Article reproduced from: IOSG
Author: Momir @IOSG
Schrödinger's cat is a fascinating thought experiment—simply put, this law summarizes that in quantum mechanics, macroscopic objects can exist in multiple states until you observe them. In the Schrödinger's cat experiment, the cat is placed in a sealed box, and until the box is opened, the cat can exist 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 as the cat in the box simultaneously has two states, the current crypto industry is also in a state of uncertainty, with many possibilities coexisting for the future. Only when market movements occur or external factors intervene will these possibilities transform into a clear reality.
The 'superposition state' of leading assets
BTC
1. Survival
BTC has the potential to solidify its position as a global reserve asset, truly realizing its 'digital gold' vision. However, achieving this vision heavily relies on several key factors:
The U.S. government includes BTC in national reserves and begins purchasing BTC (low likelihood).
Multiple governments or central banks from the top 20 economies will adopt BTC as a reserve asset (low to medium likelihood).
An increasing number of global listed companies, influenced by MicroStrategy's success, are beginning to convert large cash reserves into BTC (medium to high likelihood).
Systemic shocks (like the collapse of a government or bank) enhance BTC's appeal as a hedge against risk, further strengthening its role as a 'safe-haven asset.'
2. Death
If the key scenarios mentioned above do not materialize, BTC's future momentum may be weakened:
Government indifference: If major economies show no interest in BTC, market sentiment may turn pessimistic, and attention may shift from chasing new highs to focusing on 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 leverage operations lead to a significant market sell-off, it could become a 'burden' for BTC. Does everyone remember how giants like Alameda Research and Three Arrows Capital (3AC) were wiped out by the market? Once the liquidation line is triggered, shorts will pounce like they smell blood, triggering waves of sell-offs. If MicroStrategy follows this path, the situation could spiral out of control.
Technical issues: Whether BTC can cope with the challenges of quantum computing is also a big question. If BTC cannot adapt to this new risk, it will not be able to fulfill its role as a safe and immutable store of value.
BTC is now in a state of quantum superposition, either becoming the cornerstone of the crypto economy or being seen as an outdated technology—everything depends on market attitudes and will ultimately lead to which outcome it will 'collapse' into.
ETH
1. Survival:
ETH is expected to dominate the blockchain space in the future and further reinforce its position as a 'programmable BTC alternative.' So why might institutional investors pay more attention to ETH next? There are many reasons:
Institutional Interest: ETH's level of decentralization is extremely high. Apart from BTC, it may be the only blockchain asset that governments and institutions are willing to accept.
Quantum Computing Resistance: In the long run, ETH is more likely than BTC to smoothly transition to a post-quantum technology phase. We expect ETH's transition to be much smoother than BTC's.
Sustainable Economy: ETH has a significant amount of on-chain activity, generating natural fees that can provide stable revenue streams for validators and miners. Its flexible token economics can adjust between inflationary and deflationary models based on market demand, making its long-term economic sustainability far surpass BTC's model.
Developer Ecosystem: ETH attracts the most developers and has been the top choice for development teams for the past seven years.
Diverse Leadership: ETH has multiple teams driving its adoption, including Base (arguably the most important crypto institution in the U.S.), Arbitrum, ZkSync, Starknet, and others.
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 achieves decentralization, scalability, and security through innovative solutions like Rollups. This makes ETH the most technically advanced and versatile blockchain, suitable for both institutions and retail users.
Ecosystem Growth: ETH has a large and active ecosystem. The momentum created by such a vast ecosystem can maximize ETH's benefits under new policy advantages and clear regulatory policies.
2. 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 continually create confusion among the ETH community, spreading contradictory statements, resulting in a more fragmented ETH ecosystem.
Cultural Challenge: The new U.S. government advocates a cultural shift—from 'woke culture' to 'down-to-earth.' This shift implies that society moves away from political correctness and moral discourse towards more unconventional communication. However, ETH's culture is often perceived as more 'woke' than others, emphasizing inclusivity, political correctness, and community-led moral discussions. While these values contribute to diversity, they can sometimes lead to challenges (inefficient communication, moral judgment, and hesitation in making bold decisions). Some vocal members in the community often play the role of moral courts, which limits direct dialogue and may cause 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 thrived. If this trend continues, ETH's position as the preferred platform for attracting top developers will face further challenges.
In the future, ETH may be regarded as an upgraded version of BTC, becoming the king of blockchains; or it may face challenges due to some of its inherent traits.
Solana
1. Survival:
Solana has the potential to shine with its flexibility and active community:
The combination of memes and AI: In 2025, memes will still dominate the attention economy in the crypto circle. Solana leads a new trend under this meme trend—responding to the rapid growth of AI Agents in the industry, the forward-looking Solana team immediately introduced the Agent SDK.
DePIN: Solana's years of efforts in the DePIN field are finally paying off. With a large number of DePIN solutions coming to fruition, Solana has the opportunity to become a leader in integrating blockchain with DePIN.
Developer Leadership: Solana focuses on cutting-edge verticals and rapid innovation in the industry, challenging ETH's dominant position among developers. Solana's focus on the developer community makes it a disruptor among many challengers to ETH.
