Author: Momir, IOSG
Schrodinger's cat is a very interesting thought experiment - simply put, this law summarizes that in quantum mechanics, a macroscopic object can exist in multiple states until you observe it. In the Schrodinger's cat experiment, the cat is placed in a sealed box, and until the box is opened, the cat can be in a superposition of being alive and dead. Only when you open the box does everything 'collapse' into a result: either alive or dead.
This experiment is quite similar to the current cryptocurrency market. Just like that cat simultaneously has two states in the box, the current crypto industry is also in an uncertain phase, with many possibilities coexisting for the future. Only when market changes or external factors intervene will these possibilities become a clear reality.
The 'superposition state' of leading assets
BTC
I. Survival
BTC has the potential to solidify its position as a global reserve asset, truly realizing its vision of 'digital gold.' However, achieving this vision heavily depends on several key factors:
The US government includes BTC in its national reserves and begins purchasing BTC (low probability).
Several governments or central banks from the top 20 economies will treat BTC as a reserve asset (low to medium probability).
More and more publicly traded companies around the world are influenced by MicroStrategy's success and begin to convert large cash reserves into BTC (medium to high probability).
Systemic shocks (such as government or bank collapses) increase BTC's appeal as a hedge against risk, further solidifying its role as a 'safe-haven asset.'
II. Death
If the key scenarios above do not materialize, BTC's future momentum may be weakened:
Government indifference: If major economies are not interested in BTC, market sentiment may become pessimistic, and attention may shift from chasing new highs to concerns about whether large holders like MicroStrategy will cash out or even sell.
MicroStrategy's risk: Currently, MicroStrategy is a strong supporter of BTC, but if its leveraged operations lead to a significant market sell-off, it could become a 'burden' for BTC. Remember how giants like Alameda Research and Three Arrows Capital (3AC) were wiped out by the market? Once the liquidation line is triggered, short-sellers, sensing blood, will hunt down targets, triggering wave after wave of sell-offs. If MicroStrategy goes down this path, the situation could become uncontrollable.
Technical issues: Whether BTC can cope with the challenges of quantum computing is also a major issue. If BTC cannot adapt to this new risk, it cannot fulfill its role as a secure, immutable store of value.
BTC is now like being in a quantum superposition, either becoming the cornerstone of the crypto economy or being seen as outdated technology—everything depends on market attitudes, ultimately leading to which result it will 'collapse' into.
ETH
I. Survival:
ETH is expected to dominate the blockchain field in the future and further strengthen its position as a 'programmable BTC alternative'. So why might institutional investors pay more attention to ETH next? There are many reasons:
Institutional interest: The level of decentralization of ETH is extremely high. Apart from BTC, it may be the only blockchain asset that governments and institutions are willing to accept.
Resistance to quantum computing: In the long run, ETH is more likely than BTC to smoothly transition to a post-quantum technology stage. We expect ETH's transition to be much smoother than BTC's.
Sustainable economy: ETH has a high level of on-chain activity, and the natural fees generated can provide a stable income stream for validators and miners. Its flexible token economics can adjust between inflationary and deflationary models based on market demand, making it far superior to BTC in long-term economic sustainability.
Developer ecosystem: ETH attracts the most developers and has been the preferred ecosystem for development teams for seven years.
Diverse leadership: ETH has multiple teams driving its adoption, including Base (arguably the most important crypto institution in the US), Arbitrum, ZkSync, and Starknet.
Resistance to centralization risks: ETH does not need to worry about a single entity like MicroStrategy monopolizing market discourse as BTC does.
The blockchain trilemma: ETH is the only public chain that has successfully balanced the blockchain trilemma—it has achieved decentralization, scalability, and security through innovative solutions like Rollups. This makes ETH the most technologically advanced and versatile blockchain, suitable for both institutions and retail users.
Ecosystem growth: ETH has a large and active ecosystem. The momentum generated by such a massive ecosystem can maximize ETH's benefits under new policy benefits and clear regulatory policies.
