Author: @Web3_Mario
Summary: Thank you all for your support over the past year. I apologize for the late arrival of the author's year-end summary; handling matters took time, and I have also contemplated for a long time what angles to take in summarizing my reflections from the past year. Ultimately, I feel that sharing from the perspective of an ordinary Web3 entrepreneur still striving on the front lines will be more authentic. Overall, looking at 2024 and anticipating 2025, I believe it is quite appropriate to summarize in four sentences: from grass roots to universality, from chaos to order, from depression to bubble, from conservatism to transformation. Next, I will share my thoughts and outlook using some events that I consider representative.
From Grass Roots to Universality: The approval of the BTC spot ETF has opened the curtain for the universal path of crypto assets.
Looking back at 2024, the author believes that the most unusual transformation experienced by the crypto world is the upgrade from a past niche subculture product to an asset class with universal value. This journey can be traced back to two landmark events: the first is on January 10, 2024, when the BTC spot ETF approval event, after three months of negotiation, was officially passed with the SEC's approval. The second is on November 6, 2024, during this round of the US election cycle, when pro-crypto Trump was successfully elected as the 47th President of the United States. Both can be observed from the two significant price trends of BTC this year. The former raised the BTC price from the $30,000 range to $60,000, while the latter was responsible for the increase of BTC from $60,000 to $100,000.
The most direct impact of this transformation is in terms of liquidity. More abundant liquidity naturally favors the price trends of risk assets, but the process and motivation of attracting liquidity differ from the bull market in 2021. Looking back at the 2021 crypto asset bull market, the main driving force came from the higher capital efficiency brought about by the unregulated nature of crypto assets, which allowed the crypto sector to capture excess liquidity generated by Biden's $1.9 trillion economic relief plan more efficiently, resulting in extremely high speculative returns.
However, in the current bull market that started in 2024, we can see that the entire transmission process has undergone changes. With the 'influential funds' attracted during the 2021 bull market and the newly established vested interests forming a new interest group, they are actively releasing greater political influence, not limited to numerous crypto policy lobbying groups and massive political donations. Regarding this, the author has previously conducted a more in-depth analysis in the article (In-depth analysis of the value of World Liberty Financial: New choices under Trump's campaign funding disadvantage).
The most direct impact brought about by this is that, through political means, effectively promoting the universal value of cryptocurrencies has become possible. Therefore, in this round of cycles, you will see iterative discussions about the value of crypto assets emerging, and more traditional elite classes and mainstream media are labeling themselves as 'crypto-friendly'. This transition from 'grass roots' to 'universal' has also profoundly influenced the motivations for attracting liquidity, regardless of whether the viewpoints have sufficient evidence (as previously discussed in the article, (In-depth analysis of the underlying reasons for the current volatility in the crypto market: Value growth anxiety after BTC breaks new highs)). In this round, the purchasing power of BTC, in addition to speculation, indeed blends more 'store of value', 'anti-inflation' terms, which will reduce the cyclicality and volatility brought about by the speculative attributes of crypto assets, making value support more robust. Of course, the only crypto assets that can currently achieve this positive change appear to be a few blue-chip assets, including BTC, but the transmission effect brought by the multiplier effect will benefit the entire crypto asset market to some extent. Using an image to illustrate this transition might be more intuitive.
In addition to the impact on the top-tier class, this evolution has also brought a huge positive mindset shift for many practitioners, including the author. The most intuitive example is that when friends and family from outside the circle inquire about your industry, you no longer have to explain nervously that you are not a criminal or a nouveau riche as you did in the past; now you can proudly introduce your profession or career. This shift in mindset will also make the inflow of talent more proactive, greatly reducing friction costs in processes such as seeking partners for entrepreneurship, recruiting talent, and seeking cooperation with traditional industries. Therefore, regarding this point, the author is confident about the future development of the industry.
