Although these areas face challenges in technology, regulation, and the market, they also carry "asymmetric profit potential," which is the core characteristic of the "top winners" in the crypto field.
By Jean-Paul Faraj, Bankless
Compiled by Saoirse, Foresight News
Cryptocurrency is often criticized for "chasing novelty and hot topics," but the following five cutting-edge fields are not only in their early stages of development, but also have the potential to survive in the long run.
Anyone who’s been around crypto for a while has witnessed the rise and fall of countless hype cycles. But beneath the noise, certain sectors of the ecosystem are quietly laying the foundation for the next decade of growth.
While these areas are still in their early stages (and sometimes even moving anxiously and slowly), their potential is undeniable.
👇Here are 5 areas I will continue to focus on:
AVS and Restaking: Shared Security Becomes the New Foundational Component
The rise of re-staking networks like EigenLayer and AltLayer marks the birth of a new design area: Active Validation Services (AVS). The core principle is that Ethereum's staked ETH can be re-staking to provide security for new networks and applications. This eliminates the need for projects to build trust systems from scratch, allowing them to leverage Ethereum's credibility and validator resources.
Restaking reshapes the launch model for new protocols: by shifting trust to the Ethereum validator community, developers no longer need to worry about building their own security mechanisms, freeing them to focus on application design. This not only lowers the barrier to entry for innovative experimentation but also allows these projects to continue to integrate into the Ethereum ecosystem. The opportunity in this space lies not in a single "hit app," but in opening the floodgates for the implementation of hundreds of new applications.
Why is it important?
- A New Paradigm: Shared security has the potential to spawn entirely new industries — from decentralized computing to AI training — that will ultimately be built on Ethereum.
- AI opportunities: AI is highly adaptable to this space — autonomous agents and decentralized training can be directly connected to the re-staking security layer.
- Basic support role: As the application of encryption technology accelerates and becomes more popular, projects such as EigenLayer and AltLayer will gradually cooperate with large institutions seeking "scalable trust mechanisms."
Challenges:
- There are no benchmark applications yet: There are currently no cases that can "stand the test of time" to prove that AVS can be applied on a large scale.
- Excess funds and lagging application: A large amount of early-stage investment has poured in, but the development of actual application scenarios has been relatively slow, causing many early investors to still wait for value verification.
- Token unlocking pressure: There will be large-scale token unlocking in the future, which may have an impact on market sentiment and token prices.
If successfully implemented, restaking could have a transformational impact on infrastructure comparable to the impact of stablecoins on payments. Like a Trojan horse, it will quietly attract the next wave of users.
DeFi and TradFi: The boundaries are blurring
Not long ago, using DeFi required relying on MetaMask wallets, cross-chain bridges, and enduring the "gas wars." Now, teams like EtherFi, Coinbase, Argent, and Morpho are packaging core DeFi features like lending and yield generation into accessible tools for the average user. Services like credit card payments, fiat deposit channels, and one-click lending markets are narrowing the gap between traditional finance and DeFi.
What once seemed like distinct worlds are now increasingly converging. The key opportunity lies in this: most users won't need to actively switch to cryptocurrencies; instead, they'll naturally adopt products built on top of crypto technology simply because they're faster, cheaper, and more flexible. This trend also opens up vast distribution channels: traditional financial institutions can white-label DeFi's underlying functionality, presenting it to the public in user-friendly packaging. Ultimately, "decentralized finance" will cease to be a standalone concept and return to the essence of "finance."
Why is it important?
- Mature infrastructure: DeFi has entered a mature stage - protocols represented by Aave have undergone years of market testing and have fully demonstrated their "long-term sustainability" (Lindy effect).
- Shift in regulatory attitudes: The focus of regulators in the United States and other countries has shifted from “whether to allow cryptocurrencies” to “how to regulate cryptocurrencies.” This psychological shift is of great significance.
- Reshaping the trust landscape: Trust in traditional finance is declining globally. Every financial scandal, bank run, or fee hike creates room for alternatives like DeFi to thrive.
