Author: YBB Capital Researcher Zeke
Preface
Starting from the wave of inscriptions, to the election of the world's first crypto president, 2024 is about to come to an end. This year, Crypto has experienced an extraordinary 'bull market,' with altcoins performing weakly, memes dominating, and ultimately all rivers flowing back to BTC. Overall, although there have been some lows and frustrations, Crypto is indeed moving towards a more positive direction. In the upcoming 2025, we also have many directions worth paying attention to. In this article, we will briefly look ahead to next year based on recent viewpoints.
I. About AI
At the current stage, chain abstraction projects often become exceptionally complex due to overly pursuing conceptual perfection, ultimately affecting user interaction experience. Projects with intent architecture tend to have relatively complex implementation methods, whether based on centralized designs (like TG Bot), structured designs (combining on-chain and off-chain preprocessing), or distributed designs (like Solver + Executor architectures). These intent projects often share common issues. For example, users still need to have a considerable understanding of DeFi, and the expression of intent must be clear, accurate, and simple. For complex and vague intents proposed by users, the current intent projects often present a sense of powerlessness, and the scope of realization is quite limited. Therefore, since Paradigm proposed this concept in mid-2023, projects centered on intent have consistently shown more noise than signal, providing little help in guiding new users and lowering operational thresholds. However, we all know that from the development path of Ethereum Layer 2, the market's demand for both remains urgent.
Let's review the development of Layer 2 over the past few months. The Layer 2 alliance, represented by the OP Superchain among leading projects, has gradually grown stronger. Zksync's Elastic Chain and Arbitrum Orbit will also eventually form their own alliances along this path. These alliances will be able to achieve direct interoperability in the future through solutions such as interoperable clusters, alleviating the current issues of excessive fragmentation and lack of interoperability in the Ethereum Layer 2 ecosystem. The competition among dozens of chains will shrink to a contest among multiple forces. However, from a broader perspective, as the crypto market continues to improve, new Layer 2 projects with architectures like Movement and Fuel are also competing to launch their own mainnets to capture the scarce liquidity in the altcoin market. For projects in the second tier and below, fragmentation and lack of interoperability are still intensifying. There can even be cases where virtual machines based on different architecture designs do not have wallet plugins that communicate with each other. It's difficult to attract new users; for ordinary blockchain users, the entire Layer 2 ecosystem is extremely complex, and the development of non-financial application chains will face great resistance under these circumstances.
For Ethereum to attract new users, ecological alignment is the biggest prerequisite. An ecosystem that requires users to be half-geeks to get started will never welcome 'Mass Adoption.' Looking at the counter-trend development performance of Solana and Ton this year, the strategies of lowering user thresholds and providing a consistent, Web2-like user experience have clearly played an important role in ecological growth. To put it more directly, these two ecosystems have done little beyond their promotional efforts but reduce the difficulty of asset issuance, making the use of the chain feel less apparent. Therefore, for Ethereum, a comprehensive solution that prioritizes experience is essential. However, given the consistent open attitude of Ethereum's core developers, it is naturally impossible to align the entire Layer 2 ecosystem through coercion.
I believe that the solution that can first solve this problem is only the AI browser agent. Many people envisioned the revolution of AI in app interactions early on with the emergence of ChatGPT, which could operate across multiple apps, forming a comprehensive super app. Taking travel as a common scenario, after receiving user travel demands, AI can automatically complete ticket booking, customize travel routes, and arrange dining and scheduling based on what the user describes. If this AI also possesses long-term memory capabilities, it can arrange plans that better suit the user based on that memory.
Now, Google is about to launch the AI browser agent driven by Gemini, Project Mariner. In a demonstration by Google Labs Director Jaclyn Konzelmann, after the AI agent extension is installed in the Chrome browser, a chat window pops up on the right side. Users can instruct the agent to perform tasks such as 'create a shopping cart from the grocery store based on this list.' The AI agent then automatically navigates to a grocery platform, adds the items to the cart, and proceeds to checkout. Once the user verifies everything is correct, they will check out themselves (the agent does not have payment authority). A similar product will also be launched by OpenAI next month.
