Author: Messari
Translation: Deep Tide TechFlow
Introduction
Another year-end has arrived, a time for reflection and outlook.
As one of the top research institutions in the field, Messari has released its annual report 'The Crypto Theses 2025,' providing a comprehensive description and prediction of the crypto industry's development history in 2024 and trends for 2025.
The report highlights several key points, such as the expectation that BTC will mature as a global asset next year, and the continued appeal of Memes as a speculative outlet.
The report has two main parts. It begins with a brief article on the 'Current State of Cryptocurrency,' including insights on the state of the crypto market in 2024; followed by 'Segment Research,' which reviews the narratives and forward-looking theories of major segments.
However, considering the original report spans 190 pages, reading it fully is time-consuming; Deep Tide TechFlow has distilled and summarized the key content from the original report, presenting the most important points, especially the forecasts and outlook sections of each segment.
Macro Environment: Breaking Pessimistic Expectations, Providing Strong Support for Crypto
Key Developments
The economic trends of 2024 have shattered most pessimistic expectations, showing surprising resilience in the U.S. economy. The Federal Reserve was able to implement rate cuts of 50 and 25 basis points in September and November, respectively, achieving a relatively smooth policy shift.
The S&P 500 index rose approximately 27% for the year, ranking among the top 20 historical performances, fully reflecting market confidence in a soft landing for the economy. Notably, apart from the brief fluctuations caused by the unwinding of yen carry trades and geopolitical tensions, the market overall maintained a robust upward trend.
Unique Landscape of the Crypto Market
The crypto market faces a dual test in 2024. On one hand, it needs to cope with various risk factors from traditional markets, and on the other, it must overcome industry-specific challenges such as the German government's sell-off pressure, the Mt. Gox token distribution, and investigations into Tether. The market experienced an 8-month consolidation period until the election became a breakthrough catalyst.
2025 Forecast
The macro environment is expected to provide strong support for crypto assets. Specifically:
The Federal Reserve has started to relax the tightening policies since 2022 but has not yet entered a substantial easing phase. This gradual policy adjustment is expected to provide stable support for the market.
Post-election, volatility in various assets has significantly decreased. Historically, low volatility often breeds lower volatility, creating an environment particularly favorable for the development of crypto assets like Bitcoin and Ethereum.
Most importantly, there will be a fundamental improvement in the regulatory environment. Even a relatively neutral regulatory stance will bring significant improvements compared to the strict controls of the past four years. This change is expected to alleviate major concerns for institutional investors, bringing more incremental capital to the market.
The stablecoin sector could become a breakthrough. Bipartisan openness toward stablecoin regulation creates favorable conditions for advancing related legislation in 2025.
Institutional Funds: Full Entry
Market Landscape Transformation
In 2024, institutional funds' entry will no longer be mere talk. The approval of Bitcoin and Ethereum ETFs marks formal recognition of the crypto asset class, providing easier access for institutional and retail investors.
BlackRock's IBIT sets records: the first ETF to reach $3 billion AUM within 30 days of issuance and surpasses $40 billion in about 200 days. This shows strong institutional demand for crypto derivatives.
Diversification of Institutional Participation
Institutional participation goes far beyond ETF investments. Traditional financial institutions are making significant strides across multiple areas: 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 treasury fund) has reached an asset scale of approximately $440 million.
Fintech Integration
In May, PayPal launched its stablecoin PYUSD on Solana, while Agora, supported by Nick Van Eck, also launched its stablecoin AUSD across multiple chains, backed by Van Eck (asset management firm) 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 a small allocation, stable inflows from ETFs may persist. More importantly, institutions are seeking innovative opportunities across multiple verticals to reduce costs, improve transparency, or accelerate payment efficiency.
Particularly noteworthy is that traditional financial giants like JPMorgan and Goldman Sachs are accelerating their layouts. They are not only expanding their own blockchain platforms but also exploring a wider range of product offerings.
This trend indicates that institutions are no longer viewing 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
Although meme coins only account for 3% of the market cap of the top 300 cryptocurrencies (excluding stablecoins), their trading volume continues to capture 6-7% of the share, recently even climbing to 11%.
