Author: YBB Capital Researcher Zeke
Introduction
Starting from the craze for inscriptions and concluding with the election of the first crypto president, 2024 is coming to an end. This year, Crypto has experienced an extremely unusual 'bull market', with altcoins performing weakly and Meme taking precedence; in the end, all rivers and streams return to BTC. Overall, despite some lows and frustrations, Crypto is indeed moving towards a more positive direction. In the upcoming year of 2025, there are many directions worth paying attention to, and in this article, we will combine recent viewpoints to make a brief outlook for next year.
1. About AI
At the current stage, chain abstraction projects often become exceptionally complicated in their technical implementation process due to an excessive pursuit of conceptual perfection, ultimately affecting the user interaction experience. Projects that include Intent architecture tend to be relatively complex, whether they are designed based on centralized (like TG Bot), structured (combining on-chain and off-chain preprocessing), or distributed (like Solver + Executor architectures). These intent projects often share some common issues. For instance, users still need to have a certain level of understanding of DeFi, and the expression of intent must be clear, accurate, and simple. For complex and vague intents proposed by users, current intent projects show a sense of powerlessness, and the scope of realization is quite limited. Therefore, since the concept was proposed by Paradigm in mid-2023 until today, the so-called intent-centered projects have always demonstrated a great noise with little effect, providing no significant help in guiding new users and reducing user operation thresholds. However, we all know that from the development path of Ethereum Layer 2, the market demand for both is still urgent.
Let’s review the development of Layer 2 in the past few months. The Layer 2 alliance represented by OP Superchain has been growing stronger, and Zksync's Elastic Chain and Arbitrum Orbit will eventually form their own alliances along this path. These alliances will be able to achieve direct communication internally through interoperability clusters and other solutions in the future, alleviating the current excessive fragmentation and lack of interoperability issues in the Ethereum Layer 2 ecosystem. The competition among dozens of chains will also shrink into a competition among multiple powers. However, from a broader perspective, as the crypto market improves, new architecture Layer 2 projects such as Movement and Fuel are also competing to launch their own mainnets to capture the scarce liquidity of altcoin markets. For projects below the first tier, fragmentation and lack of interoperability are still intensifying, and virtual machines designed on different architectures may even lead to wallet plugins that don’t communicate with each other. Not to mention attracting new users, for the average user of blockchain, the entire Layer 2 ecosystem is extremely complicated, and the development of non-financial application chains will also face significant 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 start will never welcome 'Mass Adoption'. Looking at the counter-cyclical performance of Solana and Ton this year, it is clear that the strategy of lowering user thresholds and providing a consistent, more Web 2-like user experience has played an important role in ecological growth. To put it more directly, what these two ecosystems have done beyond promotion is simply to lower the difficulty of asset issuance, making the use of the chain more seamless. Therefore, for Ethereum, a comprehensive solution prioritizing experience is essential, but given the consistent open attitude of Ethereum's core developers, it is naturally impossible to align the entire Layer 2 ecosystem through coercive means.
I believe that the only solution that can solve this problem first is the AI browser agent. Many people have envisioned that AI will revolutionize interactions with apps from the early days of ChatGPT, enabling cross-APP operations to form a comprehensive super APP. Taking a common situation like travel as an example, once AI receives the user's travel needs, it can automatically complete tasks like booking tickets, customizing travel itineraries, and arranging meals and times based on what the user says. If this AI also possesses long-term memory capabilities, it can arrange plans better suited to the user based on that memory.
