Written by: Momir @IOSG
Schrödinger's cat is a very interesting thought experiment—simply put, this law summarizes that in quantum mechanics, macroscopic objects can exist in multiple states until you observe them. In the Schrödinger's cat experiment, the cat is placed in a sealed box, and until the box is opened, the cat can be in a superposition of being alive and dead. Only when you open the box does everything 'collapse' into a result: either alive or dead.
This experiment is actually quite similar to the current cryptocurrency market. Just like that cat in the box which can simultaneously have two states, the current crypto industry is also in a state of uncertainty, with many possibilities coexisting for the future. It is only when the market shifts or external factors intervene that these possibilities will collapse into a clear reality.
The 'superposition state' of top assets
BTC
1. Survival
BTC has the potential to solidify its status as a global reserve asset, truly realizing its vision as 'digital gold.' However, achieving this vision relies heavily on several key factors:
The U.S. government includes BTC in national reserves, beginning to purchase BTC (low likelihood).
Several governments or central banks from the top 20 economies will consider BTC as a reserve asset (low to medium likelihood).
An increasing number of global listed companies, influenced by MicroStrategy's success, are starting to convert large cash reserves into BTC (medium to high likelihood).
Systemic shocks (such as the collapse of governments or banks) enhance BTC's attractiveness as a hedge against risk, further strengthening its role as a 'safe-haven asset.'
2. Death
If the key scenarios mentioned above do not materialize, BTC's future momentum may be weakened:
Government Indifference: If major economies show no interest in BTC, market sentiment may turn pessimistic, and attention will shift from chasing new highs to focusing on whether large holders like MicroStrategy will cash out or even sell.
MicroStrategy's Risk: Currently, MicroStrategy is a strong supporter of BTC, but if its leveraged operations lead to significant market sell-offs, it could become a 'burden' for BTC. Remember how giants like Alameda Research and Three Arrows Capital (3AC) were wiped out by the market? Once the liquidation line is triggered, shorts will smell blood and chase targets, causing waves of sell-offs. If MicroStrategy follows this path, the situation could spiral out of control.
Technical Issues: Whether BTC can cope with the challenges of quantum computing is also a major concern. If BTC cannot adapt to this new risk, it cannot serve as a secure, tamper-proof value storage medium.
BTC is currently in a kind of quantum superposition state, either becoming the cornerstone of the crypto economy or being seen as outdated technology—this all depends on market attitudes and ultimately leads to which result it will 'collapse' into.
ETH
1. Survival:
ETH is expected to dominate the blockchain space in the future and further strengthen its position as 'programmable BTC alternative.' So why might institutional investors pay more attention to ETH next? There are many reasons:
Institutional Interest: ETH’s level of decentralization is very high. Except for BTC, it may be the only blockchain asset that governments and institutions are willing to accept.
Quantum Computing Resistance: In the long run, ETH is more likely than BTC to transition smoothly to quantum-resistant technology. We expect ETH's transition to be much smoother than BTC's.
Sustainable Economy: ETH has substantial on-chain activity, generating natural fees that can provide stable revenue streams for validators and miners. Its flexible token economics can adjust between inflationary and deflationary models based on market demand, making its long-term economic sustainability far exceed that of BTC.
Developer Ecosystem: ETH attracts the most developers and has been the preferred ecosystem for development teams for seven years.
Diverse Leadership: ETH has multiple teams driving its adoption, including Base (arguably the most important crypto institution in the U.S.), Arbitrum, ZkSync, Starknet, etc.
Resistance to Centralization Risks: ETH does not have to worry about a single entity like MicroStrategy monopolizing market discourse as BTC does.
Blockchain Trilemma: ETH is the only public chain that has successfully balanced the blockchain trilemma—it achieves decentralization, scalability, and security through innovative solutions like Rollups. This makes ETH the most technologically advanced and versatile blockchain, suitable for both institutions and retail users.
Ecosystem Growth: ETH has a large and active ecosystem. The momentum created by such a massive ecosystem can maximize ETH's benefits under new policy incentives and clear regulatory policies.
