With the increasing development of blockchain technology and the growing adoption rate, more and more use cases are experiencing explosive growth in categories such as media, sports, entertainment, and gaming. A new special ecological field is emerging – the consumer-grade encryption ecological field.
(Background: Morph will launch a centralized exchange alliance to provide multi-party support for high-quality projects and developers.)
Summary of the Report:
I. Market Pattern of Sub-sectors
II. Adoption of Cryptocurrency by Fortune 500 Companies
III. Obstacles and Regulations in Mainstream Adoption Process
Recently, global consumer-grade public chain Morph commissioned overseas research institution The Block Pro to conduct research on the consumer-grade encryption ecological field and wrote a comprehensive report of over 50,000 words (read full text: English version, Chinese version) to reveal the future development trends of the industry and provide important references for cryptocurrency investors, startups, developers, and regulators, helping stakeholders understand and explore the consumer-grade encryption ecosystem.
It is reported that Morph is a global consumer-grade public chain that uses optimistic and zkRollup technology to improve the accessibility, efficiency, and usability of developers and consumer-grade blockchains. It has received support from top capital firms such as Dragonfly, Pantera, Bitget, Spartan Ventures, and Foresight Ventures. As a resource distribution center, Morph can provide support to developers throughout the entire process, from project launch to large-scale market expansion.
The report first defines the “consumer-grade encryption field.” The consumer-grade encryption field refers to platforms, use cases, and services designed for public use that support blockchain technology to facilitate daily activities. It includes tokenized loyalty programs, encrypted collectibles, blockchain-based games, and decentralized social media platforms. On-chain consumer products aim to fundamentally reshape our interaction and experience with products and services, creating more efficient, transparent, and user-centered solutions that disrupt conventional practices in the consumer industry.
The report mainly focuses on consumer-grade on-chain products that emphasize daily practicality and participation, rather than financial-focused speculative ecosystems. Therefore, DeFi, GameFi, or NFTFi are not within the scope of discussion.
The report explores the current market pattern of the consumer-grade encryption ecosystem and traditional consumer brand activities, and systematically classifies the consumer-grade encryption field into two categories: application layer and infrastructure layer.
The application layer subdomains include community/brand engagement, decentralized social, gaming, media, and communication. The infrastructure layer subdomains include wallets, payments, DePIN, metaverse, on-chain analytics, and identity management. The report also highlights noteworthy projects and venture investment trends in each subdomain. The specific content is as follows:
1. Community/Brand Engagement
Community and brand engagement refer to a series of applications designed to strengthen internal community connections, including the relationship between brands and their audience. Applications in this subdomain include loyalty reward programs, social and fan tokens, NFTs and digital collectibles, as well as subscription and membership products. These applications aim to increase user engagement, encourage ongoing interaction and loyalty. Representative projects include:
According to data from The Block, from 2019 to 2023, “community and brand engagement” raised approximately $3.2 billion in total through 593 transactions. Financing is mostly concentrated in the early stages, with Series A, seed rounds, and pre-seed rounds accounting for 57% of the total and 77% of the transactions. This allocation of funds is a typical characteristic of emerging industries.
2. Decentralized Social
The decentralized social (DeSo) subdomain covers blockchain-driven social networking applications that allow users to create, share, and exchange messages and content in a decentralized manner. DeSo represents a shift in the way users interact, share content, and participate in online communities. The core features of DeSo emphasize censorship resistance and user control of data and content ownership, incentivized through tokens. Representative projects include:
According to The Block’s data, the decentralized social subdomain conducted approximately 290 transactions and raised approximately $1.5 billion from 2019 to 2023. The seed round, token sale, and Series A were the top three financing rounds in terms of transaction volume in the DeSo subdomain, accounting for nearly two-thirds of the total funding.
3. Gaming
On-chain gaming redefines the relationship between players, developers, and in-game assets by utilizing blockchain technology, transforming the traditional gaming industry. On-chain gaming creates a unique player-driven economy where users can truly own, sell, and trade their digital assets, addressing the limitations of traditional gaming models. Additionally, the open-source nature of on-chain gaming promotes permissionless innovation, allowing developers to create game modifications (mods), plugins, and custom game modes that can interact with the main game. Representative projects include:
According to data collected from The Block’s transaction dashboard, the on-chain gaming subdomain has raised approximately $4.5 billion through 762 transactions from 2019 to 2023. Funding is mainly concentrated in the seed round and Series A stages, accounting for 53% of transaction volume and 59% of transaction count.
Investment in the on-chain gaming sector has surged from 2019 to 2023, accompanied by a significant increase in user activity in the on-chain gaming field. Compared to other subdomains, on-chain gaming has experienced a particularly noticeable upward trend in user activity, indicating significant momentum in this emerging industry. Furthermore, the growth in user activity remains relatively stable, indicating higher user retention rates compared to other consumer-grade encryption subdomains.
