Author: Zeke Source: YBB Capital Translator: Shan Eoba, Jinse Finance
The Crypto World in 2025: Breaking the Deadlock and Rebuilding the Outlook
Introduction
From the NFT craze to the election of the first "Crypto President", 2024 is about to come to an end. This year, the crypto market experienced an unusual "bull market", with Altcoins performing poorly and meme coins dominating, eventually everything returning to Bitcoin. Although there were troughs and persistent disappointments along the way, the crypto industry as a whole is moving in a more positive direction. Looking ahead to 2025, there are many areas worth focusing on. This article will provide a brief outlook for the coming year based on recent perspectives.
I. On the Development of AI
Currently, blockchain projects often over-complexify their technical implementation in pursuit of conceptual perfection, affecting user interaction and experience. Projects built around intent (Intent) architecture are particularly complex. Whether it is centralized (like TG Bot), structured (on-chain and off-chain combined pre-processing), or distributed (like Solver + Executor architecture), these intent-based projects generally have some common issues. For example, users still need a certain level of DeFi understanding, and the expression of intent must be clear, accurate and concise. When users raise complex or ambiguous intents, the current intent-driven projects often struggle to respond and have limited execution scope. Since Paradigm proposed this concept in mid-2023, intent projects have mostly remained at the theoretical level, providing little help in guiding new users or lowering the entry barrier. However, looking at the development path of Ethereum Layer 2, the demand for such solutions is very urgent.
Reviewing the development of Layer 2 in the past few months, leading projects like OP Superchain are constantly expanding their alliances, and ZkSync's Elastic Chain and Arbitrum Orbit are also emulating, trying to form their own alliances. These alliances will achieve internal interoperability through aggregation solutions to alleviate the fragmentation and lack of interoperability in the Ethereum Layer 2 ecosystem. In the future, this multi-chain competition will gradually narrow down to a few contenders. However, from a broader perspective, with the recovery of the crypto market, emerging Layer 2 projects like Movement and Fuel are launching their mainnets, trying to compete for scarce liquidity in the Altcoin market. For non-top-tier projects, the problems of fragmentation and interoperability are still worsening. Different virtual machine architectures may even lack wallet plugins that can communicate with each other. For ordinary blockchain users, the Layer 2 ecosystem is becoming increasingly complex, which will be a major obstacle to the development of non-financial applications.
To welcome more new users to Ethereum, ecosystem integration is a key prerequisite. An ecosystem that requires users to have a geek-level understanding will never achieve "widespread adoption". In contrast, the counter-trend growth of Solana and Ton this year, with strategies of lowering user thresholds and providing more Web2-style experiences, have clearly played an important role in ecosystem growth. In other words, these two ecosystems have simply simplified the difficulty of asset issuance, making user operations on the blockchain almost seamless. Therefore, Ethereum must adopt a user experience-centric integration strategy. However, considering the core developers' consistent open attitude, the possibility of the entire Layer 2 ecosystem being forcibly integrated is slim.
I believe that AI browser agents are the answer to this problem. In the early days, many people envisioned that AI would fundamentally change the way applications are interacted with, transitioning from single-point operations to cross-application operations, creating super apps. For example, in a travel scenario, once the AI receives the user's travel requirements, it can automatically complete flight booking, customize travel routes, arrange dining, and schedule itineraries. If the AI has long-term memory, future travel can also be automatically arranged according to user needs.
Currently, Google is about to launch an AI browser agent called Project Mariner, based on the Gemini model. According to the demonstration by Jaclyn Konzelmann, the director of Google Labs, when the user installs the AI agent plugin in the Chrome browser, a chat window will pop up on the right side of the browser. Users can instruct the agent to perform tasks, such as "create a shopping cart at the grocery store based on this list." The AI agent will then automatically navigate to the grocery platform, add the items to the cart, and jump to the checkout page. The user confirms and completes the purchase (the agent does not have payment permissions). OpenAI will also launch a similar product next month.
It is worth noting that although Google's Project Mariner is currently only available to a few test users, I have already experienced some AI agents developed by crypto projects that are aimed at ordinary users. In the few hours of trial use, the agent's accuracy in executing complex or ambiguous tasks is around 60-70%. It can autonomously trade tokens on decentralized exchanges (DEXs) across multiple blockchains, and even transfer assets to Layer 2 solutions. In this process, I only need to provide the agent with the operation intent and enter the wallet password.
