Original Source: Messari

Original Translation: Deep Tide TechFlow

Introduction

As the year comes to a close, it's time for retrospection and foresight.

As a top-tier research institution in the industry, Messari delivered as promised last week, releasing the annual report "The Crypto Theses 2025," providing a comprehensive description and prediction of the development history of the crypto industry in 2024 and the trends in 2025.

The report contains several highlights, such as the expectation that BTC will mature as a global asset next year, the meme's attribute as a speculative outlet will continue to attract users.

The report has two main sections. It starts with the "Crypto Current State," which includes shorter articles about the 2024 crypto market situation, and then moves on to "Track Research," reviewing the narratives and forward-looking theories of the major tracks.

Considering the original report is a lengthy 190 pages, reading it in its entirety is time-consuming and laborious; Deep Tide TechFlow has distilled and summarized the key content from the original report, especially presenting the most important points, including the forecasts and outlooks of each section.

Macroeconomic Environment: Breaking the Bearish Expectations to Provide Strong Support for Crypto

Key Developments

The economic trends of 2024 shattered most bearish expectations, and the U.S. economy demonstrated unexpected resilience. 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 by about 27% for the whole year, ranking among the top 20% in historical performance, fully reflecting the market's confidence in an economic soft landing. It is worth noting that aside from the unwinding of the yen carry trade and brief fluctuations due to geopolitical events, the market maintained a stable upward trend overall.

Unique Landscape of the Crypto Market

The crypto market faced a dual challenge in 2024. On one hand, it needed to deal with various risk factors from traditional markets, and on the other hand, it had to overcome industry-specific challenges, including the German government's sell-off pressure, Mt. Gox's token distribution, and Tether's investigation. It wasn't until the election became a breakthrough catalyst that the market experienced an 8-month consolidation phase.

2025 Predictions

The macro environment is expected to provide strong support for crypto assets. Specifically:

· The Federal Reserve has started to unwind its tightening policies since 2022 but has not yet entered a substantial easing phase. This gradual policy adjustment is expected to provide stable support to the market;

· The volatility of various assets has significantly decreased after the election. Based on historical experience, low volatility often leads to even lower volatility, creating a favorable environment for the development of crypto assets such as Bitcoin and Ethereum;

· Most importantly, there has been a fundamental improvement in the regulatory environment. Even a relatively neutral regulatory attitude will bring significant improvement compared to the strict control of the past four years. This change is expected to address the major concerns of institutional investors entering the market, bringing in more incremental funding;

· Stablecoins may become a breakthrough point. The open attitude of both parties towards stablecoin regulation has created favorable conditions for the advancement of relevant legislation in 2025;

Institutional Funds: Full Entry

Major Shift in Market Landscape

· In 2024, institutional funds entering the market was no longer just talk. The approval of Bitcoin and Ethereum ETFs marked the formal recognition of the crypto asset class, providing more convenient access channels for institutional and retail investors;

· BlackRock's IBIT set a record: the first ETF to reach $30 billion AUM within 30 days of issuance, and surpassed $400 billion in about 200 days. This shows the strong demand from institutions for crypto derivatives;

Diversification of Institutional Participation

· Institutional participation goes far beyond ETF investments. Traditional financial institutions are expanding their presence in various areas: asset issuance, tokenization, stablecoins, and research have all made significant progress;

· Institutions such as Sky (formerly MakerDAO) and BlackRock have launched on-chain money market funds. Ondo Finance's USDY (tokenized Treasury bond fund) has reached approximately $440 million in assets under management;

Integration of Financial Technology

· PayPal issued its stablecoin PYUSD on Solana in May. Agora, backed by Nick Van Eck, has also launched the stablecoin AUSD on multiple blockchains. The asset is backed by Van Eck (an asset management company) and custody provided by State Street;

2025 Prediction

· Institutional involvement is expected to further expand in depth and breadth. With BlackRock continuing to position digital assets as a worthy albeit small-allocation non-correlated asset class, stable inflows into ETFs may persist. More importantly, institutions are exploring innovative opportunities in multiple verticals to reduce costs, increase transparency, or expedite payment efficiency;