The surge in the first quarter, driven by politically themed meme coins like Jeo Boden, was followed by the continued momentum fueled by TikTok meme coins (such as Moodeng and Chill Guy) and AI agent concepts (like Truth Terminal's GOAT).
Market Drivers
The prosperity of meme coins is not only due to trends or user-friendly interfaces but also hinges on two key conditions:
Excess Capital: As the entire crypto market appreciates, many traders have accumulated large amounts of capital but lack quality investment opportunities.
Sufficient 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 significantly promote the popularity of meme coins. Applications like Pump.fun, Moonshot, and Telegram bots simplify the operational processes for retail traders.
In particular, Moonshot has attracted a large number of new retail investors by supporting payments via ApplePay, PayPal, or USDC on Solana, bypassing traditional cryptocurrency deposit channels with its intuitive interface and simple registration process.
2025 Forecast
Predictions for 2025 suggest that meme coins are likely to continue growing, mainly due to several key factors.
Infrastructure Support: High-throughput chains like Solana, Base, Injective, Sei, and TON provide ample block space, allowing meme coin trading without incurring high fees.
User Experience Optimization: Applications like Moonshot and Pump.fun continue to lower entry barriers and simplify trading processes, likely attracting more retail participants.
Macro Environment Alignment: Meme coins, with their speculative attributes similar to gambling, may continue to attract users seeking entertainment and profit in the current macro environment.
Funding Landscape: AI Leads Emerging Investment Themes
Market Overview
Funding for crypto projects shows an upward trend compared to 2023. While the total amount of financing for startups and protocols has decreased by about 20% year-on-year (mainly due to anomalies in Q1 2023), the market still saw several large financings.
Significant Financing Cases
Monad Labs: Raised $225 million in April, indicating that infrastructure and L1 projects remain key investment areas for VCs.
Story Protocol: Completed $80 million Series B financing led by a16z, aiming to transform intellectual property into programmable assets.
Sentient: Secured $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 continued capital interest in the social space.
The Rise of AI and DePIN
AI project financing has increased by about 100% year-on-year, with funding rounds growing by 138%.
DePIN project financing has increased by about 300% year-on-year, with funding rounds growing by 197%.
AI rounds are particularly popular in accelerator projects like CSX and Beacon. Investors show strong interest in the intersection of crypto and AI.
Emerging Investment Themes
In addition to AI and DePIN, several noteworthy funding trends emerged in 2024:
The decentralized science sector is starting to gain attention, with projects like BIO Protocol and AMINOChain receiving funding.
VCs in the Asia-Pacific region are more inclined to invest in gaming protocols, especially projects launched on the TON blockchain.
The share of funding for NFT and metaverse projects has significantly decreased compared to 2021 and 2022.
The social sector continues to experiment, with projects like Farcaster, DeSo, and BlueSky receiving funding support, despite limited past success stories.
Crypto Users, New Growth Evidence
Market Size Breakthrough
According to a16z's report, the number of active monthly addresses in cryptocurrencies reached a historical high of 220 million, with a growth trend similar to early internet adoption. While this figure may include duplicates (as many users use multiple wallets), estimates suggest there are still 30 to 60 million real monthly active users after filtering.
Key Cases for User Growth in 2024
The breakthrough of the Phantom wallet has made it the most popular wallet in the Solana ecosystem, ranking among the top ten apps in the iOS App Store, even 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 through stablecoin exchange and payment APIs.
The explosion of Telegram Mini-Apps: Notcoin has over 2.5 million holders, Hamster Kombat attracted 200 million users, and 35 million YouTube subscribers.
Real-world application of Polymarket: Rapid growth during the election, adding nearly 1 million accounts, and once becoming the second most downloaded news app on iOS.
Base and Hyperliquid drive CEX users on-chain: Base L2 offers a free transfer channel 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 just preparing for mass adoption; it has already begun to realize it.
User growth is shifting from sporadic and noise-driven entry modes to a more natural discovery and continuous growth through various applications. Meme coins, consumer applications (like 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 new innovations such as chain abstraction and aggregated frontends.
Bitcoin: This year has been great, and next year will be even more mature.