Of course, this platform still needs to call centralized model APIs. So, what is the intersection of cryptocurrencies with this development? I believe that AI browser agents will not only improve the user experience of intent parsing, but also drive the development of AI wallets, decentralized computing, and data projects.
Consider a simple question: Why has the vision of AI agents only gradually materialized until now?
Reviewing the development of OpenAI, the reason why language models (LLMs) have developed faster than image generation models is that the internet itself is a huge text corpus, providing rich training materials. The more limiting factors for the development of language models are computing power and energy bottlenecks. AI agents, on the other hand, require a large amount of manual labeling and feedback, with a high cost in the reasoning process.
Cryptocurrencies are naturally suitable for incentivizing labor. In this economic system, advanced users can provide a large amount of labeled data and feedback through decentralized means to earn tokens, while the underlying infrastructure can integrate decentralized computing and data projects. Once the training is complete, it can be integrated into wallets and DeFi projects through SDKs to create a true AI wallet, and ultimately form a closed loop. The ideas of other AI agents can also be derived from this model, because any AI agent targeting Web3 needs computing power, labeling, and feedback to grow.
II. Stablecoins
Stablecoins have always been an important battlefield in the crypto market, and it is also an area with an extremely high entry barrier. Their application value is not only widely recognized within the industry, but also highly regarded in the traditional finance sector. For example, this year PayPal launched PYUSD, BlackRock collaborated with Ethena to issue USDb, and VanEck launched AUSD for Argentina and Southeast Asia, all of which signify that traditional financial giants are accelerating their deployment in the stablecoin market.
As Tether and Circle continue to consolidate their industry-leading positions, new players entering the stablecoin market are gradually divided into two categories:
1. The issuers of fiat-backed stablecoins are starting to focus on emerging markets like South America and specific application scenarios;
2. Algorithmic stablecoins are increasingly using low-risk financial products as underlying assets, such as Ethena and Usual (which we mentioned in a previous article).
Looking at the trend, more "delta-neutral" stablecoins will enter the market next year, competing for short-selling liquidity on CEXs. The scope of hedging assets will gradually expand from BTC and ETH to riskier and less liquid public chain tokens, trying to occupy the last niche market.
As for stablecoins like Usual that are supported by short-term US Treasuries, I believe the focus will still be on protocol tokens and yield innovations, as short-term government bonds remain the optimal choice for underlying assets. Furthermore, compared to the limited liquidity in CEXs, these stablecoins have greater potential and development space in less competitive areas.
Overall, the development of stablecoins is gradually moving towards more stable underlying assets and decentralized governance. But what I'm most looking forward to is seeing fully decentralized and over-collateralization-free stablecoin protocols emerge next year.
3. Payment Sector
As the regulation of stablecoins in various countries is gradually implemented and accelerated, the payment sector will become the new focus of downstream competition for stablecoins. Heterogeneous public chains like Solana and Move, with their advantages of high TPS and low Gas fees, will become the main infrastructure for payment applications.
The traditional payment market is already quite mature and highly competitive, a typical "red ocean market". So, what innovations can blockchain bring to the payment sector? There are usually two directions:
1. Optimize cross-border payments
Blockchain can eliminate the pre-financing requirement, making cross-border remittances faster, cheaper, and more convenient, solving the problem of trillions of dollars being locked in pre-financing in traditional systems.
2. Serve emerging markets
As mentioned in my previous article, the application value of stablecoins has been verified in regions such as Asia, Africa, and Latin America. The strong financial inclusiveness of stablecoins allows residents of third-world countries to effectively cope with the high inflation caused by government instability, and participate in global financial activities, enjoying the most cutting-edge virtual services.
At the 7th EthCC conference, Solana Foundation Manager Lily Liu proposed the concept of **"PayFi"**, bringing more possibilities to blockchain payments. PayFi contains two core ideas:
1. Real-time settlement (T+0 settlement)
PayFi can achieve same-day or multiple settlements, eliminating the inherent delays and complexities of traditional financial systems, and significantly improving the speed of capital circulation.
2. "Buy Now, Pay Never"
For example, a user deposits $50 into a lending product and buys a $5 coffee. Once the accumulated interest reaches $5, the interest will automatically pay for the coffee, and the remaining funds will be unlocked and returned to the user's account.
