Author: Messari
Translation: Deep Tide TechFlow
Introduction
Another year-end, time for summary and outlook.
As one of the top research institutions in the industry, Messari released its annual report (The Crypto Theses 2025) last week, providing a comprehensive description and forecast of the crypto industry's development history in 2024 and trends for 2025.
The report is not short of highlights, such as the expectation that BTC will mature as a global asset next year, and Meme, as a speculative outlet, will continue to attract users.
The report consists of two main parts. The first starts with 'The Current State of Cryptocurrency', which includes a brief article on the state of the crypto market in 2024; the second is 'Sector Research', which reviews the narratives and forward-looking theories of major sectors.
However, considering the original report spans 190 pages, a complete read is time-consuming; Deep Tide TechFlow has distilled and summarized the key content in the original report, presenting the most important points, especially the forecasts and outlook for each subsection.
Macroeconomic Environment: Breaking Pessimistic Expectations, Providing Strong Support for Crypto
Key Developments
The economic outlook for 2024 broke most pessimistic expectations, showcasing unexpected resilience in the US economy. The Federal Reserve managed to implement rate cuts of 50 and 25 basis points in September and November, respectively, achieving a relatively smooth policy transition.
The S&P 500 index rose about 27% over the year, ranking among the top 20 historical performances, reflecting the market's confidence in an economic soft landing. Notably, besides the unwinding of yen carry trades and brief volatility due to geopolitical issues, the market remained robustly upward overall.
Unique Landscape of the Crypto Market
The crypto market faces a dual challenge in 2024. On one hand, it must contend with various risk factors from traditional markets; on the other, it must overcome industry-specific challenges, including the selling pressure from the German government, the token distribution from Mt. Gox, and investigations into Tether. The market experienced an 8-month consolidation period until the elections became a breakthrough catalyst.
2025 Forecast
The macro environment is expected to provide strong support for crypto assets. Specifically:
The Federal Reserve has begun to ease the tightening measures imposed since 2022 but has not yet entered a substantial easing phase. This gradual policy adjustment is expected to provide stable support for the market;
Volatility across various assets significantly decreased after the elections. Historically, low volatility often fosters even lower volatility, making this environment particularly favorable for the development of cryptocurrencies like Bitcoin and Ethereum;
Most importantly, there has been a fundamental improvement in the regulatory environment. Even a relatively neutral regulatory stance will bring significant improvements over the stringent controls of the past four years. This change is expected to alleviate major concerns for institutional investors entering the market, bringing more incremental funds;
The stablecoin sector may become a breakthrough. The bipartisan openness towards stablecoin regulation creates favorable conditions for advancing related legislation in 2025;
Institutional Funds: Comprehensive Entry
Dramatic Market Landscape Changes
In 2024, the entry of institutional funds is no longer just talk. The approval of Bitcoin and Ethereum ETFs marks the formal recognition of the crypto asset class, providing more convenient access for institutional and retail investors;
BlackRock's IBIT creates records: the first ETF to reach $3 billion AUM within 30 days of issuance and surpassing $40 billion in about 200 days. This shows a strong institutional demand for crypto derivatives;
Diversification of Institutional Participation
Institutional participation goes far beyond ETF investments. Traditional financial institutions are making significant progress across multiple domains: asset issuance, tokenization, stablecoins, and research;
Institutions like Sky (formerly MakerDAO) and BlackRock have launched on-chain money market funds. Ondo Finance's USDY (tokenized government bond fund) has an asset scale of approximately $440 million;
Fintech Integration
