Author: YBB Capital Researcher Zeke
Foreword
Starting from the Meme token craze, to the election of the first crypto president, 2024 is about to come to an end. This year, Crypto has experienced an extremely unusual "bull market", with altcoins performing weakly, Meme tokens dominating the market, and ultimately everything flowing back to BTC. Overall, although there have been some low points and dissatisfaction, Crypto is indeed moving in a more positive direction. In the coming 2025, there are many directions worth our attention, and in this article we will combine recent views to make a brief outlook for next year.
I. About AI
At the current stage, chain-abstract projects often become overly complex in the process of technical implementation due to the pursuit of conceptual perfection, ultimately affecting the user's interaction experience. Projects with Intent architecture are relatively complex in their implementation, whether they are based on centralization (like TG Bot), structured (a combination of on-chain and off-chain pre-processing), or distributed (such as Solver + Executor architecture) design. These intent projects often have some common problems. For example, users still need to have a considerable understanding of DeFi, the expression of intent must be clear, accurate and simple, and for users' complex and vague intentions, the current intent projects are powerless, and the implementation scope is also quite limited. So from the time Paradigm proposed this concept in the middle of 2023 until today, the so-called intent-centric projects have always been like thunder without rain, and have not been of much help in guiding new users and reducing user operation thresholds. However, we all know that from the development path of Ethereum Layer 2, the market's demand for both is imminent.
Let's review the development of Layer 2 in the past few months. Among the leading projects, the Layer 2 alliance represented by OP Superchain has been growing stronger, and Zksync's Elastic Chain and Arbitrum Orbit will also form their own alliances along this path. These alliances will be able to achieve direct interconnection within through solutions such as inter-operational clusters in the future, alleviating the current problems of excessive fragmentation and lack of interoperability in the Ethereum Layer 2 ecosystem, and the competition of dozens of chains will be narrowed down to competition between multiple forces. But from a broader perspective, as the crypto market is gradually improving, new architecture Layer 2 projects such as Movement and Fuel are also rushing to launch their own mainnets in an attempt to capture the scarce altcoin market liquidity. For projects below the first echelon, fragmentation and lack of interoperability are still intensifying, and even wallet plugins may not be interoperable due to different architectural designs of virtual machines. Let alone allowing new users to enter, for ordinary blockchain users, the entire Layer 2 ecosystem is extremely complex, and the development of non-financial application chains will also face great resistance under such circumstances.
For Ethereum to introduce new users, ecosystem alignment is the biggest prerequisite. An ecosystem that requires users to be half geeks to get started will never welcome "Mass Adoption". Looking at the counter-cyclical development of Solana and Ton this year, the strategies of lowering user thresholds and providing a more consistent, Web2-like user experience have obviously played an important role in ecosystem growth. To put it more directly, the only things these two ecosystems have done beyond publicity are to reduce the difficulty of asset issuance and make the use of the chain more transparent. So, a comprehensive solution with experience as the priority is a must for Ethereum, but given the open attitude of Ethereum's core developers, it is naturally impossible to force the entire Layer 2 ecosystem to align.
I believe that the solution that can first solve this problem is the AI browser agent. Even in the early days of the emergence of ChatGPT, many people have envisioned the innovation of AI in APP interaction, which can span multiple APPs and form a comprehensive super APP. For example, in the case of tourism, which is relatively common, the AI can automatically complete ticket booking, customize travel routes, arrange meals and time, etc. after receiving the user's travel needs. If this AI also has long-term memory, it can arrange more suitable plans based on this memory.
Now, Google is about to launch the AI browser agent Project Mariner driven by Gemini. In the demo shown by Jaclyn Konzelmann, the director of Google's research lab, after installing the AI agent extension 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 from this list at the grocery store". Then the AI agent will automatically navigate to a grocery platform, add the items to the shopping cart, and enter the checkout page, and the user will check out on their own (the agent does not have payment authority). Similar products will also be launched by OpenAI next month.
It is worth mentioning that although Google's Project Mariner is currently only available to selected testers, I have already experienced similar agents developed by some projects in Crypto for ordinary users. From a few hours of trial use, the agent's accuracy in implementing complex and vague intentions can currently reach 60-70% (the cursor operation speed is relatively slow), and it can independently complete operations such as token trading on various DEXs within the chain and even cross-asset transfers from Ethereum to Layer 2, and all I need to do is inform it of the intention and enter the wallet password.
