Original title: Breaking the Impasse and Rebuilding: A 2025 Outlook on the Crypto World
Original author: Zeke, YBB Capital
Original source: https://medium.com/ybbcapital/breaking-the-impasse-and-rebuilding-a-2025-outlook-on-the-crypto-world-ff26fcc9dedd
Compiled by: Tom, Mars Finance
introduction
From the lettering craze to the birth of the first crypto president, 2024 is coming to an end. This year, the crypto industry has experienced an unusual "bull market": altcoins performed poorly, memecoins took the lead, but in the end all eyes were back on BTC. Although there were lows and hard-to-get-over losses, overall, the crypto industry is still moving in a more positive direction. Looking ahead to the upcoming 2025, there are many areas worth paying attention to. This article will briefly talk about the outlook for next year based on recent views.
1. About AI
At the current stage, blockchain projects tend to over-complicate their technical implementation in pursuit of conceptual perfection, which ultimately affects user interaction and experience. Projects based on the Intent architecture tend to be more complex. Whether centralized (such as TG Bot), structured (combining on-chain and off-chain preprocessing) or distributed (such as Solver + Executor architecture), such intent-based projects often face some common problems. For example, users still need to have a certain degree of DeFi understanding, and the expression of the "intent" itself must be clear, accurate and simple. When users propose complex and vague intents, current intent projects are often unable to complete them and have a very limited scope of execution. Since Paradigm proposed this concept in mid-2023, most intent-focused projects have remained on paper and have not effectively promoted new user onboarding or lowered the threshold. However, based on the development trajectory of Ethereum Layer 2, the need for such solutions is very urgent.
Looking back at the recent development of Layer 2, leading projects such as OP Superchain continue to increase the expansion of alliances. ZkSync's Elastic Chain and Arbitrum Orbit are also following this idea and forming their own alliances. These alliances will achieve internal interoperability through clustered solutions to alleviate the fragmentation and non-interoperability problems within the Ethereum Layer 2 ecosystem. In the future, when the competition among dozens of chains begins to shrink, there will only be multiple parties left. But from a more macro perspective, as the crypto market picks up, some new Layer 2 projects (such as Movement, Fuel, etc.) are constantly joining the competition after launching the mainnet to seize the few liquidity in the altcoin market. For those projects that cannot enter the first echelon, the phenomenon of fragmentation and lack of interoperability is still intensifying. Virtual machines based on different architectures may not even have wallet plug-ins that are compatible with each other. For ordinary blockchain users, the entire Layer 2 ecosystem will become more and more complicated, which is bound to bring great barriers to the implementation of non-financial applications.
In order for Ethereum to truly achieve the introduction of new users, the unification of the ecosystem is crucial. An ecosystem that requires users to have "semi-geek" qualities is doomed to fail to achieve "large-scale adoption". Looking at the counter-trend growth trend of Solana and Ton this year, it can be found that they have lowered the user threshold and provided an experience closer to Web2. Such a strategy has played an important role in the expansion of the ecosystem. To put it bluntly, these two ecosystems actually only reduce the difficulty of asset issuance, making it almost impossible for users to feel the process of using blockchain. It can be seen that Ethereum needs to integrate all parties and focus on user experience; however, given the open attitude of core developers, it is unlikely that the Layer 2 ecosystem will be forced to be unified.
I think the solution to this problem lies in AI browser agents. It has long been imagined that AI can completely change the way applications interact, from single-point interaction to cross-application operation, forming a "super application". For example, when a user makes a travel request, AI can automatically handle air tickets, customize travel routes, arrange meals, and preset times. If AI also has long-term memory capabilities, it can also arrange multiple subsequent trips for users.
Now, Google is about to launch an AI browser agent called Project Mariner, powered by Gemini. In a demonstration by Jaclyn Konzelmann, director of Google Labs, when a user installs the AI agent extension on Chrome, a chat window pops up on the right side of the browser. Users can give the agent instructions such as "Put the items on this list in the grocery store shopping cart," and the AI agent will automatically jump to the grocery shopping platform, add the items to the shopping cart and enter the checkout page. After confirmation, the user only needs to complete the payment (the agent does not have payment authority). OpenAI will also launch a similar product next month.
It is worth noting that although Google's Project Mariner is currently only open to a small number of testers, I have experienced similar agents for ordinary users in some crypto projects. After several hours of trial, I found that the accuracy of the agent for performing complex or ambiguous tasks is about 60%-70%. It can complete token transactions on decentralized exchanges on multiple blockchains and transfer assets across Layer 2 networks. Throughout the process, I only need to express my intention to the agent and enter my wallet password.
