Original author: YBB Capital Researcher Zeke.
Introduction
Starting from the wave of inscriptions and culminating in the election of the first crypto president, 2024 is about to reach its conclusion. This year, Crypto has experienced an unusually 'bull market', where altcoins performed weakly, meme tokens dominated, and ultimately, everything converged back to BTC. Overall, although there have been some lows and grievances, Crypto is indeed moving towards a more positive direction. In the upcoming year of 2025, there are many directions worth paying attention to. In this article, we will provide a brief outlook for next year based on recent opinions.
One, about AI.
At the current stage, chain abstraction projects often become exceptionally complex in their technical implementation process due to the pursuit of conceptual perfection, ultimately affecting the user experience. On the other hand, projects that incorporate Intent architecture are relatively complex in their implementation methods, whether they are based on centralized (such as TG Bot), structured (a combination of on-chain and off-chain preprocessing), or distributed designs (such as Solver + Executor architectures), these intent projects often have common issues. For instance, users still need to possess a considerable 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 often present a sense of powerlessness, and the scope of implementation is quite limited. Therefore, since Paradigm proposed this concept in mid-2023 until now, so-called intent-centered projects have shown to be more noise than effectiveness, providing little help in guiding new users and lowering the operational threshold for users. However, we are all aware that from the development path of Ethereum's second layer, the market's demand for both remains urgent.
Looking back at the development of Layer 2 over the past few months, the second-layer alliance represented by OP Superchain has been growing steadily. Zksync's Elastic Chain and Arbitrum Orbit will eventually form their own alliances along this path. These alliances can achieve internal direct interoperability through solutions such as interoperable clusters in the future, alleviating the current excessive fragmentation of liquidity and lack of interoperability in Ethereum's second-layer ecosystem. The competition of dozens of chains will also shrink to a competition among multiple forces. However, from a broader perspective, as the cryptocurrency market becomes increasingly favorable, new Layer 2 projects with architectures like Movement and Fuel are also competing to launch their mainnets to capture scarce liquidity in the altcoin market. For projects below the first tier, fragmentation and lack of interoperability continue to intensify. There may even be cases where virtual machines based on different architectural designs do not even have wallet plugins that can interoperate. Let alone allowing new users to enter; for ordinary blockchain users, the entire second-layer ecosystem is extremely complicated, and the development of non-financial application chains will also face significant resistance in such circumstances.
To attract new users, Ethereum must prioritize ecological alignment. An ecosystem that requires users to be half-geeks to get started will never welcome 'Mass Adoption'. From the performance of Solana and Ton this year, it is clear that strategies to lower user thresholds and provide a consistent, more Web2-like user experience have played a significant role in ecological growth. To put it more directly, what these two ecosystems have done beyond publicity is to reduce the difficulty of asset issuance and make the use of the chain feel more seamless. Therefore, for Ethereum, a comprehensive solution prioritizing user experience is essential, but given the core developers' consistent open attitude, it is naturally impossible to align the entire second-layer ecosystem through coercive means.
I believe the only solution that can first address this issue is the AI browser agent. Many people envisioned the revolution of AI in app interaction at the early emergence of ChatGPT, where it could operate across multiple apps to form a comprehensive super app. Taking tourism as a common example, after receiving users' travel needs, AI can automatically complete ticket booking, customize travel routes, arrange meals and schedules, and other comprehensive planning based on what the user articulates. If this AI also possesses long-term memory capabilities, it can arrange plans more suitable for the user based on that memory.
Now, Google is about to launch the AI browser agent powered by Gemini, Project Mariner. In a demonstration by Jaclyn Konzelmann, director of Google Labs, after installing the AI agent extension in Chrome, 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 will automatically navigate to a grocery platform and add items to the cart, proceeding to the checkout screen. Once confirmed, the user will check out on their own (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 several hours of trial, the current agent can achieve an accuracy level of around 60-70% for complex and vague intents (cursor operation speed is relatively slow), and can autonomously complete tasks such as token trading on various public chains' Dex, even transferring assets from Ethereum to the second layer. In this process, all I needed to do was inform it of my intent and enter my wallet password.
Of course, this foundation still needs to call the API of centralized models. So, what collision can Crypto generate with it? I believe that the AI browser agent, in addition to becoming a better intent solution, will also drive the explosion of AI wallets, decentralized computing power, and decentralized data projects next year.
Consider a simple question: during these years of rapid AI development, why has the beautiful concept of an agent only been realized today? In fact, looking back at OpenAI's development process, it is not difficult to find that the development of pure language models has always been faster than that of image generation and other models. This is because the internet itself is a vast corpus, providing an inexhaustible source of textual material for training. The limitations on the development of language models are more about computing power and energy. However, agents require a large amount of manual labeling and feedback, and the inference process is expensive. Crypto inherently possesses the ability to acquire labor through incentives. In this economic system, upper-layer users can provide a large amount of labeled data and feedback through decentralized means to earn tokens, while the lower layer can integrate decentralized computing power and data projects. After training is completed, 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 AI agent ideas can also be derived from this, as any AI agent applicable to Web3 will need computing power, labeling, and feedback to 'grow'.
Two, stablecoins.
Stablecoins will always be a battlefield and are also a highly competitive track in Crypto. Regarding their application value, even outside the industry, they have gained wide recognition. For instance, this year, several giants in the traditional financial sector have entered the stablecoin market, including PayPal's PYUSD, BlackRock's USDb in collaboration with Ethena, and VanEck's AUSD (serving regions like Argentina and Southeast Asia).
