In Q4 of 2015 , driven by a combination of market forces and policy changes, traditional global finance and emerging open finance clashed violently in an increasingly disordered environment. The resulting dramatic changes wiped out most of the remaining momentum of the first curve (Note 1), and the emotional wreckage was difficult to digest in a short period of time. At the same time, traditional finance was also isolated and besieged by the bubble narrative of AI and the gold rush of a chaotic world, reaching its limit. Central banks around the world had to use textbook-like monetary and fiscal policies to rigidly satisfy the rigid aesthetics of the market public, forcing everyone to believe that these outdated economic inertias could still be maintained for a little longer.
In previous articles, I've detailed the failure of conventional economic models at the Kondratiev wave transition, but experiencing it firsthand still provides a more tangible understanding. Amidst the noise, only Coinbase's year-end market outlook report , <2026 Crypto Market Outlook>, offered a relatively objective summary and prediction of the current market and industry. The overall trend isn't actually difficult to discern; it's just that too much emotion and ingrained aesthetics have obscured the brief gap. From my current perspective, I'm primarily concerned with three questions:
i) The current global situation is highly similar to the entropy increase trend in the period from 1910 to 1935 (Note 2). How long is the corresponding window period today? How should we make comparisons rather than mechanically drawing on historical experience to assess risks and make decisions?
ii) Which of the following will become the primary contradiction, with the speed of native development of Crypto and Open Finance and their collision with traditional financial compliance in the positive market, thus restraining the other as a secondary contradiction?
iii) The combination of the first two factors creates a non-linear problem: Will the chaos reach a turning point in 2026 and become an independent growth factor that enables Crypto and Open Finance to cross the chasm (Note 3) and quickly enter the mainstream world and financial markets?
Coinbase's <2026 Crypto Market Outlook> report highlighted several impressive figures, with one concerning stablecoin particularly noteworthy: as of Q4 2025, the global stablecoin supply reached $305 billion, and the total transaction volume reached $47.6 trillion. We can roughly compare this to the current global M0 supply of $15 trillion and the total global cryptocurrency transaction volume of $1500 trillion (Note 4). We can see that stablecoin's supply share has reached 2.0%, and its application share has reached 3.2% (note that this indicates stablecoin's average activity is 160% higher than traditional Fiat). Coupled with the report's mention of a 65% compound annual growth rate over four consecutive years, and considering the various foreshadowing events for 2025, we have reason to believe that Open Finance will cross the chasm and enter Early Majority within the next year or so.
tl;dr
- 1011 marks the end of the first curve of Crypto; 2025 marks the end of the previous Kondratiev wave cycle.
- The waning of traditional financial aesthetics and the social failures under strong data regulation
- The question behind the RWA resurgence becoming a mainstream narrative in 2025
- Emerging developing economies and the new global geopolitics
- DeFi2.0, DAT2.0, Tokenomics2.0
- 2025 Review and Summary and 2026 Analysis and Outlook
1. 1011 marks the end of the first curve of Crypto; 2025 marks the end of the previous Kondratiev wave cycle.
In our January 2025 article, "The Second Curve of Crypto Growth," we discussed the unsustainability of the cryptocurrency market's past logic of speculation and narrative. Looking back after a full year, only the number one player remains of the seven giants at the table, fighting alone and forging a new path. Almost all the original market players have either left the game or transformed themselves to start developing a second curve in a more pragmatic way.
October 11th triggered the largest single-day liquidation in Crypto history, amounting to $19.3 billion, and subsequently resulted in approximately $40 billion in liquidations over the next few days. On the surface, it appeared to be a concentrated liquidation of the extreme leverage structure at the end of the first curve market's speculative phase in a low-liquidity environment. In essence, however, it stemmed from the insufficient number of players in a zero-sum game market, rendering the platform's ability to mitigate customer losses and profits ineffective. When only two players remain at the table, all cooperative strategies become ineffective, and the opponent's predicament is the inevitable cause of the demise of the first curve.