Of course, this foundation still needs to call the API of the centralized model, so what kind of collision will Crypto produce with it? I believe that the AI browser agent will not only become a better experience-oriented intent solution, but will also drive the outbreak of AI wallets, decentralized computing power, and decentralized data projects next year.
Think about a simple question, why was the concept of Agent not realized until today in the rapid development of AI in recent years? In fact, by looking back at the development of OpenAI, it is not difficult to find that the development of pure language models is always faster than that of image generation models, because the Internet itself is a huge corpus that can provide endless textual materials for training, and the limitation of language model development is more about computing power and energy. Agents require a large amount of manual labeling and feedback, and the reasoning process is expensive. Crypto naturally has the ability to obtain labor through incentives. In this economic system, top-level users can provide a large amount of labeled data and feedback to obtain Tokens in a decentralized way, and the bottom layer can also integrate decentralized computing power and data projects, and after the training is completed, they can be integrated with wallets and DeFi projects through SDKs to realize truly meaningful AI wallets, forming a closed loop. Other ideas about AI agents can also be derived in this way, because any AI agent applicable to Web3 will need computing power, labeling, and feedback to "grow".
II. Stablecoins
Stablecoins are always a battleground, and also a track with extremely high thresholds in Crypto. Regarding its application value, it has already gained relatively widespread recognition even outside the industry. For example, this year, several giants in the traditional finance sector have also entered the stablecoin market, including PayPal's PYUSD, BlackRock and Ethena's USDb, and VanEck's AUSD (serving Argentina, Southeast Asia and other regions).
Tether and have continued to deepen their dominance in this track, and new entrants in the stablecoin issuance space have gradually differentiated into two categories. First, issuers of fiat-backed stablecoins are beginning to turn their attention to emerging markets, mainly in South America, and specific application scenarios, while algorithmic stablecoins have generally shifted to using low-risk financial products as underlying assets for their stablecoins, such as Ethena and Usual mentioned in the previous article. Looking at the trend, next year will see more delta-neutral stablecoins competing for short positions in CEXs, and the hedging assets will gradually expand from BTC and ETH to public chain tokens with higher risk and lower liquidity to compete for the remaining downside market. Usual-type stablecoins with US Treasuries as the underlying asset in the medium to short term, I think, will focus more on innovation in protocol tokens and revenue models, and there is no better choice than medium to short-term Treasuries in terms of RWA assets, but compared to the limited liquidity in CEXs, the competition for this type of stablecoin will be smaller and the upside potential greater.
Overall, the development of stablecoins is gradually moving towards more stable underlying assets and decentralized governance. However, what I hope for next year is the emergence of some fully decentralized and non-overcollateralized stablecoin protocols.
III. Payments
As the compliance and accelerated adoption of stablecoins in various countries, the downstream payment track of stablecoins will also become a new competitive focus, with heterogeneous public chains such as Solana and Move with high TPS and low gas becoming the main infrastructure for payment applications. Traditional payments are already an extremely mature and saturated red ocean market, so what kind of disruption can blockchain provide? First, there are two relatively simple and often mentioned points: one is to optimize cross-border payments, eliminate the requirement for pre-financing, making cross-border remittances faster, cheaper and easier, solving the problem of trillions of dollars in pre-paid funds in traditional systems. The second is to serve emerging markets, which I have mentioned in previous articles, where the application value of stablecoins has already been demonstrated in regions like Asia, Africa and Latin America, with their strong financial inclusiveness allowing residents of third-world countries to effectively cope with the high inflation caused by government instability, and through stablecoins they can also participate in some global financial activities and subscribe to and use the world's most cutting-edge virtual services.
Solana Foundation manager Lily Liu proposed the concept of "PayFi" at the 7th EthCC conference, which provides more imagination for the combination of blockchain and payments. This concept involves two core elements: first is instant settlement, i.e. T+0 settlement, where PayFi can achieve same-day settlement, or even multiple settlements per day, eliminating the delays and complexities of the traditional financial system involved in the entire process, greatly increasing the speed of capital circulation. The second is Buy Now, Pay Never (BNPL), where for example, the user deposits $50 into a lending product and buys a $5 coffee. Once the accumulated interest reaches $5, the interest will be used to pay for the coffee, and the funds will be unlocked and returned to the user's account.