In May, PayPal issued its stablecoin PYUSD on Solana, and Agora, supported by Nick Van Eck, also launched a stablecoin AUSD across multiple chains, with assets backed by Van Eck (asset management company) and custodied by State Street;
2025 Forecast
The depth and breadth of institutional participation are expected to further expand. As BlackRock continues to position digital assets as a non-correlated asset class worth small allocations, the steady inflow into ETFs may persist. More importantly, institutions are seeking innovative opportunities across multiple verticals to reduce costs, increase transparency, or accelerate payment efficiency;
Notably, traditional financial giants such as JPMorgan and Goldman Sachs are accelerating their布局. They are not only expanding their blockchain platforms but also exploring a wider range of product offerings;
This trend indicates that institutions no longer view crypto merely as an investment asset, but are beginning to take its potential as financial infrastructure seriously;
Meme: The Heat Will Continue
2024 Market Landscape
While meme coins account for only 3% of the top 300 cryptocurrencies by market capitalization (excluding stablecoins), their trading volume consistently holds a 6-7% share, recently even climbing to 11%;
Following a surge led by politically themed meme coins like Jeo Boden in the first quarter, TikTok meme coins (such as Moodeng and Chill Guy) and AI agent concepts (like the GOAT from Truth Terminal) continue to drive this momentum;
Market Drivers
The boom of meme coins is attributed not only to trends or user-friendly interfaces but also to two key conditions:
Excess Capital: With the overall appreciation of the crypto market, many traders have accumulated significant funds but lack quality investment opportunities;
Ample block space: High-throughput networks like Solana and Base provide a low-cost, efficient trading environment;
This environment is particularly evident on Solana. The strong market performance at the end of 2023 and the beginning of 2024 has allowed Solana users to accumulate significant capital.
Evolution of Trading Infrastructure
User-friendly trading platforms have significantly driven the popularity of meme coins. Applications like Pump.fun, Moonshot, and Telegram bots simplify the operations for retail traders;
In particular, Moonshot has bypassed traditional cryptocurrency deposit channels by supporting payments via ApplePay, PayPal, or USDC on Solana, attracting a large number of new retail investors with its intuitive interface and simple registration process;
2025 Forecast
Forecast for 2025, meme coins are expected to continue growing, primarily due to several key factors:
Infrastructure support: High-throughput chains such as Solana, Base, Injective, Sei, and TON provide ample block space, allowing meme coin trading without bearing high costs;
User experience optimization: Applications like Moonshot and Pump.fun continue to lower barriers to entry and simplify trading processes, likely attracting more retail participants;
The macro environment aligns: Meme coins, as a speculative outlet, have attributes similar to gambling and may continue to attract users seeking entertainment and profit in the current macro environment;
Financing Landscape: AI Leads Emerging Investment Themes
Market Overview
Crypto project financing is showing an upward trend compared to 2023. Although the total financing amount for startup projects and protocols has decreased by about 20% year-on-year (mainly due to the anomalous values in the first quarter of 2023), the market still saw several large financing cases;
Important Financing Cases
Monad Labs raised $225 million in April, highlighting that infrastructure and L1 projects remain a key focus for VCs;
Story Protocol completed a $80 million Series B funding round led by a16z, aiming to convert intellectual property into programmable assets;
Sentient received $85 million in funding, led by Thiel's Founders Fund, focusing on an open AGI development platform;
Farcaster and Freechat raised $150 million and $80 million, respectively, indicating sustained capital interest in the social domain;
The Rise of AI and DePIN
Total funding for AI projects has increased by approximately 100% year-on-year, with funding rounds growing by 138%;
Total funding for DePIN projects has increased by approximately 300% year-on-year, with funding rounds growing by 197%;
AI rounds are particularly popular in accelerator projects like CSX and Beacon. Investors are showing strong interest in the intersection of crypto and AI.