Many ideas can be derived from this. For example, in terms of use cases, the financing needs of emerging projects can be met through PayFi on the blockchain, providing a more secure and transparent way of entry and exit. Currency exchange during travel will no longer require various physical financial institutions. Payment and collection times will be more flexible (delayed collection to earn interest, early payment to get discounts). In addition, revenue models will also become more diversified. In addition to depositing stablecoins into lending products to earn interest, I personally believe that the types of stablecoins should also be easily exchangeable.
In the future, as more and more new stablecoins enter the market, users can choose the most suitable stablecoin type based on their risk preferences, while earning protocol tokens and higher stablecoin interest. If this payment system becomes mainstream, its growth potential in DeFi will be tremendous.
4. Decentralized Exchanges (DEXs)
As mentioned earlier, the fragmentation of Layer 2 and the lack of interoperability are becoming important obstacles to the development of the crypto market. However, there is another problem with this development path: excess block space. The development speed of infrastructure (Infra) far exceeds the growth rate of DApps (decentralized applications).
This imbalance may naturally eliminate many long-tail chains in the next few years, which is also a headache for Ethereum. Due to the imperfect data availability (DA) pricing mechanism of Ethereum, the positive feedback brought by Layer 2 to the Ethereum mainnet is very limited.
Looking back, the public chains that grew against the trend during the bear market were basically relying on strong community, complete ecosystem, and marketing advantages. These advantages are mainly reflected in asset issuance platforms, driving rapid growth in total locked value (TVL). Therefore, not all Layer 2s can replicate this "attention economy" model. The lack of killer applications will continue to exist in the next year.
In terms of future trends, one possible development direction is the demand for AI agents we mentioned earlier. In the short term, other clear trends include:
• On-chain order book DEXs
• Privacy solutions
• Technology stacks related to payments
• On-chain decision-making tools
I am optimistic about the development of on-chain order book DEXs, and believe they will become the mainstream of the next generation of decentralized exchanges.
After all, from the development of AMMs, the complexity of their technical paths is constantly increasing, but the marginal efficiency improvement is getting smaller and smaller. We have discussed this issue in our previous article about Uniswap.
However, for Layer 2, performance and Gas fee limitations are still very obvious. Therefore, innovations in matching algorithms and Gas fee optimization will be key challenges.
5. Asset Issuance Remains Mainstream
From 2023 to the present, from Meme to AI Meme platforms, asset issuance methods have run through the entire past year. If we extend the timeline, asset issuance has been the core theme of the crypto market since the ICO era. The only change is the external packaging and entry threshold.
The positive side is that the market's demand for user participation has driven the development of early infrastructure and DeFi. As the technology is gradually recognized and accepted, blockchain has entered the mainstream and deeply integrated with the real world.
The negative side is that market competition is becoming more and more pure and absurd. The lowering of asset issuance thresholds means that this "dark forest" of the crypto market has become more dangerous. Nowadays, with just a few clicks, accompanied by some pictures and a few lines of text, a large-scale zero-sum game can be started.
But why not guide this force in a positive direction to promote industry development?
For example, some current AI Meme projects are gradually evolving towards actual AI agents, rather than the "nonsensical" AI assistants of the past. The recently popular DeSci (Decentralized Science) can also be seen as a "scientific version of ICO". Although it is still core-driven by memes at present, in the long run, combined with the advantages of blockchain, DeSci can make traditional scientific research more transparent, easier to disseminate, easier to raise funds, and promote global research collaboration.
However, whether this model can succeed in practice or how it will develop remains to be observed.
In fact, the idea behind DeSci is similar to what I mentioned in my GameFi-related articles: how blockchain can promote the development of independent games in the face of lack of funding and manpower in small studios.
The core problems facing on-chain financing are:
• The asset issuance threshold is too low
• Lack of restrictions
• Excessive financing capabilities
This may be attributed to the extremely low entry threshold of blockchain. How to constrain the use of funds through rules, forcing project teams to continuously create truly valuable products, is the focus we need to pay attention to.
Let players compete freely, and let builders keep moving forward. This is the premise for the continuous development of blockchain. In the coming year, we may see more iterative versions of the "ICO" model, but what I really look forward to is that in this grand game, the next "DeFi Summer" will arrive.
