Original Source: Messari
Original text translated by: Deep Tide TechFlow
Introduction
It's the end of another year, a time for summarizing and looking forward.
As one of the top research institutions in the industry, Messari has released its annual report (The Crypto Theses 2025), providing a comprehensive description and prediction of the crypto industry's developments in 2024 and trends for 2025.
The report highlights several points, such as the expectation that BTC will mature as a global asset next year, and the speculative nature of memes will continue to attract users.
The report consists of two main parts. First, it starts with 'The State of Cryptocurrency', which includes a brief article about the state of the crypto market in 2024; second, there is a 'Segment Research' that reviews the narratives and forward-looking theories of the main segments.
However, given that the original report spans 190 pages, complete reading is time-consuming; Deep Tide TechFlow has refined and summarized the key content from the original report, presenting the most important views, especially the predictions and outlook for each subsection.
Macroeconomic Environment: Breaking Pessimistic Expectations, Providing Strong Support for Crypto
Key Developments
The economic trends of 2024 have broken many pessimistic expectations, showing extraordinary resilience in the U.S. economy. The Federal Reserve implemented rate cuts of 50 and 25 basis points in September and November, respectively, achieving a relatively smooth policy shift.
The S&P 500 index rose about 27% over the year, ranking among the top 20 historical performances, fully reflecting the market's confidence in a soft landing for the economy. Notably, apart from the unwinding of yen arbitrage trades and short-term fluctuations caused by geopolitical events, the market remained robust overall.
Unique Landscape of the Crypto Market
The crypto market faces dual challenges in 2024. On one hand, it needs to address various risk factors from traditional markets, and on the other, it must overcome industry-specific challenges, including sell-off pressures from the German government, token distribution from Mt. Gox, and investigations into Tether. The market underwent an 8-month consolidation period until the elections became a breakthrough catalyst.
2025 Predictions
The macro environment is expected to provide strong support for crypto assets. Specifically:
· The Federal Reserve has begun to relax the tightening policies since 2022, but has not yet entered a substantial easing phase. This gradual policy adjustment is expected to provide stable support for the market;
· Volatility of various assets has significantly decreased post-election. Based on historical experience, low volatility often leads to even lower volatility, which is particularly favorable for the development of cryptocurrencies like Bitcoin and Ethereum;
· Most importantly, a fundamental improvement in the regulatory environment. Even a relatively neutral regulatory stance will represent a significant improvement over the harsh controls of the past four years. This change is expected to eliminate major concerns for institutional investors entering the market and bring in more incremental funds;
· The stablecoin sector may become a breakthrough point. The bipartisan openness towards stablecoin regulation creates favorable conditions for advancing related legislation in 2025;
Institutional Funds: Full Entry
Significant Changes in the Market Landscape
· In 2024, the entry of institutional funds is no longer just talk. The approval of Bitcoin and Ethereum ETFs marks the formal recognition of the crypto asset class, providing a more convenient access channel for institutional and retail investors;
· BlackRock's IBIT breaks records: the first ETF to reach $3 billion AUM within 30 days of issuance, surpassing $40 billion in about 200 days. This shows strong institutional demand for crypto derivatives;
Diversification of Institutional Participation
· Institutional participation goes beyond ETF investments. Traditional financial institutions are expanding their layout across multiple areas: asset issuance, tokenization, stablecoins, and research have all made significant progress;
· Institutions like Sky (formerly MakerDAO) and BlackRock have launched on-chain money market funds. Ondo Finance's USDY (tokenized treasury fund) has reached an asset scale of approximately $440 million;
Fintech Integration
