Author: @Web3_Mario
Summary: Thank you very much for your support over the past year. I apologize for the delay in my year-end summary; dealing with matters took up time, and I have also thought for a long time about how to organize my reflections from this past year. In the end, I felt that sharing my thoughts and feelings from the perspective of an ordinary Web3 entrepreneur still struggling on the front lines would be more genuine. Overall, looking back at 2024 and looking forward to 2025, I believe it is quite appropriate to summarize with four sentences: from grassroots to universality, from chaos to order, from recession to bubble, from conservatism to reform. Next, I will share some representative events that I believe reflect my thoughts and outlook.
From grassroots to universality: The approval of the BTC spot ETF has opened the curtain on the universal path for crypto assets.
Looking back at 2024, the author believes that the most unusual transformation experienced by the crypto world is the upgrade from a product of niche subculture groups to a universally valued asset class. This process can be traced back to two landmark events: the first was on January 10, 2024, when the BTC spot ETF approval, which had been gamed for three months, was officially passed with the SEC's approval. The second was on November 6, 2024, during this round of the US election cycle, when crypto-friendly Trump successfully won the presidency as the 47th president of the United States. Both can be seen reflected in this year's BTC price movements. The former raised BTC's price from the $30,000 range to $60,000, while the latter was crucial in lifting BTC from $60,000 to $100,000.
The most direct impact of this transformation is in terms of capital liquidity. More abundant liquidity is naturally beneficial to the price trends of risk assets, but the process and motivation of attracting liquidity are different from those in the 2021 bull market. Looking back at the 2021 crypto asset bull market, the main driving force came from the deregulated properties of crypto assets, leading to higher capital efficiency, which allowed the crypto track to capture the excess liquidity driven by the Biden administration's $1.9 trillion economic relief plan in response to the COVID-19 pandemic, thus achieving extremely high speculative returns.
However, in this bull market that began in 2024, it can be seen that the entire transmission process has undergone a shift. With the 'influential capital' attracted during the bull market of 2021 and new vested interests forming a new interest group, they are actively releasing greater political influence, including 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: A new choice under Trump's campaign funding disadvantage).
The most direct impact brought by this is that, through political means, the efficient promotion of the universal value of cryptocurrencies has become possible. Therefore, in this round of cycles, you will see iterations of the value discourse surrounding crypto assets emerging, with more traditional elite classes and mainstream media labeling themselves as 'crypto-friendly.' This transformation from 'grassroots' to 'universal' has also profoundly affected the motivation for attracting liquidity, regardless of whether the views have sufficient arguments (which has been discussed in previous articles, such as 'In-depth analysis of the underlying reasons for fluctuations in the current crypto market: Value growth anxiety after BTC hits a new high'). In this round, the purchasing power of BTC is indeed mixed with more terms like 'store of value' and 'anti-inflation,' which will reduce the cyclicality and volatility brought by speculative attributes in crypto assets, making value support more robust. Of course, currently, only a few blue-chip assets, including BTC, can achieve such positive changes, but with the multiplier effect, the entire crypto asset market will benefit to varying degrees. A diagram might illustrate this transformation more intuitively.
In addition to the impact on the top-tier class, this evolution has also brought about a significant positive mindset shift for many practitioners, including the author. The most intuitive example is that when friends and relatives outside the circle inquire about your industry, you no longer need to explain, as in the past, hesitantly that you are not a criminal or a nouveau riche. Instead, you can proudly introduce your profession or career. This change in mindset will also make the inflow of talent more positive, significantly reducing friction costs in processes such as seeking partners for entrepreneurship, recruiting talent, or collaborating with traditional industries. Therefore, regarding this point, the author is very confident about the future development of the industry.
Finally, some expectations for this narrative path must also be mentioned. In 2025, discussions about the value of crypto assets represented by BTC will be more positive. In previous articles, this has been analyzed, specifically referring to BTC's store of value and its potential to take over AI as the core of US stock market growth. Therefore, relevant information needs to be kept sensitive, which may include the following aspects:
lProgress on Bitcoin reserve-related bills at the national, regional, organizational, and corporate levels;
lRelevant statements or viewpoints expressed by key figures with political influence;
lThe configuration of BTC in the balance sheets of US-listed companies;
From chaos to order: The global sovereign country's regulatory framework for the crypto industry will be further improved, and Web3 business scenarios will have a basis for breaking out of their circles.
The author's second observation path is 'from chaos to order.' For a long time, a core narrative in the cryptocurrency industry has been its resistance to censorship due to decentralization and anonymity. You can find similar statements in most Web3 applications in the last 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 industry development will iterate in this direction, not completely abandoning Web3 fundamentalism but rather viewing it from a pragmatic perspective. The current crypto industry will experience a transition from chaos to order, alongside the further improvement of the regulatory framework for the crypto industry by global sovereign states. We know that among many 'crypto gaming hotspots' in 2024, the transition of SEC Chairman Gary Gensler has attracted much attention. Under the long tenure of this anti-crypto chairman, the SEC has prosecuted numerous US crypto companies, such as Ripple and Consensys, causing these giants' business development and expansion to face bottlenecks. In a previous article (Buy the rumor series: Improving regulatory environment expectations, which cryptocurrencies benefit directly?), Lido was used as a clear example to analyze the progress in this direction.
However, with Trump's assumption of office and his deregulatory policy preferences, combined with Gary Gensler's transition, a more relaxed and inclusive, crypto-friendly regulatory framework is worth looking forward to. Based on the recent progress of related case judgments, such as Ripple and Tornado Cash, the introduction of this framework will not be far off.
