Author: @Web3_Mario
Abstract: Thank you all for your support over the past year. I apologize that my year-end summary comes a bit late, as I was delayed by some matters. I have also thought for a long time about which angles to share my insights from this past year. In the end, I feel that sharing from the perspective of an ordinary Web3 entrepreneur still striving on the front lines will be more genuine. Overall, looking ahead to 2024 and 2025, I think it is appropriate to summarize in four sentences: from grassroots to universality, from chaos to order, from recession to bubble, and from conservatism to transformation. Next, I will share some representative events that I believe illustrate my thoughts and outlook.
From grassroots to universality: The approval of the BTC spot ETF has opened the curtain on the universal path for crypto assets.
Reviewing 2024, the author believes that the most unusual transformation in the crypto world is the upgrade from a niche subculture to an asset class with universal value. This journey can be traced back to two landmark events: the first being the BTC spot ETF approval event on January 10, 2024, which was formally approved with the SEC's approval after three months of deliberation. The second was on November 6, 2024, during the current U.S. election cycle, when crypto-friendly Trump was successfully elected as the 47th President of the United States. Both events can be seen in the two distinct price movements of BTC this year. The former raised BTC's price from the $30,000 range to $60,000, while the latter was instrumental in BTC's rise from $60,000 to $100,000.
The most direct impact of this transformation is in terms of liquidity. More abundant liquidity naturally favors the price trends of risk assets, but the process and motives for attracting liquidity differ from those in the 2021 bull market. Looking back at the 2021 crypto asset bull market, the core driving force primarily stemmed from the deregulated nature of crypto assets, which led to higher capital efficiency. This allowed the crypto sector to capture excess liquidity generated by the $1.9 trillion economic relief package promoted by the Biden administration in response to the COVID-19 pandemic, resulting in super-high speculative returns.
However, in the current bull market that began in 2024, we can see a shift in the entire transmission process. Capital categorized as 'influential' attracted during the 2021 bull market and new vested interests have formed a new interest group, actively releasing greater political influence, not limited to numerous lobbying groups for crypto policy and massive political donations. Regarding this, the author has conducted a more in-depth analysis in a previous article (In-depth analysis of the value of World Liberty Financial: New choices under Trump's campaign funding disadvantage).
The most direct impact of this is that it has made it possible to efficiently implement the universal value of cryptocurrencies through political means. Therefore, in this cycle, you will see iterative discussions about the value of crypto assets emerging. Furthermore, more traditional elite classes and mainstream media have labeled themselves as 'crypto-friendly.' This transformation from 'grassroots' to 'universality' has also profoundly influenced the motives for attracting liquidity. Whether or not the viewpoints are backed by sufficient arguments (which has been discussed in previous articles, such as 'In-depth analysis of the underlying reasons for the current fluctuations in the crypto market: Value growth anxiety after BTC hits new highs'), in this cycle, BTC's purchasing power, besides speculation, indeed mixes in more terms like 'store of value,' 'anti-inflation,' etc. This will reduce the cyclicality and volatility brought by the speculative attributes in crypto assets, providing more robust value support. Currently, only a few blue-chip assets, including BTC, seem to enjoy this positive change. However, with the multiplier effect brought about by this transmission effect, the entire crypto asset market will benefit to some extent. A diagram might illustrate this transformation more intuitively.
In addition to the impact on the top-tier classes, this evolution has also brought about a significant positive mindset shift for many practitioners, including the author. The most direct example is that when friends and relatives outside the circle inquire about your industry, you no longer need to explain, as in the past, that you are not a criminal or a nouveau riche. Now you can proudly introduce your profession or career. This mindset shift will also make talent inflow more proactive, significantly reducing friction costs in processes such as seeking partners for entrepreneurship, recruiting talent, and collaborating with traditional industries. Therefore, regarding this, the author is full of confidence in the future development of the industry.