· PayPal issued its stablecoin PYUSD on Solana in May, and Agora, backed by Nick Van Eck, also launched stablecoin AUSD across multiple chains, which is supported by Van Eck (asset management company) and custodied by State Street;
2025 Predictions
· The depth and breadth of institutional participation are expected to further expand. As BlackRock continues to position digital assets as a non-correlated asset class worth a small allocation, stable inflows into ETFs may continue. More importantly, institutions are seeking innovative opportunities across multiple verticals to reduce costs, improve transparency, or accelerate payment efficiency;
· Particularly noteworthy is that traditional financial giants such as JPMorgan and Goldman Sachs are accelerating their layout. They are not only expanding their own blockchain platforms but also exploring a broader range of product offerings;
· This trend indicates that institutions no longer view crypto merely as an investment asset but are starting to take its potential as financial infrastructure seriously;
Meme: The Heat Will Continue
2024 Market Landscape
· Although meme coins account for only 3% of the market capitalization of the top 300 cryptocurrencies (excluding stablecoins), their trading volume continues to account for 6-7% of the share, recently even climbing to 11%;
· The rise led by politically themed meme coins like Jeo Boden in Q1 was followed by TikTok meme coins (like Moodeng and Chill Guy) and AI agent concepts (like Truth Terminal's GOAT) continuing to drive momentum;
Market Drivers
The prosperity of meme coins is not only due to trends or user-friendly interfaces but also relies on two key conditions:
1. Excess Capital: As the overall crypto market appreciates, many traders have accumulated significant funds, but lack quality investment opportunities;
2. Ample Block Space: High-throughput networks like Solana and Base provide a low-cost, efficient trading environment;
This environment is particularly evident on Solana. The strong market performance at the end of 2023 and the beginning of 2024 has allowed Solana users to accumulate significant capital.
The evolution of trading infrastructure
· User-friendly trading platforms have significantly promoted the popularity of meme coins. Applications like Pump.fun, Moonshot, and Telegram bots simplify the operation process for retail traders;
· Especially Moonshot, which bypasses traditional cryptocurrency deposit channels by supporting payments via ApplePay, PayPal, or USDC on Solana, attracting a large number of new retail investors with its intuitive interface and simple registration process;
2025 Predictions
Predictions for 2025 suggest that meme coins are expected to continue growing, primarily due to several key factors:
1. Infrastructure Support: High-throughput chains like Solana, Base, Injective, Sei, and TON provide ample block space, allowing meme coin trading without incurring high costs;
2. User experience optimization: Applications like Moonshot and Pump.fun continue to lower the barrier to entry and simplify the trading process, which is expected to attract more retail participants;
3. Macroeconomic Environment Fit: The speculative nature of meme coins, akin to gambling, may continue to attract users seeking entertainment and profit in the current macro environment;
Financing Landscape: AI Leads New Investment Themes
Market Overview
· Crypto project financing shows an upward trend compared to 2023. Although the total financing amount for startup projects and protocols decreased by about 20% year-on-year (mainly affected by an outlier in Q1 2023), the market still saw several large financings;
Important Financing Cases
· Monad Labs raised $225 million in April, demonstrating that infrastructure and L1 projects remain key investment areas for VCs;
· Story Protocol: Completed a $80 million Series B funding round, led by a16z, aimed at transforming intellectual property into programmable assets;
· Sentient: Raised $85 million, led by Thiel's Founders Fund, focusing on open AGI development platforms;
· Farcaster and Freechat: respectively raised $150 million and $80 million, indicating continuous capital attention in the social sector;
The Rise of AI and DePIN
· AI project financing grew approximately 100% year-on-year, with the number of financing rounds increasing by 138%;
· The total financing amount for DePIN projects has increased by about 300% year-on-year, with the number of financing rounds increasing by 197%;
AI rounds are particularly popular in accelerator projects like CSX and Beacon. Investors show strong interest in the intersection of crypto and AI.