2. Death:
In the worst-case scenario, ETH may miss the entire cycle due to some internal and external risks:
Leadership, leadership, leadership:
Leadership Vacuum: Due to the large and decentralized ETH community, this characteristic allows some opinion leaders to constantly create chaos among the ETH community, spreading contradictory statements, making the ETH ecosystem even more fragmented.
Cultural Challenge: The new U.S. government advocates a cultural shift—from 'woke culture' to 'grounded.' This shift means society moves from political correctness and moral discussions to a more pragmatic communication style. The culture of ETH is often considered more 'woke' than others. It emphasizes inclusivity, political correctness, and community-led moral discussions. While these values contribute to diversity, they can sometimes bring challenges (inefficient communication, moral judgments, hesitation in making bold decisions). Some vocal members in the community often play the role of a moral court, limiting direct dialogues and potentially creating friction when adopting a more assertive leadership style.
Challenges from Competing Chains: Competitors like Solana continue to challenge ETH's dominance. Numerous public chains outside the ETH ecosystem have thrived. If this trend continues, ETH's position as the preferred platform for attracting top developers will face further challenges.
In the future, ETH may be hailed as an upgraded version of BTC, becoming the king of blockchain; or it may find itself in trouble due to some characteristics rooted in its lineage.
Solana
1. Survival:
Solana can shine with its flexibility and active community:
The combination of Meme and AI: In 2025, Meme will still dominate the economic attention of the crypto circle. Under this Meme trend, Solana leads the new wave – in response to the rapid growth of AI Agents in the industry, the forward-thinking Solana team has immediately introduced Agent SDK.
DePIN: Solana's years of layout in the DePIN track can finally reap rewards. With a large number of DePIN solutions finally landing, Solana has the opportunity to become a leader in integrating blockchain with DePIN.
Developer Leadership: Solana focuses on cutting-edge verticals and rapid innovation in the industry, challenging ETH's dominance among developers. Solana's focus on the developer community makes it a breakthrough among many challengers to ETH.
Institutional Certification: If a Solana ETF is approved, it will be a crucial milestone. This indicates that Solana's ecosystem is recognized by institutions, further enhancing its standing among institutional and retail investors.
2. Death:
From Hunter to Prey: Solana has experienced a stunning turnaround in the past 18 months. Its alternative roadmap and calm response to the FTX collapse have allowed it to reclaim a position among leading blockchains. However, the current Solana is no longer the dark horse but rather a player with a somewhat 'big boss' demeanor. Consequently, attention among speculative investors is beginning to shift toward its rivals, such as Sui, Hyperliquid, Aptos, Monad, etc. In contrast, these emerging chains all claim to offer fast, integrated solutions, each challenging Solana's position.
Overreliance on Meme: Solana's rise has been inseparable from Meme and speculation. While this strategy has successfully attracted market attention, it also brings the risk of waning speculative enthusiasm for Solana. Without sustainable on-chain activity (such as a thriving DeFi ecosystem or other enduring narratives), the decline of Meme could severely impact Solana's on-chain economy. The attention economy is inherently fleeting, and long-term growth for an ecosystem cannot overly rely on market attention.
Developer Stickiness: In 2022, Solana experienced the largest-scale developer exodus in blockchain history, and public concerns regarding the long-term growth of Solana's ecosystem stem from this. The success of Solana in the past 18 months can be attributed to speculators, but we remain skeptical about whether Solana has cultivated a loyal and resilient developer community during this time. In the coming years, as competition intensifies, a strong developer community will be a moat for Solana to maintain its leading position.
Solana stands at a crossroads of survival and death: its flexibility, active community, and innovative capacity give it the potential to break through ETH. However, whether Solana can maintain momentum in the face of increasing competition, speculation, and developer stickiness issues will determine whether it can continue to dominate the market.
Investment institutions look at the track
2.1 Crypto x AI
Crypto x AI is one of the most innovative and dynamic fields in the industry recently. It has attracted nearly mainstream market attention and offers a very broad space for imagination. Sovereign AI (AI systems powered by decentralized crypto infrastructure) represents a revolutionary opportunity (but granting such power to AI also carries many risks). These systems can achieve true autonomy, interacting on-chain with other agents and humans using non-custodial wallets. We might even see AI agents purchasing human services for off-chain tasks in the future.