Key Developments in 2024
Price and Institutional Adoption
Starting from $40,000, the ETF approval marked a new high of $75,000 in Q1, breaking the $100,000 barrier after Trump's victory.
Bitcoin's market cap dominance has risen to about 55%.
ETF issuers hold over 1.1 million bitcoins, with BlackRock and Grayscale accounting for 45% and 19%, respectively.
After the approval of ETFs, there has only been a net outflow in April. BlackRock's IBIT continues to be the largest net buyer, with about $8 billion flowing in just in November.
MicroStrategy continues to make large purchases, with the latest acquisition of $2.1 billion in Bitcoin between December 2 and 8, having previously held about 420,000 bitcoins, second only to Binance, Satoshi Nakamoto, and ETF issuers.
Michael Saylor and MicroStrategy (MSTR) continue to dollar-cost average, incentivizing other public companies like Marathon Digital Holdings (MARA), Riot Platforms, and Semler Scientific to start accumulating BTC reserves.
2024 will also be a halving year for BTC, leading to a decrease in the number of natural sellers of Bitcoin over time.
Network Innovation
The Rise of Ordinals and Runes
Ordinals bring NFT functionality to Bitcoin, while 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.
Breakthroughs in Bitcoin programmability and staking innovation
The emergence of BitVM brings the possibility of arbitrary computation to Bitcoin, with over 40 Layer-2 projects underway on testnets or mainnets.
CORE, Bitlayer, Rootstock, and Merlin Chain lead in TVL.
Babylon launched as the first staking protocol for Bitcoin in Q3, with the first round of 1000 BTC staking capacity reached in just 6 blocks.
Liquidity staking tokens like Lombard's LBTC have begun to emerge.
2025 Forecast
The inflows into Bitcoin ETFs have significantly exceeded expectations, and over time, institutions are likely to gradually become the main drivers of daily BTC price movements.
ETFs can purchase spot Bitcoin without using leverage. Institutional inflows of spot funds will be smoother and more consistent, likely reducing reflexivity and leverage-driven volatility, helping Bitcoin mature as an asset.
The approval of Bitcoin ETFs may have placed BTC in the early-mid stage of becoming the leading store of value globally. In November, Bitcoin surpassed silver to become the eighth most valuable asset in the world, partly due to ETF inflows throughout the year. Year-end trends indicate that ETF inflows will continue to increase in 2025, especially as Grayscale's GBTC shifts to positive net flows.
In terms of regulation, the new Trump administration has shown a positive attitude toward cryptocurrencies and Bitcoin, making promises related to Bitcoin during the campaign. Although Bitcoin quickly re-priced after Trump's victory, the government will ultimately need to deliver on some of its promises.
While we predict the likelihood of this happening is low, a federal strategic Bitcoin reserve would be particularly impactful. The market seems cautiously optimistic about the Trump administration, and if the president can achieve some highly probable action items, it may build enough goodwill to maintain Bitcoin's positive sentiment going forward.
After the 2024 election, clear and proactive cryptocurrency reform will become a significant issue for all government departments. We believe cryptocurrencies are about to gain bipartisan support. The impact is substantial, and it will help eliminate regulatory uncertainties surrounding Bitcoin in the foreseeable future.
Regarding Runes and Ordinals, we believe the dust has largely settled, and the opportunities by 2025 will be enticing.
Magic Eden is a driving force in improving Bitcoin's UI/UX; if the Bitcoin ecosystem takes off, we expect them to emerge as clear winners.
Bitcoin's programmability and BTC staking are still in their infancy, and early TVL growth is not sufficient to indicate real demand; consumers largely 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
Overview of 2024 Performance
Ethereum has had an extraordinary year. As the 'second brother' of the crypto market, it faces the challenge of competing with Bitcoin's hard currency narrative while also contending with new public chains like Solana. Key performances include:
Significantly underperforming relative to other major crypto assets, especially compared to Bitcoin and Solana.
The Layer-2 ecosystem continues to grow, but mainnet activity has significantly declined; ETH has shown persistent inflation for the first time instead of the expected deflation.