It is worth mentioning that although Google's Project Mariner is currently only available to selected testers, I have already experienced similar agents developed for ordinary users in some crypto projects. From a few hours of trial use, the current agents can achieve an accuracy level of about 60% to 70% for complex and vague intents (the cursor operation speed is relatively slow), and they can autonomously complete tasks such as token trading on various public chain DEXs and even cross-asset transactions from Ethereum to Layer 2. During this process, all I need to do is inform it of my intent and enter my wallet password.
Of course, this base still needs to call the APIs of centralized models. So what kind of collision can Crypto generate with them? I believe that AI browser agents will not only become a better experience for intent solutions but also drive the emergence of AI wallets, decentralized computing power, and decentralized data projects in the coming year.
Consider a simple question: why has it taken until today to realize the beautiful concept of an Agent during these years of rapid AI development? In fact, looking back at the development process of OpenAI, it is not difficult to find that the development of pure language models has always been faster than that of models for image generation, as the internet itself is a vast corpus, providing endless text materials for training. The limitations on the development of language models are more about computing power and energy. On the other hand, agents require a lot of human labeling and feedback, and the reasoning process is expensive. Crypto inherently possesses the capability to obtain labor through incentives. In this economic system, upper-layer users can provide a large amount of labeled data and feedback in a decentralized manner to obtain tokens, while the lower layer can integrate decentralized computing power and data projects. After training, it can also integrate with wallets and DeFi projects through SDKs to create a true AI wallet, ultimately forming a closed loop. Other ideas for AI agents can also be derived from this, as any AI agent applicable to Web3 will need computing power, labeling, and feedback to 'grow.'
II. Stablecoins
Stablecoins will always be a battleground and a highly competitive field in crypto. Regarding their application value, they have gained relatively broad recognition even outside the industry. For instance, this year, several giants in traditional finance have also ventured into the stablecoin market, including PayPal's PYUSD, BlackRock's USDb in partnership with Ethena, and VanEck's AUSD (serving regions like Argentina and Southeast Asia).
As Tether and Circle continue to deepen their dominance in this field, new entrants to the stablecoin issuance market are gradually dividing into two categories. Firstly, issuers of fiat-backed stablecoins are starting to focus on emerging markets primarily in South America and specific application scenarios, while algorithmic stablecoins are generally turning towards stablecoins backed by low-risk financial products. For example, Ethena and Usual, which we mentioned in the previous article. From a trend perspective, next year will see more delta-neutral stablecoins competing for short liquidity in CEX, while hedging assets will gradually expand from BTC and ETH to higher-risk, lower-liquidity public chain tokens to compete for the remaining downward market. As for Usual-type stablecoins backed by mid- and short-term U.S. Treasury bonds, I believe more innovation will occur in protocol tokens and ways of earning, as there are no better choices than mid- and short-term Treasury bonds in terms of asset types. However, compared to the limited liquidity in CEX, competition for these stablecoins will be smaller, and the ceiling for growth will be larger.
Overall, the development of stablecoins is gradually moving towards pursuing more stable underlying assets and decentralization in governance. However, I hope that next year we will see some completely decentralized and non-overcollateralized stablecoin protocols emerge.
III. Payment
With the compliance and accelerated adoption of stablecoins in various countries, the downstream payment track for stablecoins will also become a new competitive focal point. Heterogeneous public chains like Solana and Move, which have high TPS and low gas fees, will become the main infrastructure for payment applications. Traditional payments have already matured into an extremely competitive red ocean market; what kind of transformation can blockchain provide? First, two relatively simple and often mentioned points: one is optimizing cross-border payments, eliminating pre-financing requirements, making remittances faster, cheaper, and easier, and solving the pre-paid capital issues worth trillions of dollars in traditional systems. The second is serving emerging markets. I mentioned this in previous articles: in regions like Africa and Latin America, the application value of stablecoins has already been demonstrated. Strong financial inclusivity enables residents of third-world countries to effectively cope with the high inflation of currencies brought about by government instability. Through stablecoins, they can also participate in global financial activities and subscribe to the most cutting-edge virtual services.