Emerging Investment Themes
In addition to AI and DePIN, several notable funding trends emerged in 2024:
The decentralized science field is beginning to receive attention, with projects like BIO Protocol and AMINOChain securing funding;
VCs in the Asia-Pacific region are more inclined to invest in gaming protocols, especially those launched on the TON blockchain;
Funding shares for NFT and metaverse projects have significantly declined compared to 2021 and 2022;
The social domain continues to experiment, with projects like Farcaster, DeSo, and BlueSky receiving funding support, despite limited past success cases;
Crypto Users, New Evidence of Growth
Market Size Breakthrough
According to a16z's report, the number of active cryptocurrency addresses reached a historic high of 220 million, with a growth trend similar to early internet adoption. Although this number may include duplicate counts (as many users utilize multiple wallets), the estimated number of genuine monthly active users is still around 30-60 million after filtering;
Key Cases of User Growth in 2024
The breakthrough of the Phantom wallet, becoming the most popular wallet in the Solana ecosystem, once ranked in the top ten in the IOS app store, surpassing WhatsApp and Instagram;
The application of stablecoins in emerging markets: Sub-Saharan Africa, Latin America, and Eastern Europe are beginning to bypass traditional banking systems and directly adopt stablecoins; platforms like Yellow Card, Bitso, and Kuna are promoting adoption by providing stablecoin exchange, payment APIs, and other services;
The explosion of Telegram Mini-Apps: Notcoin boasts over 2.5 million holders, Hamster Kombat attracts 200 million users, and 35 million YouTube subscribers;
Polymarket's practical application: Rapid growth during election periods, with nearly 1 million new accounts, briefly becoming the second most downloaded news app on IOS;
Base and Hyperliquid drive CEX users on-chain: Base L2 offers free transfer channels from Coinbase to Base, while Hyperliquid provides a CEX-like high-performance trading experience for perpetual contract traders;
2025 Forecast
The crypto ecosystem is no longer merely preparing for mass adoption but has already begun to achieve it;
User growth is shifting from sporadic, noisy entry patterns to a mode of natural discovery and sustained growth through various applications. Meme coins, consumer applications (such as Phantom and Telegram), prediction market platforms, and the growing on-chain utility will continue to drive compound growth;
The next key step is to make blockchain navigation more retail-friendly, which will be greatly improved through innovations like chain abstraction and aggregation frontends;
Bitcoin: This Year Was Good, Next Year Will Be More Mature
Key Developments in 2024
Price and Institutional Adoption
Starting from $40, the ETF approval led to a new high of $75,000 in Q1, breaking through the important $100,000 threshold after Trump's victory;
Bitcoin's market capitalization dominance rises to approximately 55%;
ETF issuers hold over 1.1 million Bitcoins, with BlackRock and Grayscale accounting for 45% and 19%, respectively;
Since ETF approval, there was only a single month of net outflow in April; BlackRock's IBIT continues to be the largest net buyer, with approximately $8 billion inflows in November alone;
MicroStrategy continues to make large-scale purchases, most recently acquiring $2.1 billion in Bitcoin between December 2 and 8, holding about 420,000 Bitcoins, second only to Binance, Satoshi Nakamoto, and ETF issuers;
Michael Saylor and MicroStrategy (MSTR) continue to dollar-cost average, with a BTC-centered strategy incentivizing other public companies like Marathon Digital Holdings (MARA), Riot Platforms, and Semler Scientific to begin accumulating BTC reserves;
2024 is also a halving year for BTC, and the natural seller count for Bitcoin will decrease over time;
Network Innovation
The Rise of Ordinals and Runes
Ordinals bring NFT functionality to Bitcoin, and Runes launch as a new token standard, similar to Ethereum's ERC-20;
Some Runes projects have valuations reaching nine figures, indicating market recognition of Bitcoin's ecosystem expansion;
The Breakthroughs in Bitcoin's Programmability and Staking Innovation
The emergence of BitVM brings arbitrary computation possibilities to Bitcoin, with over 40 Layer-2 projects launched in testnet or mainnet;
CORE, Bitlayer, Rootstock, and Merlin Chain are leading in TVL;
Babylon launched as Bitcoin's first staking protocol in Q3, reaching its first round of 1,000 BTC staking limit within 6 blocks;
Liquid staking tokens such as LBTC from Lombard are beginning to appear;
2025 Forecast
Inflow into Bitcoin ETFs has significantly exceeded expectations, and over time, institutions are likely to slowly become the primary drivers of daily BTC price movements;