· Of particular note, traditional financial giants like JPMorgan, Goldman Sachs, and others are accelerating their efforts. They are not only expanding their own blockchain platforms but also exploring a wider array of product offerings;

· This trend indicates that institutions no longer view crypto solely as an investment asset but are beginning to seriously consider its potential as financial infrastructure;

Meme: The Heat Will Continue

2024 Market Landscape

· While meme coins represent only 3% of the top 300 cryptocurrencies by market cap (excluding stablecoins), their trading volume continues to capture a 6-7% share and has recently surged to 11%;

· Following the first-quarter surge driven by politically themed meme coins like Jeo Boden, TikTok meme coins (such as Moodeng and Chill Guy) and AI avatar concepts (like Truth Terminal's GOAT) have sustained this momentum;

Market Drivers

The prosperity of meme coins stems not only from trends or user-friendly interfaces, but also benefits from two key conditions:

1. Excess Capital: As the overall crypto market appreciates, many traders have accumulated significant funds but lack high-quality investment opportunities;

2. Abundant Blockchain Space: High-throughput networks like Solana and Base provide a low-cost, efficient transaction environment;

This environment is particularly evident on Solana. The strong market performance at the end of 2023 and beginning of 2024 has allowed Solana users to amass significant capital.

Evolution of Transaction Infrastructure

· User-friendly trading platforms have significantly driven the mainstream adoption of meme coins. Applications such as Pump.fun, Moonshot, and Telegram bots have simplified the operational process for retail traders;

· Particularly, Moonshot, by supporting ApplePay, PayPal, or USDC payments on Solana, has bypassed traditional cryptocurrency deposit channels. Its intuitive interface and simple registration process have attracted a large number of new retail investors;

2025 Predictions

Looking ahead to 2025, meme coins are expected to continue growing, mainly benefiting from several key factors:

1. Infrastructure Support: High-throughput chains like Solana, Base, Injective, Sei, and TON provide ample block space, enabling meme coin transactions without incurring high fees;

2. Enhanced User Experience: Applications like Moonshot and Pump.fun continue to lower entry barriers, streamline the trading process, and are poised to attract more retail participants;

3. Macro Environment Fit: As meme coins possess speculative appeal similar to gambling, they may continue to attract users seeking entertainment and profit in the current macro environment;

Funding Landscape: AI Leads Emerging Investment Themes

Market Overview

· Cryptocurrency project funding has shown an upward trend compared to 2023. While the total funding for startups and protocols decreased by about 20% year-on-year (mainly due to anomalies in the first quarter of 2023), the market has still seen several large funding rounds;

Key Funding Cases

· Monad Labs: Raised $225 million in April, demonstrating that infrastructure and L1 projects remain a focal point for VCs;

· Story Protocol: Completed an $80 million Series B funding round, led by a16z, dedicated to transforming intellectual property into programmable assets;

· Sentient: Secured $85 million in funding, with Thiel's Founders Fund leading the round, focusing on an open AGI development platform;

· Farcaster and Freechat: raised $1.5 billion and $80 million in funding, respectively, indicating continued capital interest in the social sector;

The Rise of AI and DePIN

· AI projects saw a year-over-year funding increase of about 100%, with a 138% growth in funding rounds;

· DePIN projects saw a year-over-year funding increase of about 300%, with a 197% growth in funding rounds;

AI rounds were particularly popular in accelerators like CSX and Beacon. Investors have shown a strong interest in the intersection of crypto and AI.