Emerging Investment Themes
In addition to AI and DePIN, several noteworthy financing trends emerged in 2024:
1. The decentralized science field is starting to attract attention, with projects like BIO Protocol and AMINOChain receiving funding;
2. VCs in the Asia-Pacific region are more inclined to invest in gaming protocols, especially projects launched on the TON blockchain;
3. The financing share of NFT and metaverse projects has significantly decreased compared to 2021 and 2022;
4. The social sector continues to experiment, with projects like Farcaster, DeSo, and BlueSky receiving financing support, although past successful cases have been limited;
Crypto Users, New Evidence of Growth
Market Scale Breakthrough
According to a16z's report, the monthly active addresses for cryptocurrencies have reached a historic high of 220 million, with growth trends resembling the early internet adoption. Although this figure may include duplicate counts (as many users utilize multiple wallets), it is estimated that there are still 30 to 60 million real monthly active users after filtering;
Key Cases for User Growth in 2024
· The breakthrough of Phantom wallet has made it the most popular wallet in the Solana ecosystem, momentarily surpassing WhatsApp and Instagram to enter the top ten in the iOS App Store;
· The application of stablecoins in emerging markets: Sub-Saharan Africa, Latin America, and Eastern Europe are starting to bypass traditional banking systems and directly adopt stablecoins; platforms like Yellow Card, Bitso, and Kuna are promoting adoption by providing stablecoin exchange and payment APIs;
· The explosion of Telegram Mini-Apps: Notcoin has over 2.5 million holders, Hamster Kombat has attracted 200 million users, and 35 million YouTube subscribers;
· Polymarket's real-world application: It saw rapid growth during the election period, adding nearly 1 million accounts and briefly becoming the second most downloaded news app on iOS;
· Base and Hyperliquid drive CEX users on-chain: Base L2 provides a free transfer channel from Coinbase to Base, while Hyperliquid offers a CEX-like high-performance trading experience for perpetual contract traders;
2025 Predictions
· The crypto ecosystem is no longer merely prepared for mass adoption but has already begun to realize it;
· User growth is shifting from sporadic and noisy entry models to a pattern of natural discovery and sustained growth through various applications. Meme coins, consumer applications (like Phantom and Telegram), prediction market platforms, and the growing on-chain utility will continue to drive compound growth;
· The next key step is to make blockchain navigation more retail-friendly, which will be greatly improved through new innovations like chain abstraction and front-end aggregation;
Bitcoin: This year is great, and next year will be more mature.
Key Developments in 2024
Pricing and Institutional Adoption
· Starting from $40,000, ETF approvals set a new high of $75,000 in Q1, breaking through the important threshold of $100,000 after Trump's victory;
· Bitcoin's market capitalization dominance is expected to rise to about 55%;
· ETF issuers hold over 1.1 million Bitcoins, with BlackRock and Grayscale accounting for 45% and 19%, respectively;
· After ETF approvals, there was only a single month of net outflow in April; BlackRock's IBIT continues to be the largest net buyer, with about $8 billion inflows in November alone;
· MicroStrategy continues to buy in large quantities, with the latest purchase of $2.1 billion in Bitcoin between December 2 and 8, holding about 420,000 Bitcoins, second only to Binance, Satoshi Nakamoto, and ETF issuers;
· Michael Saylor and MicroStrategy (MSTR) continue to dollar-cost average, with a BTC-centric strategy incentivizing other public companies like Marathon Digital Holdings (MARA), Riot Platforms, and Semler Scientific to start accumulating BTC reserves;
· 2024 is also the Bitcoin halving year, and the number of natural sellers of Bitcoin will decrease over time;
Network Innovation
The Rise of Ordinals and Runes
· Ordinals bring NFT functionality to Bitcoin, while Runes launch as a new token standard, similar to Ethereum's ERC-20;
· Some Runes projects have valuations reaching nine figures, showing market recognition of Bitcoin ecosystem expansion;
Breakthroughs in Bitcoin's Programmability and Staking Innovations
· The emergence of BitVM brings the possibility of arbitrary computation to Bitcoin, with over 40 Layer-2 projects launching on testnets or mainnets;
· CORE, Bitlayer, Rootstock, and Merlin Chain lead in TVL;
· Babylon launched as the first staking protocol for Bitcoin in Q3, with the first round of 1000 BTC staking quotas reaching its limit within 6 blocks;
· Liquid staking tokens like Lombard's LBTC are starting to appear;
2025 Predictions