And there are many more ideas that can be extended from this, such as using PayFi to form a more secure and transparent inflow and outflow of funds for the financing needs of emerging projects on the blockchain, eliminating the need for various physical financial institutions for currency exchange in tourism, and the freedom to control payment and collection times (delayed collection to earn interest, early payment to get discounts). The revenue models will also become more diversified, in addition to depositing stablecoins into lending products to earn interest as mentioned above, I personally think the types of stablecoins should also be allowed to be freely converted. In the future, with the surge of new stablecoins, users can choose the most suitable stablecoin type based on their risk tolerance at any time, which can simultaneously obtain stablecoin protocol tokens and higher stablecoin interest. For DeFi, if this payment system can become mainstream, its growth potential will be unimaginably huge.
IV. Dex
As we mentioned in the first section, the fragmentation and lack of interoperability of Layer 2 is a problem, and this development path actually has another problem, which is the oversupply of block space, with the development of infrastructure far exceeding the development of dapps. This problem will lead to the natural elimination of a large number of long-tail chains within a few years, which is an extremely headache problem for Ethereum, which has failed in DA pricing and has not received the positive feedback from Layer 2.
Looking back, the public chains that have grown counter-cyclically have basically relied on their own strong community, ecosystem, and marketing advantages, and have supplied these advantages to asset issuance platforms to achieve rapid growth in overall TVL. So it's not that every Layer 2 can replicate this attention economy, and the lack of killer apps is still a reality problem to be faced next year. Going with the wind, in addition to what we mentioned above, the future demand for AI agents may be a way out. In the short term, other relatively obvious trends include on-chain order book DEXs, privacy, payment-related stacks, and decision-making tools.
I am personally more optimistic that on-chain order book DEXs will become the mainstream of the next generation of DEXs, after all, from the development of AMM, the complexity of its technical path is constantly doubling, but the efficiency is becoming more and more limited, which we have also mentioned in the articles related to Uni. The only problem is that for the second layer, the limitations of performance and gas are still very obvious, and the improvement of the matching algorithm and the innovation of the gas solution will become the key challenges.
V. Asset Issuance Remains the Main Melody
From the time of the Inscription to the current AI Meme platforms, the way of providing asset issuance has been the hotspot of the past year. If we extend this time span a little, in fact, asset issuance has been the only main melody of the crypto circle from the ICO era to the present. It's just that the external packaging and the threshold of issuance are changing. From a positive perspective, the gaming needs of users have driven the advanced development of infrastructure and DeFi, and as this technology becomes known and recognized by the public, blockchain has been able to enter the mainstream and integrate with reality. From a negative perspective, this game has become more pure and absurd, and the lowering of the difficulty of asset issuance also means that this dark forest is becoming more dangerous. Nowadays, it only takes a simple touch with a picture and a few words to start a grand zero-sum game, so why not guide it back to a more positive side and drive the progress of the industry in the game?
For example, some of the current AI Meme projects are also starting to shift towards practical Agent development, rather than the early version of AI Agent that talked nonsense. The recently popular DeSci can also be called the "scientific research version of ICO", and although the current core is driven by Meme, in the long run, the advantages of blockchain can promote traditional scientific research to be more transparent, easy to spread, easy to finance, and easy to communicate. But whether it can be implemented and how it will evolve still needs a question mark.
In fact, similar ideas to DeSci, I have also mentioned in my article on GameFi, such as how to effectively promote the development of independent games through blockchain financing in the case of independent game capital and personnel shortages. The problem with blockchain financing is that the threshold for asset issuance is too low and the restrictions are too few, and the fundraising capability is too strong (or can be said to be because the entry threshold on the chain is extremely low). How to restrict the use of funds through rules, forcing project parties to constantly create truly valuable things, is also a focus we should think about.
Let the players play, let the builders move forward, this is the premise for blockchain to continue to develop. Next year, we may see more versions of "ICO", but what I hope for is that in this feast of gaming, we can push forward the next "DeFi Summer".
