Author: @Web3_Mario
Summary: I sincerely thank everyone for your support this past year. I apologize for the delay in my year-end summary due to some time-consuming matters. I have also thought for a long time about which angles to use to share my insights from this past year. In the end, I felt that sharing from the perspective of an ordinary Web3 entrepreneur still fighting on the front lines would be more genuine. Overall, looking back at 2024 and looking forward to 2025, I believe it is appropriate to summarize in four phrases: from grassroots to universal, from chaos to order, from recession to bubble, and from conservatism to reform. Next, I will share my thoughts and outlook based on what I consider to be representative events.
From grassroots to universal: The passage of the BTC spot ETF has opened the door to the universal path of crypto assets.
Looking back at 2024, I believe the most unusual transformation the crypto world has experienced is the upgrade from a product of niche subculture communities to an asset class with universal value. This process can be traced back to two landmark events: first, on January 10, 2024, the approval of the BTC spot ETF after three months of negotiation, officially passed with the SEC's approval. Second, on November 6, 2024, during the current U.S. election cycle, crypto-friendly Trump was successfully elected as the 47th President of the United States. The corresponding impacts can be observed from two notable price trends of BTC this year. 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 liquidity. More abundant liquidity naturally favors the price trends of risk assets, but the process and motivation for attracting liquidity differ from the bull market in 2021. Reviewing the 2021 crypto asset bull market, its primary driving force came from the deregulated nature of crypto assets, which brought about higher capital efficiency. This allowed the crypto track to capture excess liquidity driven by the Biden administration's (1.9 trillion dollar economic relief plan) in response to the COVID-19 pandemic more efficiently, resulting in extraordinarily high speculative returns.
However, in the current bull market that began in 2024, the entire transmission process has undergone a transformation. The 'influential capital' attracted by the bull market in 2021 and the newly established vested interests are forming a new interest group actively releasing greater political influence, which includes numerous crypto policy lobbying groups and massive political donations. About this, I previously conducted a more in-depth analysis in my article (In-depth analysis of World Liberty Financial's value: a new choice amid Trump's campaign financing disadvantages).
The most direct impact of this is that it has become possible to efficiently promote the universal values of cryptocurrency through political means. Therefore, in this cycle, you will see iterative discussions about the value of crypto assets emerging, and more traditional elites and mainstream media are labeling themselves as 'crypto-friendly'. This shift from 'grassroots' to 'universal' has profoundly influenced the motivations for attracting liquidity, regardless of whether the viewpoints are supported by sufficient evidence (as discussed in previous articles, analyzing the underlying causes of current fluctuations in the crypto market: the anxiety of value growth after BTC hits a new high). Besides speculation, the purchasing power of BTC in this round indeed mixes in more terms like 'store of value', 'anti-inflation', etc., which will reduce the cyclical and volatile nature brought by speculative attributes in crypto assets, making value support more robust. Of course, the only crypto assets currently able to achieve this positive change seem to include only a few blue-chip assets like BTC, but thanks to the multiplier effect, the entire crypto asset market will benefit to some extent.
In addition to the impact on the top-tier class, this evolution also brings about a significant positive mindset change for many practitioners, including myself. The most intuitive example is that when friends outside the industry ask you about your field, you no longer have to explain timidly that you are not a criminal or a nouveau riche, but can proudly introduce your profession or career. This shift in mindset will also make the influx of talent more positive, greatly reducing friction costs in processes such as seeking partners for entrepreneurship, recruiting talent, and collaborating with traditional industries. Therefore, regarding this point, I am very confident about the future development of the industry.
Finally, I would like to mention some prospects for this narrative path. In mid-2025, discussions about the value of crypto assets represented by BTC will be more positive. Analyzing previous articles, BTC's store of value and its potential to take over AI, becoming the core of growth in the U.S. stock market, is particularly relevant. Therefore, it is essential to remain sensitive to related information, which may include the following aspects:
Regarding the progress of Bitcoin reserve-related bills at the national, regional, organizational, and corporate levels.
Relevant speeches or viewpoints expressed by key figures with political influence.
The configuration of BTC in the balance sheets of U.S. listed companies.
From chaos to order: The regulatory framework for the crypto industry by global sovereign nations will be further improved, providing a basis for Web3 business scenarios to break out.
My second observation path is 'from chaos to order'. For a long time, a core narrative of the cryptocurrency industry has been the censorship resistance brought about by decentralization and anonymity. You can find similar discussions in most Web3 applications during the previous cycle, which naturally contributed significantly to finding value support early in the Web3 industry, but also brought considerable harm to the industry, such as fraud and money laundering.
However, I believe the industry will iterate in this direction. It is not about completely abandoning Web3 fundamentalism but rather understanding from a pragmatic perspective that the current crypto industry will undergo a transition from chaos to order, which will be accompanied by further improvement of the regulatory framework for the crypto industry by global sovereign nations. We know that in 2024, many 'crypto game hotspots' have drawn attention, particularly the transition of SEC Chairman Gary Gensler. For a long time, this crypto-unfriendly chairman oversaw the SEC, which sued a large number of U.S. crypto companies, such as Ripple and Consensys, making it difficult for these giants to conduct and expand their businesses. In a previous article (Buying the rumor series: Expectations for improvement in the regulatory environment heat up, which crypto assets benefit the most?), I analyzed this direction using Lido as an example.
However, with Trump's presidency, his deregulatory policy preferences, coupled with Gary Gensler's transition, a more relaxed, inclusive, and crypto-friendly regulatory framework is worth looking forward to. Based on recent relevant case rulings, such as Ripple and Tornado Cash, the introduction of this framework should not be too far off.