· The inflow of Bitcoin ETFs has greatly exceeded expectations, and over time, institutions are likely to slowly become the main drivers of daily BTC price movements;
· ETFs can purchase spot Bitcoin without the use of leverage. The inflow of spot funds from institutions is smoother and more consistent, which should reduce reflexive, leverage-driven volatility, helping Bitcoin mature as an asset;
· The approval of Bitcoin ETFs may have placed BTC in the early to mid-stage of becoming the leading global store of value. In November, Bitcoin surpassed silver to become the eighth most valuable asset globally, partly due to ETF inflows throughout the year. Year-end trends suggest that ETF inflows will continue to increase in 2025, particularly as Grayscale's GBTC shifts to positive net flows;
· In terms of regulation, the new Trump administration has shown a positive attitude toward cryptocurrencies and Bitcoin, making promises related to Bitcoin during the campaign. Although Bitcoin quickly re-priced after Trump's victory, the government ultimately needs to fulfill some of their claims;
· Although we predict that the likelihood of this happening is low, federal strategic Bitcoin reserves would be particularly influential. The market seems to hold a cautiously optimistic view towards the Trump administration, and if the president can implement some high-probability action projects, it may establish enough goodwill to maintain Bitcoin's optimistic momentum going forward;
· After the 2024 elections, the clear and proactive impact of cryptocurrency reform has become a significant issue for all government departments. We believe cryptocurrency is about to gain bipartisan support. The implications are significant and will help eliminate the regulatory uncertainty surrounding Bitcoin in the foreseeable future;
· On Runes and Ordinals, we believe the dust has mostly settled, and by 2025 the opportunities will be very enticing;
· Magic Eden is a driving force in improving Bitcoin's UI/UX. If the Bitcoin ecosystem takes off, we expect them to emerge as significant winners;
· Bitcoin's programmability and BTC staking are still in their infancy, and early growth in TVL is not yet sufficient to demonstrate actual demand; consumers largely favor the performance capabilities of networks like Solana and Base, and if this trend continues, Bitcoin builders will face a tough battle;
Ethereum: Identity Crisis and Future Opportunities
Overview of 2024 Performance
Ethereum has experienced an extraordinary year. As the "second brother" of the crypto market, it is competing with Bitcoin's narrative as hard currency while also facing challenges from new public chains like Solana. Key performance:
· Significantly underperforming compared to other major crypto assets, especially against Bitcoin and Solana;
· The Layer-2 ecosystem continues to grow, but mainnet activity has significantly declined; ETH has experienced sustained inflation for the first time, rather than the expected deflation;
· Initial capital inflows were limited after ETF approvals and have only recently begun to accelerate;
· L2 expansion capacity is expected to increase 15 times, with cumulative throughput reaching approximately 200 TPS;
· The rapid growth of Base has sparked discussions about 'the future of Ethereum is Coinbase,' but the decentralization of the L2 ecosystem has led to a compromised user experience and developer experience;
Key Outlook for 2025
L2 is better than L1
· Layer-2 designs allow for more flexible execution environments, outperforming native Layer-1; high-throughput L2s (like MegaETH) theoretically have capacities far exceeding fast L1s;
· Application chains can achieve better trade-offs, such as customized transaction priorities;
Two feasible models for increasing value capture
Ethereum faces two paths for value capture:
The fee-agnostic pathway
· Current fees mainly come from speculative activities, with sustainability in question;
· Token valuations should be based on 'security demand' rather than fees; maximum application creates the highest security demand, driving the value of native assets;
Enhancing Fee Capture Pathways
· Native rollups can improve mainnet value capture and enhance data availability fees;
· Extending the base layer to compete with ordinary EVM Layer-2;
Overall New Opportunities in the Ecosystem
· A super rollup, interconnected based-rollup network, or high-fee burning could all become successful pathways;
· Regaining market share in the crypto-native speculative market will drive institutional interest;
· The decentralized nature of the ecosystem allows any participant to facilitate this transformation;
Solana: From Follower to Mainstream Ecosystem
Key Performance in 2024
Solana has transformed from the "resurgence after the FTX collapse" to a decisive breakthrough. Key achievements:
· The competition has shifted from a 'duopoly' between Bitcoin and Ethereum to a 'tripod' structure;
· Network stability has significantly improved, with only one 5-hour outage occurring throughout the year; total locked value (TVL) in DeFi grew from $1.5 billion to over $9 billion; stablecoin issuance increased from $1.8 billion to nearly $5 billion;
· Positioning themselves as investment venues, especially through Memecoin trading. The seamless user experience of ecosystem wallets, along with platforms like Pump.fun and Moonshot, makes the issuance and trading of tokens easier than ever;
· This series of on-chain activities has even pushed Solana's on-chain fees to occasionally exceed those of Ethereum, highlighting the network's momentum and retail appeal;
2025 Key Outlook
Ecosystem Expansion
· Expecting applications that go beyond speculation: We are particularly excited about the prediction markets of MetaDAO, and the emerging Solana L2 ecosystem is worth watching to see if they can effectively compete with their counterparts on Ethereum;
· AI trend innovation: ai16z has become one of the most trend-worthy repositories across all fields on GitHub. The Solana ecosystem not only embraces AI x Crypto but also leads this trend;
Traditional Financial Interest
· Under the ETF trend, investors may look for 'tech stocks' to invest in the sector, with Solana becoming the fastest horse;
· Spot Solana ETFs are likely to go live within the next year or two, creating a perfect storm for the explosive second phase of the Solana story;
Intensifying Competition
A new batch of Layer 1 blockchains (such as Monad, Berachain, and Sonic) is expected to emerge next year;
· The resurgence of DeFi, AI agents, and consumer applications led by platforms like Base and numerous new L2s;
Other L1 + Infrastructure 2025 Outlook
Deep Tide Note: Due to space limitations, we will focus on interpreting the section regarding the 2025 outlook. The summary for 2024 can be found in the original report, along with more publicly available information.
· Next year, we will see Monad and Sonic launch as two general-purpose, high-throughput, 'whole' L1s;
· Both projects have accumulated substantial funds (Monad raised $225 million, Sonic's FTM tokens are approximately $250 million) to attract developers and developer teams;
· Berachain is one of the most interesting experiments in L1, raising $142 million in Series A and B funding, with over 270 projects committed to supporting the network, showing great interest from developers and application teams;
· Celestia's Lazybridging proposal and Avail's Nexus ZK proof verification layer may establish meaningful network effects for modular L1 in the second half of 2025;
· If Unichain is successful, it will trigger a wave of protocols --- bypassing L1 and building application-specific or domain-specific L2 to increase value accumulation and create more income for token holders;
· Alternative virtual machines (mainly Solana and Move VM) will continue to attract attention;
· Avalanche9000 combines Avalanche's BD strength in the institutional and gaming sectors, making this year another strong year;
· The outlook for Cosmos remains uncertain in 2025;
· Initia will launch as L1, supporting 5 to 10 application-specific, interoperable L2 solutions. This strategic setup positions Initia to lead the next wave of application chain advancements;
· In the interoperability track, focus on Across, Espresso, Omni Network;
· Attention to Polygon's Agglayer in the ZK track. By 2025, it is expected that nearly all infrastructure protocols will adopt ZK technology;
· The boundaries between applications and infrastructure are becoming increasingly blurred, and modular projects like Celestia, EigenDA, and Avail may benefit from this;
DeFi 2025 Outlook
· Base and Solana - valuable real estate: We continue to see the growing prospects of Solana and Base DEX relative to DEXs on other chains;
· Vertical integration and composability: Protocols like Hyperliquid and Uniswap have already turned to owning their own infrastructure to configure network features to benefit their applications;
· Prediction Markets: We predict that trading volumes may decline compared to previous election-driven trading months. To win, other protocols must be able to provide relevant markets that allow bettors to continue speculating while incentivizing market makers;
· RWA: As interest rates decline, tokenized treasury bonds are expected to face resistance; idle on-chain funds may gain more favor, shifting the focus from purely importing traditional financial assets to exporting on-chain opportunities. Even if macroeconomic conditions change, RWAs have the potential to maintain growth and diversify on-chain assets;