The concept of 'PayFi' proposed by Solana Foundation Manager Lily Liu at the 7th EthCC conference provides more imagination for the integration of blockchain and payment. This concept involves two core elements: first is timely settlement, that is, T+0 settlement. PayFi can achieve same-day settlement and even multiple settlements in a single day, eliminating the delays and complexities traditionally involved in the financial system, significantly increasing fund circulation speed. Secondly, it involves buy now, pay never (BNPL), for example, a user deposits $50 into a lending product to buy a coffee worth $5. Once the accumulated interest reaches $5, that interest will be used to pay for the coffee, and the funds will be unlocked and returned to the user's account.
There are many ideas that can be extended from this, for example, the financing needs of emerging projects in usage scenarios can form more secure and transparent entry and exit through PayFi in blockchain. Currency exchange during travel no longer requires various physical financial institutions, and there can be free control over payment and collection times (delayed collection to gain interest, advance payment to receive discounts). The ways to earn will also become more diverse. Besides the interest earned by depositing stablecoins in lending products mentioned above, I personally believe that the types of stablecoins should also allow for easy conversion. In the future, with the substantial emergence of new stablecoins, users can choose the most suitable type of stablecoin based on their personal risk tolerance, thus obtaining both stablecoin protocol tokens and higher stablecoin interest simultaneously. For DeFi, if this payment system can become mainstream, its growth potential will be unimaginably huge.
IV. DEX
We have already mentioned the fragmentation and lack of interoperability in Layer 2 in the first section. This development path also faces an issue, namely the excess of blockchain space, where the development of Infra far exceeds that of DApps. This problem will lead to a natural elimination of many long-tail chains within a few years, which is also a very troublesome problem for Ethereum, where the pricing of DA has not received positive feedback from Layer 2.
Looking back at the recent counter-trend growth of public chains, it is essentially reliant on their strong community, ecosystem, and promotional advantages, providing these advantages to asset issuance platforms to achieve rapid growth in overall TVL. Therefore, not every Layer 2 can replicate this eyeball economy; the lack of super applications remains a reality to face next year. Following the trend, aside from what we mentioned above, future demands related to AI agents may be a way out. In the short term, other clear trends include on-chain order book DEXs, privacy, payment-related stacks, and decision-making tools.
Personally, I am optimistic that on-chain order book DEXs will become mainstream among the next generation of DEXs. After all, looking at the development of AMM, the complexity of its technological path is continuously increasing, but the efficiency gains are becoming more limited, as we have mentioned in our articles related to Uni. However, for Layer 2, the limitations in performance and gas are still quite evident, and the improvements in matching algorithms and innovations in gas solutions will become key challenges.
V. Asset issuance remains the main theme
From 2023 to today, from inscriptions to the current AI meme platforms, the method of providing asset issuance has been a hot topic over the past year. If we extend this time span a little, asset issuance has, in fact, been the only main theme in the crypto world since the ICO era. However, the external packaging and the thresholds for issuance are changing. From a positive perspective, users' demand for games has driven the advanced development of Infra and DeFi. As this technology becomes known and recognized by the world, blockchain can step into the mainstream and integrate into reality. From a negative perspective, this game has become more pure and absurd. The ease of asset issuance means that this dark forest has become more dangerous. Now, with just a click, accompanied by an image and a few words, a grand zero-sum game begins. Why not steer it back to a more positive side? Promote progress in the industry through the game.
For example, some current AI memes are also starting to shift towards the development of practical agents, rather than the early versions of AI agents that spoke nonsense. The recently popular DeSci can also be referred to as 'research-version ICO.' Although the current kernel is driven by memes, in the long run, combining the advantages of blockchain can make traditional scientific research more transparent, easier to spread, easier to finance, and easier to communicate. However, whether it can ultimately be implemented and how it will evolve still needs to be questioned.
In fact, similar ideas to DeSci have been mentioned in my articles about GameFi, such as the funding and personnel shortages in independent games, and how to effectively promote the development of independent games through blockchain. The problem with blockchain financing is that the threshold for asset issuance is too low, restrictions are minimal, and fundraising capabilities are too strong (which can also be said to be due to the extremely low entry barrier on-chain). How to impose rules to limit the use of funds and force project parties to continuously create truly valuable things is also a key point we should consider.
Let the players play, let the builders move forward; this is the premise for blockchain to continue to develop. Next year, we may see more versions of 'ICO,' but I hope that in this feast of games, we can push out the next 'DeFi Summer.'