Months before AI agents became the market focus, we had already written about the potential of this field: The Agent Wars: Silicon Valley Titans vs. Crypto Challengers (Link: https://x.com/momir_amidzic/status/1825895123315458281)
In addition to AI Agents, several other areas within Crypto x AI are also worth our attention, as we have showcased in the Crypto x AI industry map from June 2024:
2.2 DePin
DePIN is a highly innovative and diverse field. It combines crypto economic models with off-chain hardware to solve many challenges in traditional industries.
Core target industries and application scenarios
DePIN projects cover multiple industries:
In edge computing, DePIN provides distributed processing capabilities for latency-sensitive applications.
In energy and electricity infrastructure, DePIN can incentivize the adoption of renewable energy.
In the wireless network field, DePIN focuses on community-driven 5G and IoT connectivity, bypassing the limitations of traditional telecom providers.
DePIN supports decentralized crowdfunding solutions for several other important industries (such as mapping and high-precision positioning services).
In terms of computation and storage, DePIN provides a decentralized alternative to traditional cloud services, offering secure data storage and processing.
CDN can achieve cost-effective and scalable digital content distribution through DePIN.
Data scraping projects like Grass can establish a network of millions of nodes through token incentives. It can utilize the internet bandwidth contributed by participating nodes to scrape massive data.
Although DePIN is a very promising field, not all DePIN projects are equally promising; the success of specific projects highly depends on their own merits.
We are excited about DePIN projects that can provide clear and measurable value (such as reducing costs, improving efficiency, or entering untapped markets). The success of DePIN often comes from the new business models it realizes, which centralized systems cannot replicate. This advantage allows projects to achieve better market penetration, distribution, and accessibility. DePIN can also drive cost efficiency and better unit economics by lowering operating costs or increasing resource utilization, making its decentralized model more competitive and sustainable. Additionally, capital expenditure optimization is a significant advantage for DePIN projects, as it spreads infrastructure costs to the community through token incentives, enabling faster scaling and broader participation.
On the other hand, we should avoid those improperly tokenized DePIN projects as much as possible. Their failed token economics often lead to unsustainable ecosystems. Some projects' tokens do not bring actual efficiency improvements or enhancements compared to traditional methods, but purely rely on token incentives to mask potential inefficiencies and subsidize usage costs in the short term. Relying solely on tokenization cannot justify decentralization, and sometimes the outcome is worse than existing centralized models.
2.3 Payments
Stablecoins have become the mainstream payment medium in the crypto industry. Due to their programmability, cross-border usability, and increasingly clear regulatory framework, stablecoins are expected to become the standard settlement currency for global payments.
While stablecoins have clear advantages over fiat in terms of programmability and cross-border liquidity, broader applications are still constrained by regulatory challenges and inefficient on-chain and off-chain mechanisms. However, a pro-crypto U.S. government may provide regulatory clarity that creates a healthier environment for efficient, liquid, and low-cost crypto and fiat transactions.
Short-term (1–3 years): Remittances and consumer applications
Stablecoins will first dominate cross-border remittances, providing a faster and cheaper alternative to SWIFT. Debit/credit cards associated with cryptocurrencies (Visa/MasterCard) will also simplify consumption and build a bridge between on-chain wealth and real-world transactions. This will benefit those outside the U.S. banking system, individuals who have difficulty obtaining traditional payment cards, and cryptocurrency holders looking for convenient consumption of assets.
Medium-term (3–7 years): Commercial adoption
Companies will increasingly adopt stablecoins due to their low fees, instant settlement, and programmability. Companies will be able to seamlessly convert between cryptocurrencies and fiat, providing customers with two payment options. This dual-track approach will enhance efficiency and further integrate stablecoins into mainstream business.
Long-term (7 years and beyond): Pay taxes with stablecoins
Stablecoins will become mainstream fiat currencies, widely accepted for payments, eliminating the need to convert them into fiat. At that point, stablecoins will disrupt traditional financial infrastructure, driving low-cost P2P transactions between consumers and merchants, significantly reducing reliance on banks and credit card companies.