Similar to the market manipulation of the $TRUMP pair, 1011 fundamentally undermined the foundation of the first curve's belief, destroying the remaining expectations based on mere narratives, indicating that empty consensus based solely on gambling-style speculation will come to an end (Note 5). Conversely, the second curve has further grown in this process, with all remaining ecosystem companies transforming or innovating to pursue more pragmatic and long-term development paths. The DeFi 2.0 market based on Onchain Asset Management, RWA Finance, and Tokenization has become the inevitable direction for the next stage of the market. CEXs, public chains, and Top Infra are also adapting to the trend, rapidly transforming and deploying towards PayFi and RWA.
On the other hand, by the end of 2025, global economic inflation has completely transitioned to stagflation, and the fiscal and monetary policies of central banks in many countries have become ineffective, leaving only the role of emotional value in regulation. The ultimate involution of traditional economies and the sense of powerlessness in pushing AI expectations to the limit are completely equivalent to the Rockefeller era in 1910, and the last Kondratiev wave cycle marks its complete end (Note 6).
On October 29, 2025, Nvidia's market capitalization surpassed $500 billion, making it the first company in global history to reach that level. While many are still speculating about how many times this price could grow, and without even comparing it to Rockefeller's Standard Oil Company in 1910, I just want to say that you should rationally consider that the annual GDP of the African continent is only about half that size.
Entering the second half of 2025, more and more rating agencies, hedge funds, and investment banking consulting firms have begun to closely monitor Nvidia's financial situation. Putting aside the production capacity and profitability of its upstream and downstream supply chains, the EV ratio of long on Nvidia versus short has become completely unbalanced, based solely on the proportion of systemic risk. In other words, even if the fundamentals continue to improve, this trend is unlikely to be sustained. Moreover, it is clear that the reality of the AI industry is not so optimistic.
It is worth noting that when Standard Oil was broken up into 34 companies in 1911 due to antitrust measures, the global demand for petroleum energy in automobiles, aircraft, and next-generation automated industries was already very clear. However, this did not successfully prevent the chaos, depression, and systemic restructuring that followed 30 years after 1911. The reason was that the chaos and disorder were essentially the result of the failure of the previous stage of production relations, manifested in severe monopolies, widespread poverty, unbalanced development, and continuous contradictions, etc., which are irreversible phenomena of social entropy increase.
At the juncture of major cycles, economic policies and short-term common sense become ineffective. The factors hindering socio-economic development and environmental improvement are not the lack of feasible growth, but rather the inertia of the monopolistic production relations principle under the previous cycle, which prevents or fails to support the fair and effective combination of productivity and labor in the next stage . Focusing on today, the development of AI is inevitable, but the global management mechanism of semi-feudal and semi-monopolistic capitalism can no longer support or adapt to it (Note 7).
2. The waning of traditional financial aesthetics and the social failures under strong data regulation.
Even so, one of the surprises that exceeded my expectations is that so many economists and industry experts are still fixated on the calculation of interest rate cuts. Comparing the period from February 2020 (before the pandemic) to April 2022 (at the peak of the pandemic), the cumulative increase in US M2 exceeded 40%. Faced with such a massive monetary volume, each subsequent QT and QE, in my understanding, was merely a formalistic emotional massage; whether it was 25bp or 100bp, it had long lost its original economic value (Note 8).
In the current environment, interest rate cuts have become a perfect combination of the recipients' emotional and aesthetic expectations and the policymakers' coerced decision-making . To put it bluntly, it's a two-way, inertial form of psychological manipulation, a tool to influence the market through emotional value. One point worth respecting is that countries have made their utmost efforts to delay global chaos and total disorder by utilizing financial and policy tools based on inertial aesthetics.
However, the process of entropy increase cannot be slowed down. Looking back at Greenspan's prediction I mentioned earlier, six months later: "We must accept that monetary and fiscal policy cannot permanently boost economic growth in the presence of deeply rooted structural constraints," we can see that many policies under the traditional system have quickly become ineffective.
In mid-December 2025, Nasdaq publicly stated that it would submit an application to the SEC to change the trading hours of its stocks to 24/7. This move essentially represents a defensive measure by traditional financial institutions to exert pressure on crypto and onchain markets in the face of significant changes, while simultaneously testing the waters with regulators. In fact, many traditional financial institutions in North America and East Asia have been constantly adjusting their stance since the Genius Act in the middle of this year, struggling repeatedly between how to meet the challenges of crypto finance and directly confront the risks of change, and how to maintain their previous competitive advantages as much as possible.
