Author: Paul Veradittakit, Managing Partner of Pantera Capital Source: veradiverdict Translation: Shan Ouba, Golden Finance

Last week, Coindesk published my eight predictions for 2025, and I would like to share the complete version here, including an overview of this year, a review of my predictions for 2024, and my predictions for 2025.

Every year, both Call and Put investors use short-term case studies to predict the destruction or exponential growth of Cryptos. But every year, neither group is entirely correct.

Some major events this year: Ethereum Dencun upgrade, USA elections, crypto ETF, Wyoming DUNA bill, wBTC controversy, Robinhood received Wells notice, Hyperliquid nearly 2 billion dollar airdrop, Bitcoin breaking 0.1 million dollars, and SEC Chairman Gary Gensler announced he would resign in January.

No major market turbulence occurred in 2024. Although it did not bring in a lot of new capital, it demonstrated the growing sustainability of more and more Cryptos companies. Bitcoin's market cap reached 1.9 trillion dollars, with the total value of all other Cryptos at 1.6 trillion dollars. The total market cap of the crypto market has doubled since the beginning of 2024.

The diversification of the crypto market has enhanced its ability to withstand shocks. Fields such as Payments, DeFi, Gaming, ZK, Infrastructure, and consumer applications are all growing, with each subfield having its own funding ecosystem, market, incentives, and bottlenecks.

This year at Pantera, investments were made in companies targeting specific issues within these ecosystems.

• Crypto gaming companies are facing challenges in adopting Web3 data analysis tools, which is why we invested in Helika, a game analysis platform.

• Web3 AI products often face promotional challenges due to the fragmentation of AI technology stacks, so Sahara AI aims to create an integrated platform for permissionless contributions while maintaining a seamless user experience similar to Web2.

• Intention infrastructure is chaotic, and order flow is dispersed, so Everclear standardizes processes by connecting all stakeholders.

• zkVM integration is complex, so Nexus adopts a modular approach to meet the needs of clients requiring only parts of the over-scaled layers.

• Consumer applications face the challenge of attracting users, so we made the largest investment ever in TON, which directly connects to Telegram's 0.95 billion monthly active users.

In 2025, we will enter a new year driven by possible regulatory clarification, ongoing mainstream interest, and rising cryptocurrency prices. Even though the market seemed slightly sluggish this summer, crypto users are entering the new year with strong optimism (or 'greed').

CoinMarketCap's Fear and Greed Index.

Review of 2024 predictions.

Last year, a prediction was made for this year. Here, I am rating myself, where 1 means the least accurate and 5 means the most accurate.

1. The revival of Bitcoin and 'DeFi Summer 2.0'

Accuracy: 4/5

• In 2023, the price of Bitcoin rose from $16,000 in January to a peak of $40,000 in December.

• Currently, the price of Bitcoin has exceeded $90,000, and the dominance of Bitcoin has surpassed 60% this year.

• There was indeed a Bitcoin DeFi summer, but the definition of success depends on specific Indicators.

• Less than 1% of Bitcoin is wrapped and used for DeFi, showing weak growth compared to last year. Projects like Mezo, Stacks, and Merlin have built communities within the Bitcoin ecosystem but face challenges in sustaining user growth.

• A prediction was made that Ordinals, inscriptions, and staking might encourage 1% of Bitcoin users to try DeFi, but this prediction was not fully realized.

However, the Babylon launched this year allows users to directly lock Bitcoin without packaging, attracting about 2 billion dollars of Bitcoin. The rise in price also helped total value locked (TVL) reach 3.549 billion dollars, which is ten times that of last year (last year's TVL was about 0.3 billion dollars), but it is still far from my prediction of 1% or about 0.2 million Bitcoins (currently valued at 19 billion dollars).

2. Tokenized social experiences for new consumer scenarios.

Accuracy: 2/5.

• If meme coins, prediction markets, or gambling-type applications are excluded, then this prediction has basically fallen short.

• The definition of tokenized social experiences has evolved this year, with the rise and success of on-chain gaming becoming the focus.

• Games based on platforms such as TON (Telegram), Arbitrum, etc., have performed excellently and successfully integrated tokenization mechanisms in games.

• The growth of Farcaster (and frames) has stabilized. DePin projects like Helium, Grass, and Blackbird are still in the early stages.

But in terms of new consumer scenarios, the results are scant. We invested in Morph, a global consumption layer, hoping it can become a leader in this area.

The growth of "bridges" between traditional finance and DeFi, such as stablecoins and mirrored assets.

Accuracy: 5/5

• The purchase volume of ETFs continues to increase, with the total for Ethereum and Bitcoin ETFs reaching a record 119 billion USD.

Liquidity of ETH and Bitcoin ETFs

Since the beginning of this year, the number of RWAs has increased by more than 60%, reaching over 13 billion USD, and the number of stablecoins has also reached a historical high of 192 billion USD.

