Trust. Additionally, Grayscale's first actively managed fund, GDIF, includes nine crypto assets, including NEAR, and focuses on multi-asset staking.

Closer Look at their Chain abstraction updates:

Chain Abstraction

The NEAR ecosystem’s focus for 2024 is expanding chain abstraction across more chains and ecosystems, with the goal of abstracting the blockchain away from the user and developer experience. The vision for chain abstraction is that apps should work seamlessly with all chains, onboarding should be effortless, and elements like gas fees and bridging should become invisible to end users. To achieve this, NEAR is focusing on several key developments outlined below.

Account Aggregation

NEAR's Account Aggregation aims to offer users the ability to transact on any blockchain through a single account and interface. It simplifies user interactions across multiple blockchains by integrating three core technologies:

NEAR Account: Account abstraction for smooth onboarding and recovery of accounts. In Q2 2024, the NEAR Foundation partnered with D3 to introduce NEAR Name Tokens, which offer simplified wallet addresses, cross-platform usernames, verifiable credentials, and a potential NEAR domain integration.

Chain Signatures: Enabling the NEAR network to have MPC nodes that jointly sign transactions and messages. This eliminates asset bridging, enhances security, and improves the user experience across DAOs, NFT minting, and airdrops, promoting mainstream crypto adoption. Chain Signatures launched on mainnet on March 26th.

Intent Relayers: Parties in the ecosystem that can execute the user's intent on different chains.

This approach enables a unified, non-custodial account experience, significantly reducing the barriers to accessing and navigating the decentralized web.

Data Availability

The NEAR Data Availability (NEAR DA) layer is designed to enhance data availability for Ethereum rollups in a cost-efficient manner. Partnerships include Arbitrum Orbit, Polygon CDK, Madara by StarkNet, Caldera, Fluent, OP, Gateway, and AltLayer. NEAR DA aims to substantially reduce developer costs by offering a cheaper alternative for call data.

Comparative data highlights the cost efficiency of NEAR DA compared to other solutions. As of December 2023, 231 kB of calldata costs $0.0016 on NEAR, significantly lower than $140.54 on Ethereum L1 and $0.046 on Celestia for the same amount.

Fast Finality Layer

In Q2 2024, information on the Fast Finality Layer was revealed with the announcement by Nuffle Labs, formerly known as NEAR Modular, about the development of the Nuffle Fast Finality Layer (NFFL) AVS. This finality layer, built on top of NEAR DA, aims to enhance block finality across L2s, reducing transaction times to three to four seconds and decreasing transaction costs by a factor of 4000. The NFFL feature is currently in the testnet. Additionally, Nuffle Labs announced securing $13 million in funding led by Electric Capital.

Pagoda, the NEAR ecosystem development team, leads the collaboration to transition the NEAR-Ethereum Rainbow Bridge to an actively validated service (AVS). This effort aims to improve composability with Ethereum Layer 2s and reduce liquidity fragmentation within the rollup ecosystem. The partnership aims not only to benefit projects on Ethereum but also to enhance the bridging experience between NEAR and Ethereum, enabling faster transaction finality with increased security and decentralization.

zkWasm

The NEAR Foundation and Polygon Labs partnered to develop zkWasm, a zero-knowledge prover designed for Wasm blockchains. The collaboration focuses on providing a customizable development environment for Wasm chains to integrate more effectively with Ethereum's liquidity and network capabilities. As part of this collaboration, the NEAR Foundation has become a core contributor to Polygon's Chain Development Kit (CDK).