Emerging Investment Themes

Aside from AI and DePIN, several noteworthy funding trends emerged in 2024:

1. Decentralized science projects started gaining attention, with projects like BIO Protocol and AMINOChain receiving funding;

2. VC firms in the Asia-Pacific region showed a preference for investing in gaming protocols, especially projects launched on the TON blockchain;

3. Funding shares for NFT and metaverse projects significantly declined compared to 2021 and 2022;

4. The social sector continues to experiment, with projects like Farcaster, DeSo, and BlueSky receiving funding support, despite limited past success cases;

Crypto Users, Evidence of Growth

Market Size Breakthrough

According to a16z's report, the monthly active addresses in cryptocurrency reached a historical high of 220 million, showing a growth trend similar to early internet adoption. Although this number may include duplicate counts (as many users use multiple wallets), even after filtering, an estimated 30-60 million genuine monthly active users remain;

Key Cases of 2024 User Growth

· The breakthrough of the Phantom wallet, becoming the most popular wallet in the Solana ecosystem, briefly ranking in the top ten on the iOS App Store, surpassing WhatsApp and Instagram;

· Stablecoin Application in Emerging Markets: Sub-Saharan Africa, Latin America, and Eastern Europe have started bypassing the traditional banking system and directly adopting stablecoins; Platforms like Yellow Card, Bitso, and Kuna are driving adoption by offering stablecoin exchanges, payment APIs, and other services;

· Explosion of Telegram Mini-Apps: Notcoin has over 2.5 million holders, Hamster Kombat has attracted 200 million users, and 35 million YouTube subscribers;

· Practical Application of Polymarket: Experienced rapid growth during the election period, adding nearly 1 million accounts and at one point becoming the second most downloaded iOS news app;

· Base and Hyperliquid Driving CEX Users On-Chain: Base L2 provides a free transfer channel from Coinbase to Base, Hyperliquid offers a high-performance trading experience similar to CEX for perpetual contract traders;

2025 Predictions

· The crypto ecosystem is no longer just preparing for widespread adoption but has already begun to realize it;

· User growth is shifting from a sudden, noisy entry model to a natural discovery and continuous growth model through various applications. Memecoins, consumer apps (such as Phantom and Telegram), prediction market platforms, and ever-expanding on-chain utility will continue to drive compounded 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 front ends;

Bitcoin: A Great Year This Year, Even Better Next Year

2024 Key Developments

Price and Institutional Adoption

· Starting from $40,000, it hit a new high of $75,000 in Q1 after ETF approval, surged past $100,000 after Trump's reelection;

· Bitcoin's market dominance rose to about 55%;

· ETF issuers hold over 1.1 million bitcoins, with BlackRock and Grayscale holding 45% and 19%, respectively;

· After the approval of the ETF, there has only been a net outflow in a single month, with BlackRock's IBIT continuing to be the largest net buyer, with approximately $8 billion inflow in November alone;

· MicroStrategy continues to make large-scale purchases, with the most recent one being a $2.1 billion Bitcoin purchase between December 2 and 8, holding approximately 420,000 bitcoins, second only to Binance, Satoshi Nakamoto, and the ETF issuer;

· Michael Saylor and MicroStrategy (MSTR) continue their dollar-cost averaging, with their Bitcoin-centric strategy inspiring other publicly traded companies like Marathon Digital Holdings (MARA), Riot Platforms, and Semler Scientific to start accumulating BTC reserves;

· 2024 is also a Bitcoin halving year, where the natural sellers of Bitcoin will decrease over time;

Network Innovation

The Rise of Ordinals and Runes

· Ordinals bring NFT functionality to Bitcoin, while Runes are introduced as a new token standard similar to Ethereum's ERC-20;

· Some Runes projects have reached a nine-figure valuation, demonstrating the market's recognition of Bitcoin's ecosystem expansion;

Breakthrough in Bitcoin Programmability and Staking Innovation

· The emergence of BitVM has brought the possibility of arbitrary computation to Bitcoin, with over 40 Layer-2 projects live on testnets or mainnets;

· CORE, Bitlayer, Rootstock, and Merlin Chain are leading in Total Value Locked (TVL);

· Babylon launched as Bitcoin's first staking protocol in Q3, with the initial 1,000 BTC staking capacity reaching the limit within 6 blocks;

· Liquidity staking tokens like LBTC from Lombard are starting to emerge;