Initial capital inflows after the approval of ETFs were limited, only recently beginning to accelerate.
L2 scaling capabilities have improved 15-fold, with cumulative throughput reaching approximately 200 TPS.
Base's rapid growth has sparked discussions about 'Ethereum's future 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 more flexible execution environments, superior to native Layer-1; high-throughput L2s (like MegaETH) theoretically have capacities far exceeding fast L1s.
Application chains can achieve better trade-offs, such as customized transaction priority.
Two viable models for increasing value capture
Ethereum faces two paths for value capture:
The Route Where Fees Are Irrelevant
Current fees mainly stem from speculative activities, raising questions about sustainability.
Token valuations should be based on 'security demand' rather than fees; maximum applications create the highest safety demand, driving the value of native assets.
Enhancing Fee Capture Routes
Native rollups can enhance mainnet value capture and improve data availability fees.
Expanding the base layer to compete with standard EVM Layer-2 solutions.
New Opportunities Across the Ecosystem
A super rollup, interconnected based-rollup networks, or high-fee burning could all become successful paths.
Regaining market share in the crypto-native speculative space will drive institutional interest.
The decentralized nature of the ecosystem allows any participant to facilitate this transformation.
Solana: From Chaser to Mainstream Ecosystem
Key Performances for 2024
Solana has transformed from 'recovery after the FTX crash' to a decisive breakthrough. Major achievements include:
Transitioning from a 'duopoly' of Bitcoin and Ethereum to a 'trio' of competition.
Network stability has significantly improved, with only one 5-hour interruption throughout the year; DeFi's total locked value (TVL) has grown from $1.5 billion to over $9 billion; the issuance of stablecoins has risen from $1.8 billion to nearly $5 billion.
Positioning itself as a speculative venue, especially through memecoin trading. The seamless user experience of ecosystem wallets and platforms like Pump.fun and Moonshot makes token issuance and trading easier than ever.
This series of on-chain activities has even led to Solana's on-chain fees occasionally exceeding those of Ethereum, highlighting the network's accelerating momentum and retail appeal.
Key Outlook for 2025
Ecosystem Expansion
Expecting applications that go beyond speculation: We are particularly excited about the prediction markets of MetaDAO; the emerging Solana L2 ecosystem merits attention to see if they can effectively compete with their Ethereum counterparts.
AI Trend Pioneering: ai16z has become one of the most trend-worthy repositories across all fields on GitHub. The Solana ecosystem not only embraces AI x Crypto but also leads this trend.
Traditional Financial Interest
Under the ETF trend, investors may seek to invest in 'tech stocks' in this field, with Solana emerging as the fastest horse.
The launch of a spot Solana ETF in the next year or two seems inevitable, creating the perfect storm for the explosive second phase of the Solana story.
Increased Competition
Next year is expected to see a new wave of Layer 1 blockchains (such as Monad, Berachain, and Sonic).
Revived DeFi, AI agents, and consumer applications led by platforms like Base and numerous new L2s.
Outlook for Other L1 + Infrastructure in 2025
Note: Due to space limitations, this chapter begins our focus on interpreting key aspects of the 2025 forecast, while the 2024 summary can be found in the original report, with more information integrating publicly available objective data.
Next year, we will see Monad and Sonic launch as two universal, high-throughput 'all-in-one' L1s.
Both projects have accumulated significant funding (Monad at $225 million, Sonic at approximately $250 million in FTM tokens) to attract developers.
Berachain is one of the most interesting experiments in L1, having raised $142 million in Series A and B funding, with over 270 projects committed to supporting the network, demonstrating immense interest from developers and application teams.
Celestia's Lazybridging proposal and Avail's Nexus ZK proof verification layer could establish meaningful network effects for modular L1 in the second half of 2025.
If successful, Unichain could trigger a wave of protocol innovation—avoiding L1 and building application-specific or domain-specific L2s to increase value accumulation and create more revenue for token holders.
Alternative virtual machines (primarily Solana and Move VM) will continue to attract attention.
Avalanche9000, combining Avalanche's BD strengths in institutional and gaming sectors, is set to have another strong year.
In 2025, the outlook for Cosmos remains uncertain.