Institutional Recognition: If the Solana ETF gets approved, it would be a crucial milestone. This indicates that Solana's ecosystem is recognized by institutions, further enhancing its status among institutional and retail investors.
2. Death:
From Hunter to Prey: Solana has undergone a shocking turnaround in the past 18 months. Its alternative roadmap and calm response to the FTX collapse have allowed it to reclaim a position among leading blockchains. However, the current Solana is no longer that dark horse; it has become a player with a bit of a 'leader' temperament. Thus, attention among speculative investors has begun to shift to its competitors, such as Sui, Hyperliquid, Aptos, Monad, and others. In contrast, these emerging chains all claim to provide fast, integrated solutions, each challenging Solana's position.
Over-leveraged Meme: Solana's rise cannot be separated from memes and speculation. While this strategy successfully attracted market attention, it also poses the risk of a decline in speculative enthusiasm for Solana. Without sustainable on-chain activity (like a thriving DeFi ecosystem or other lasting narratives), the decline of memes could severely impact Solana's on-chain economy. The attention economy is inherently very fleeting, and 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 the long-term growth of Solana's ecosystem stem from this. Solana's success over 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, a strong 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 increasing competition, speculation, and developer stickiness issues, whether Solana can maintain its momentum will determine whether it continues 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 significant market attention and provides a broad space for imagination. Sovereign AI (AI systems driven by decentralized crypto infrastructure) represents a revolutionary opportunity (but granting such power to AI also carries many risks). These systems can achieve true autonomy, interacting with other agents and humans on-chain using non-custodial wallets. We may even see AI agents purchasing human services when off-chain tasks are required in the future.
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 in Crypto x AI are also worth our attention, which we have showcased in the Crypto x AI industry map from June 24:
2.2 DePin
DePIN is a highly innovative and diverse field. It combines crypto economic models with off-chain hardware, addressing many challenges in traditional industries.
Core target industries and application scenarios
DePIN projects cover multiple industries:
In edge computing, DePIN provides distributed processing power for latency-sensitive applications.
In energy and power infrastructure, DePIN can incentivize the adoption of renewable energy.
In wireless networking, DePIN focuses on community-driven 5G and IoT connections, bypassing the limitations of traditional telecom providers.
DePIN supports decentralized crowdfunding solutions for other important industries (like mapping and high-precision positioning services).
In computing and storage, DePIN provides decentralized alternatives to traditional cloud services, ensuring secure data storage and processing.
CDNs 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 field, not all DePIN projects are equally viable; the success of specific projects highly depends on themselves.
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 often comes from its novel business models that 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 through reducing operational costs or improving resource utilization, making its decentralized model more competitive and sustainable. Additionally, capital expenditure optimization is a significant advantage of DePIN projects, as it distributes infrastructure costs to the community through token incentives, enabling faster scaling and broader participation.
On the other hand, we should try to avoid those improperly utilized tokenized DePIN projects. Their failed token economics often lead to unsustainable ecosystems. Some projects' tokens do not bring any real efficiency improvements or advantages over traditional methods but purely rely on token incentives to cover potential inefficiencies and subsidize usage costs in the short term. Merely relying on tokenization itself cannot justify decentralization, and sometimes the outcome is worse than existing centralized models.
2.3 Payments
Stablecoins have become the mainstream medium of payment in the crypto industry. With their programmability, cross-border utility, and increasingly clear regulatory framework, stablecoins are expected to become the standard settlement currency for global payments.
While stablecoins have clear advantages over fiat in terms of programmability and cross-border liquidity, broader adoption is still hampered by regulatory challenges and inefficient on-chain and off-chain mechanisms. However, a pro-crypto U.S. 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 faster and cheaper alternatives to SWIFT. Debit/credit cards related to cryptocurrencies (Visa/MasterCard) will simplify consumption and build bridges between on-chain wealth and real-world transactions. This will benefit those outside the U.S. banking system, individuals having difficulty obtaining traditional payment cards, and cryptocurrency holders looking for convenient consumption of assets.
Medium-term (3–7 years): Commercial adoption
Businesses will increasingly adopt stablecoins due to their low fees, instant settlement, and programmability. Companies will be able to seamlessly convert between cryptocurrencies and fiat, 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): Paying taxes with stablecoins
Stablecoins will become mainstream fiat currency, widely accepted for payments with tax knowledge, 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 like AI, DePIN, and payments. This field encompasses a wide range of applications, including but not limited to AI-driven consumer solutions, consumer-oriented DeIN projects, and payment solutions designed for consumers.
In addition to practical application scenarios, consumer applications in the crypto field also contain speculative and gamified elements. A very important category here is blockchain gaming. They incorporate elements of speculative economics and memes, remaining 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 that combine crypto with consumer applications will bring more opportunities. Game mechanisms integrated with economic incentives show tremendous potential, offering new ways to attract users and drive adoption. The design space in this field is vast, and we expect it to lead to 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 and successfully breaking into the top five stablecoins. The governance token has also been listed on Binance, the largest CEX globally. Their fierce momentum does not stop there; Usual is expected to break into the top three in the stablecoin market in the next 12 months, standing shoulder to shoulder with giants like Circle and Tether. Usual's scalability is on par with its competitors, and their ambitious goal seems within reach.