2025 Predictions

· The inflow of Bitcoin ETF has far exceeded expectations. Over time, institutions are likely to gradually become a major driver of daily BTC price trends;

· ETF can buy spot Bitcoin without using leverage. The smoother and more consistent inflow of spot funds from institutions should reduce reflexive, leverage-driven volatility, helping Bitcoin mature as an asset;

· The approval of a Bitcoin ETF may have pushed BTC into the early to mid-stage of becoming the world's leading store of value. In November, Bitcoin surpassed silver to become the world's eighth most valuable asset, partly due to ETF inflows throughout the year. Year-end trends suggest that ETF inflows will continue to rise in 2025, especially as Grayscale's GBTC shifts to a positive net flow;

· On the regulatory front, the new Trump administration has shown a positive attitude towards cryptocurrency and Bitcoin, making commitments related to Bitcoin during the election process. Although Bitcoin quickly repriced after Trump's victory, the government will ultimately need to follow through on some of their claims;

· While the likelihood of this scenario playing out is low, a federal strategic Bitcoin reserve would be particularly impactful. The market seems to be cautiously optimistic about the Trump administration, and if the president can accomplish some of the more probable action items, it could build enough goodwill to sustain Bitcoin's optimistic momentum going forward;

· Following the 2024 election, the impact of clear and proactive cryptocurrency reform will be a major issue for all government departments, and we believe cryptocurrency is poised to receive bipartisan support. Its impact is significant and will help resolve the regulatory uncertainty around Bitcoin in the foreseeable future;

· On Runes and Ordinals, we believe the dust has mostly settled, and the opportunity looks compelling by 2025;

· Magic Eden is a driving force in improving Bitcoin's UI/UX, and if the Bitcoin ecosystem takes off, we expect them to be clear winners;

· Bitcoin's programmability and BTC staking are still in the early stages, and the growth of early TVL is not enough to indicate actual demand; consumers are largely favoring high-performance networks like Solana and Base, and if this trend continues, Bitcoin builders will face an uphill battle;

Ethereum: Identity Crisis and Future Opportunities

2024 Performance Overview

Ethereum has experienced an extraordinary year. As the "Big Brother" of the crypto market, it has faced the challenge of competing with the narrative of Bitcoin as digital gold while also dealing with newcomers to the scene like Solana. Key highlights include:

· Underperformance compared to other major crypto assets, especially when compared to Bitcoin and Solana;

· Continued growth of the Layer-2 ecosystem, but a noticeable decrease in mainnet activity; Ethereum saw its first sustained inflation rather than the expected deflation;

· Limited initial inflow of funds post-ETF approval, with acceleration seen more recently;

· A 15x increase in L2 scaling capacity, with a cumulative throughput of approximately 200 TPS;

· The rapid growth of Base has sparked discussions around "Coinbase is the future of Ethereum," but the decentralization of the L2 ecosystem has led to compromised user and developer experiences;

2025 Key Outlook

L2 Superiority Over L1

· Layer-2 design allows for a more flexible execution environment, surpassing native Layer-1 capabilities; high-throughput L2 solutions (such as MegaETH) have theoretical capacities far exceeding fast L1;

· Application chains can achieve better trade-offs, such as customized transaction priorities;

Two Viable Models for Value Capture Enhancement

Ethereum faces two paths to value capture enhancement:

Fee-Less Importance Route

· Current fees are primarily driven by speculative activities, raising questions about sustainability;

· Token valuation should be based on "security demand" rather than fees; maximal applications create the highest security demand, driving native asset value;

Fee Capture Augmentation Route

· Leveraging native rollups can enhance mainnet value capture, increasing data availability fees;

· Extending the base layer to compete with typical EVM Layer-2 solutions;

New Ecosystem-Wide Opportunities

· A super rollup, interconnected based-rollup network, or high-fee burning could all be successful paths;

· Reclaiming market share in the crypto-native speculation market will drive institutional interest;

· The decentralized nature of the ecosystem means any participant could drive this shift;