As Tether and Circle's dominance in this track continues to deepen, new entrants among stablecoin issuers are gradually differentiating into two categories. First, the issuers of fiat-backed stablecoins are beginning to shift their focus to emerging markets and specific application scenarios mainly in South America, while algorithmic stablecoins are generally turning towards stablecoins backed by low-risk financial products as underlying assets, such as Ethena and Usual mentioned in the previous article. From a trend perspective, next year there will likely be more Delta-neutral stablecoins competing for short-selling liquidity in Cex, and the hedging assets will gradually expand from BTC and ETH to higher-risk, lower-liquidity public chain tokens competing for the remaining sinking market. I believe that Usual-type stablecoins, which are based on short- to medium-term U.S. Treasury bonds, will see more innovation in protocol tokens and yield methods, as there is no better choice in terms of RWA asset types than short- to medium-term Treasury bonds. However, compared to the limited liquidity in Cex, competition for such stablecoins will be smaller, and the upper limit of potential will be greater.
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 can see some fully decentralized and non-over-collateralized stablecoin protocols emerge.
Three, payments.
With the compliance and accelerated adoption of stablecoins in various countries, the downstream payment track of stablecoins will also become a new focus of competition. Heterogeneous public chains such as Solana and Move, with high TPS and low Gas, will become the main infrastructure for payment applications. Traditional payments are currently an extremely mature and competitive red ocean market. What transformations can blockchain provide? First, 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, solving the problem of trillions of dollars in prepaid funds in traditional systems. The second is serving emerging markets, as I mentioned in previous articles, the application value of stablecoins has already been demonstrated in regions such as Africa, Asia, and Latin America. The strong financial inclusion enables residents of third-world countries to effectively cope with high inflation caused by government instability, and 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 Lily Liu, the manager of the Solana Foundation, at the 7th EthCC conference provides more imagination for the combination of blockchain and payments. This concept involves two core aspects: first, timely settlement, which is T+0 settlement. PayFi can achieve same-day settlement, and even multiple settlements in a day, eliminating the delays and complexities of the traditional financial system involved in the process, significantly increasing the speed of capital circulation. Second is Buy Now, Pay Later (BNPL), or 'Buy Now, Pay Never'. For example, a user deposits $50 into a lending product and buys a cup of 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.
The ideas that can be derived from this are numerous. For example, in terms of use cases, the financing needs of emerging projects can form a more secure and transparent flow in the blockchain through PayFi. Currency exchange during travel no longer requires relying on various physical financial institutions, and the freedom to control payment and collection times (delayed collection to earn interest, early payment to obtain discounts) will be more flexible. The ways to generate income will also diversify. In addition to earning interest by depositing stablecoins into lending products mentioned above, I personally believe that the types of stablecoins should also allow for free conversion. In the future, with the massive emergence of new stablecoins, users can choose the most suitable stablecoin type based on their personal risk tolerance, 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.
Four, Dex
We have already mentioned the fragmentation and lack of interoperability of Layer 2 in the first section. This development path actually faces another issue: excess blockchain space, where the development of infrastructure far exceeds that of Dapp. This issue will naturally lead to the elimination of many long-tail chains within a few years, which is also a very troublesome problem for Ethereum, as it fails to receive positive feedback on Layer 2 due to pricing missteps.
Looking back, the recent growth of public chains has largely relied on their strong communities, ecosystems, and promotional advantages, and providing these advantages to asset issuance platforms has achieved rapid overall TVL growth. Thus, not every Layer 2 can replicate this attention economy, and the lack of super applications remains a reality that must be faced next year. Following the trend, besides the aforementioned points, the future demand for AI agents may be a way out. Other evident short-term trends include on-chain order book Dex, privacy, payment-related stacks, and decision-making tools.
Personally, I am optimistic that on-chain order book Dex will become the mainstream in the next generation of Dex. After all, looking at the complexity of technological paths in AMM development, its efficiency is increasingly limited. We have discussed this in previous articles related to Uni. However, for the second layer, the limitations of performance and gas are still very apparent, making improvements in matching algorithms and innovations in gas schemes key challenges.
Five, asset issuance remains the main theme.
From 2023 to today, from inscriptions to the current AI Meme platform, the provision of asset issuance methods has been a hot topic over the past year. If we extend this time span a bit, in fact, from the ICO era to now, asset issuance can be regarded as the only main theme in the crypto world. The only changes are in the outer packaging and the issuance thresholds. From a positive perspective, the demand for user gaming has driven the advanced development of infrastructure and DeFi. As this technology becomes known and recognized by the world, blockchain has entered the mainstream and integrated into reality. From a negative perspective, this game has become purer and more absurd. The reduced difficulty of asset issuance also means that this dark forest has become more dangerous. Nowadays, it only takes a click with an image and a few words, and a grand zero-sum game begins. Why not redirect it towards a more positive side? To promote industry progress within the game.
For example, some current AI Memes are beginning to shift towards practical agent development, rather than the earlier versions of incoherent AI agents. The recently popular DeSci can also be described as 'ICO for scientific research.' Although the current core is driven by memes, looking forward, the various advantages combined with blockchain can promote traditional scientific research to be more transparent, easily disseminable, fundable, and communicable. However, whether it can be grounded and how it evolves still remains a question mark.
In fact, similar ideas to DeSci have also been mentioned in my article on GameFi. For instance, how to effectively promote the development of independent games through blockchain in situations of independent game funding and staff shortages. The problem with blockchain financing is that the threshold for asset issuance is too low, and there are too few restrictions, resulting in excessive fundraising capability (which can also be said to be due to the extremely low entry threshold on the chain). How to impose rules to restrict the use of funds and compel project parties to continuously create truly valuable things is also a key point we should consider.
Let the players play, and let the builders move forward; this is the premise for the continuous development of blockchain. Next year, we may see more versions of 'ICO', but what I hope is that this gaming feast can promote the next 'DeFi Summer'.