In the DeFi space, 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—offering high crypto-native yields in a bull market while providing stable RWA-backed returns in a bear market. At the same time, in CeFi, Usual's integration as collateral is just beginning. Usual assets will deeply integrate with the foundations of both CeFi and DeFi ecosystems. As these integrations continue to advance, 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, we can fully believe that Usual's innovations and breakthroughs are just around the corner.
We previously published Usual's Thesis: Link, as well as our story with the Usual team 'Unusual': 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 groundbreaking projects around the BTC ecosystem that are shaping the next frontier of BTC's development:
Babylon: A cryptographic breakthrough that allows trustless BTC staking, enabling BTC holders to secure external networks and earn rewards without relying on intermediaries.
BoB: A hybrid Rollup utilizing BitVM v2 for trustless BTC bridging. BoB creates a secure hub by combining Babylon's rapid finality with ETH's data availability, allowing BTC to seamlessly integrate 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 critical year when years of innovation and development in the BTC ecosystem will translate into practical applications. This is one of the real demands we can test for the prosperity of the BTC on-chain economy. 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-looking framework enables AI agents to jointly solve complex problems that a single-agent system cannot tackle. Theoriq introduces agents with memory functions, advanced evaluators, and user-friendly tools, ensuring that human feedback remains at the core of agent development, thus driving compound growth in value. This creates a virtuous cycle: agents continuously learn, adapt, and self-organize while effectively collaborating, creating an ecosystem of continuous improvement.
Theoriq operates in a self-regulating environment by integrating crypto economic incentive mechanisms. Specifically, agents are rewarded for good behavior and punished for errors, maximizing the reliability and accountability of the framework. 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 go into production.
Phala has always been one of our long-term investment projects. As we recognize Phala's immense potential in shaping the future of Crypto x AI, we have 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 key assets (such as wallets and social accounts), ensuring privacy, trust, and efficiency without sacrificing performance. In today's environment, where almost all Infra projects are exploring how to integrate TEE technology, Phala's superior solution is preferred by numerous developers due to its reliability and scalability.
Hyperbolic is revolutionizing the AI infrastructure field. As a leading GPU network, Hyperbolic focuses on reasoning and provides verifiable reasoning tools. In addition, they have pioneered a GPU layer that allows AI agents to rent GPUs through SDKs. This innovation enables AI agents rich in GPU resources to easily access the computing power they need, driving more complex and efficient workflows.
Hyperbolic reasoning cloud is a platform where anyone can contribute GPU resources; it completely abstracts the non-uniformity of GPU hardware, making GPUs truly interchangeable. Hyperbolic's execution is outstanding, and it has 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 the enormous potential of Gelato early on. We led the seed round investment in Gelato and continued to follow up in subsequent funding rounds. Over the years, Gelato has quietly evolved into the AWS of Web 3.0. Today, if you think of three crypto projects at random, at least one will be using Gelato's tech stack in the backend. Gelato has achieved success in product offering, with a robust and multifunctional tech stack that includes RaaS, Functions, Relay, VRF, account abstraction, RPCs, bridging, and oracles. Its solutions cover multiple areas, from payments, DeFi, infrastructure, consumer applications to AI agents.
2025 will be the year Gelato transitions from quietly 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 will also become a pillar 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 Merge' and 'Shanghai Upgrade' staking and re-staking ecosystems. The projects we have laid out include EigenLayer, ether.fi, Kiln, Renzo, Babylon, and AltLayer, four of which have already been listed on Binance. EigenLayer and ether.fi rank third and fourth among all DeFi protocols with TVLs of $15.7 billion and $8.4 billion, respectively. Moreover, ether.fi and Kiln are the fourth and fifth largest staking service providers for ETH, with Kiln managing assets worth $13 billion.
Looking back at the development of the ETH staking and re-staking ecosystem, we can clearly see the value of ETH as a multifunctional asset being continuously reinforced and expanded.
With the advancement of the ETH roadmap and the maturation of the staking ecosystem, 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 properties as a capital, consumer goods, and store of value asset by expanding economic security and ecological richness.
In Conclusion
The fate of the crypto industry in 2025 is like Schrödinger's cat. Its success or failure is not determined by its inherent 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 the pillar of decentralized innovation, and Solana may be the agile disruptor, but their ultimate destinies depend on the narratives we choose to accept and the meanings we assign to their existence.
In a world filled with infinite possibilities but limited attention, the market's perception becomes the ultimate currency. The crypto market is driven not only by technology or utility but also by beliefs, trust, and those stories that can spark our imagination. What we focus on determines what will survive and thrive, just as observation collapses Schrödinger's paradoxical cat into a single state. The collective gaze of the market, institutions, and individuals will determine which futures will win in the crypto space and which will fade away. Ultimately, what will shape the cornerstones of the future digital economy is our perceptions and views—and the stories we tell ourselves.
