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 exist in a superposition of being alive and dead. Only when you open the box does everything 'collapse' into one outcome: either alive or dead.
This experiment is quite similar to the current cryptocurrency market. Just like the cat in the box can simultaneously have two states, the current crypto industry is also in an uncertain stage, with many possibilities coexisting. Only when market fluctuations or external factors intervene will these possibilities turn into a clear reality.
The 'Superposition State' of Leading Assets
BTC
1. Survival
BTC has the potential to solidify its status as a global reserve asset, truly realizing its vision of 'digital gold.' However, achieving this vision heavily relies on several key factors:
The U.S. government incorporates BTC into national reserves and begins purchasing BTC (low possibility).
Several governments or central banks from the top 20 economies will consider BTC as a reserve asset (low to medium possibility).
More and more global listed companies are influenced by MicroStrategy's success, beginning to convert large cash reserves into BTC (medium to high possibility).
Systemic shocks (such as government or bank collapses) enhance BTC's appeal 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 Apathy: If major economies show no interest in BTC, market sentiment may turn pessimistic, and people's attention may shift from chasing new highs to watching whether large holders like MicroStrategy will cash out or even sell off.
MicroStrategy's Risk: Currently, MicroStrategy is a strong supporter of BTC, but if its leveraged operations lead to a significant market sell-off, it could become a 'burden' for BTC. Does anyone remember how giants like Alameda Research and Three Arrows Capital (3AC) were wiped out by the market? Once the liquidation line is triggered, short sellers, like sensing blood, will chase targets, triggering wave after wave of sell-offs. If MicroStrategy goes down this path, the situation could spiral out of control.
Technical Issues: Whether BTC can handle the challenges of quantum computing is also a big question. If BTC cannot adapt to this new risk, it cannot serve as a secure, tamper-proof value storage vehicle.
BTC is now in a sort of quantum superposition state, either becoming a cornerstone of the crypto economy or being seen as outdated technology—this all depends on market attitudes and ultimately leads to which outcome it will 'collapse' into.
ETH
1. Survival:
ETH is expected to dominate the blockchain space in the future and further strengthen its position as a 'programmable BTC alternative.' So why might institutional investors pay more attention to ETH next? There are many reasons:
Institutional Interest: The level of decentralization in ETH is extremely high. Besides 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 into the quantum-resistant technology phase. We expect ETH's transition to be much smoother than BTC's.
Sustainable Economy: ETH has a large amount of on-chain activity, and the natural fees generated can provide stable revenue streams for validators and miners. Its flexible token economics can adjust between inflationary and deflationary patterns based on market demand, making it far superior to BTC in terms of long-term economic sustainability.
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.
The 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 large ecosystem can maximize ETH's benefits under new favorable policies and clear regulatory frameworks.
2. Death:
In the worst-case scenario, ETH may miss the entire cycle due to some internal and external risks:
Leadership, Leadership, Leadership:
Leadership Vacuums: Due to the large and decentralized nature of the ETH community, this characteristic allows some opinion leaders to continuously create chaos among the ETH community, spreading contradictory statements, making the ETH ecosystem even more fragmented.
Cultural Challenges: The new U.S. government advocates a cultural shift—from 'woke culture' to 'down-to-earth.' This transition means society shifts from political correctness and moral discussions to more straightforward communication. However, ETH culture is often considered more 'woke' than other ecosystems. 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 serve as moral courts, which restricts direct dialogue and may create friction when adopting a more assertive leadership style.
Challenges from Competing Chains: Competitors like Solana continue to challenge ETH's dominance. A large number of public chains outside the ETH ecosystem have already thrived. If this trend continues, ETH's status 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 blockchains; it may also fall into difficulties due to some of its inherent characteristics.
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 in the crypto space. Solana leads a new trend under this Meme trend – in response to the rapid growth of AI Agents in the industry, the forward-thinking Solana team has promptly introduced the Agent SDK.
DePIN: Solana's years of layout in the DePIN space is finally reaping 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 the industry's cutting-edge verticals and rapid innovation, challenging ETH's dominance among developers. Solana's focus on the developer community makes it a disruptor among numerous ETH challengers.
Institutional Certification: If Solana's ETF is approved, it will be a crucial milestone. This indicates that Solana's ecosystem is recognized by institutions, further enhancing its status among institutional and retail investors.
2. Death:
From Hunter to Prey: Solana has undergone a remarkable reversal in the past 18 months. Its alternative roadmap and calm response to the FTX collapse have allowed it to reclaim a seat among the leading blockchains. However, Solana is no longer the dark horse but a player with a bit of 'boss' temperament. Consequently, attention among speculative investors is beginning to shift towards its competitors, such as Sui, Hyperliquid, Aptos, Monad, etc. These emerging chains all claim to offer fast, integrated solutions, each challenging Solana's position.