Finally, some outlooks on this narrative path should be mentioned. By mid-2025, discussions about the value of crypto assets represented by BTC will be more positive. Previous articles have analyzed this, specifically referring to BTC's store of value and its potential to succeed AI as the core of U.S. stock market growth. Therefore, it is necessary to remain sensitive to relevant information, which may include the following aspects:
Progress of relevant bills regarding Bitcoin reserves at the national, regional, organizational, and corporate levels;
Statements or viewpoints expressed by key political figures with political influence;
The configuration of BTC in the balance sheets of publicly listed companies in the U.S.;
From chaos to order: The regulatory framework for the crypto industry of global sovereign states will be further improved, and Web3 business scenarios will have data to support their breakthrough.
The author's second observation path is 'from chaos to order.' For a long time, a core narrative in the cryptocurrency industry has been the resistance to censorship brought about by decentralization and anonymity. You can find similar discussions in most Web3 applications from the previous cycle, which undoubtedly contributed significantly to the early identification of value support in the Web3 industry, but also brought considerable harm to the industry, such as fraud, money laundering, and other criminal activities.
However, the author believes that the industry will iterate in this direction. This does not mean completely abandoning Web3 fundamentalism, but rather from a pragmatic perspective, the current crypto industry will undergo a transformation from chaos to order, accompanied by the further improvement of regulatory frameworks for the crypto industry by sovereign states worldwide. We know that among the many 'crypto game hotspots' in 2024, the change of SEC Chairman Gary Gensler is highly anticipated. Under this crypto-unfriendly chairman, the SEC has prosecuted numerous American crypto companies, such as Ripple and Consensys, causing bottlenecks in the operations and expansion of these giants. In a previous article (Buy the rumor series: Expectations of improved regulatory environment heat up, which cryptocurrency benefits the most?), Lido was analyzed clearly as a case in this direction.
However, with Trump's inauguration and his deregulatory policy preferences, coupled with Gary Gensler's succession, a more lenient, inclusive, and crypto-friendly regulatory framework is to be expected. From the recent progress in relevant case rulings, such as Ripple and Tornado Cash, this framework is not far off.
The most direct benefit of this change is that it has made it possible for Web3 business scenarios to break out of their confines with data to support them, without bearing many potential legal risks. In the upcoming year of 2025, the author will particularly observe the progress of such events. Everyone should also remain sensitive to similar information, including results of other lawsuits, proposals and advancements of relevant bills, changes in SEC personnel appointments, and statements and views from key decision-makers. Regarding potential breakout businesses, the author is particularly interested in two aspects:
l Ce-DeFi scenarios: Connecting traditional financial instruments with on-chain tools like crypto assets to enhance capital efficiency and reduce transaction friction costs. From the perspective of capital flow, it can be divided into two major categories: first, capital flowing from the traditional finance world to on-chain crypto assets, such as the financial innovations of MicroStrategy. Second, capital flowing from on-chain crypto assets to the traditional finance world, specifically referring to bond-based RWAs, on-chain financing channels similar to Usual Money, and stablecoins in the TradeFi sector.
l Scenarios of DAOs in managing off-chain entity businesses: This direction seems a bit arbitrary. Due to Trump's policies easing regulatory measures related to cryptocurrencies and the boost in domestic demand from 'America First,' will more organizations or companies leaning towards traditional businesses choose to use the DAO model for internal governance to exchange for cheaper financial services? To illustrate, if someone wishes to open a Chinese restaurant, they could choose to operate through a DAO and integrate a stablecoin-based payment system, making all cash flows transparent. If regulatory policies are further relaxed, the company's financing and dividend processes could also be accommodated through the DAO.
From recession to bubble: Traditional Web3 business development focuses on three main axes: more innovative grand narratives, more robust business revenues, and more balanced interest game models.
The author's third observation path is 'from recession to bubble.' We know that in 2024, traditional Web3 business hotspots underwent a significant transformation. In the first half of the year, represented by the LRT market driven by EigenLayer, it mainly exhibited characteristics of industry recession. Due to a lack of widespread profitability, in the context of the existing game, capital clustered together, choosing to gather in a few sectors with potentially massive market scales but practical business implementation further out, using time to exchange for space. By raising valuations and pairing them with 'points strategies,' they avoided chip dilution, thus exploiting users, as discussed in the author's previous article (Web3 oligarchs are exploiting users: From Tokenomics to Pointomics).