Solana: From Follower to Mainstream Ecosystem

Key Performance in 2024

Solana has shifted from a "recovery after FTX's collapse" to a deterministic breakthrough. Key achievements:

· Transitioned from Bitcoin and Ethereum's "duopoly competition" to a "tripartite" pattern;

· Network stability significantly improved, with only one 5-hour outage throughout the year; DeFi Total Value Locked (TVL) grew from $1.5 billion to over $9 billion; stablecoin issuance increased from $1.8 billion to nearly $5 billion;

· Positioned itself as a speculative venue, especially through Memecoin trading. The seamless user experience of the ecosystem wallets, along with platforms like Pump.fun and Moonshot, has made token issuance and trading easier than ever;

· This series of on-chain activities has even driven Solana's on-chain fees occasionally surpassing Ethereum's, highlighting the network's momentum and retail appeal;

Key Outlook in 2025

Ecosystem Expansion

· Expectation to go beyond speculative applications: We are particularly excited about the prediction market of MetaDAO, and emerging Solana L2 ecosystems deserve attention to see if they can effectively compete with their counterparts on Ethereum;

· Pioneering AI Trends: ai16z, has become one of the trendiest repositories on GitHub across all domains. The Solana ecosystem not only embraces AI x Crypto but also leads this trend;

Traditional Financial Interest

· With the ETF trend, investors may seek to invest in the "tech stocks" of this sector, and Solana will emerge as the fastest horse;

· The launch of a Solana spot ETF in the next year or two seems inevitable, creating the perfect storm for the explosive second phase of the Solana story;

Increasing Competition

· It is expected that a new batch of Layer 1 blockchains will emerge next year (such as Monad, Berachain, and Sonic);

· A resurgence of DeFi, AI agents, and consumer applications led by platforms like Base and numerous emerging L2s;

Other L1 + Infrastructure 2025 Outlook

Deep Tidal Note: Due to space constraints, starting from this chapter, we will focus on interpreting the section about the 2025 forecast outlook. The 2024 summary section is detailed in the original report, which also integrates more publicly available objective information.

· Next year, we will see Monad and Sonic as two general-purpose, high-throughput, "holistic" L1 releases;

· Both projects have amassed substantial funding (Monad at $225 million, Sonic valued at around $250 million in FTM tokens) to attract developers and development;

· Berachain is one of the most interesting L1 experiments, having raised $142 million in Series A and B funding, with over 270 projects committed to supporting the network, showing great 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 by the second half of 2025;

· If successful, Unichain will trigger a wave of protocolism --- bypassing L1 and building L2 designed for specific applications or domains to increase value accrual and generate more income for token holders;

· Alternative virtual machines (primarily Solana and Move VM) will continue to receive attention;

· Leveraging Avalanche's institutional and gaming sector business development strength, Avalanche9000 is poised for 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 positioning could enable Initia to lead the next wave of application chain development;

· On the interoperability track, focus on Across, Espresso, Omni Network;

· On the ZK track, keep an eye on Polygon's Agglayer. By 2025, nearly all foundational protocols are expected to adopt ZK technology;

· The boundary between applications and infrastructure is becoming increasingly blurred, modular projects like Celestia, EigenDA, Avail, etc., may benefit from this trend;

DeFi 2025 Outlook

· Base and Solana - Valuable Real Estate: We continue to see the prospect of Solana and Base DEX gaining market share compared to DEXs on other chains;

· Vertical Integration and Composability: Protocols like Hyperliquid and Uniswap have shifted towards owning their infrastructure to configure network features for the benefit of their applications;

· Prediction Markets: We anticipate a potential decrease in trading volume compared to the months driven by previous elections. To succeed, other protocols must be able to provide markets that bettors can continuously speculate in, while incentivizing liquidity providers;

· RWA: With lowering interest rates, tokenized sovereign debt is expected to face resistance; idle on-chain capital may receive more favor, with a focus shifting from solely importing traditional financial assets towards outbound on-chain opportunities. Even if macroeconomic conditions change, RWAs have the potential to sustain growth and diversify on-chain assets;