An interesting phenomenon is that this contradiction elicited strong reactions from various institutions in Q2 of this year. It seemed that the Genius Act had instantly shattered the existing game equilibrium and the moat of the cartel alliance (Note 9), and everyone felt insecure, knowing that this trend was inevitable and that the traditional financial system was about to be completely transformed. However, by Q3, it became clear that the market reaction was excessive, and the market iteration process would not be as fast as imagined. Traditional financial practitioners and policymakers miraculously reached a short-term reverse equilibrium. The main logic was that change was inevitable, but policy compliance would become the reassurance to ensure a smooth transition to the new equilibrium and moat. As long as licensees and policymakers upgraded together, they could successfully complete the transition. This stage in Q3 was very delicate, equivalent to everyone participating in a prisoner's dilemma, and all agreeing to temporarily reverse their decisions to cope with greater external pressure. This was merely a psychological illusion before the cartel alliance truly collapsed . By Q4, the most advanced players knew that, with Hyperliquid and Robinhood... This "eight immortals crossing the sea" approach will eventually lead to the complete collapse of traditional financial cartel alliances. That's why both Nasdaq and Coinbase are stepping up to speak the truth and gain a real advantage in the next stage by facing more real-world changes, such as changing transaction durations and building their own RWA tokenization system.
The process described above is actually quite classic. It involves all players forming a Gartner Curve mental sandbox and engaging in a game of strategy before facing a major change.
The decline of traditional financial conventional wisdom does not signify the failure of economic principles. On the contrary, Crypto Economy and Open Finance represent further developments based entirely on economic principles. However, the obstacle lies in systemic problems within managerial economics and market production mechanisms, particularly in the fully digital age. Existing management systems are completely incapable of finding a balance between regulation and freedom. Globally, there has been a significant misuse of strong digital regulation, leading to a rapid increase in entropy within just a decade.
Over the past decade, people around the world have sooner or later fallen into the huge misconception of "using data wherever it exists and regulating whatever methods exist." The rule costs and barriers of outdated systems have far exceeded opportunity costs and risk costs. The rigidity of data management has not only prevented the dogmatic reliance on historical paths from being broken, but has also resulted in paying for it or paying an even greater price, creating a terrible "data medieval" effect .
This phenomenon has permeated every industry and corner of the world from top to bottom. Excessive digital abuse and financial restrictions have hindered the development of every industry. To give a simple example, based on my more than 15 years of experience in venture capital, if you dogmatically judge whether someone can get funding based on their bank KYC (Know Your Customer) records, then 99% of the world's businesses and innovations will be stifled.
Faced with the entropy increase and failure of the globalized financial system and social management environment, 2026 will inevitably enter a period of further disorder and restructuring. A large number of rules and industries will be rewritten, and it will also be difficult to avoid falling into a period of chaotic transition that will last for at least 10 years.
3. The issues behind the RWA resurgence becoming a mainstream narrative in 2025
RWA's narrative made a remarkable comeback in 2025 for a simple reason: the credibility of the first curve collapsed, and there was no new term with consensus for the second curve. As a result, RWA temporarily stepped in and won this year's MVP.
Two months ago, I spoke with an industry OG friend in Silicon Valley. After learning that Cicada Finance was about to announce its IPO plans, he suggested that I focus on RWA Finance. I followed his advice, while also retaining Onchain Asset Management as the core business, which led to the creation of Onchain Asset Management for RWA Finance. Undoubtedly, both Onchain Asset Management and RWA Finance will remain strong mainstream players in the market in 2026.
Aside from the name, RWA isn't reviving; it's building from scratch. The problem is that people using the term RWA have vastly different understandings of it. As of the second half of 2025, in most parts of the world, the understanding remains roughly the same: a crowdfunding activity that tokenizes assets.
