Who is getting rich from the crypto bull run?

The ongoing memecoin trading frenzy amid the cryptocurrency bull run is allowing traders to experience dizzying highs and lows, but those benefiting from the “gold rush” appear to be pick-and-shovel sellers, crypto infrastructure providers.

Memecoin's popularity has seen Solana-based decentralized applications (DApps) collect record revenues from activity onchain, while automated market maker Radium saw a record $11 million in 24-hour payments earlier this month.

Solana's onchain activity has exploded in the past few weeks, with the decentralized exchange's (DEX) daily volume rising from $1.6 billion to $10 billion, according to Blockworks data.

Including this, crypto bull markets have been compared to the California Gold Rush, which occurred between 1848 and 1855 after gold was discovered at a construction site, which led to a massive exodus of miners to the area.

In 1853, about 250,000 gold miners moved to the area, and gold production increased rapidly. However, it is widely believed that most of the wealth goes not to the miners, but to the entrepreneurs who supply them with goods and services.

In other words, those who sold picks and shovels earned real money, not gold.

Infrastructure providers that sell picks and shovels in crypto include trading platforms, blockchain networks, wallet providers, payment systems, and other decentralized applications.

Speaking to Cointelegraph, Gracie Chen, CEO of cryptocurrency exchange Bitget, agreed that the “picks and shovels” analogy remains relevant in the context of the cryptocurrency market, “which is the necessary infrastructure and broader ecosystem needed for cryptocurrencies to function.”

Comparing the sector to California's Gold Rush, Chen pointed to the 2017-18 initial coin offering (ICO) that ended in losses for several investors, adding that “ICO founders often made huge profits, including luxury purchases like Lamborghinis and extravagant villas.” He said.

A Binance spokesperson told Cointelegraph that the “pick and shovel” analogy “doesn't perfectly fit the multifaceted nature of crypto markets” but “describes the entities that provide the necessary infrastructure and services,” agreeing “stablecoin issuers, blockchain networks, mining companies, and ETFs.” [exchange-traded fund] suppliers and more.

Benefit from the crypto gold rush

In the chart above, it is clear that decentralized exchanges are gaining an advantage over Solana, because the volume of transactions – and as a result, the fees collected – thanks to the memecoin trading frenzy.

David Google, vice president of strategy at DIDX Foundation, told Cointelegraph that historically, exchanges “have been the biggest beneficiaries of a bull run as increased trading volume drives higher revenue from fees.”

Google added that it sees the trend continuing in the current market cycle, with a new segment of “sophisticated wallets” like Phantom “showing significant activity through their mobile apps.” They are able to do this by providing seamless integration in an ecosystem where marketing frustration continues.

Ethereum and Solana, Eclipse is the first layer-2 network CEO Vijay Chetty, cryptocurrency gateways and asset issuers such as Circle and Tether as a step in the development of a stable coin supply for users and users on-ramp.

Token and memecoin launchpads like Pump.fun are also doing well, Chetty said. Platforms such as Jupiter, which facilitates exchange activity, and Solana MEV (Maximum Extractable Value) and liquidity crunching platforms such as Gito are also generating “significant amounts of payout,” he added.

In fact, data from Dune Analytics shows that daily transaction volumes on Pump.fun, a platform for startups, have exploded over the past few weeks. The platform was so popular that it had to disable its live streaming feature after facing backlash over the transparent content it hosted.

Ilya Otychenko, a lead analyst at cryptocurrency exchange CEX.IO, told Cointelegraph that infrastructure providers — including oracles and software development kit providers — are also “well positioned to grow,” but each market cycle introduces a new type of gold.

According to Otychenko, In 2021, 71 percent of the total value locked in decentralized finance was focused on decentralized exchange and credit platforms, while in the current cycle it has shifted to “liquidity storage and re-storage”. [are] Emergence as the main users.

However, a Binance spokesperson suggested that users of the cryptocurrency market could benefit from the frustration due to the “unique crypto market volatility.” He added:

“During the gold rush, miners chased gold with some foresight and strategic foresight. Participants in crypto markets – including traders, speculators and investors – have access to sophisticated tools, data and strategies that allow for more informed and calculated decisions.

As a result, while infrastructure providers remain critical to ecosystem growth, “winners in the crypto market may include traders, speculators and venture capitalists,” he said.

Bitgate's Chen echoed his sentiment, “Anyone with the ability to use advanced technologies can profit from digital assets — not just the developers or providers of these technologies.”

Is the current crypto bull run sustainable?

The current crypto market rally may benefit traders and infrastructure providers, but observers are unsure how long the bull run will last.

After CEX.IO's Otichenko volumes exploded, he said the increase “doesn't look sustainable” but could “create a new baseline for Solana fees.” In the year In March 2024, Solana's daily pay rose from $200,000-$400,000 to $2 million-$3 million before settling in the $1 million to $2 million range.

A Binance spokesperson said that while the disappointment indicates higher user engagement and activity, “sustainability is uncertain.” Fee increases are “typically intermittent, and may be closely tied to broader market cycles and specific events.”

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The long-term view depends on “how marketing narratives and user behavior evolve.” He added:

“For such payment levels – and mainstream demand – to be sustainable, Solana may need to reduce its reliance on concentrated DApp activity by diversifying use cases and developing consistent user engagement across multiple crypto sub-sectors.

This could include game expansion, decentralized finance and “other high-growth areas that can enhance long-term service and engagement,” they concluded. Business models may also change as the market adapts to flexible payment structure implementations where fees have grown to prohibitive levels.

Bitgate's Chen said we're seeing a “stress test for existing blockchain infrastructure,” adding that addressing high transaction fees and increasing revenue “has become urgent again.”