Bitcoin ETFs can be purchased without using leverage. The inflow of spot funds from institutions is smoother and more consistent, which should reduce reflexive, leverage-driven volatility, thereby helping Bitcoin mature as an asset;
The approval of Bitcoin ETFs may have placed BTC in the early to mid-stage of becoming the leading global store of value. In November, Bitcoin surpassed silver to become the world's eighth most valuable asset, partly due to the inflow of ETF funds throughout the year. Year-end trends suggest that ETF inflows will continue to increase in 2025, especially as Grayscale's GBTC shifts towards positive net flows;
Regarding regulation, the new Trump administration has shown a positive attitude towards cryptocurrencies and Bitcoin, making promises related to Bitcoin during the campaign. Although Bitcoin was quickly repriced after Trump's election victory, the government ultimately needs to deliver on some of their claims;
While we predict that the likelihood of this occurring is low, a federal strategic Bitcoin reserve would be especially influential. The market seems to approach the Trump administration with cautious optimism, and if the president can achieve some of the more likely action items, it may build enough goodwill to sustain Bitcoin's optimistic sentiment going forward;
After the 2024 election, the impact of clear and positive cryptocurrency reform becomes a significant issue across all government departments, and we believe that cryptocurrency is about to gain bipartisan support. Its impact is substantial and will help eliminate regulatory uncertainties surrounding Bitcoin in the foreseeable future;
Regarding Runes and Ordinals, we believe the dust has largely settled, and opportunities will be very enticing by 2025;
Magic Eden is a driving force behind improving Bitcoin's UI/UX; if the Bitcoin ecosystem takes off, we expect them to become clear winners;
The programmability of Bitcoin and BTC staking are still in their infancy; early growth in TVL is insufficient to indicate actual demand; consumers significantly favor the performance capabilities of networks like Solana and Base; if this trend continues, Bitcoin builders will face a tough battle;
Ethereum: Identity Crisis and Future Opportunities
2024 Performance Overview
Ethereum has had an extraordinary year. As the 'second brother' in the crypto market, it competes with Bitcoin for the hard currency narrative while also facing challenges from younger public chains like Solana. Key performances:
Significantly underperformed relative to other major crypto assets, especially compared to Bitcoin and Solana;
Layer-2 ecosystems continue to grow, but mainnet activity has noticeably declined; ETH has seen sustained inflation for the first time instead of the expected deflation;
Initial capital inflows following ETF approval were limited, only recently starting to accelerate;
L2 scalability improved 15 times, with a cumulative throughput of about 200 TPS;
Base's rapid growth has sparked discussions about 'the future of Ethereum being Coinbase', but the decentralization of the L2 ecosystem has compromised user and developer experiences;
Key Outlook for 2025
L2 is better than L1
Layer-2 designs allow for a more flexible execution environment that outperforms native Layer-1; high-throughput L2 (like MegaETH) theoretically has far greater capacity than fast L1;
Application chains can achieve better trade-offs, such as customized transaction prioritization;
Two feasible models for increasing value capture
Ethereum faces two paths for value capture:
The fee-agnostic route
Current fees mainly arise from speculative activities, with sustainability in question;
Token valuations should be based on 'security demand' rather than fees; maximum applications create the highest security demand, driving the value of native assets;
Enhancing Fee Capture Route
Native rollups can enhance mainnet value capture and improve data availability fees;
Expand the base layer to compete with conventional EVM Layer-2;
Overall New Opportunities in the Ecosystem
A super rollup, an interconnected based-rollup network, or high fee burn could all potentially become successful paths;
Regaining market share in the crypto-native speculative market will drive institutional interest;
The decentralized nature of the ecosystem allows any participant to potentially facilitate this transformation;
Solana: From Chase to Mainstream Ecosystem
Key Performances in 2024
Solana has transitioned from the 'recovery after the FTX collapse' to a decisive breakthrough. Major achievements:
Transitioning from the 'duopoly competition' of Bitcoin and Ethereum to a 'tripod' pattern;
Network stability has significantly improved, with only one 5-hour interruption throughout the year; the total value locked (TVL) in DeFi grew from $1.5 billion to over $9 billion; the issuance of stablecoins increased from $1.8 billion to nearly $5 billion;