Most people who approached RWA for involvement weren't driven by industry development goals, but rather by their own needs, which is understandable. However, just like the problems faced by crowdfunding in the P2P and e-commerce eras, a demand-driven market will force platforms, channels, and the market itself to become one-sided, causing the industry to rapidly veer in the wrong direction.
What's the difference between RWAs without fair value and equity crowdfunding from back then? Is tokenization necessary for illiquid RWA assets? Conversely, do all RWA assets really need liquidity? These questions are clearly still unresolved and unresolved by the market as a whole by 2025, and some deeper business-related issues cannot be discussed here for the time being.
The current asset distribution data for RWA is analyzed in detail in Coinbase's report. T-Bills, Commodities, Liquid Funds, and Credit Loans remain the four main categories , illustrating the importance of quantifiable financial assets in RWA. In our view, the RWA landscape will undergo some changes by 2026. While the aforementioned assets will still exist, the actual DeFi and Crypto Finance businesses from emerging economies will be consolidated into the RWA market as asset suppliers, with Stablecoin Payments and SupplyChainFi expected to experience rapid growth.
4. Emerging Developing Economies and the New Global Geopolitics
In 2025, while developed economies and financial regions around the world are struggling with how to formulate management policies for Stablecoin and Crypto Finance, the development speed of emerging developing countries and regions around the world will be astonishing and beyond imagination.
"What they all want are stablecoins, or platform tokens would also be acceptable." This is the consistent result reported by cross-border trading companies and payment companies this year. In addition to Nigeria, India, Brazil, Indonesia, and Bangladesh, many other countries and regions in Africa, South America, South Asia, Southeast Asia, Eastern Europe, and the Middle East have also seen exponential growth in the application of Stablecoins and Crypto Finance for three consecutive years, and their actual share is far higher than that of developed economies, with many exceeding or catching up with the usage volume of local mainstream fiat currencies (Note 10).
These emerging economies, comprised of numerous newly developed nations, are rapidly expanding through "off-balance-sheet assets," a stark contrast to the aforementioned management dilemmas within the current mainstream global environment. Although significant differences in economic strength and consumption capacity still exist across different regions of the world due to long-standing historical factors, it is clear that mainstream global economic analysis data has become completely distorted. Faced with a new environment of stagflation fueled by excessive regulation on one hand, and rapid growth on the other, the global economic landscape will be reshaped within five years, and geopolitical relationships will undergo dramatic changes.
Regarding question ii) from the opening, I clearly have a definitive answer. The true reshaping of the Nash equilibrium is not a disruption and reshaping within the existing global economic system, but rather a complex new reshaping formed by external forces disrupting the existing global order. The native development speed of Crypto and Open Finance will far exceed the speed at which traditional economies and markets accept and understand them, and 2026 will most likely be a crucial turning point in this process of accepting and reconstructing disorder.
5. DeFi2.0, DAT2.0, Tokenomics2.0
In this report, Coinbase has started to introduce some new terms, including DAT2.0 and Tokenomics2.0, both essentially developments of DeFi 2.0, which are already familiar to the industry. The definitions of these concepts are quite good, and we'll discuss them in detail here.
In 2025, the DAT concept successfully spread from MSTR to the mainstream global financial markets. Its essential logic is very simple: DAT premium multiple = stock market value ÷ NAV (net asset value) of its BTC (or other mainstream crypto); however, this premium multiple declined rapidly from Q3 to Q4 and even reversed, quickly ending this year's global DAT 1.0 craze.
The fundamental reason for the decline in DAT1.0 value and the end of the financial effect is that the friction coefficient of the capital multiplier is too small, the story is simple, the price is transparent and the expectations are limited, the Davis double play and double kill are too direct, and once the bull and bear market reverses, confidence will quickly dissipate.
The essence of the DAT concept's industry value in 2025 lies in the fact that traditional financial stock market concepts have reached their limit, the bubble is too large and EV is difficult to support, and the Crypto first curve bubble and credit collapse will lead to a two-way shift of attention and mutual support between the two markets.