RWA data

Mirrored Assets have become a hot topic, with Ethena, Ondo, and M^0 leading the trend. Assets like sUSDe have an annualized yield (APY) close to 30%.

Protocols like Morpho and Pendle allow for leveraged operations, yield farming, and circular borrowing on these assets.

Protocols like Superstate further strengthen the direct connection between traditional finance (TradFi) and decentralized finance (DeFi).

4. Modular blockchain intersects with zero-knowledge proofs (ZK).

Accuracy: 4/5

Zero-knowledge proof (ZK Proof) is an efficient method of verification or proof, which has successfully been integrated as an infrastructure component in multiple blockchains and protocols.

• Polygon, Conduit, and OP Stack have now integrated SP1 from Succinct.

• Nexus has partnered with protocols like QED and Caldera, but has not yet experienced explosive growth.

Although there has been progress, it has not yet reached the level of exponential growth.

5. More compute-intensive applications (such as AI and DePIN) are gradually moving onto the chain.

Accuracy: 2/5.

Despite the price increase, in reality, very few compute-intensive applications have truly moved onto the chain.

• A few AI projects have not yet gained widespread, permissionless market recognition beyond their token value.

• Helium is one of the few companies that has truly developed products that are more competitive than Web2 alternatives.

• Grass somewhat aligns with this trend, but overall, the wave of DePIN (Decentralized Physical Infrastructure Networks) has not truly arrived.

6. Integration of public chain ecosystems and the 'central radiation model' of Appchains.

Accuracy: 2/5.

Despite some application chains choosing the Hub-and-Spoke model, an interesting trend has been observed:

• Applications choose to create their own chains, often built through Rollup as a Service (RaaS) providers or specific ecosystems (such as Arbitrum Orbit or OP Stack). For example:

• Unichain adopted OP Stack.

• Application chains have found that subscribing to a platform with built-in interoperability protocols and additional features is simpler and performs better than building their own hub-and-spoke chain.

In the underlying architecture, many chains may use hub-and-spoke technology in certain modules of the stack (such as messaging, broadcasting, and liquidity aggregation), but they do not consider the hub-and-spoke model as the core design philosophy of the chain.

2025 Forecast

The views expressed in this article are the author's opinions as of the publication date and are subject to change at any time. Predictions do not guarantee future results.

This year, investors from the Pantera team were invited to participate in the predictions. The predictions were divided into two categories: Upward Trends and Emerging Concepts.

Upward Trends

1. Real World Assets (RWA) will account for 30% of the Total Value Locked (TVL) on-chain (currently at 15%).

This year, on-chain funding for RWA has grown by over 60%, reaching $13.7 billion. Approximately 70% of RWA is private credit, while the remainder mainly consists of treasury bills and commodities. The inflows for these categories are accelerating, and more complex RWA may be introduced by 2025.

Firstly, private credit is accelerating in growth due to improvements in infrastructure. Digital assets account for almost all of this, and by 2024, asset value is expected to increase by nearly $4 billion. As more companies enter this field, it is becoming easier to use private credit as a means of moving funds into Cryptos.

Secondly, there are off-chain U.S. treasury bills and commodities valued in the trillions of dollars. There are only $2.67 billion worth of U.S. treasury bills on-chain, and their ability to generate returns (unlike stablecoins, which allow issuers to earn interest) makes them a more attractive alternative than stablecoins. Blackrock's BUIDL U.S. treasury bill fund has only $0.5 billion on-chain, while its off-chain government bonds amount to hundreds of billions of dollars. Now, the DeFi infrastructure has fully embraced stablecoins and U.S. treasury bill RWA (integrating them into DeFi pools, lending markets, and perps), significantly reducing the resistance to adopting them. The same goes for commodities.

Finally, the current range of RWA is limited to these basic products. The infrastructure for creating and maintaining RWA protocols has been greatly simplified, and operators have a better understanding of the risks associated with on-chain operations and the appropriate mitigation measures. There are dedicated companies managing wallets, minting mechanisms, witch sensing, new crypto banks, etc., which means that it may eventually be feasible to introduce stocks, ETFs, bonds, and other more complex financial products on-chain. These trends will only accelerate the use of RWA until 2025.

2. 1% of Bitcoin will participate in Bitcoin Finance (Bitcoin-Fi).

Last year, the prediction for Bitcoin finance was relatively optimistic, but Bitcoin's TVL did not reach 1-2% of all Bitcoins.

This year, due to native Bitcoin financial protocols (like Babylon) being usable without cross-chain bridges, along with high returns on Bitcoin, high stock prices, and increased demand for Bitcoin assets (such as Runes, Ordinals, BRC20), it is expected that 1% of Bitcoins will participate in Bitcoin finance.