· Gamification: We expect gamification to remain core to protocols designed to drive user adoption through token distribution, powering markets and yield trading protocols. As we enter 2025, protocols may refine their gamification schemes while nurturing early adopter communities;

· Under the momentum of new opportunities in yield farming and speculation driven by points-based incentives, protocols like Pendle are poised for further growth;

AI X Crypto 2025 Outlook

Bittensor and Dynamic TAO: A New Type of AI Coin Casino

· Each existing subnet (and future ones) will have its own token, fundamentally linked to Bittensor's native TAO token;

· The AI race is a talent race, and Bittensor has a unique angle to attract talent -- subnets are showing early signs of producing high-quality research;

· Do not be surprised if next year Bittensor unexpectedly becomes a hub for cutting-edge artificial intelligence research in the cryptocurrency space;

· Bittensor is not just a speculative "AI coin casino," but a platform capable of attracting serious AI developers;

Decentralized Model Training: A Stepping Stone and a Pivot

· Decentralized networks will not try to compete with giants like OpenAI and Google by training large-scale base models, but may shift focus to fine-tuning smaller specialized models;

· It is expected that more experiments will be conducted next year in the small and specialized model space. These models may be designed to perform specific tasks;

Artificial Intelligence Agents and Meme Coins: Ongoing Experiments

· Most artificial intelligence agents may prefer to be on-chain;

· The growing token valuation can provide continuous funding for AI Agent development and encourage social media engagement;

· We believe that with more engineer attention, talent density will continue to increase;

· As AI Agent KOLs actively vie for attention on social media, this category will surpass "static" Meme Coins;

· With the ongoing open and closed discussions surrounding AI, we expect cryptocurrency to take up an increasingly larger portion of the conversation;

DePIN 2025 Outlook

· By 2025, we anticipate that Energy DePIN will construct $1.5 billion in supply-side infrastructure, while generating up to $50 million in demand-side sales;

· With Helium Mobile gearing up for further growth and DAWN set to launch its mainnet in 2025, the wireless space will solidify its position as a groundbreaking use case within DePIN;

· Revenue Forecast: The industry is expected to achieve low double-digit to single-digit revenue by 2025;

· It is anticipated that GEODNET and other RTK networks will expand the supply side, providing 90%-100% coverage for the EU and North America's high-value areas by the end of 2025. Additionally, annual revenue may grow to over $10 million;

· The vertical area of weather collection networks is expected to make significant progress by 2025;

· It is expected that integration and partnerships between Energy and Mobility DePIN will further enhance grid integration and energy data collection from electric vehicle batteries;

· In 2025, the Document Storage DePIN is expected to generate revenue ranging from $15 to $50 million across the entire subindustry;

· With the successful advancement of projects like Grass, data collection-focused DePINs are expected to increase by 2025;

Consumer Applications 2025 Outlook

· Play-to-Earn will continue to serve as a key method to attract players to games. The "Pay-to-Earn" strategy may become the new standard in 2025;

· Mobile applications will be a defining trend in 2025;

· In 2025, we expect Solana to continue to hold the largest share of Memecoin trading activity;

· Ordinals are expected to remain a category of continued interest. Upcoming catalysts such as potential CEX listings, airdrop-driven wealth effects, and the increasing adoption in the Asian market are expected to drive sustained growth and broader appeal throughout the year;

CeFi 2025 Outlook

· With the continuation of the bull market and the ongoing rise in funding rates, Ethena's supply may continue to expand;

· Profit-bearing stablecoins may not quickly take a significant share away from Tether;

· Howard Lutnick, Trump's pick for Secretary of Commerce, managing Tether's assets, the U.S. could potentially shift from a hostile stance on Tether;

· True innovation is likely to occur 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 globally as a form of payment;

· In the exchange space, 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 by 2025 and may provide incentives to do so;

· New governments will allow exchanges to be more lenient in listing assets of their choice. With Binance, Bybit, and Coinbase competing to list the most popular crypto assets, this trend may reach a fever pitch in 2025;

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