4. Media
On-chain media applications utilize the immutable and transparent nature of blockchain technology to authenticate and establish ownership of digital content. By turning media assets into NFTs or other blockchain-based tokens, creators can prove their authorship and maintain control over the distribution and monetization of their works. Smart contracts enable automatic royalty payments, ensuring creators receive a fair share of income each time the content is consumed or resold, reducing the reliance on intermediaries. Representative projects include:
According to The Block’s data, the decentralized media subdomain has raised approximately $672 million through 157 transactions from 2019 to 2023. Funding is mainly concentrated in the early stages, with Series A, seed rounds, and pre-seed stages accounting for 51% of transaction volume and 75% of transaction count. Over 80% of Series B transactions occurred in 2021 or later, indicating increasing maturity in the industry as projects progress beyond the initial funding stage.
5. Communication
On-chain communication protocols aim to address the limitations of centralized messaging platforms. In on-chain communication, communication occurs directly between wallet addresses, eliminating the need for centralized intermediaries. Messages are encrypted and stored on decentralized networks such as IPFS or the blockchain. This decentralized approach ensures that no single entity controls the data, reducing the risks of data breaches, unauthorized access, and potential misuse of personal messages. Representative projects include:
According to The Block’s data, on-chain communication has raised approximately $5.4 million through 12 transactions from 2019 to 2023. Fundraising occurred mainly in the Series A or earlier stages. This pattern may reflect the lack of an explosive application in the field, which typically attracts later-stage investments. Early-stage attention indicates interest and potential in the on-chain communication field, but it is still in its infancy.
6. Wallets
Wallets are the key entry point for users to interact with and manage digital assets on decentralized applications. Cryptocurrency wallets are software programs that allow users to store, send, and receive cryptocurrencies and interact with blockchain networks. The initial versions of wallet solutions included complex onboarding processes, users needing to manage private keys, and clumsy user interfaces. Improving the user experience of wallets has always been a key priority in driving mainstream adoption of on-chain products. Account abstraction and embedded wallets can simplify the user experience and lower the barriers to consumer involvement. Representative projects include:
7. Payments
In the digital asset world, on-chain payment infrastructure plays a crucial role, primarily in facilitating exchanges between traditional finance and cryptocurrencies and conducting transactions within the Web3 ecosystem. On and off-ramping solutions allow users to convert fiat currencies into cryptocurrencies and vice versa, making it easier for individuals to enter and exit the cryptocurrency field. On-chain payment infrastructure simplifies the process of managing cryptocurrencies for consumers and enhances the utility of their on-chain funds. Representative projects include:
8. Networking
The networking subdomain focuses on decentralized messaging platforms that aim to address the limitations of centralized platforms. In on-chain communication, communication occurs directly between wallet addresses, eliminating the need for centralized intermediaries. Messages are encrypted and stored on decentralized networks such as IPFS or the blockchain. This decentralized approach ensures that no single entity controls the data, reducing the risks of data breaches, unauthorized access, and potential misuse of personal messages. Representative projects include:
According to The Block’s data, on-chain communication has raised approximately $54 million through 157 transactions from 2019 to 2023. Funding is mainly concentrated in the early stages, with Series A, seed rounds, and pre-seed stages accounting for 51% of transaction volume and 75% of transaction count. Over 80% of Series B transactions occurred in 2021 or later, indicating increasing maturity in the industry as projects progress beyond the initial funding stage.Infrastructure layer of the network refers to the underlying systems and protocols that support efficient and secure transfer of digital assets, execution of smart contracts, and storage of data. This subdomain encompasses both blockchain layer networks and networks built on top of existing consensus layers. These infrastructures form the backbone of the crypto ecosystem, providing the foundation for the operation of decentralized applications and services. The emergence of new blockchain networks such as Solana, Base, and Flow has brought significant improvements to the network infrastructure layer. These networks prioritize faster transaction speeds, low latency, and cost-effectiveness, making them more suitable for consumer-grade use cases. Representative projects are as follows:
(9) Identity Management
Identity management refers to the systems and protocols that allow users to manage their digital identities in a decentralized and autonomous manner. These solutions are designed to give users control over their personal data, allowing them to selectively share information with third parties while maintaining privacy and security. On-chain identity management solutions address the limitations of traditional centralized identity systems. Representative projects are as follows:
(10) Metaverse
The metaverse refers to a collective virtual shared space that is a critical infrastructure component in the consumer-grade crypto space. In this digital environment, users can interact with digital assets and decentralized applications in a more immersive way. Metaverse platforms provide consumers with a user-friendly and intuitive interface to access and interact with a variety of on-chain products and services. Metaverse platforms enable a wide range of consumer-grade use cases, creating new opportunities for brands and businesses to engage with consumers. Representative projects are as follows:
(11) Analytics
Web3 advertising and growth analytics platforms play a crucial role in the consumer-grade crypto ecosystem. They provide projects and developers with the necessary tools and analytical insights to attract their target audience. The solutions offered by these platforms help users acquire, advertise, and optimize growth. By aggregating data from various sources and analyzing user behavior across different touchpoints, these platforms enable projects to make data-driven decisions, measure the effectiveness of their marketing efforts, and ultimately drive adoption and growth. Representative projects are as follows:
(12) DePIN
DePIN is an emerging category of crypto networks that leverage token incentives to deploy location-dependent hardware devices and generate non-fungible consumable resources. These networks play a crucial role in the consumer-grade crypto ecosystem by monetizing unique real-world data assets, supporting various consumer-grade applications and services. Representative projects are as follows:
The report also predicts the development direction of several subdomains. For example, decentralized social media platforms offer customizable content filtering algorithms. The future of the blockchain gaming sector will expand to include different types of games, platforms, and economic models to cater to different player preferences. In the media subdomain, blockchain technology will enable dynamic and interactive media assets such as artworks or music. In the communication subdomain, we will see the emergence of more sophisticated and feature-rich communication platforms that leverage the unique properties of blockchain to achieve secure, private, and censorship-resistant communication. In the community and brand engagement subdomain, the next generation of digi-physical NFT platforms will become more immersive and interactive, leveraging advanced technology to enable dynamic, context-aware interactions between NFTs and the real world.