II. Death:
In the worst-case scenario, ETH may miss the entire cycle due to some internal and external risks:
Leadership, leadership, leadership:
Leadership vacuum: Due to the large and decentralized ETH community, this characteristic allows some opinion leaders to continuously create chaos among the ETH community, spreading conflicting statements that make the ETH ecosystem more fragmented.
Cultural challenges: The new US government advocates a cultural shift—from 'woke culture' to 'down-to-earth'. This shift signifies a move from political correctness and moral discussions toward more unconstrained communications. The culture of ETH is often considered more 'woke' than others, emphasizing inclusivity, political correctness, and community-led moral discussions. While these values contribute to diversity, they can sometimes present challenges (inefficient communication, moral judgment, hesitation in making bold decisions). Some vocal members in the community often play the role of moral courts, which can limit direct dialogue and potentially create friction when adopting a more assertive leadership style.
Challenges from competing chains: Competitors like Solana continue to challenge ETH's dominance. Many public chains outside the ETH ecosystem have grown robustly. If this trend continues, ETH's position as the preferred platform for attracting top developers may face further challenges.
In the future, ETH may be hailed as an upgraded version of BTC, becoming the king of blockchains; or it may fall into difficulties due to some intrinsic traits stemming from its lineage.
Solana
I. Survival:
Solana can shine with its flexibility and active community:
The combination of Meme and AI: In 2025, Meme will still dominate the economic attention in the cryptocurrency circle. Under this Meme trend, Solana leads a new wave – in response to the rapid growth of AI Agents in the industry, the visionary Solana team immediately introduced the Agent SDK.
DePIN: Solana's years of layout in the DePIN track can finally yield results. With a large number of DePIN solutions finally landing, Solana has the opportunity to become a leader in integrating blockchain with DePIN.
Developer leadership: Solana focuses on cutting-edge vertical areas and rapid innovation in the industry, challenging ETH's dominance among developers. Solana's focus on the developer community makes it a breakthrough among many ETH challengers.
Institutional certification: If the Solana ETF is approved, it will be a crucial milestone. This indicates that Solana's ecosystem is recognized by institutions, and its status among institutional and retail investors will be further enhanced.
II. Death:
From hunter to prey: Solana has undergone a remarkable turnaround in the past 18 months. Its alternative roadmap and calm response to the FTX collapse have allowed it to reclaim a place among leading blockchains. However, Solana is no longer the underdog but a player with a bit of 'big boss' temperament. As a result, attention among speculative investors has begun to shift toward its competitors, such as Sui, Hyperliquid, Aptos, and Monad. In contrast, these emerging chains all claim to offer fast, integrated solutions, each challenging Solana's position.
Over-reliance on Meme: Solana's rise is inseparable from Meme and speculation. Although this strategy successfully attracted market attention, it also brings the risk of waning speculative enthusiasm for Solana. Without sustainable on-chain activity (such as a thriving DeFi ecosystem or other enduring narratives), the decline of Meme could severely impact Solana's on-chain economy. The attention economy is inherently fleeting; long-term growth of an ecosystem cannot overly rely on market attention.
Developer stickiness: In 2022, Solana experienced the largest developer exodus in blockchain history, and public concerns about Solana's long-term growth stem from this. Solana's success in the past 18 months can be attributed to speculators, but we remain skeptical about whether Solana has cultivated a loyal and resilient developer community during this time. As competition intensifies in the coming years, an excellent developer community will be a moat for Solana to maintain its leading position.
Solana stands at the crossroads of survival and death: its flexibility, active community, and innovative capabilities give it the potential to break through ETH. However, in the face of increasingly fierce competition, speculation, and developer stickiness issues, whether Solana can maintain momentum will determine whether it can continue to dominate the market.
Investment institutions look at the track
2.1 Crypto x AI
Crypto x AI is one of the most innovative and dynamic fields in the industry recently. It has attracted almost out-of-the-box market attention and provides a wide range of imaginative possibilities. Sovereign AI (AI systems driven by decentralized crypto infrastructure) represents a revolutionary opportunity (but there are also many risks in granting such great power to AI). These systems can achieve true autonomy, interacting on-chain with other agents and humans using non-custodial wallets. We may even see AI agents purchasing human services when off-chain tasks need to be performed.
