Foreword
Starting from the Meme token craze, and ending with 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, 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 also 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 technical implementation process 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 (such as 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 now, the so-called intent-centric projects have always been like thunder and 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 Layer2, the market's demand for both is still imminent.
Let's review the development of Layer2 in the past few months. Among the leading projects, the Layer2 alliance represented by OP Superchain has been growing stronger, and Zksync's Elastic Chain and Arbitrum Orbit will also eventually 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, to alleviate the current problems of excessive fragmentation and lack of interoperability in the Ethereum Layer2 ecosystem. The competition of dozens of chains will also be narrowed down to the competition of multiple forces. But from a broader perspective, as the crypto market is gradually improving, new architecture Layer2 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 Layer2 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". From the performance of Solana and Ton in the opposite direction this year, the strategy of lowering user thresholds and providing a more consistent and Web2-like user experience has obviously played an important role in ecosystem growth. To put it more directly, the only thing these two ecosystems have done besides promotion is 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 Layer2 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. Taking tourism as a more common example, 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 also arrange more suitable plans based on this memory.
Now, Google is about to launch the AI browser agent driven by Gemini, Project Mariner. 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 grocery list". Then the AI agent will automatically navigate to a grocery platform and add the items to the shopping cart, 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 on different chains, and even cross-asset transfers from Ethereum to Layer2. In this process, all I need to do is inform it of the intent and enter the wallet password.
Of course, this foundation still needs to call the API of centralized models, so what kind of collision will Crypto have with it? I think 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 reviewing 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 text materials for training, and the limitations of language models are 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 through decentralized means, and the bottom layer can also integrate decentralized computing power and data projects, and after training, integrate with wallets and DeFi projects through SDKs to realize truly 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 must-win battlefield, 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 field have also entered the stablecoin market, including PayPal's PYUSD, BlackRock and Ethena's USDb, and VanEck's AUSD (serving Argentina, Southeast Asia, etc.).
With the continued deepening of Tether and Circle's dominance in this track, new entrants of stablecoin issuers are also gradually differentiated into two categories. First, the issuers of fiat-backed stablecoins are starting to turn their attention to emerging markets, mainly in South America, and specific application scenarios. Algorithmic stablecoins have also generally turned to low-risk financial products as the underlying assets, such as the Ethena and Usual mentioned in our previous article. From the trend, next year there will be more delta-neutral stablecoins competing for the short-selling liquidity in CEXs, and the hedging assets will gradually expand from BTC and ETH to riskier and less liquid public chain tokens to compete for the remaining downside market. As for stablecoins like Usual, which are based on short-term US Treasuries, I think more innovation will be in the protocol tokens and revenue models, and there is no better choice than short-term Treasuries in the types of RWA assets, but compared to the limited liquidity in CEXs, the competition of such stablecoins will be smaller and the upside space will be larger.
In general, the development of stablecoins is gradually moving towards pursuing 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
With the compliance and accelerated adoption of stablecoins in various countries, the downstream payment track of stablecoins will also become a new competitive focus, and heterogeneous public chains such as Solana and Move with high TPS and low Gas will become the main infrastructure for payment applications. Traditional payments have already become an extremely mature and saturated red ocean market, so what kind of revolution can blockchain provide? First, there are two relatively simple and commonly 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, as I mentioned in my previous article, in regions such as Asia, Africa and Latin America, the application value of stablecoins has already been demonstrated, with 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 the world's most cutting-edge virtual service subscriptions.
The concept of "PayFi" proposed by Lily Liu, manager of the Solana Foundation, at the 7th EthCC conference, provides more imagination for the combination of blockchain and payments. This concept involves two core aspects: first is real-time settlement, i.e. T+0 settlement, PayFi can realize same-day settlement, or even multiple settlements per day, and the delays and complexities of the traditional financial system involved in the entire process will be eliminated, greatly improving the speed of fund circulation. The second is Buy Now, Pay Never, 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 the financing needs of emerging projects can form a more secure and transparent inflow and outflow in the blockchain through PayFi, currency exchange in tourism no longer needs to rely on various physical financial institutions, and the freedom to control payment and collection time (delayed collection to earn interest, early payment to get discounts). The ways of earning will also become more diversified, in addition to depositing stablecoins into lending products to earn interest as mentioned above, I personally think that the types of stablecoins should also be allowed to be freely converted. In the future, with the emergence of a large number of new stablecoins, users can choose the most suitable stablecoins at any time according to their risk tolerance, so as to 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
We have already mentioned the fragmentation and lack of interoperability of Layer2 in the first section, but this development path actually has another problem, which is the oversupply of block space, and the development of Infra far exceeds the development of Dapp. This problem will lead to the natural elimination of a large number of long-tail chains within a few years, which is also an extremely troublesome problem for Ethereum, which has failed to get the positive feedback of Layer2 due to improper DA pricing.
Looking back, the public chains that have grown against the trend are basically relying on their own strong community, ecology, and promotion advantages, and supplying these advantages to asset issuance platforms to achieve rapid overall TVL growth. So it is not the case that every Layer2 can replicate this eyeball economy, and the lack of killer apps is still a reality 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 Dex, privacy, payment-related stacks, and decision-making tools.
I am personally more optimistic that on-chain order book Dex will become the mainstream of the next generation of Dex, 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, as we have also mentioned in the articles related to Uni. It's just 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 is Still the Main Melody
From 23 years ago to the present day, from Minting to the current AI Meme platform, the way of asset issuance has been the hotspot of the past year. If we extend this time span a little further, in fact, from the ICO era to the present, asset issuance can be considered the only main melody in the crypto world. 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 Infra and DeFi, and as this technology becomes known and recognized by the world, 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 decline in the difficulty of asset issuance also means that this dark forest is becoming more dangerous. Nowadays, it only takes a touch of a picture and a few words to start a grand zero-sum game, why don't we guide it back to a more positive side? To promote the progress of the industry in the game.
For example, some of the current AI Memes are also starting to shift towards the development of practical Agents, rather than the early version of AI Agents that talked nonsense. The recently popular DeSci can also be called the "ICO version of scientific research", although the current core is driven by Meme, but 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 like DeSci, I have also mentioned in my article on GameFi, such as how to effectively promote the development of independent games through blockchain financing when they lack independent game funds and personnel. The problem with blockchain financing is that the threshold for asset issuance is too low and the restrictions are too few, and the financing capability is too strong (or it can be said that 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".