However, with the improvement of the market environment around mid-year and the underwhelming performance of LRT sector token prices, the hotspots gradually transitioned to application layers represented by TON Mini Apps. Compared to infrastructure, the application layer is favored by capital due to more target options, lower development costs, shorter landing cycles, and more controllable iterative benefits. At this point, the market quickly emerged from the shadows of the recession.
As we enter the second half of the year, with the Federal Reserve entering a rate-cutting cycle and the FUD issues surrounding VC coins, traditional capital exit pathways are disrupted, and the market quickly enters a state of bubble. Capital is increasingly chasing meme coins, which offer a shorter exit cycle in pursuit of higher capital turnover rates. In addition to meme coins themselves, launch platforms like Pumpfun and updated tools incorporating narratives like AI Agents are also being pursued by the market.
Looking ahead to the next year, the author believes that traditional Web3 businesses will develop according to the bubble cycle model.
l Updated grand narratives: We know that capital likes to chase high-growth tracks, the core reason being the immense imaginative potential and tolerance for current delivery, which allows valuation bubbles to be larger. It also attracts market traders and new capital to enter, making it easier for investors to exit through the secondary market at the right time. Therefore, regardless of whether one recognizes the long-term value of a certain track, as long as it is logical, it can become a target for capital speculation during bull market bubbles. Hence, from the perspective of chasing capital gains, one should maintain sensitivity.
l More robust business revenue: For some tracks that have undergone a round of iteration, the valuation model will return to a reasonable range, and the pursuit of real income will become the main theme of industry iteration. This raises higher demands for refining commercializable potential; however, if a certain scenario can truly be explored, the market potential will be limitless. Here, it specifically refers to the DeFi track, or the Ce-DeFi track. The author is personally quite interested in the interest rate trading market and welcomes those with similar ideas to discuss with the author.
l A more balanced interest game model: We know that traditional VC coins are currently suffering from FUD, and more issues stem from the traditional financing model causing the game relationship between project parties, primary market VCs, and secondary market investors to fall into a prisoner's dilemma regarding individual optimal strategies. Each prisoner believes the other may betray, thus choosing to betray (ensuring their own release or reducing penalties). Hence, in this new environment, whether a better model can be found is also worthy of attention. For example, the author believes HyperLiquid is very likely to discover some of the secrets, which is also a key focus for future research.
From conservatism to transformation: A rare opportunity for risk assets due to significant uncertainties.
The author's fourth observation path is 'from conservatism to transformation.' It needs clarification that conservatism and transformation here are neutral terms, where conservatism means compliance with existing rules, while transformation implies breaking them. The main theme of 2025 will certainly be major changes in the economic and cultural fields triggered by political transformation, with the entire process filled with uncertainties stemming from the collapse of the old order. For example, uncertainties related to the U.S.-China government debt crisis, uncertainties in monetary policies of various countries, uncertainties in changes in mainstream social values, uncertainties in international relations, etc.
The uncertainties brought about by these changes result in massive volatility in the risk market. Of course, if sector rotations push the industry into a positive momentum, such volatility can be beneficial, and vice versa. A recent news flash piqued the author's interest in this direction, stating that the FTX restructuring plan will take effect on January 3, allowing users to start receiving repayments.
We know that in the previous cycle, the mainstream political spectrum in the tech industry was relatively biased toward the Democratic Party. Therefore, it is believed that many prominent figures who entered during the last bull market might not fare well after Trump's return. Consequently, utilizing the window of opportunity before his official inauguration, it is understandable for them to try to inflate relevant prices to mitigate the risks associated with their held assets. Here, a slightly conspiratorial perspective: some Deep State capital suffered significant losses due to the bankruptcy of FTX and the collapse of the crypto industry. Therefore, after Trump's victory, they spared no effort in using many political means to elevate crypto asset prices to an exaggerated level, thereby reviving some already devastated balance sheets and avoiding their losses.
From the FTX case, the author has also gained some insights. Therefore, in 2025, the author is quite interested in the development of the NFT track, as it seems there are some similarities between the two. Combined with new speculative narratives like AI Agents, it is not impossible for the NFT market to usher in a second spring.