2.4 Consumer Applications
The consumer applications space is very exploratory but also harder to define, often overlapping with other fields like AI, DePIN, and payments. This area encompasses a wide range of applications, including but not limited to AI-driven consumer solutions, consumer-oriented DeIN projects, and payment solutions designed for consumers.
In addition to practical application scenarios, consumer applications in the crypto space also incorporate speculation and gamification elements. A very important category here is blockchain games. They integrate speculative economic elements and Meme, currently remaining one of the most successful consumer interaction experiments in the industry. These speculative applications often blur the lines between entertainment, finance, and utility, creating unique opportunities for innovation.
Looking ahead, new experiments combining crypto with consumer applications will bring more opportunities. Game mechanics integrated with economic incentives show immense potential, offering new ways to attract users and drive adoption. The design space in this area is vast, and we expect it to yield groundbreaking innovations in 2025.
IOSG's portfolio
1. Usual
2024 will be a very successful year for Usual, as it reached $1.5 billion in TVL in just six months and successfully entered the top five stablecoins. The governance token has also been listed on Binance, the largest CEX globally. Their fierce momentum shows no signs of stopping, and Usual is expected to break into the top three in the stablecoin market, standing shoulder to shoulder with giants like Circle and Tether. Usual's scalability is on par with its competitors, and their ambitious goals seem within reach.
In the DeFi space, Usual's strategic partnership with Ethena, Ondo, and M0 will drive the next phase of growth. Notably, the yield products between Ethena and Usual can adapt to various market conditions—providing high crypto-native yields in bull markets and stable RWA-supported returns in bear markets. Meanwhile, in CeFi, Usual's integration as collateral is just beginning. Usual assets will be deeply integrated into the foundations of the CeFi and DeFi ecosystems. As these integrations progress, powerful network effects will accelerate adoption and application.
Looking ahead, the Usual team remains focused on building a vibrant ecosystem around Usual assets. With their outstanding execution capabilities, we can fully believe that Usual's innovations and breakthroughs are just around the corner.
We previously published Usual's Thesis: Link, and our story with the Usual team 'Unusual': Link
2. BTC Ecosystem
While BTC is the oldest and most mature cryptocurrency, its life is still in a very early stage. We have supported a range of pioneering projects around the BTC ecosystem that are shaping the next frontier of BTC's development:
Babylon: A breakthrough in cryptography allowing trustless BTC staking, enabling BTC holders to secure external networks and earn rewards without relying on intermediaries.
BoB: A hybrid Rollup utilizing BitVM v2 for trustless BTC bridging. BoB creates a secure hub by combining Babylon’s fast finality with ETH’s data availability, allowing BTC to freely integrate with ETH’s DeFi ecosystem.
Solv: The largest BTCfi application, redefining BTC's role in decentralized finance by unlocking yields for BTC holders and driving the development of foundational financial products for BTC.
2025 will be a pivotal year, as years of innovation and development in the BTC ecosystem will translate into practical applications. This is one of the real demands we can test for economic prosperity on the BTC chain. We are confident in BTC's evolution from a value-storing tool to trustless staking, DeFi, and cross-chain interoperability ecosystems.
3. AI Track: Theoriq, Phala, Hyperbolic
Theoriq is an AI DePIN project that is redefining the future of AI collaboration. In Theoriq's framework, AI agents can not only work independently but also collaborate as a dynamic collective. This forward-thinking framework allows AI agents to collectively solve complex problems that a single-agent system cannot tackle. Theoriq introduces memory-enabled agents, advanced evaluators, and user-friendly tools, ensuring that human feedback remains central to agent development, thus driving compounded value growth. This creates a virtuous cycle: agents continuously learn, adapt, and self-organize while effectively collaborating, creating a self-improving ecosystem.
Theoriq operates in a self-regulating environment by integrating cryptoeconomic incentive mechanisms. Specifically, agents are rewarded for good behavior and penalized for mistakes, maximizing the framework's reliability and accountability. We led Theoriq's seed round in 2022 when Crypto x AI was still a non-consensus idea. Two years later, we are very pleased to see Theoriq entering production.
