1/ Coming off last week's @CoinDesk article, I dive into general trends in 2024, a review and rating of my predictions last year, and 8 predictions for 2025.
open.substack.com/pub/veradiverdict/p/8-predictions-for-2025
2/ Some notable events this year: Ethereum’s Dencun Upgrade, the U.S. election, crypto ETFs, Wyoming's DUNA, the wBTC controversy, Robinhood’s Well’s notice, @HyperliquidX’s near $2 billion airdrop, Bitcoin hitting $100,000, and SEC Chair Gary Gensler’s January resignation announcement.
3/ 2024 was a year with no major market shocks. And, though it didn’t bring in an explosion of new capital, it proved that a growing number of companies in the crypto ecosystem are sustainable. Bitcoin is worth $1.9 trillion and all other cryptos are worth $1.6 trillion. The market cap of all crypto has doubled since the start of 2024.
4/ The diversification of crypto has strengthened its ability to react to shocks. This year, we’ve invested in companies that target these ecosystem-specific problems.
• Crypto gaming companies face issues adopting web3 data analysis tools, so we invested in @HelikaGaming to be the web3 gaming analysis platform.
• Web3 AI products often face adoption challenges because of the fragmentation of the AI stack, so @SaharaLabsAI aims to create an all-in-one platform to allow permissionless contribution while keeping a seamless web2-like user experience.
• Intent infrastructure is messy and orderflow is fragmented, so @EverclearOrg standardizes the process by connecting all stakeholders.
• zkVM’s are complicated to integrate, so @NexusLabs uses modularity in order to cater to customers who want only parts of their hyper-scalable layer.
• Building consumer apps faces the issue of attracting users, so we made our largest ever investment in @ton_blockchain, the blockchain that directly plugs into Telegram’s 950 million monthly active users.
5/ Last year, I made predictions about this year here. I’ll score myself with 1 being the least accurate and 5 being the most accurate.
The resurgence of Bitcoin and “DeFi Summer 2.0”: Accuracy: 4/5
Tokenized social experiences for new consumer use cases: Accuracy: 2/5
An increase in TradFi-DeFi “bridges” such as stablecoins and mirrored assets: Accuracy: 5/5
The cross-pollination of modular blockchains and Zero Knowledge Proofs: Accuracy: 4/5
More computationally intensive applications moving on-chain, such as AI and DePIN: Accuracy: 2/5
Consolidation of public blockchain ecosystems and a “Hub-and-Spoke” model for appchains: Accuracy: 2/5
6/ This year, I enlisted the help of some people on the team for their thoughts. 8 predictions for 2025:
• RWAs (excluding Stablecoins) will account for 30% of on chain TVL (15% today)
RWA’s on-chain has increased over 60% this year, to $13.7 billion. Around 70% of RWAs are private credit and the majority of the rest are in T-Bills and Commodities. Inflows from these categories are accelerating, and 2025 may see the introduction of more complex RWA’s.
@Figure increased the total value of their tokenized private credit on chain by almost $4b in 2024. @BlackRock’s BUIDL T-Bill fund only has $500m on-chain, as opposed to the tens of billions of government bills it owns off-chain. As well, the infrastructure to mint and maintain the RWA protocols has drastically simplified and operators have a much better understanding of the risks and appropriate mitigations that come with on-chain operations.
7/
• 1% of Bitcoins will participate in Bitcoin-Fi
In 2023, Bitcoin went from a low of 16k in January to a high of 40k in December.Bitcoin is now >90k. Less than 1% of Bitcoin is wrapped and used in DeFi, with menial growth from 2023. However in 2024, @babylonlabs_io, which simply makes users lock their Bitcoin without having to wrap them, launched and single handedly attracted ~$2b worth of Bitcoin.
This year, pushed by Bitcoin-native finance protocols that do not require bridging, high returns, high Bitcoin prices, and increased appetite for more BTC assets (runes, ordinals, BRC20), 1% of Bitcoins will participate in Bitcoin-Fi.
8/
• Every Fintech becomes a crypto gateway
TON, Venmo, Paypal, Whatsapp have seen crypto growth because of their neutrality. They are gateways where users can interact with crypto, but do not push specific apps or protocols. They attract different users; TON for its existing 950 million Telegram users, Venmo and Paypal for their respective 500 million payments users, and Whatsapp for its 2.95 billion monthly active users.
@Felixpago, a third party which operates on Whatsapp, allows instant money transfers via a message. Users can now buy crypto on @MetaMask using @Venmo, @stripe acquired @Stablecoin (a stablecoin company), and Robinhood acquired @Bitstamp.
9/
• Unichain becomes the leading L2 by transaction volume
@Uniswap has a TVL of almost $6.5b, 50-80k transactions per day, and volume of $1-4b daily. @arbitrum has ~$1.4b of transaction volume a day (a third of which is Uniswap) and @base has ~$1.5b of volume a day (a fourth of which is Uniswap).
If @unichain captures just half of Uniswap’s volume, it would easily surpass the largest L2’s to become the leading L2 by transaction volume.
10/
• NFT resurgence but in a application specific way
NFT’s were meant as a tool in crypto - not a means to an end. NFT’s are being used as a utility in on-chain gaming, AI (to trade ownership of models), identity, and consumer apps.
@blackbird_xyz is a restaurant rewards app that integrates NFT’s into customer identification in their platform of connecting web3 into dining.
@sofamon_xyz creates web3 bitmoji’s (which are NFT’s), called wearables, unlocking the financial layer of the emoji market.
@StoryProtocol, which recently raised $80M at a $2.25B valuation, has the broader goal of tokenizing the world’s IP, putting originality back as the centerpiece of creative exploration and creators.
@IWC (the Swiss luxury watch brand) has a membership NFT which buys access to an exclusive community and events.
11/
• Restaking reality check
In 2025, restaking protocols like @eigenlayer, @symbioticfi, and @Karak_Network will finally launch their mainnets which would pay operators from AVS’ and slashing. It seems that through this year, restaking lost relevance.
Restaking draws power as more networks use it. It is by this power that protocols can lose relevance but still hold huge valuations. We believe restaking is still a multi billion dollar market and as more apps become appchains, they harness restaking protocols, or other protocols that are built on restaking protocols.
12/
• zkTLS bringing offchain data on-chain
zkTLS uses zero knowledge proofs to prove the validity of data from the web2 world.
For example, zkTLS can be used to prove that data came from a certain website to others. Currently, there is no way to do this.
This is a new idea, but we predict that companies will step up to begin building this and integrating it into on-chain services, like verifiable oracles for nonfinancial data or cryptographically secured data oracles.
13/
• Regulatory support
For the first time, the US regulatory environment seems crypto-positive. Significantly more pro-crypto candidates were elected compared to anti-crypto (@standwithcrypto). Gary Gensler announced that he will be resigning in January. Reportedly, Trump is set to nominate Paul Atkins to lead the SEC. @DavidSacks is also being named as the “AI & crypto czar”.
There are many avenues in which the regulatory environment could improve: a winding down of SEC lawsuits, clear definitions of crypto as a particular asset class, and tax considerations. Hopefully some of these happen.
14/ We enter 2025 on tailwinds of possible regulatory clarity, continued mainstream interest, and rising crypto prices. Let’s see how many I end up getting correct!
h/t 🎩 @masonnystrom @nihal_maunder @ishanee_ @Ryan__Barney