Of course, the platform still needs to use the centralized model API. So, what role can Crypto play in this trend? I believe that AI browser agents will not only improve the user experience of intent parsing, but will also promote the development of AI wallets, decentralized computing power, and decentralized data projects in the coming year.
Imagine a simple question: Why did the beautiful vision of AI agents begin to become a reality only today after many years of rapid development of AI? Looking back at the development history of OpenAI, it is not difficult to find that the reason why language models can be faster than image generation models is that the Internet itself, as a massive corpus, can provide it with a steady stream of text training materials. What limits the development of language models is more the problem of computing power and energy consumption. On the other hand, AI agents require a lot of manual annotation and feedback, and their reasoning process is costly. Crypto is naturally suitable for obtaining labor through token incentives: in such an economic system, upper-level users can earn tokens by providing a large amount of labeled data and feedback in a decentralized manner, while the bottom layer can integrate decentralized computing power and data projects. Once the training is completed, it can be integrated with wallets and DeFi projects through SDK to form a real AI wallet and finally achieve a closed loop. Based on this idea, the concept of other AI agents will also appear one after another, because any Web3 AI agent needs computing power, annotation and feedback to "grow".
2. Stablecoins
Stablecoins have always been a battleground in the crypto industry, and they are also a track with extremely high barriers to entry. In terms of their application value, they have also been widely recognized outside the industry. For example, this year, several major players in traditional finance have begun to get involved in the issuance of stablecoins, including PYUSD launched by PayPal, USDb in cooperation between BlackRock and Ethena, and AUSD launched by VanEck for Argentina and Southeast Asia.
With the continued strength of Tether and Circle in this field, new entrants are gradually differentiating into two types: one is the issuers of fiat-backed stablecoins, which are beginning to turn to emerging markets such as South America or specific application scenarios; the other is the increasing number of algorithmic stablecoins with low-risk financial products as underlying assets, such as Ethena and Usual mentioned above. Judging from the trend, there may be more "Delta neutral" stablecoins competing for liquidity for short-selling transactions on centralized exchanges (CEX) next year, and the range of hedging assets will also expand from BTC and ETH to public chain tokens with higher risks and poorer liquidity, in order to capture the last remaining market segment. As for stablecoins like Usual that use short- and medium-term U.S. Treasury bonds as backing assets, I think the focus will still be on the innovation of protocol tokens and income methods, because in comparison, short- and medium-term Treasury bonds are still the most stable underlying assets. For the CEX market with limited liquidity, this type of stablecoin has less competitive pressure and a higher theoretical growth ceiling.
In general, stablecoins are gradually evolving towards more stable underlying assets and decentralized governance. But what I am most looking forward to is whether a truly fully decentralized stablecoin protocol that does not require over-collateralization will emerge next year.
3. Payment
As countries relax their regulation of stablecoins and accelerate their adoption, the payment field downstream of stablecoins will also become the focus of a new round of competition. Heterogeneous public chains with high TPS and low gas fees such as Solana and Move will become the main underlying infrastructure for payment applications. Traditional payment has long been a mature and competitive red ocean market, so what kind of innovation can blockchain bring to payment? The two most commonly mentioned points are: one is to optimize cross-border payments, avoid the need for pre-funding, and make cross-border remittances faster, cheaper, and simpler, thereby solving the problem of trillions of dollars being occupied by pre-funding in the traditional system; the second is to serve emerging markets. As I mentioned in my previous article, the application value of stablecoins in Asia, Africa, Latin America and other regions has been initially verified. With the strong financial inclusion provided by stablecoins, residents of third world countries can more effectively cope with high inflation caused by government turmoil, participate in global financial activities, and subscribe to the world's most cutting-edge virtual services.
The concept of "PayFi", proposed by Solana Foundation manager Lily Liu at the 7th EthCC conference, has brought more possibilities to the combination of blockchain and payment. Its core includes two points: one is real-time settlement, that is, T+0 settlement. PayFi can achieve multiple settlements on the same day, get rid of the delays and cumbersomeness of the traditional financial system, and greatly improve the turnover rate of funds; the second is the Buy Now, Pay Never (BNPL) model. For example, a user deposits $50 in a loan product and goes to buy a $5 cup of coffee. When the interest generated accumulates to $5, this part of the interest is used to pay for the coffee, and then the funds are unlocked and returned to the user's account.