The most direct benefit brought by this change is that it allows Web3 business scenarios to break out of their circles with a basis, without having to bear many potential legal risks. In the upcoming 2025, the author will pay special attention to the progress of such events, and everyone should also maintain sensitivity to similar information, including the judgment results of other lawsuits, the introduction and advancement of relevant bills, changes in SEC personnel appointments, key decision-makers' statements and views, etc. The author is particularly interested in two aspects regarding potential breakout businesses:
lCe-DeFi scenario: Connecting traditional financial tools with crypto assets and other on-chain tools to solve issues such as capital efficiency and reducing transaction friction costs. From the direction of capital flow, they can be divided into two categories: the first is the flow from the traditional financial world to on-chain crypto assets, such as MicroStrategy's financial innovation. The second is the transmission from on-chain crypto assets to the traditional financial world, specifically referring to bond-based RWA, on-chain financing channels similar to Usual Money, and stablecoins in the TradeFi field.
lDAO in off-chain entity business management scenarios: This direction might be a bit impulsive. Due to Trump's policy of relaxing regulatory measures on cryptocurrencies and the boost to domestic demand from 'America First,' will more organizations or companies leaning towards traditional business choose to use the DAO model for internal governance in exchange for cheaper financial services? To illustrate this, if someone wants to open a Chinese restaurant, they could choose to operate through a DAO and integrate a stablecoin-based payment system. At that time, all cash flows would be open and transparent, and if regulatory policies are further relaxed, the company's financing and dividend processes could also be managed through the DAO.
From recession to bubble: The development of traditional Web3 businesses focuses on three main axes: more novel grand narratives, more robust business revenues, and more balanced interest gaming models.
The author's third observation path is 'from recession to bubble.' We know that in 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, mainly exhibiting characteristics of an industry recession. Due to the lack of a universal profit-making effect, under the background of stock game play, capital has huddled together for warmth, choosing to gather in a few potentially huge but practically longer-term Infra sectors, trading time for space, raising valuations and matching 'points strategies' to avoid dilution of chips, thereby exploiting users. This has been analyzed in the author's previous article (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 Token prices in the LRT sector, the spotlight gradually shifted to the application layer represented by TON Mini App. Compared to infra, the application layer is favored by capital due to more target choices, lower development costs, shorter implementation cycles, and more manageable iterative benefits. At this time, the market quickly emerged from the shadows of the recession.
As we enter 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 have been broken, and the market has rapidly entered a bubble phase. Capital is heavily chasing the virtual at the expense of the real, and Meme coins, which have shorter exit cycles, are pursued for higher capital turnover rates. Aside from Meme coins themselves, launch platforms represented by Pumpfun and tools updated with narratives like AI Agents are also being chased by the market.
Looking ahead to the next year, the author believes that traditional Web3 businesses will develop according to the bubble cycle model.
lMore novel grand narratives: We know that capital likes to chase high-growth tracks, primarily due to the enormous imaginative potential and tolerance for the current delivery, which allows valuation bubbles to be inflated larger. It is also easier to attract market traders and new capital, making it more convenient for investors to exit through the secondary market at the right time. Therefore, regardless of whether one recognizes the long-term value of a certain track, as long as it is logical, it can become a target for capital speculation during the bull market bubble period. Thus, from the perspective of chasing capital gains, sensitivity should be maintained.
lMore robust business revenue: For some tracks that have undergone a round of iteration, valuation models will return to reasonable ranges, and the pursuit of real income will become the main theme of industry iteration, raising higher demands for refining commercially viable needs. However, if a particular scenario can truly be discovered, the market potential will be limitless. Here, the author specifically refers to the DeFi track, or Ce-DeFi track. Personally, the author is quite interested in the interest rate trading market, and those with similar ideas are welcome to discuss with the author.
lMore balanced interest gaming models: We know that current traditional VC coins are plagued by FUD, and more problems arise from the traditional financing model causing a prisoner’s dilemma in the game relationship between project parties, primary market VCs, and secondary market investors. Each prisoner suspects the other may betray, thus choosing to betray (to ensure their release or reduce their sentence). Therefore, in the new environment, whether a better model can be found is also worth paying attention to. For example, the author believes HyperLiquid likely discovered some of these secrets, which will be a key focus of the author's upcoming research.
From conservatism to reform: The rare opportunity of risk assets escaping the slope brought about by significant uncertainty.
The author's fourth observation path is 'from conservatism to reform.' It needs to be explained that conservatism and reform here are neutral terms; conservatism refers to compliance with existing rules, while reform implies breaking them. The main theme of 2025 will certainly be significant changes in the economic and cultural fields triggered by political reforms, with the entire process filled with uncertainties brought about by the collapse of the old order. For example, the uncertainties surrounding the US-China government debt crisis, various countries' monetary policies, changes in mainstream social values, and uncertainties in international relations, etc.
The volatility brought about by the uncertainties creates significant fluctuations in the risk market. Of course, if sector rotation puts the industry in a positively driven state, this volatility is a good thing; conversely, it is not. A piece of news from a couple of days ago caught the author's interest in this direction: the FTX restructuring plan will take effect on January 3 and will allow users to start receiving repayments.
We know that in the last cycle, the mainstream political spectrum in the tech industry was relatively pro-Democratic. Therefore, it is believed that many big players who entered during the last bull market will have a hard time after Trump's return. Thus, it is understandable that they took advantage of the window period before his official assumption of office to push related prices up as much as possible, treating their risk assets as a hedge, which led to an escape slope.
From the FTX case, the author has also gained some insights, so in 2025, the author is quite interested in the development of the NFT track. It seems that the two have some similarities, and combined with new speculative narratives like AI Agents, it is not impossible for the NFT market to experience a second spring.