Now, Google is about to launch an AI browser agent driven by Gemini, Project Mariner. In the example demonstrated by Jaclyn Konzelmann, the director of Google Labs, after installing the AI agent extension in the Chrome browser, a chat window pops up on the right side of the browser. Users can instruct the agent to perform tasks such as 'create a shopping cart from the grocery store based on this list.' Then, the AI agent automatically navigates to a grocery platform and adds items to the shopping cart for checkout. After confirming everything is correct, the user will check out on their own (the agent does not have payment permissions). Similarly, OpenAI will also launch a similar product 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 testing, the current agent can achieve an accuracy level of 60-70% for complex and vague intents (with relatively slow cursor operation speed), and can autonomously complete various token transactions within Dex on different public chains, even transferring assets from Ethereum to Layer 2, etc. In 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 API of the centralized model, so what collisions can Crypto generate with it? I believe that AI browser agents, in addition to becoming a better intent solution, will also drive the emergence of AI wallets, decentralized computing power, and decentralized data projects in the coming year.
Consider a simple question: during the rapid development of AI in recent years, why has the beautiful concept of Agent only been realized until today? Actually, 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 image generation models, because the internet itself is a vast corpus that provides an endless supply of text material for training. The limitations on the development of language models are more about computing power and energy. In contrast, agents require a massive amount of manual labeling and feedback, and the reasoning process is expensive. Crypto inherently has the ability to acquire labor through incentives. In this economic system, upper-layer users can provide a large amount of labeled data and feedback in a decentralized way to earn tokens, while the lower layer can integrate decentralized computing power and data projects. Once training is complete, it can also be integrated with wallets and DeFi projects through SDKs to realize a truly meaningful AI wallet, ultimately forming a closed loop. Other ideas about AI agents can also be derived from this, because any AI agent suitable for Web3 will require computing power, labeling, and feedback to 'grow'.
2. Stablecoins
Stablecoins are always a battlefield of contention and a highly challenging track in Crypto. Regarding their application value, they have gained relatively wide recognition even outside the industry. For example, this year, several giants in the traditional financial sector have also entered the stablecoin market, including PYUSD launched by PayPal, USDb in collaboration with BlackRock and Ethena, and AUSD launched by VanEck (serving Argentina, Southeast Asia, etc.).
With the continued dominance of Tether and Circle in this track, new entrants in the stablecoin issuance sector are gradually differentiating into two categories. First, issuers of fiat-backed stablecoins are beginning to turn their attention to emerging markets and specific application scenarios primarily in South America, while algorithmic stablecoins are currently generally shifting towards stablecoins that use low-risk financial products as underlying assets, such as Ethena and Usual mentioned in our previous article. From a trend perspective, next year will see more Delta-neutral stablecoins competing for short-selling 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 medium and short-term U.S. treasury bonds, I believe they are more focused on innovation in protocol tokens and income methods, and there is no better choice in terms of the types of RWA assets than medium and short-term treasury bonds. However, compared to the limited liquidity in Cex, the competition for such stablecoins will be smaller and the upper limit will be larger.
Overall, the development of stablecoins is gradually moving towards pursuing more stable underlying assets and decentralization in governance. However, what I hope for is that next year, there will be some completely decentralized and non-over-collateralized stablecoin protocols appearing.
3. Payments
With the compliance and accelerated adoption of stablecoins in various countries, the downstream payment track of stablecoins will also become a new competitive focus. 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 are already a highly mature and saturated red ocean market; what revolutions can blockchain provide? First, there are two relatively simple and often mentioned points: one is optimizing cross-border payments, eliminating pre-financing requirements, making cross-border remittances faster, cheaper, and easier, thus solving the traditional system's problem of tens of trillions of dollars in pre-paid funds. The second is serving emerging markets; as I mentioned in a previous article, the application value of stablecoins has already been realized in regions like Asia, Africa, and Latin America. The strong financial inclusivity allows residents of third-world countries to effectively deal with the high inflation caused by government instability, and through stablecoins, they can participate in some global financial activities and subscribe to the use of the world's most advanced virtual services.