Finally, it should be mentioned that there are some expectations regarding this narrative path. In mid-2025, discussions about the value of crypto assets represented by BTC will be more positive. In previous articles, there has been analysis specifically targeting BTC's store of value and its role in succeeding AI as the core of US stock market growth. Therefore, it is necessary to remain sensitive to related information, which may include several aspects:
Progress regarding Bitcoin reserve-related legislation at the national, regional, organizational, and corporate levels;
Relevant statements or viewpoints expressed by key figures with political influence;
The allocation of BTC in the balance sheets of US publicly listed companies;
From Chaos to Order: The regulatory framework for the crypto industry of global sovereign nations will be further improved, providing evidence for the breakout of Web3 business scenarios.
The author's second observation path is 'From Chaos to Order'. For a long time, a core narrative of the cryptocurrency industry has been the anti-censorship capability brought about by decentralization and anonymity. You can find similar discussions in most Web3 applications from the previous cycle, which naturally contributed significantly to finding value support for the Web3 industry in its early stages, but it also brought considerable harm to the industry, such as fraud, money laundering, and other criminal activities.
However, the author believes that the industry will iterate in this direction. It does not mean completely abandoning Web3 fundamentalism; rather, the author believes that from a pragmatic perspective, the current crypto industry will experience a transition from chaos to order, accompanied by the further improvement of the regulatory framework for the crypto industry by global sovereign nations. We know that in many of the 'crypto game hotspots' in 2024, the transition of SEC Chairman Gary Gensler has drawn considerable attention. For a long time, this crypto-unfriendly chairman oversaw the SEC and sued many US crypto companies, such as Ripple and Consensys, making the business development and expansion of these giants face bottlenecks. In the previous work (Buy the Rumor series: The improvement of regulatory environment expectations heats up, which crypto assets benefit the most?), the author has clearly analyzed progress in this direction using Lido as an example.
However, with Trump's inauguration and his deregulatory policy preferences, coupled with Gary Gensler's transition, a more relaxed, inclusive, and crypto-friendly regulatory framework is to be expected. Judging from the recent progress of relevant case rulings, such as Ripple and Tornado Cash, the introduction of this framework will not be far off.
The most direct benefit brought about by this change is that it makes the breakout of Web3 business scenarios evidence-based, without bearing many potential legal risks. In the upcoming 2025, the author will particularly observe the progress of such events, and everyone should remain sensitive to similar information, including the outcomes of other lawsuits, the proposal and advancement of related legislation, changes in SEC personnel appointments, statements and viewpoints from key decision-makers, etc. The author is particularly interested in two aspects regarding potential breakout businesses:
Ce-DeFi scenarios: Connecting traditional financial tools with on-chain tools such as crypto assets to solve issues of capital efficiency and reduce trading friction costs. From the direction of capital flow, it can be divided into two categories: first, from the traditional financial world to on-chain crypto assets, such as MicroStrategy's financial innovations. Second, from on-chain crypto assets to the traditional financial world, specifically referring to bond-based RWAs, on-chain financing channels similar to Usual Money, and stablecoins in the TradeFi field.
DAO in the management of off-chain entity business: This direction seems a bit impulsive. Due to Trump's policy loosening regulatory measures related to cryptocurrencies, along with the 'America First' boost to domestic demand, will more off-chain organizations or companies leaning towards traditional businesses choose to use the DAO model for internal governance in exchange for cheaper financial services? For example, if someone wants to open a Chinese restaurant, they could choose to operate through a DAO and integrate a stablecoin-based payment system. All cash flows would then be publicly transparent, and if regulatory policies are further relaxed, the company’s financing and dividend processes could also be supported by the DAO.
From Depression to Bubble: Traditional Web3 business development focuses on three main axes: newer grand narratives, more robust business revenue, and a more balanced interest game model.
The author's third observation path is 'From Depression to Bubble'. We know that in the middle of 2024, traditional Web3 business hotspots have undergone a significant transformation. Represented by the LRT market driven by EigenLayer in the first half of the year, it mainly exhibited characteristics of an industry depression period. Due to the lack of a general profit effect, in the context of stock game competition, capital clustered together, choosing to focus on the few Infra sectors with huge potential market sizes but longer-term actual business implementation. They exchanged time for space, raising valuations and using 'point strategies' to avoid dilution of stakes, thereby exploiting users. This has been analyzed in the author's previous work (Web3 Oligarchs are Exploiting Users: From Tokenomics to Pointomics).