The most direct benefit of this change is that it provides evidence for Web3 business scenarios to break out of their confines without bearing many potential legal risks. In the upcoming year of 2025, I 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 bills, changes in SEC personnel appointments, and the speeches and viewpoints of key decision-makers. In terms of potential breakout businesses, I am particularly interested in two aspects:
Ce - DeFi scenarios: Connecting traditional financial tools with on-chain tools like crypto assets to address funding efficiency, reduce transaction friction costs, etc. From the direction of capital flow, it can be divided into two main categories: the first is from the traditional financial world to on-chain crypto assets, such as MicroStrategy's financial innovations. The second is from on-chain crypto assets to the traditional financial world, specifically referring to RWA based on bonds, on-chain financing channels similar to Usual Money, and stablecoins in the TradeFi space.
DAO in the management of off-chain entity businesses: This direction seems a bit impulsive, as Trump's policies have relaxed regulations related to cryptocurrency, coupled with 'America First' boosting domestic demand. Will more organizations or companies leaning towards traditional business choose to use the DAO model for internal governance in exchange for cheaper financial services? For example, if someone wishes to open a Chinese restaurant, they could choose to operate through a DAO and connect to a stablecoin-based payment system, making all cash flows transparent. Furthermore, 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 traditional Web3 business development focuses on three main axes: innovative grand narratives, more stable business revenue, and more balanced interest game models.
My third observation path is 'from recession to bubble'. We know that in mid-2024, traditional Web3 business hotspots underwent a significant transformation. The LRT market, driven by EigenLayer in the first half of the year, primarily exhibited characteristics of an industry recession. Due to the lack of a widespread profit effect, in the context of stock game, capital chose to congregate in a few potential markets with enormous actual business deployment in the long term, using time to exchange for space, raising valuations and avoiding dilution of shares through 'points strategies', thus exploiting users. This was discussed in my 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 underwhelming performance of the LRT sector's token prices, the spotlight gradually shifted to the application layer represented by the TON Mini App. Compared to infra, the application layer is favored by capital due to more target choices, lower development costs, shorter landing cycles, and more manageable positive iterations. At this time, the market quickly emerged from the shadow 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, the traditional capital exit paths have been disrupted, leading to a rapid bubble in the market. Capital is aggressively pursuing meme coins with shorter exit cycles in pursuit of higher capital turnover rates. Aside from meme coins themselves, platforms like Pumpfun that represent launching tools and updated narratives such as AI Agent are also being chased by the market.
Looking ahead to the coming year, I believe traditional Web3 businesses will develop according to the bubble cycle model:
Innovative grand narratives: We know that capital likes to chase high-growth tracks, primarily due to immense imaginative potential and tolerance for current delivery, allowing valuation bubbles to grow larger. This also makes it easier to attract market traders and new capital, enabling investors to exit through secondary markets at opportune moments. Therefore, regardless of whether one recognizes the long-term value of a particular track, as long as it is logical, it can become a target for capital speculation during bull market bubbles. Thus, from the perspective of pursuing capital gains, sensitivity should be maintained.
More stable business revenue: For some tracks that have undergone an iteration, valuation models will return to reasonable ranges. At that point, the pursuit of real income will become the main melody of industry iteration, which will raise higher demands for refining commercial potential. However, if a particular scenario can truly be explored, the market potential will be infinite. Here, I specifically refer to the DeFi track or Ce-DeFi track. I am personally quite interested in the interest rate trading market, and I welcome anyone with similar thoughts to discuss with me.
A more balanced interest game model: We know that the current traditional VC coins are suffering from FUD, and more problems stem from the traditional financing model that has caused the game relationship between project parties, primary market VCs, and secondary market investors to fall into a prisoner's dilemma of individual optimal strategies. Each prisoner believes that the other may betray, and thus chooses to betray (ensuring their own release or reducing their punishment). Therefore, in the new environment, finding a more optimal model can also be a focus. For example, I believe HyperLiquid is very likely to have discovered some of the secrets behind this, which is also a key area of my upcoming research.
From conservatism to reform: Rare opportunities for risk assets to escape the slope brought by significant uncertainty.
The author's fourth observation path is 'from conservatism to reform'. It is necessary to explain that both conservatism and reform here are neutral terms; conservatism refers to adherence to existing rules, while reform means breaking them. The main theme of 2025 must be significant changes in the economic and cultural fields triggered by political reform, a process fraught with uncertainty brought about by the collapse of the old order. For example, the uncertainties related to the China-U.S. government debt crisis, the uncertainties in monetary policies of various countries, the uncertainties in changes to mainstream social values, and uncertainties in international relations, etc.
The uncertainty brought about by these factors is the substantial volatility in the risk market. Of course, if sector rotation places industries in a state of positive momentum, this volatility can be a good thing; the opposite is also true. A news flash from a couple of days ago sparked my interest in this direction, namely that the FTX restructuring plan will take effect on January 3 and will allow users to start receiving repayments.
We know that in the previous cycle, the mainstream political spectrum in the technology industry was relatively tilted towards the Democratic Party. Therefore, many big players who entered the market during the last bull market may not fare well after Trump's return. Thus, it is understandable that they would take advantage of the transition period before his official inauguration to push related prices up as much as possible, treating their held risk assets as a hedge against losses.
From the FTX case, I also gained some insights. Therefore, in 2025, I am quite interested in the development of the NFT track, as it seems there are some similarities between the two. Coupled with new speculative narratives like AI Agent, the NFT market is also likely to experience a second spring.