Challenges:
- User trust threshold: For most families, "DeFi" is still an unfamiliar concept, and it will take long-term efforts to convince users of its security.
- Geographic access restrictions: Affected by policies in different jurisdictions, many DeFi products cannot reach global users.
- Winner-takes-all effect: The power law will lead to the concentration of market resources at the top, and many high-quality small and medium-sized products may be buried.
For DeFi developers, the core question is not "whether users will use these tools" but "whether users will realize that they are using DeFi."
RWAs: The largest capital bridge
If the core of DeFi is to "create new money markets," then the goal of real-world assets (RWAs) is to "bring all traditional assets onto the blockchain." Projects like Ondo, Reserve, Centrifuge, and Maple are building the infrastructure to tokenize real-world assets like US Treasuries, corporate bonds, commodities, and even real estate, enabling their tradability and functional integration in the crypto market.
The tokenization of RWAs breaks the silo effect of traditional financial markets: a tokenized Treasury bond can simultaneously serve as collateral in DeFi, underpin stablecoin issuance, and enable global fractional ownership transactions, all without the need for traditional intermediaries. The real opportunity in this sector lies in transforming previously static assets into programmable building blocks, opening up the design space for unprecedented new products and risk models.
Why is it important?
- Huge market size: The global capital market is worth tens of trillions of dollars. Even if only a small portion of assets are put on the chain, its scale will far exceed the current total locked value (TVL) of DeFi.
- New sources of on-chain yield: RWAs have driven a new wave of stablecoin yields. For example, Ondo’s tokenized treasury bonds allow stablecoin holders to earn US government-backed returns without leaving the crypto ecosystem.
- Market stabilizer role: In the volatile crypto market, RWAs can act as a "ballast stone", providing safer collateral while deepening the liquidity pool.
- Institutional trust bridge: RWAs are a "narrative that can be understood" by traditional financial institutions such as Wall Street. It is not a threat to traditional finance, but a bridge connecting the two.
Challenges:
- Regulatory resistance: Different jurisdictions have vastly different rules on securities and asset custody, and compliance processes will slow down development.
- Liquidity mismatch: Although tokenization improves the trading convenience of assets, the underlying assets such as real estate and corporate bonds are not highly liquid.
- Bottlenecks in institutional adoption: It will take time for traditional institutions to trust the "on-chain asset packaging model," and most funds are currently on the sidelines.
If DeFi is likened to a "sandbox for experiments," then RWAs are the "highway" connecting the crypto ecosystem to the real world. This sector may become the most important "entry point" for cryptocurrencies—at that point, cryptocurrencies will no longer be "experimental technologies" but will become core components deeply integrated into the global financial system.
ZK Technology: Balancing Scalability and Privacy
In the future of blockchain infrastructure, zero-knowledge proofs (ZK) are a key industry consensus. Organizations such as Starknet, Succinct, Linea, and zkSync are vying to demonstrate that ZK systems are not merely theoretical but already possess production-grade capabilities. The core value of ZK technology lies in reducing trust costs—it enables the verification of large-scale computational processes in a cost-effective, fast, and secure manner.
Blockchains powered by ZK technology open the door to applications that were previously impossible or impractical on-chain. By reducing computational complexity and data requirements, ZK technology enables systems previously too large, expensive, or insecure to implement on-chain. Its applications are vast: from more efficient on-chain verification to privacy-focused consumer applications to a whole new class of secure and data-rich protocols, ZK technology promises to revolutionize how we interact and develop on-chain.
Why is it important?
- Core project endorsement: Ethereum itself has clearly defined ZK technology as a “scalability solution,” providing legitimacy for the development of this technology.
- Exponentially decreasing costs: The cost of ZK verification is decreasing exponentially, making it possible for large-scale application in consumer scenarios.
- The rise of privacy applications: Consumer-grade applications with privacy as the core are gradually emerging, covering areas such as payment, identity authentication, and instant messaging.