However, with the improvement of the market environment in the middle of the year and the unsatisfactory performance of LRT sector Token prices, the focus gradually shifted to the application layer represented by TON Mini App. Compared to infra, the application layer, with more target choices, lower development costs, shorter landing cycles, and more easily manipulated iterative benefits, is favored by capital. At this point, the market quickly emerged from the shadow of the depression.
As we entered the second half of the year, with the Federal Reserve entering a rate-cutting cycle and the FUD issues surrounding VC coins, traditional capital exit paths were disrupted. The market quickly entered a bubble phase, with capital massively chasing after speculative assets like Meme coins, which offer shorter exit cycles for higher capital turnover rates. Besides Meme coins themselves, launch platforms represented by Pumpfun and newly updated tools with narratives such as AI Agents are also being pursued by the market.
Looking ahead to the next year, the author believes that traditional Web3 businesses will develop according to the model of bubble cycles:
A newer grand narrative: We know that capital likes to chase high-growth sectors, primarily due to the enormous imaginative potential and tolerance for current delivery, allowing valuation bubbles to be inflated larger. It is also easier to attract market traders and new capital, making it easier for investors to exit through the secondary market at the right moment. Therefore, whether or not one recognizes the long-term value of a particular sector, as long as it is logical, it can become a target for capital speculation during the bubble period of a bull market, hence it is essential to maintain sensitivity from the perspective of pursuing capital gains.
More robust business revenue: For some sectors that have undergone a round of iteration, valuation models will return to reasonable ranges. At that time, the pursuit of real income will become the main theme of industry iteration, which will raise higher demands for extracting commercial potential. However, if a particular scenario can be genuinely explored, the market potential will be limitless. Here, it specifically refers to the DeFi sector, or the Ce-DeFi sector. The author is personally quite interested in the interest rate trading market, and those with similar ideas are welcome to discuss with the author.
A more balanced interest game model: We know that traditional VC coins currently face FUD, and more issues arise from the current traditional financing model, creating a prisoner's dilemma in the game relationship between project parties, first-level market VCs, and second-level market investors. Each prisoner believes that the other may betray, and thus chooses to betray (to ensure their own release or reduce their punishment). Therefore, whether a better model can be found in the new environment is also worth attention. For example, the author believes that HyperLiquid is very likely to have discovered some of the secrets within it, which is also a key focus of the author's upcoming research.
From Conservatism to Transformation: Unique opportunities for risk assets brought about by significant uncertainty.
The author's fourth observation path is 'From Conservatism to Transformation'. It is necessary to clarify that 'conservatism' and 'transformation' are merely neutral terms here, where conservatism signifies compliance with existing rules, and transformation implies breaking those rules. The main theme of 2025 will undoubtedly be significant changes in the economic and cultural fields triggered by political transformation, a process filled with uncertainties brought about by the collapse of old orders, such as the uncertainties of the US-China government debt crisis, uncertainties in monetary policies of various countries, changes in mainstream social values, and uncertainties in international relations.
The uncertainty brought about by these factors leads to significant volatility in the risk market. Of course, if sector rotation puts the industry in a positively driven state, this volatility can be beneficial; otherwise, it can be detrimental. A piece of news from a few days ago sparked the author's interest in this direction: the FTX restructuring plan will take effect on January 3 and will allow users to begin receiving repayments.
We know that during the last cycle, the mainstream political spectrum in the tech industry leaned more towards the Democratic Party. Therefore, it is believed that many of the big players who entered during the last bull market will not fare well after Trump's return. Consequently, it is understandable that they would attempt to inflate related prices as much as possible during the window before his official inauguration, treating their held risk assets as a hedge and creating an escape route. Here, a slight conspiracy theory is proposed: some Deep State capital suffered enormous losses due to the FTX bankruptcy and the collapse of the crypto industry. Therefore, after Trump’s victory, they did not hesitate to use numerous political means to inflate crypto asset prices to an exaggerated level, thereby resurrecting some already devastated balance sheets to avoid further losses.
From the FTX case, the author has also gained some insights. Consequently, in 2025, the author is quite interested in the development of the NFT sector. There seem to be some similarities between the two, and combined with new speculative narratives like AI Agents, the NFT market could very well experience a renaissance.