The concept of 'PayFi' proposed by Lily Liu, manager of the Solana Foundation, at the 7th EthCC conference provides more imagination for the combination of blockchain and payment. This concept involves two core aspects: first is timely settlement, which is T+0 settlement; PayFi can achieve same-day settlement and even multiple settlements within a single day, eliminating the delays and complexities of the traditional financial system involved in the entire process, greatly increasing the speed of fund circulation. Second is buy now, pay later (BNPL), which means 'Buy Now, Pay Never'; for example, a user deposits $50 into a lending product to purchase a $5 cup of coffee. 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, such as using PayFi to form a more secure and transparent entry and exit for emerging projects' financing needs in blockchain, currency exchange during travel no longer needing various physical financial institutions, and free control over payment and receipt times (delayed receipts to earn interest, early payments to receive discounts). The ways to earn will also become more diverse; besides earning interest by depositing stablecoins into lending products, I personally believe that the types of stablecoins should also allow for free conversion. In the future, with the substantial emergence of new stablecoins, users will be able to choose the most suitable type of stablecoin based on their personal risk tolerance at any time, thus obtaining both stablecoin protocol tokens and higher stablecoin interest. For DeFi, if this payment system can become mainstream, its growth potential will be unimaginably vast.
4. Dex
We have already mentioned the fragmentation and lack of interoperability issues of Layer 2 in the first section. There is actually another problem with this development path, which is the oversupply of block space; the development of infrastructure far exceeds that of Dapps. This issue will lead to the natural elimination of many long-tail chains within a few years, which is also a headache for Ethereum, which suffers from mispricing of DA and does not receive positive feedback from Layer 2.
Looking back at this wave of counter-cyclical growth, public chains have basically relied on their strong communities, ecosystems, and promotional advantages, supplying these advantages to asset issuance platforms for rapid overall growth in TVL. Therefore, not every Layer 2 can replicate this attention economy, and the lack of super applications remains a reality to face next year. Following the trend, aside from what we mentioned earlier, future demand for AI agents may be a way out. In the short term, other noticeable trends include on-chain order book Dex, privacy, payment-related stacks, decision-making tools, etc.
I personally believe that on-chain order book Dex will become mainstream among the next generation of Dex. After all, looking at the development of AMM, the complexity of its technical path is constantly increasing, but the efficiency gains are becoming more limited; we have mentioned this in articles related to Uni. However, for Layer 2, the limitations in performance and gas are still quite obvious, and improvements in matching algorithms and innovations in gas solutions will become key challenges.
5. Asset issuance remains the main theme
From 2023 to today, that is from the craze for inscriptions to the current AI Meme platform, the method of asset issuance has been a hot topic over the past year. If we stretch this time span a bit, asset issuance has actually been the only main theme in the coin circle since the ICO era. However, the external packaging and issuance thresholds are changing. From a positive perspective, users' demand for gaming has driven the advanced development of infrastructure and DeFi, and 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 purer and more absurd; the lowered difficulty of asset issuance also means that this dark forest is becoming more dangerous. Nowadays, one just needs to click a button, add some images and sentences, and a grand zero-sum game begins. Why not steer it back to a more positive side? Using the game to promote industry progress.
For instance, some current AI Memes are beginning to shift towards practical Agent development, rather than the earlier versions of nonsensical AI Agents. The recently popular DeSci can also be termed 'scientific research version of ICO'; although its current core is driven by Meme, in the long term, combining various advantages of blockchain, DeSci can promote greater transparency, easier dissemination, easier financing, and easier communication in traditional research. However, whether it can ultimately be implemented and how it will evolve still remains a question mark.
In fact, similar ideas to DeSci have also been mentioned in my articles about GameFi, such as the situation of 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 too few, and fundraising capabilities are too strong (also due to the extremely low entry barriers on the chain). How to impose rules to limit the use of funds and force project parties to continuously create things of real value is also a focus we should consider.
Let the gamers game, let the builders advance, is the premise for blockchain to continue developing. Next year, we may see more versions of 'ICO', but what I hope is that in this feast of games, we can push out the next 'DeFi Summer'.