In the months before AI agents became the market focus, we had already written about the potential of this field: The Agent Wars: Silicon Valley Titans vs. Crypto Challengers (Link: https://x.com/momir_amidzic/status/1825895123315458281)
In addition to AI Agents, several other fields within Crypto x AI also deserve our attention, which we have showcased in the Crypto x AI industry map from June 2024:
2.2 DePin
DePIN is a highly innovative and diverse field. It combines crypto economic models with off-chain hardware to tackle many challenges in traditional industries.
Core target industries and application scenarios
DePIN projects cover multiple industries:
In edge computing, DePIN provides distributed processing capabilities for latency-sensitive applications.
In energy and power infrastructure, DePIN can incentivize the adoption of renewable energy.
In the wireless network field, DePIN focuses on community-driven 5G and IoT connectivity, bypassing the limitations of traditional telecom providers.
DePIN supports decentralized crowdfunding solutions in some other important industries (such as mapping and high-precision positioning services).
In computing and storage, DePIN provides decentralized alternatives to traditional cloud services, thus offering secure data storage and processing.
CDN can achieve cost-effective and scalable digital content distribution through DePIN.
Data scraping projects like Grass can build a network of millions of nodes through token incentives. It can leverage the internet bandwidth contributed by participating nodes to scrape massive amounts of data.
While DePIN is a highly promising area, not all DePIN projects are equally promising; the success of individual projects highly depends on their own merits.
We are very optimistic about DePIN projects that can provide clear and measurable value (such as reducing costs, improving efficiency, or entering untapped markets). The success of DePIN typically comes from new business models it implements, which centralized systems cannot replicate. This advantage allows projects to achieve better market penetration, distribution, and accessibility. DePIN can also drive cost efficiency and better unit economics by reducing operating costs or improving resource utilization, making its decentralized model more competitive and sustainable. Additionally, capital expenditure optimization is an important advantage of DePIN projects, as they distribute infrastructure costs to the community through token incentives, achieving faster scaling and broader participation.
On the other hand, we should avoid those DePIN projects that misuse tokenization. Their flawed tokenomics often lead to unsustainable ecosystems. Some projects' tokens do not bring actual efficiency improvements or advancements over traditional methods but rely solely on token incentives to mask potential inefficiencies and subsidize usage costs in the short term. Relying solely on tokenization does not justify decentralization, and sometimes the results can be worse than existing centralized models.
2.3 Payments
Stablecoins have become the mainstream payment medium in the cryptocurrency industry. Due to their programmability, cross-border usability, and increasingly clear regulatory framework, stablecoins are expected to become the standard settlement currency for global payments.
Although stablecoins have clear advantages over fiat currencies in programmability and cross-border liquidity, broader adoption is still constrained by regulatory challenges and inefficient entry and exit mechanisms. However, a pro-crypto US government may provide regulatory clarity, creating a healthier environment for efficient, liquid, and low-cost crypto-to-fiat transactions.
Short-term (1–3 years): Remittances and consumer applications
Stablecoins will first dominate cross-border remittances, providing a faster and cheaper alternative to SWIFT. Debit/credit cards (Visa/MasterCard) associated with cryptocurrencies will also simplify consumption and build bridges between on-chain wealth and real-world transactions. This will benefit those outside the dollar banking system, individuals who have difficulty obtaining traditional payment cards, and crypto holders wishing to conveniently consume their assets.
Medium-term (3–7 years): Commercial adoption
Companies will increasingly adopt stablecoins due to their low fees, instant settlement, and programmability. Companies will be able to seamlessly convert between cryptocurrencies and fiat currencies, providing customers with two payment options. This dual-track approach will enhance efficiency and further integrate stablecoins into mainstream commerce.
Long-term (7 years and beyond): Tax payment in stablecoins
Stablecoins will become mainstream fiat currencies, widely accepted for payments, eliminating the need to convert them into fiat. At that time, stablecoins will disrupt traditional financial infrastructure, promoting low-cost P2P transactions between consumers and merchants, significantly reducing reliance on banks and credit card companies.