Challenges:
- Fragmentation of technical standards: Multiple ZK technical standards coexist, and it is currently impossible to determine which technology stack will ultimately win.
- Hype outweighs implementation: For developers and users, the "ZK technology explosion moment" has not yet arrived, and actual applications still lag behind market expectations.
- High technical complexity: Superimposing the ZK verification system on the bottom layer of the blockchain adds new technical barriers to the already complex technical architecture.
ZK technology is both an infrastructure-level innovation and a consumer-level application tool. It promises to simultaneously achieve high throughput and privacy protection—two key features that Web2 struggles to achieve.
Decentralized social networking: breaking through the limitations of “only related to money”
The crypto space has long been financially focused and socially neglected, but this landscape is gradually changing. Applications like Zora, Lens, Mirror, Farcaster, the Base App, and the emerging Thousands Network are building the foundational framework for a decentralized social layer. The goal: to create a platform with an experience comparable to Twitter, Instagram, or TikTok, but where creators truly own their content, reputation, and revenue.
The value of decentralized social networking lies not only in distributing revenue to creators but also in reconstructing the social graph into a public good. Instead of each platform locking data in isolated information silos, users' reputations, fan relationships, and content can flow freely across different applications. This completely overturns current platform logic: platforms no longer compete for users, but rather compete by serving them. The opportunity in this area lies in the fact that even modest progress can create an ecosystem that cannot be ignored—creators and communities are strongly motivated to migrate to platforms that retain more of their own revenue.
Why is it important?
- Not affected by market cycles: The development of consumer applications does not rely entirely on the crypto market cycle. High-quality social platforms can achieve user growth even in a bear market.
- Support from leading institutions: Coinbase’s recent integration with Zora is of great significance - with the scale advantage of Coinbase, millions of users will be exposed to the field of encrypted social networking for the first time.
- The market window is mature: The creator economy of Web2 platforms is gradually declining (such as reduced revenue sharing and strict content review), providing room for the development of decentralized alternatives.
- Significantly improved user experience: Over the past 18 months, the user experience (UX) of decentralized social networking has improved significantly, overcoming the core barriers that once hindered user adoption.
Challenges:
- User inertia resistance: It is extremely costly to convince users to leave familiar platforms like Instagram and switch to new apps.
- Reliance on speculation: Many decentralized social projects are launched through "tokenization", which makes them vulnerable to "price increase cycles" and lacks long-term stable development momentum.
- There are still barriers to entry: wallet operations, cross-chain transfers, seed phrase management and other aspects are still too complicated for mainstream users and can easily lead to resistance.
Decentralized social networking may not be able to "replace Instagram" in the short term, but as the "exploitation" of creators by Web2 platforms continues to intensify, the appeal of users migrating to "user-owned networks" will become stronger and stronger.
Summarize
Cryptocurrency is often criticized for "chasing novelty and hype," but beneath the hype, the following five cutting-edge areas are not only in their early stages of development, but also have the potential to survive long-term:
- Restaking/AVS: Expected to redefine network security mechanisms and open the door to new industries such as decentralized AI.
- The integration of DeFi and TradFi: Continuously shortening the gap between encryption technology and daily financial products, and promoting the innovation of the financial system.
- RWAs: Bringing the "biggest cake" of the global capital market directly to the chain, unlocking new sources of revenue and institutional trust.
- ZK technology: It improves blockchain scalability while ensuring privacy and opens up space for new application designs.
- Decentralized social networking: Providing an ownership-based alternative to Web2 platforms that no longer serve creators and users.
These sectors all face significant challenges—technical bottlenecks, regulatory complexity, and saturated market competition. However, they also hold the potential for asymmetric returns, a core characteristic of the crypto space's top winners.
If the core of the previous cycle was proving that blockchains can support stablecoins and DeFi protocols, the next cycle will focus on integrating crypto into every corner of finance, infrastructure, and culture. Developers in these five areas aren't chasing narrative buzz; they're paving the necessary path for the next generation of applications, users, and capital.
These areas deserve long-term attention for both investors and developers.