Overreliance on Meme: Solana's rise is inseparable from Meme and speculation. While this strategy successfully attracted market attention, it also brings the risk that speculative enthusiasm for Solana may wane. Without sustainable on-chain activity (such as a thriving DeFi ecosystem or other lasting narratives), a decline in Meme could severely impact Solana's on-chain economy. The attention economy is inherently very fleeting; a long-term growth of an ecosystem cannot overly depend on market attention.
Developer Stickiness: In 2022, Solana experienced the largest-scale developer exodus in blockchain history, and public concerns about the long-term growth of Solana's ecosystem stem from this. Solana's success over the past 18 months can be attributed to speculators, but during this time, we remain skeptical about whether Solana has cultivated a loyal and resilient developer community. 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 the crossroads of survival and death: its flexibility, active community, and innovative capabilities give it the potential to break through ETH. However, in the face of intensifying competition, speculation, and developer stickiness issues, whether Solana can maintain its momentum will determine whether it can continue to dominate the market.
Investment Institutions Look at Tracks
2.1 Crypto x AI
Crypto x AI is one of the most innovative and dynamic fields in the industry. It has attracted almost out-of-the-box market attention and provides a broad space for imagination. Sovereign AI (AI systems driven by decentralized crypto infrastructure) represents a revolutionary opportunity (but granting AI such power also carries many risks). These systems can achieve true autonomy, interacting on-chain with other agents and humans using non-custodial wallets. In the future, we may even see AI agents purchasing human services when off-chain tasks need to be performed.
Months before AI agents became the market focus, we wrote 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 in Crypto x AI are also worth our attention, which we have showcased in the Crypto x AI industry map released in June 2024:
2.2 DePin
DePIN is a highly innovative and diverse field. It combines crypto-economic models with off-chain hardware to address many challenges in traditional industries.
Core target industries and application scenarios
DePIN projects cover multiple industries:
In edge computing, DePIN provides distributed processing power for latency-sensitive applications.
In energy and power infrastructure, DePIN can incentivize the adoption of renewable energy.
In the wireless network field, DePIN focuses on community-driven 5G and IoT connectivity, bypassing traditional telecom provider constraints.
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, thus 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 leverage the internet bandwidth contributed by participating nodes to scrape massive amounts of data.
While DePIN is a very promising field, not all DePIN projects have the same prospects; the success of specific projects highly depends on their own attributes.
We are excited about DePIN projects that can provide clear and measurable value (such as cost reduction, efficiency improvement, or entering untapped markets). The success of DePIN often comes from its realization of new business models that 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 operational costs or improving resource utilization, making its decentralized model more competitive and sustainable. Furthermore, capital expenditure optimization is a significant advantage for DePIN projects, as it distributes infrastructure costs to the community through token incentives, enabling faster scaling and broader participation.
On the other hand, we should try to avoid DePIN projects that misuse tokenization. Their failed token economics often lead to unsustainable ecosystems. Some projects' tokens do not bring actual efficiency improvements or advancements over traditional methods but purely rely on token incentives to mask potential inefficiencies and subsidize usage costs in the short term. Relying solely on tokenization itself cannot justify decentralization, and sometimes the results are worse than existing centralized models.
2.3 Payment
Stablecoins have become the mainstream payment medium in the crypto industry. Due to their programmability, cross-border practicality, and increasingly clear regulatory framework, stablecoins are expected to become the standard settlement currency for global payments.
Although stablecoins have clear advantages over fiat currencies in terms of programmability and cross-border liquidity, broader applications are still constrained by regulatory challenges and inefficient on-chain-off-chain mechanisms. However, the pro-crypto U.S. government may provide regulatory clarity, creating 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 than SWIFT. Debit/credit cards (Visa/MasterCard) associated with cryptocurrencies will also simplify spending and build bridges between on-chain wealth and real-world transactions. This will benefit those who are not in the dollar banking system, individuals who struggle to obtain traditional payment cards, and cryptocurrency holders who want to conveniently spend their assets.
Mid-term (3–7 years): Commercial adoption
Businesses will increasingly adopt stablecoins due to their low fees, instant settlement, and programmability. Companies will be able to seamlessly convert between cryptocurrencies and fiat currencies, 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 above): Paying taxes with stablecoins
Stablecoins will become mainstream fiat currencies, widely accepted for payments, eliminating the need to convert them into fiat currency. At that time, stablecoins will disrupt traditional financial infrastructure, promoting low-cost P2P transactions between consumers and merchants, thereby significantly reducing reliance on banks and credit card companies.
2.4 Consumer Applications
The consumer application space is very exploratory but also harder to define, often overlapping with other areas such as AI, DePIN, and payments. This sector 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 actual application scenarios, consumer applications in the crypto field also contain speculative and gamified elements. A very important category here is blockchain gaming. They incorporate speculative economic elements and Meme, and currently remain 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 that combine crypto with consumer applications will bring more opportunities. The integration of economic incentive mechanisms into gaming shows enormous potential, providing new ways to attract users and drive adoption. The design space in this area is vast, and we expect it to bring breakthrough innovations in 2025.