2.4 Consumer applications
The consumer applications space is highly exploratory but also harder to define, often overlapping with other areas such as AI, DePIN, and payments. This space encompasses a wide array of applications, including but not limited to AI-driven consumer solutions, consumer-facing DeIN projects, and payment solutions designed for consumers.
In addition to actual application scenarios, consumer applications in the crypto field also contain elements of speculation and gamification. A very important category here is blockchain games. They incorporate elements of speculative economics and Meme, and remain one of the most successful consumer interaction experiments in the industry. These speculative applications often blur the lines between entertainment, finance, and practicality, creating unique opportunities for innovation.
Looking ahead, new experiments combining crypto and consumer applications will bring more opportunities. Game mechanics that incorporate economic incentives show great potential, providing new ways to attract users and drive adoption. The design space in this field is vast, and we expect it to bring groundbreaking innovations by 2025.
IOSG's investment portfolio
1. Usual
2024 will be a very successful year for Usual, reaching $1.5 billion in TVL in just six months, successfully entering the top five stablecoins. The governance token has also been listed on Binance, the largest CEX in the world. Their fierce momentum does not stop, and Usual is expected to break into the top three in the stablecoin market alongside giants like Circle and Tether in the next 12 months. Usual's scalability is on par with its competitors, and their ambitious goals seem within reach.
In terms of DeFi, Usual's strategic partnerships with Ethena, Ondo, and M0 will drive the next phase of growth. Notably, the yield products between Ethena and Usual can adapt to various market conditions—providing high crypto-native yields in bull markets while offering stable RWA-backed returns in bear markets. Meanwhile, in the CeFi space, the integration of Usual as collateral is just beginning. Usual assets will deeply integrate into the foundations of both the CeFi and DeFi ecosystems. As these integrations progress, strong network effects will accelerate adoption and application.
Looking ahead, the Usual team remains focused on building a vibrant ecosystem around Usual assets. With their outstanding execution capabilities, we can fully believe that Usual's innovations and breakthroughs are just around the corner.
We previously published Usual's Thesis: Link, and our story of 'Unusual' with the Usual team: Link
2. BTC ecosystem
Although BTC is the oldest and most mature cryptocurrency, it is still in a very early stage. We have supported a series of pioneering projects around the BTC ecosystem that are shaping the next frontier of BTC's development:
Babylon: Cryptographic breakthroughs that allow trustless BTC staking, enabling BTC holders to secure external networks and earn rewards without relying on intermediaries.
BoB: A hybrid Rollup that uses BitVM v2 for trustless BTC bridging. BoB creates a secure hub by combining Babylon's fast finality with ETH's data availability, allowing BTC to integrate freely with ETH's DeFi ecosystem.
Solv: The largest BTCfi application, redefining BTC's role in decentralized finance by unlocking yields for BTC holders and driving the development of BTC-based financial products.
2025 will be a crucial year, as the innovations and developments in the BTC ecosystem over the years will translate into practical applications. This is one of the real tests of the demand for economic prosperity on the BTC chain. We are confident in BTC's evolution from a store of value tool to a trustless staking, DeFi, and cross-chain interoperability ecosystem.
3. AI track: Theoriq, Phala, Hyperbolic
Theoriq is an AI DePIN project that is redefining the future of AI collaboration. Within Theoriq's framework, AI agents can not only work independently but also collaborate as a dynamic collective. This forward-thinking framework enables AI agents to collectively solve complex problems that single-agent systems cannot address. Theoriq integrates memory-enabled agents, advanced evaluators, and user-friendly tools, ensuring that human feedback remains central to agent development, thus driving compounding value growth. This creates a virtuous cycle: agents continuously learn, adapt, and self-organize while effectively collaborating, creating a continuously improving ecosystem.
Theoriq operates in a self-regulating environment by integrating economic incentive mechanisms. Specifically, agents are rewarded for good behavior and punished for mistakes, maximizing the framework's reliability and accountability. We led Theoriq's seed round in 2022 when Crypto x AI was still a non-consensus idea. Two years later, we are very pleased to see Theoriq enter production.