Initia will launch as an L1, supporting 5 to 10 application-specific, interoperable L2 solutions. This strategic setup positions Initia to lead the next wave of application chain advancements.
In the interoperability track, focus on Across, Espresso, Omni Network.
In the ZK track, focus on Polygon's Agglayer. It is expected that nearly all infrastructure protocols will adopt ZK technology by 2025.
The boundaries between applications and infrastructure are becoming increasingly blurred, with modular projects like Celestia, EigenDA, and Avail potentially benefiting from this.
DeFi Outlook for 2025
Base and Solana - Valuable Real Estate: We continue to see the prospect of Solana and Base DEX gaining market share relative to DEXs on other chains.
Vertical Integration and Composability: Protocols like Hyperliquid and Uniswap have shifted to owning their own infrastructure to configure network features that benefit their applications.
Prediction Markets: We forecast that trading volume may decline compared to previous election-driven trading months. To win, other protocols must provide relevant markets for bettors to continuously speculate on while incentivizing market makers.
RWA: With interest rates declining, tokenized treasury bonds are expected to face resistance; idle on-chain funds may gain more favor, shifting the 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.
Loyalty Programs: We expect loyalty points to remain central to protocols aimed at guiding user adoption through token distribution, powering market and yield trading protocols. As we enter 2025, protocols may refine their loyalty programs while fostering early adopter communities.
Driven by new opportunities in yield farming and the speculative allure of point-based incentives, yield trading protocols like Pendle are expected to grow further.
AI X Crypto Outlook for 2025
Bittensor and Dynamic TAO: A new type of AI coin casino
Each existing subnet (as well as future subnets) will have its own token, and they will essentially be linked to Bittensor's native TAO token.
The AI race is a battle for talent, and Bittensor has a unique angle to attract talent—subnets are showing early signs of producing high-quality research.
If Bittensor unexpectedly becomes the hub for cutting-edge AI research in the cryptocurrency field next year, do not 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 foundational models, but may instead focus on fine-tuning smaller specialized models.
More experiments in small and specialized models are expected next year. 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 growing token valuations can provide funding for the continued 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 surpass 'static' meme coins.
With ongoing discussions around the openness and closure of AI, we expect cryptocurrencies to occupy an increasingly significant portion of the discourse.
DePIN Outlook for 2025
By 2025, we expect Energy DePIN to build supply-side infrastructure worth $50-150 million while generating up to $50 million in demand-side sales.
With Helium Mobile preparing for further growth and DAWN launching 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 revenues in the low to high eight figures by 2025.
Networks like GEODNET are expected to expand supply, providing 90%-100% coverage for high-value areas in the EU and North America by the end of 2025. Additionally, annual revenue may grow to over 10 million dollars.
The weather collection network in this vertical field is expected to make significant progress in 2025.
The integration and partnerships between energy and mobility DePIN are expected to enhance grid integration and energy collection data from electric vehicle batteries.
In 2025, the file storage DePIN is expected to generate between $1.5 million and $5 million in revenue across the entire sub-industry.
Driven by the success of projects like Grass, data collection DePIN is expected to increase in 2025.
Consumer Applications Outlook for 2025
Playing airdrops will continue to be a major way to attract players into games. 'Paid airdrop' strategies may become the new standard in 2025.
Mobile applications will become a decisive trend in 2025.
In 2025, we expect Solana to continue dominating 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 growing popularity in Asian markets, will lead to sustained growth and broader appeal throughout the year.
CeFi Outlook for 2025
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 a large share from Tether.
Trump's appointed Secretary of Commerce, Howard Lutnick, manages Tether's assets, and the U.S. could completely change its hostile stance toward Tether.
Real innovation is likely to happen behind the scenes at orchestration companies like Bridge. Stablecoin APIs (such as those provided by Yellow Card) will enhance small businesses' ability to accept stablecoins as a payment method globally.
In terms of exchanges, we will continue to see the integration of on-chain and off-chain services. Coinbase and Kraken hope to onboard as many people as possible onto their L2 by 2025, potentially providing incentives for this.
The new government will allow exchanges to be more lenient with 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.