Positioning itself as a speculative venue, particularly through Memecoin trading. The seamless user experience of ecosystem wallets, along with platforms like Pump.fun and Moonshot, has made the issuance and trading of tokens easier than ever;
This series of on-chain activities has even caused Solana's on-chain fees to occasionally exceed those of Ethereum, highlighting the network's acceleration momentum and appeal to retail investors;
Key Outlook for 2025
Ecosystem Expansion
Expecting applications that go beyond speculation: We are particularly excited about the prediction market for MetaDAO, and the emerging Solana L2 ecosystem is worth watching to see if they can effectively compete with their Ethereum counterparts;
AI Trend Pioneering: ai16z has become one of the most trend-value-rich repositories in all areas of Github. The Solana ecosystem not only embraces AI x Crypto but leads this trend;
Traditional Financial Interests
Under the ETF trend, investors may seek to invest in 'tech stocks' in this area, with Solana becoming the fastest horse;
The launch of a spot Solana ETF within the next year or two seems inevitable, creating a perfect storm for the explosive second phase of the Solana story;
Intensifying Competition
Next year, we expect a new wave of Layer 1 blockchains (such as Monad, Berachain, and Sonic) to emerge;
DeFi, AI agents, and consumer applications led by platforms like Base and numerous emerging L2s are experiencing a revival;
Other L1 + Infrastructure 2025 Outlook
Deep Tide Note: Due to space limitations, we will focus on interpreting the section regarding 2025 forecasts here; the summary for 2024 can be found in the original report, along with more publicly available objective information consolidation.
Next year we will see Monad and Sonic launch as two general-purpose, high-throughput, 'holistic' L1s;
Both projects have accumulated substantial funds (Monad at $225 million and Sonic with FTM tokens at about $250 million) to attract developers and development teams;
Berachain is one of the most interesting experiments in L1, having raised $142 million in A and B rounds, with over 270 projects committed to supporting the network, showing immense interest from developers and application teams;
Celestia's Lazybridging proposal and Avail's Nexus ZK proof verification layer may establish meaningful network effects for modular L1s in the second half of 2025;
If successful, Unichain could trigger a wave of protocols --- bypassing L1 to build application-specific or domain-specific L2s to increase value accumulation and create more revenue for token holders;
Alternative virtual machines (mainly Solana and Move VM) will continue to attract attention;
Avalanche9000, combining Avalanche's BD strength in institutional and gaming sectors, is expected to have another strong year;
The outlook for Cosmos in 2025 remains uncertain;
Initia will launch as L1, supporting 5 to 10 application-specific, interoperable L2 solutions. This strategic setup positions Initia to potentially lead the next wave of application chain advancements;
In the interoperability track, focus on Across, Espresso, Omni Network;
In the ZK track, attention is on Polygon's Agglayer. By 2025, nearly all infrastructure protocols are expected to adopt ZK technology;
The boundaries between applications and infrastructure are becoming increasingly blurred, which modular projects like Celestia, EigenDA, and Avail may benefit from;
DeFi 2025 Outlook
Base and Solana - Valuable Real Estate: We continue to see the growing outlook for Solana and Base DEX relative to DEXs on other chains;
Vertical Integration and Composability: Protocols like Hyperliquid and Uniswap have already turned to owning their infrastructure to configure network features for the benefit of their applications;
Prediction Markets: We predict that trading volumes may decrease compared to previous trading months driven by elections. To win, other protocols must be able to offer relevant markets for bettors to continue speculating while incentivizing market makers;
RWA: With declining interest rates, tokenized government bonds are expected to face resistance; idle on-chain funds may receive more favor, shifting focus from purely importing traditional financial assets to exporting on-chain opportunities. Even if macroeconomic conditions change, RWA has the potential to maintain growth and diversify on-chain assets;
Points Systems: We expect points to remain central to protocols aimed at guiding user adoption through token distribution, powering market and yield trading protocols. Entering 2025, protocols may refine their points systems while cultivating early adopter communities;
Driven by new opportunities in yield farming and the speculative appeal of points-based incentives, yield trading protocols like Pendle are expected to grow further.