· Points-based play: We expect points to remain central to protocols aimed at guiding user adoption through token distribution, powering markets and yield trading protocols. As we enter 2025, protocols may refine their points programs while nurturing early adopter communities;
· Driven by new opportunities in yield farming and the speculative appeal of points-based incentives, yield trading protocols like Pendle are expected to grow further;
AI X Crypto 2025 Outlook
Bittensor and Dynamic TAO: New AI Coin Casinos
· Each existing subnet (as well as future subnets) will have its own tokens, which will essentially be linked to Bittensor's native TAO token;
· The AI competition is a talent competition, and Bittensor has a unique angle to attract talent -- subnetworks show early signs of producing high-quality research;
· If Bittensor unexpectedly becomes the center of cutting-edge AI research in the cryptocurrency field next year, do not be surprised;
· Bittensor is not only a speculative 'AI coin casino' but also a platform capable of attracting serious AI developers;
Decentralized model training: A stumbling block and a fulcrum
· Decentralized networks will not attempt to compete with giants like OpenAI and Google by training large-scale foundational models, but may instead focus on fine-tuning smaller specialized models;
· Next year, we expect more experiments in the field of small and specialized models. These models may be designed to perform specific tasks;
AI Agents and Meme Coins: Ongoing Experiments
· Most AI agents may prefer to operate on-chain;
· The continuously growing token valuations can provide funding for the sustained development of AI Agents and promote social media participation;
· We believe that as more engineers focus on it, talent density will continue to increase;
· As AI agents vie for attention on social media, this category will outperform 'static' meme coins;
· As discussions around AI's openness and closure continue, we expect cryptocurrencies to occupy an increasingly larger portion of the dialogue;
DePIN 2025 Outlook
· By 2025, we expect energy DePIN to build a supply-side infrastructure worth $500 million to $1.5 billion, generating up to $50 million in demand-side sales;
· With Helium Mobile preparing for further growth and DAWN launching its mainnet in 2025, the wireless sector will solidify its position as a breakthrough use case in DePIN;
· Revenue forecast: The industry is expected to achieve revenue in the range of 8 to 9 figures by 2025;
· It is expected that networks like GEODNET will expand their supply side, providing 90%-100% coverage for high-value areas in the EU and North America by the end of 2025. Additionally, annual revenue could grow to over $10 million;
· The weather collection network in this vertical is expected to make significant progress in 2025;
· Integration and partnerships between energy and mobility DePIN are expected to further enhance energy collection data for grid integration and electric vehicle batteries;
· In 2025, document storage DePIN is expected to generate $1.5 to $50 million in revenue;
· With the success of projects like Grass, data collection DePIN is expected to increase in 2025;
Consumer Applications 2025 Outlook
· Playing airdrops will continue to be a major way to attract players into games. The 'paid airdrop' strategy may become the new standard in 2025;
· Mobile applications will become a decisive trend in 2025;
· In 2025, we expect Solana to continue to dominate the activity in Memecoin trading;
· Ordinals are expected to become a category that continues to attract attention. Upcoming catalysts, such as potential CEX listings, airdrop-driven wealth effects, and the increasing popularity in Asian markets, are expected to lead to sustained growth and broader appeal throughout the year;
CeFi 2025 Outlook
· With the ongoing bull market and the continued rise in financing rates, the supply of Ethena may continue to expand;
· Yield-bearing stablecoins may not quickly take a significant share from Tether;
· Trump's chosen Secretary of Commerce, Howard Lutnick, managing Tether's assets, may lead the U.S. to completely change its hostile stance towards Tether;
· Real innovation is likely to happen behind the scenes of orchestration companies like Bridge. Stablecoin APIs (like those offered by Yellow Card) will enhance small businesses' ability to accept stablecoins as payment globally;
· On the exchange front, we will continue to see the integration of on-chain and off-chain services. Coinbase and Kraken hope to onboard as many people as possible onto their L2s in 2025 and may offer incentives for this;
· The new government will allow exchanges to be more lenient regarding the assets they choose to list. As Binance, Bybit, and Coinbase compete to list the most popular crypto assets, this trend may reach a fever pitch in 2025;
Original link