Many use cases can be derived from this. For example, in terms of financing needs for emerging projects, PayFi can provide a safer and more transparent access channel; when traveling abroad, there is no need to exchange currencies through various physical financial institutions; the time of payment and collection can be more flexible (delaying collection to earn interest, paying in advance to enjoy discounts); in addition, the way of earning income will become more diverse. In addition to depositing stablecoins in lending products to earn interest, I personally believe that different types of stablecoins should also be allowed to be easily interchangeable. In the future, as more emerging stablecoins enter the market, users can choose the most suitable type of stablecoin according to their own risk preferences, and at the same time obtain stablecoin protocol tokens and higher stablecoin interest. If this payment system can go mainstream, then its potential in the field of DeFi will be very considerable.
4. Decentralized Exchange (DEX)
As mentioned above, Layer 2 fragmentation and non-interoperability are still headaches. However, there is another problem with this development path: excess block space. The speed of infrastructure construction far exceeds the growth of decentralized applications (DApps) themselves. This problem is likely to naturally eliminate many long-tail public chains in the next few years, and it has also become a major problem for Ethereum to obtain positive feedback on the data availability (DA) pricing mechanism.
Looking back at the public chains that have gained development opportunities counter-cyclically, most of them rely on strong communities, strong ecosystems, and marketing advantages to bring opportunities to asset issuance platforms, thereby quickly increasing the overall TVL. Not every Layer 2 can replicate this "attention economy" model. The lack of killer applications will continue in the coming year. Continuing this line of thought, in addition to the potential demand for AI agents mentioned above, the more clear directions in the short term include on-chain order book DEX, privacy solutions, payment-related technology stacks, and decision-making tools.
Personally, I am optimistic that on-chain order book DEX will become the mainstream of the next generation of decentralized exchanges. After all, judging from the development history of AMM, its technical path is becoming increasingly complex, but the marginal efficiency improvement is becoming increasingly limited. This is also mentioned in our previous article on Uniswap. However, for most Layer 2s, the limitations in performance and Gas costs are still obvious. Therefore, innovation in matching algorithms and Gas solutions will be a key challenge.
5. Asset issuance is still the mainstream
From 2023 to now, from engraving to the current AI Meme platform, there have been many hot topics surrounding asset issuance in the past year. If we extend the timeline a little bit, since the ICO era, "asset issuance" has always been the core proposition of the entire crypto circle, but the packaging and threshold are constantly changing.
On the positive side, users' demand for market participation has driven the early development of the underlying infrastructure and DeFi. When this technology is recognized and widely used, blockchain begins to move towards the mainstream and integrate with the real world. On the negative side, the competition in the market is becoming more and more pure and absurd. The lower the threshold for asset issuance, the more dangerous this "dark forest" is. With just a few clicks, a few pictures and a few lines of copy, a large-scale zero-sum game can be initiated. However, why not take this model to the positive side and promote the progress of the industry?
For example, some AI Meme projects have begun to evolve into practical AI agents, rather than the previous "paper AI" that only outputs randomly. In addition, the recently popular DeSci can also be regarded as a "scientific version of ICO". Although its core is still mainly memes, in the long run, injecting the advantages of blockchain into the traditional scientific research field can make scientific research more transparent, easier to spread, easier to obtain funds, and easier to collaborate. As for whether it can be implemented in practice or how it will evolve, it is still unknown.
In fact, the idea behind DeSci is similar to my view when discussing GameFi, that is, how blockchain can effectively promote the development of independent games when small and medium-sized game studios lack funds and manpower. However, the main problems faced by financing under the blockchain model are still too low issuance thresholds, too few restrictive clauses, and too strong financing capabilities (which can also be attributed to the extremely low entry threshold of blockchain itself). How to constrain the use of funds through rules and force project parties to continue to create products with real value is the focus we should pay attention to.
Let speculators compete and builders move forward. This is the premise for the sustainable development of blockchain. There may be more iterative versions of "ICO" emerging next year, but what I expect is that in this grand game, we can witness the rise of the next "DeFi Summer".
About YBB
YBB is a Web3 fund dedicated to exploring potential projects that define Web3, with the goal of creating a better online home for all Internet residents. YBB was founded by a group of believers who have been deeply involved in the blockchain industry since 2013 and are always willing to help early projects evolve from 0 to 1. We value innovation, self-drive, and user-centric products, while recognizing the potential of encryption and blockchain applications.