Phala has always been our long-term investment project. As we recognize Phala's immense potential in shaping the future of Crypto x AI, we recently increased our investment in it. As a pioneer of TEE technology, Phala has a unique advantage in meeting the security infrastructure needs of AI agents.
AI agents rely on TEE technology to securely manage critical assets (such as wallets and social accounts) to ensure privacy, trust, and efficiency without sacrificing performance. In an environment where almost all Infra projects are exploring how to integrate TEE technology, Phala's superior solution is favored by many developers due to its reliability and scalability.
Hyperbolic is revolutionizing the AI infrastructure space. As a leading GPU network, Hyperbolic focuses on inference and provides verifiable inference tools. Additionally, they have pioneered a GPU layer that allows AI agents to rent GPUs via SDK. This innovation enables GPU-rich AI agents to easily access the computational resources they need, driving more complex and efficient workflows.
Hyperbolic inference cloud is a platform where anyone can contribute GPU resources; it fully abstracts the heterogeneity of GPU hardware, making GPUs truly interchangeable. Hyperbolic's execution is excellent, having become the first project to offer some of the most advanced open-source AI models on its platform.
4. Gelato
Five years ago, we recognized Gelato's enormous potential early on. We led Gelato's seed round investment and continued to follow up in subsequent investment rounds. Over the years, Gelato has quietly evolved into the AWS of Web 3.0. Today, if you randomly think of three crypto projects, at least one will use Gelato's tech stack on the backend. Gelato has achieved success in terms of products, with its powerful and versatile tech stack including RaaS, Functions, Relay, VRF, account abstraction, RPCs, bridging, and oracles. Its solutions cover various fields, from payments, DeFi, infrastructure, consumer applications to AI agents.
2025 will be the year when Gelato shifts from silently supporting the ecosystem to telling its story, effectively marketing itself, and building attractive token utility. It is not only expected to be recognized as a key infrastructure layer, but also to become a cornerstone of reliability and innovation in the Web 3.0 space.
5. Staking and re-staking
We have been actively investing in two major themes of the ETH ecosystem—the staking and re-staking ecosystem of 'The Merge' and 'Shanghai Upgrade.' The related projects we have laid out, EigenLayer, ether.fi, Kiln, Renzo, Babylon, and AltLayer, include four that have already been listed on Binance. EigenLayer and ether.fi rank third and fourth among all DeFi protocols, with a TVL of $15.7 billion and $8.4 billion, respectively. Furthermore, ether.fi and Kiln are the fourth and fifth largest ETH staking service providers, with Kiln managing $13 billion in assets.
Looking back at the development of the ETH staking and re-staking ecosystem, we can clearly see that the value of ETH as a multifunctional asset continues to be reinforced and expanded.
As the ETH roadmap progresses and the staking ecosystem matures, its importance in the blockchain industry continues to grow. Through staking and re-staking, ETH not only provides a solid foundation for network security and decentralization, but also showcases its unique attributes as capital, consumer goods, and a store of value by expanding economic security and ecological richness.
In conclusion
The fate of the crypto industry in 2025 is like Schrodinger's cat. Its success or failure is not determined by its intrinsic qualities but by how it is perceived by the outside world. On many levels, value is a construct shaped by collective consensus. BTC may be 'digital gold', ETH may be a pillar of decentralized innovation, and Solana may be a flexible disruptor, but their ultimate fates depend on the narratives we choose to accept and the meanings we assign to their existence.
In a world of infinite possibilities but limited attention like Crypto, market perceptions become the ultimate currency. The crypto market is driven not just by technology or utility, but also by belief, trust, and stories that inspire our imagination. What we pay attention to determines what survives and thrives, just as observing behavior causes Schrodinger's contradictory cat to collapse into a single state. The collective gaze of markets, institutions, and individuals will decide which futures will succeed in the crypto space and which will fade away. Ultimately, what will determine the cornerstone of the future digital economy are our perceptions and views—along with the stories we tell ourselves.