AI X Crypto 2025 Outlook
Bittensor and Dynamic TAO: A New Type of AI Coin Casino
Each existing subnet (as well as future subnets) will have its own token, which will be intrinsically linked to Bittensor's native TAO token;
The AI race is a talent race, and Bittensor has a unique angle to attract talent -- subnets show early signs of producing high-quality research;
If Bittensor unexpectedly becomes a hub for cutting-edge AI research in the cryptocurrency space next year, don't be surprised;
Bittensor is not just a speculative 'AI coin casino', but a platform capable of attracting serious AI developers;
Decentralized Model Training: A Stumbling Block and a Lever
Decentralized networks will not attempt to compete with giants like OpenAI and Google by training large-scale foundational models but may focus on fine-tuning smaller specialized models;
Next year, we expect more experiments in the realm of small and specialized models. These models may be designed to perform specific tasks;
AI Agents and Meme Coins: Ongoing Experiments
Most AI agents may prefer to operate on-chain;
The continuously growing token valuations can provide funding for the sustained development of AI Agents and promote social media engagement;
We believe that as more engineers pay attention, talent density will continue to increase;
As AI agent KOLs actively compete for attention on social media, this category will outperform 'static' meme coins;
As discussions around AI's openness and closure continue, we expect cryptocurrencies to occupy an increasingly larger part of the conversation;
DePIN 2025 Outlook
By 2025, we expect Energy DePIN to build supply-side infrastructure worth $50-150 million, generating demand-side sales of up to $50 million;
As Helium Mobile prepares for further growth and DAWN is set to launch its mainnet in 2025, the wireless sector will solidify its position as a breakthrough use case in DePIN;
Revenue Forecast: The industry is expected to achieve revenue in the range of low eight to low nine figures by 2025;
By the end of 2025, RTK networks like GEODNET are expected to expand supply-side coverage to 90%-100% for high-value areas in the EU and North America. Additionally, annual revenues may grow to exceed $10 million;
The weather collection network in this vertical is expected to make significant progress by 2025;
Integration and partnerships between energy and mobility DePIN are expected to further enhance grid integration and energy collection data from electric vehicle batteries;
By 2025, document storage DePIN is expected to generate revenues of $1.5-50 million across the entire sub-industry;
With successful projects like Grass, the data collection DePIN is expected to increase by 2025;
Consumer Applications 2025 Outlook
Airdrop plays will continue to be a primary method for attracting players into games. The 'paid airdrop' strategy may become the new standard in 2025;
Mobile applications will become a decisive trend in 2025;
In 2025, we expect Solana to continue to hold the largest share of Memecoin trading activity;
Ordinals are expected to become a category that continues to attract attention. Upcoming catalysts, such as potential CEX listings, airdrop-driven wealth effects, and the increasing popularity of the Asian market, are expected to drive sustained growth and wider appeal throughout the year;
CeFi 2025 Outlook
As the bull market continues and financing rates remain high, the supply of Ethena may continue to expand;
Yield-bearing stablecoins may not quickly capture significant market share from Tether;
Trump's appointed Secretary of Commerce Howard Lutnick manages Tether's assets, and the US may completely change its hostile stance towards Tether;
Real innovation is likely to occur behind the scenes of orchestration companies like Bridge. Stablecoin APIs (e.g., those provided by Yellow Card) will enhance the ability of small businesses to accept stablecoins as a payment method globally;
On the exchange front, we will continue to see the integration of on-chain and off-chain services. Coinbase and Kraken aim to onboard as many people as possible to their L2 in 2025 and may provide incentives for this;
The new government will allow exchanges to be more lenient regarding the assets they choose to list. As Binance, Bybit, and Coinbase compete to list the most popular crypto assets, this trend may reach a fever pitch in 2025.