Phala has always been our long-term investment project. As we recognize Phala's immense potential in shaping the future of Crypto x AI, we recently increased our investment in it. As a pioneer of TEE technology, Phala has a unique advantage in meeting the AI agent's demand for secure infrastructure.
AI agents rely on TEE technology to securely manage critical assets (such as wallets and social accounts) to ensure privacy, trust, and efficiency without sacrificing performance. In an environment where almost all Infra projects are exploring how to integrate TEE technology, Phala's superior solution is chosen by many developers for its reliability and scalability.
Hyperbolic is revolutionizing the AI infrastructure space. As a leading GPU network, Hyperbolic focuses on inference and provides verifiable inference tools. Additionally, they have created a GPU layer that allows AI agents to rent GPUs through SDK. This innovation allows GPU resource-rich AI agents to easily access the computing resources they need, driving more complex and efficient workflows.
Hyperbolic inference cloud is a platform where anyone can contribute GPU resources; it fully abstracts the non-uniformity of GPU hardware, making GPUs truly interchangeable. Hyperbolic's performance is exceptional, having become the first project to provide some of the most advanced open-source AI models on its platform.
4. Gelato
Five years ago, we recognized Gelato's immense potential early on. We led the seed round investment in Gelato and continued to follow up in subsequent rounds. Over the years, Gelato has quietly grown into the AWS of Web 3.0. Today, if you randomly think of three crypto projects, at least one will be using Gelato's tech stack in the backend. Gelato has achieved success in product offerings, with its powerful and versatile tech stack including RaaS, Functions, Relay, VRF, account abstraction, RPCs, bridging, and oracles. Its solutions cover various fields, from payments and DeFi to infrastructure, consumer applications, and AI agents.
2025 will be the year Gelato transitions from quietly supporting the ecosystem to telling its story, effectively marketing itself, and building attractive token utility. It is expected to be recognized as a critical infrastructure layer and become a pillar of reliability and innovation in the Web 3.0 space.
5. Staking and Re-staking
We have been actively investing in two major themes in the ETH ecosystem—the staking and re-staking ecosystems of 'The Merge' and 'Shanghai Upgrade.' The related projects we have laid out, EigenLayer, ether.fi, Kiln, Renzo, Babylon, and AltLayer, among which four have already been listed on Binance. EigenLayer and ether.fi rank third and fourth among all DeFi protocols with a TVL of $15.7 billion and $8.4 billion, respectively. Furthermore, ether.fi and Kiln are the fourth and fifth largest staking service providers for ETH, with Kiln managing $13 billion in assets.
Reflecting on the development of the ETH staking and re-staking ecosystem, we can clearly see the value of ETH as a multifunctional asset continuously being strengthened and expanded.
As the ETH roadmap progresses and the staking ecosystem matures, its importance in the blockchain industry continues to grow. Through staking and re-staking, ETH not only provides a solid foundation for network security and decentralization but also showcases its unique properties as capital, consumer goods, and a value-storing asset by expanding economic security and ecological richness.
In conclusion
The fate of the crypto industry in 2025 is like Schrödinger's cat. Its success or failure is not determined by its inherent qualities but by how it is perceived by the outside world. On many levels, value is a construct shaped by collective consensus. BTC may be 'digital gold,' ETH may be the pillar of decentralized innovation, and Solana may be the flexible disruptor, but their ultimate fate depends on the narratives we choose to accept and the meanings we ascribe to their existence.
In a world of Crypto filled with infinite possibilities but limited attention, market perception becomes the ultimate currency. The crypto market is driven not only by technology or utility but also by beliefs, trust, and stories that can ignite our imagination. What we focus on determines what will survive and thrive, just as observing behavior collapses Schrödinger's cat into a single state. The collective gaze of the market, institutions, and individuals will determine which futures will prevail in the crypto space and which will disappear. Ultimately, what will determine the cornerstone of the future digital economy is our perceptions and views—and the stories we tell ourselves.