Why can DAT2.0 continue the value of cryptocurrency-equity linkage? Simply put, DAT1.0 was the value transfer from the first curve of Crypto to traditional finance, while DAT2.0 is the value integration of the second curve of Crypto into traditional finance. Unlike the former, the latter's value has long-term sustainable development. In 2025, Ondo, Ethena, Maple, Robinhood, and Figure have already provided good examples in DAT2.0, and in 2026, more emerging companies will rapidly develop within it.
Tokenomics 2.0 is a broader concept. This year, we proposed various derivative products related to Tokenomics, such as Liquid Engineering and Yield Engineering, which are actually further evolutions of Financial Engineering. In different real-world financial cases, Tokenomics, like financial circuits (Note 11), continuously modifies and optimizes each financial scenario. Each case is different, but in the process of overall industry evolution, innovative and universal protocols with overall impact, like PT-YT proposed by Pendle, will gradually emerge.
Coinbase's report only briefly touched upon a few issues when discussing Tokenomics 2.0: Value Capture, Token Buybacks, Financial Engineering, Regulatory Clarify as Catalyst, and Protocol P&L. There was no logical connection or detailed explanation.
Let's break it down simply:
Value Capture has nothing to do with Tokenomics 2.0. It is just a necessary condition for the application and promotion of assets in the second curve. Tokenomics exists independently of value capture. In other words, Tokenomics without sustainable value capture has already been proven in the first curve to be Ponzinomics. It will no longer be a mainstream market in Crypto Market and Open Finance after this year.
Token Buybacks are an important condition for Asset Tokenization in RWA and DAT2.0, and in my opinion, even a necessary condition. Or, to be more precise, Asset Clearing Capability is a necessary condition for all asset investment. The healthy development of RWA Finance next year largely depends on whether the market can reach a consensus on this point.
Regarding Regulatory Clarify, after discussing it in Chapters 2 and 4, it should clearly be objectively expressed as Pros and Cons. Coinbase's perspective has its own unique starting point, but as discussed, the greater and faster development of flexibility globally is actually in emerging and newly formed economies.
Furthermore, the process of financial protocolization is not actually determined by regulatory clarification. It is only highly correlated in some financially developed regions in North America and East Asia. Protocol Finance P&L is entirely an upgraded open finance market transaction phenomenon, determined by the objective market itself.
Both DAT2.0 and Tokenomics2.0 are just temporary terms. The same goes for the second curve and DeFi2.0. They describe the phenomenon and inevitable trend of a fundamental shift in the current Crypto Market and Open Finance after 2025.
6. Review and Summary of 2025 and Analysis and Outlook for 2026
As 2025 comes to a close, let's review and summarize the forecasts and analyses from this year:
February <Crypto's Second Growth Curve>
" Zero-sum game and the 7 giants at the poker table ", " The trend of RYA/RWA and the rise of PayFi ", " Crossing the chasm: The second curve of Crypto growth ", " The development landscape of Crypto under compliance issues and the situation in various countries ";
In April, Trump's tariff policy was predicted to trigger the end of the Kondratiev wave and a qualitative change in Bitcoin.
"The Triple Kill of Bonds, Stocks, and Currency and the Failure of the Merrill Lynch Clock", "The Thucydides Trap and the End of Five Historical Kondratiev Waves", "Greenspan's Prediction and the Significance of Crypto at the Crossroads of Kondratiev Waves", "The Shifting Correlation Between Bitcoin and Chaos: A Change in Habitual Perception and Similarities to the Merrill Lynch Clock Problem".
May's GENIUS Act and On-Chain Shadow Currencies
"The fundamental reasons for the decline in the traditional control of the US dollar", "The nominal and substantive purposes of the GENIUS Act", "The implications of DeFi Restaking for the fiat currency world and the money multiplier of shadow currencies", "Gold, the US dollar and Crypto stablecoins";
September <The Trend of Asset On-Chain Demand Under Stablecoin Pricing Methods>
"The essence of the Genius Act is to decentralize the issuance and settlement rights of currency, thereby gaining enhanced currency pricing power." "Stablecoins have triggered reforms in the global financial and asset on-chain systems through changes in currency pricing methods." "The reforms are rapidly dismantling long-standing cartel alliances in traditional finance, bringing opportunities for interest restructuring amidst chaos." "The two directions of cryptocurrency-equity linkage: securitization and tokenization, and their market characteristics." "The industry characteristics and problems of stablecoins, DAT, stock tokenization, RWA, and on-chain asset management."