IOSG's Portfolio
1. Usual
2024 will be a very successful year for Usual, achieving a TVL of $1.5 billion in just six months and successfully entering the top five stablecoins. The governance token has also been listed on Binance, the largest CEX in the world. Their fierce momentum has not stopped, and Usual is expected to break into the top three of the stablecoin market within the next 12 months, 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 terms of DeFi, Usual's strategic partnerships with Ethena, Ondo, and M0 will propel the next phase of growth. Notably, the yield products between Ethena and Usual can adapt to various market conditions—offering 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 continue to advance, strong 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 believe that Usual's innovations and breakthroughs are just around the corner.
We previously published Usual's Thesis: Link, as well as our story with the Usual team 'Unusual': Link
2. BTC Ecosystem
Although BTC is the oldest and most mature cryptocurrency, it is still in a very early stage. We have supported a series of pioneering projects around the BTC ecosystem that are shaping BTC's next frontier of development:
Babylon: A cryptographic breakthrough 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 the fast finality of Babylon with the data availability of ETH, enabling BTC to freely integrate with the ETH 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 where several 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 storage 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 dynamic collectives. This forward-thinking framework allows AI agents to jointly solve complex problems that single-agent systems cannot address. Theoriq introduces memory-enabled agents, advanced evaluators, and user-friendly tools, ensuring that human feedback is always at the core of agent development, driving compound growth of value. 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 crypto-economic incentive mechanisms. Specifically, agents are rewarded for good behavior and penalized for mistakes, maximizing the reliability and accountability of the framework. 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 enter 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 security infrastructure needs of AI agents.
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 due to its reliability and scalability.
Hyperbolic is revolutionizing the field of AI infrastructure. As a leading GPU network, Hyperbolic focuses on inference and provides verifiable inference tools. In addition, they have pioneered a GPU layer that allows AI agents to rent GPUs through SDK. This innovation enables GPU resource-rich AI agents to easily access the computational resources they need, driving more complex and efficient workflows.
Hyperbolic's inference cloud is a platform where anyone can contribute GPU resources; it completely abstracts the non-uniformity of GPU hardware, making GPUs truly interchangeable. Hyperbolic has performed exceptionally well, becoming the first project to offer some of the most advanced open-source AI models on its platform.
4. Gelato
Five years ago, we recognized Gelato's tremendous potential early on. We led Gelato's seed round investment and continued to follow up in subsequent funding rounds. Over the years, Gelato has quietly evolved 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, and its powerful and versatile tech stack includes RaaS, Functions, Relay, VRF, account abstraction, RPCs, bridging, and oracles. Its solutions cover a wide range of areas, from payments, DeFi, infrastructure, consumer applications to AI agents.
2025 will be the year Gelato transitions from silently supporting the ecosystem to telling its story, effectively marketing itself, and building attractive token utility. It is not only expected to be recognized as a critical infrastructure layer but will also become a pillar of reliability and innovation in the Web 3.0 space.
5. Staking and Restaking
We have been actively investing in two major themes of the ETH ecosystem—the staking and restaking ecosystems of 'The Merge' and 'Shanghai Upgrade.' The related projects we have laid out—EigenLayer, ether.fi, Kiln, Renzo, Babylon, and AltLayer—four of which have already been listed on Binance. EigenLayer and ether.fi rank third and fourth respectively among all DeFi protocols with TVLs of $15.7 billion and $8.4 billion. Additionally, ether.fi and Kiln are the fourth and fifth largest staking service providers for ETH, with Kiln managing $13 billion in assets.
Looking back at the development of the ETH staking and restaking ecosystem, we can clearly see the continuous strengthening and expansion of ETH's value as a multifunctional asset.
As the ETH roadmap progresses and the staking ecosystem matures, its importance in the blockchain industry continues to grow. Through staking and restaking, ETH not only provides a solid foundation for network security and decentralization but also demonstrates its unique attributes as a capital, consumer goods, and value storage asset by extending 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 traits, but rather by how it is perceived by the outside world. In many ways, 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 destinies depend on the narratives we choose to accept and the meanings we assign to their existence.
In a world of Crypto filled with infinite possibilities but limited attention, market perceptions become the ultimate currency. The crypto market is not only driven by technology or utility; it also relies on beliefs, trust, and stories that can inspire our imagination. The content we focus on determines what will survive and thrive, just as observing behavior collapses Schrödinger's contradictory cat into a single state. The collective gaze of markets, institutions, and individuals will determine which futures will succeed in the crypto space and which will fade away. Ultimately, what will decide the cornerstone of the future digital economy will be our perceptions and views – and the stories we tell ourselves.