Furthermore, the report explores the potential of emerging subdomains, such as on-chain AI agents and tokenized personal data markets.
The report also presents data on the adoption of consumer-grade crypto initiatives among the Fortune 100 companies. The data shows that nearly one-third of the companies (27 companies) have undertaken a consumer-grade crypto initiative at some stage. These 27 companies have a total of 55 crypto initiatives from 2019 to 2023, as shown in the graph below, which increases from 7 initiatives in 2019.
By 2022 and 2023, there will be 19 initiatives each year, more than doubling the number of initiatives.
If the initiatives are classified into one of four different stages: ideation, development, pre-release/testing, and public release, to measure their maturity. The graph below also shows that the maturity of crypto initiatives has improved from 2019 to 2023. The proportion of ideation stage initiatives decreased from 43% in 2019 to 37% in 2022 and 11% in 2023.
Meanwhile, the proportion of public release initiatives increased from 29% in 2019 to 47% in 2022 and 58% in 2023. This trend indicates that companies are moving beyond the initial ideation stage and actively focusing on the development and improvement of their consumer-grade crypto projects.
In the three key subdomains, there is a high concentration of initiatives: community and brand engagement, media, and gaming, which together account for 99% of the initiatives, with specific proportions of 57%, 26%, and 16% respectively. The main reason is that these subdomains can help brands establish direct connections with their target audience, and the applications and tools in these subdomains are relatively more mature and popular, with distinct characteristics corresponding to the traditional markets familiar to traditional consumer brands.
In different industries within the traditional consumer sector, there are differences in the penetration levels of consumer-grade crypto. The technology, retail, and food and beverage industries are the obvious leaders, accounting for a total of 65% of all initiatives, with specific proportions of 27%, 20%, and 18% respectively; the penetration levels of the other six subdomains are relatively average, with each subdomain’s proportion of initiatives being less than 10% of the total initiatives.
The report points out that the consumer-grade crypto space is still in the early stages and identifies key barriers to mainstream adoption, such as high transaction costs, complex user experiences, negative public perception, and regulatory uncertainty, and provides corresponding recommendations:
User Experience:
The development of user interfaces and experiences for on-chain consumer-grade products needs to be prioritized. Developers need to leverage several key infrastructure components, such as wallets and key management solutions, various abstraction layers and middleware, and interoperable identity solutions.
Public Perception:
Reducing the use of specialized crypto terminology to lower the cognitive threshold; improving product services to enhance the user experience and raise public awareness; increasing transparency of messaging.
Regulatory Uncertainty:
The lack of standardization between different countries and regions further complicates the regulatory landscape for on-chain projects. Legal risks and uncertainties around on-chain products may limit their ability to form partnerships with mainstream brands and businesses.
The report also explores the regulatory direction of consumer-grade crypto by analyzing past enforcement actions and their potential impact on future consumer-grade crypto products, with a focus on outlining the regulatory landscape for consumer-grade crypto in major markets in North America, Europe, and Asia (China, Singapore).
Finally, the report summarizes several notable trends and developments in the consumer-grade crypto space:
Mainstream Adoption Potential:
Nearly one-third of the Fortune 100 companies are developing consumer-grade crypto initiatives, indicating their increasing recognition of the potential of blockchain in consumer applications. Additionally, certain on-chain consumer-grade products show signs of product-market fit.
Infrastructure Development:
The emergence of user-friendly wallets, efficient payment systems, and robust identity management solutions is laying the foundation for more accessible consumer-grade crypto experiences.
Regulatory Competition:
The diverse global regulatory environment is creating a “natural experiment” for the development of consumer-grade crypto. This divergence may lead to unexpected innovations in less regulated markets and may force more stringent jurisdictions to reconsider their approaches to remain competitive.
Emerging Use Cases:
The rise of on-chain AI agents and tokenized personal data markets could fundamentally change how consumers interact with digital services and manage their personal information.
User Experience as a Key Driver:
The success of consumer-grade crypto largely depends on its ability to shed technological complexity and provide users with intuitive and value-added experiences.
Consumer crypto represents a growing intersection of blockchain technology and the consumer domain. While the space is still in its early stages, it demonstrates the potential to reshape how individuals interact and transact in their daily lives. The future of consumer crypto is promising.
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