The outlook for 2026 has been discussed extensively in this article. Except for issue i), I believe that sufficient analysis has been done. The further disorder and restructuring of the macro environment and the resulting explosion of DeFi 2.0 are clear trends and inevitabilities.
Problem i) is indeed a headache. Whether it's socio-economic trends or financial assets, trends and directions are always easier to judge than time and extent. Unlike the two Kondratiev wave cycles of the last century, under similar paradigmatic environments, the main differences are as follows:
a) The speed from information exchange to situation evolution is much faster, with a difference of more than 2.5 to 5 times in different aspects (Note 12);
b) The potential spillover space for global geopolitical conflicts is completely different, increasing the inevitability of conflict outbreaks;
c) The nonlinear effects brought about by AI and Crypto are far greater than those of industrial electrical automation.
In other respects, many aspects have not changed much compared to a hundred years ago. For example, the physical conditions for social management have not changed much, the natural lifespan of people and the ability of a generation to process short and long emotions, as well as the political and economic management cycles under different social forms, remain largely similar.
Against this backdrop, in the past two years of corporate management, I have often discussed with my partners and gradually accepted the fact that we must pay attention to non-linear issues, learn to deal with and master non-linear triggering situations, and integrate unexpected changes into the plan.
Note 1: The first curve refers to the wealth effect created by consensus expectations in the 16 years of Crypto’s development, which continuously pushes up the wealth effect formed by expectations.
Note 2: The reason for choosing 1935 instead of 1945, the year World War II ended, is that the price of gold experienced a precipitous rise in 1934, the highest in decades.
Note 3: "Crossing the Chasm" is a classic paradigm for the development of innovative things. Here, it is used as a metaphor for Crypto and Open Finance being in the early adopter stage a few years ago.
Note 4: The estimate of $1500T here uses the annualized trading volume of the foreign exchange market and securities market as a rough calculation basis to obtain the financial magnitude.
Note 5: The prediction market is actually a transformation and extension of the first curve. After the consensus of unrealistic expectations no longer supports a consensus credit, a short-term, pragmatic event-based bet becomes the new consensus credit soil for this type of risk-averse.
Note 6: The end and boundary of the Kondratiev wave have been mentioned many times in previous articles, such as Chapter 2, "The Thucydides Trap and a Comparison of the Ends of Five Historical Kondratiev Waves," in "Trump's Tariff Policy Will Trigger the End of the Kondratiev Wave and a Qualitative Change in Bitcoin." From 2020 to 2025, the world is in the process of the end of the previous Kondratiev wave and the beginning of the next. The main difference this time is that the end of 2025 and the accompanying socio-economic phenomena mark the end of the previous Kondratiev wave.
Note 7: In the article "The Dramatic Changes in the Global Landscape After Trump's Victory" published in November 2024, it was first mentioned that "as of the end of 2024, most countries and stakeholders in the world are still in a semi-feudal, semi-centralized state capitalist environment." This time, the description has been changed to "semi-feudal, semi-monopoly capitalism."
Note 8: Objectively speaking, emotional value itself has become an important factor in today's global financial secondary market, and economic policies and market confidence are mutually causal under the connection of emotional value.
Note 9: The issue of breaking down traditional financial cartel alliances is explained in detail in Chapter 3 of "The Trend of Asset On-Chain in Stablecoin Pricing Methods" in May 2025.
Note 10: There is no publicly available, clearly cited data on the economies of underdeveloped emerging developing countries. The relevant information is based on non-public, confidential corporate data.
Note 11: "Financial Circuit and Web3 Tokenomics Theory" was written in October 2022 and details the underlying framework mechanism of the Web3 Tokenomics financial system.
Note 12: This multiple has only a relatively narrow reference value: macroscopically, 2.5 times = Merrill Lynch clock cycle of 10 years / Bitcoin cycle of 4 years; microscopically, 5 times = 7×24 hours of trading / 5×6.5 hours of trading; it cannot effectively represent the differences in actual production and social iteration.