3. CNI Xiangmi Lake Fintech Index companies will become gateways to Cryptos.

TON, Venmo, PayPal, and WhatsApp have witnessed the growth of Cryptos due to their Neutrality. They are gateways where users can interact with Cryptos without pushing specific applications or protocols; in fact, they can serve as simplified entry points to Cryptos. They attract different users; TON has its existing 0.95 billion Telegram users, Venmo and PayPal each have 0.5 billion payment users, and WhatsApp has 2.95 billion monthly active users.

For example:

• Felix operates on WhatsApp, allowing instant transfers via messages, with funds available for digital transfer or cash withdrawal at partner stores (like 7-11).

• Felix uses stablecoins and Bitso on the Stellar network at its core.

• MetaMask now supports users purchasing Cryptos through Venmo.

• Stripe acquired the stablecoin company Bridge, and Robinhood acquired the crypto exchange Bitstamp.

Ultimately, every fintech company will become an entry point for Cryptos, whether intentionally or by supporting third-party applications. The popularity of fintech may rival the crypto holdings of small centralized exchanges (CEX).

4. Unichain will become the largest L2 by trading volume.

The current total locked value (TVL) of Uniswap is close to 6.5 billion USD, with a daily trading volume of 1-4 billion USD and 0.05-0.08 million transactions each day. Arbitrum has a daily trading volume of about 1.4 billion USD (of which one third comes from Uniswap), and Base has a daily trading volume of about 1.5 billion USD (of which one fourth comes from Uniswap).

If Unichain can capture half the trading volume of Uniswap, it will easily surpass the current largest L2 and become the king of trading volume.

5. NFTs will experience a resurgence, but focused on specific application scenarios.

NFTs are seen as crypto tools, not the ultimate goal. NFTs are gradually becoming practical tools in on-chain games, AI (for model ownership trading), identity, and consumer applications.

Case:

• Blackbird is a dining rewards application that integrates NFTs into the customer identity system, connecting Web3 with the Restaurant Industry. Restaurants can use NFTs to provide Consumer behavior data and easily create/mint subscriptions, memberships, and discounts.

• Sofamon develops Web3 Bitmoji stickers (NFTs), unlocking the financial aspect of the sticker market. They collaborate with KOLs and K-pop stars to combat digital counterfeiting, reflecting the growth of on-chain IP value.

• Story Protocol aims to tokenize Global IP assets, centered around originality. The project recently raised $80 million at a valuation of $2.25 billion.

• IWC (Swiss Franc luxury watch brand) launches member NFTs, providing holders exclusive access to events and communities.

NFTs can be used to identify transactions, transfers, ownership, and memberships; they can also represent and value Assets, enabling monetization and potential speculative growth. This flexibility gives NFTs strong potential, and future use cases will only continue to increase.

6. Restaking mainnet launched.

In 2025, restaking protocols such as Eigenlayer, Symbiotic, and Karak will officially launch on the mainnet, with operators earning income through AVS (Active Verification Services) and a penalty mechanism (slashing). However, this year, the enthusiasm for restaking seems to have diminished.

The influence of restaking grows as more networks use it. If a protocol utilizes infrastructure supported by a specific restaking protocol, it can gain value from that connection even without direct links. Therefore, even if some protocols lose focus, they may still hold significant valuations.

We believe that re-staking remains a multi-billion dollar market, as more applications become Lisk, they will utilize re-staking protocols or other protocols built on top of re-staking protocols.

Emerging Concepts.

7. zkTLS: Bringing off-chain data on-chain.

zkTLS uses zero-knowledge proofs (ZK Proof) to verify the validity of data from the Web2 world. This new technology has not yet fully landed, but it is expected to introduce a new type of data this year (hopefully) when realized.

For example, zkTLS can be used to prove that certain data indeed comes from a specific website. Currently, there is no way to verify this. This technology leverages advancements in **Trusted Execution Environments (TEE) and Multi-Party Computation (MPC)**, which may further improve in the future, allowing some data to remain private.

Although zkTLS is still in the conceptual stage, we predict that companies will begin to develop and integrate it into on-chain services, such as:

• Verifiable oracles for non-financial data,

• Cryptographically secure data oracles.

Provide reliable external data sources for on-chain applications.

8. Regulatory Support

The regulatory environment in the USA has shown a positive attitude towards Cryptos for the first time. In the latest elections, 278 candidates for the House of Representatives who support Cryptos were elected, while there were only 122 candidates opposed to Cryptos. SEC Chairman Gary Gensler, who is against Cryptos, announced his resignation in January. Reports indicate that Trump plans to nominate Paul Atkins to lead the SEC. Atkins served as an SEC commissioner from 2002 to 2008 and is a public supporter of the Crypto industry, as well as an advisor to the Chamber of Digital Commerce, an organization dedicated to promoting the legalization and popularization of Cryptos.

Trump also appointed technology investor, former Yammer CEO and former PayPal COO David Sacks to the newly created position of "AI and Crypto Czar." In Trump's statement, he mentioned, "David Sacks will be committed to establishing a legal framework that provides clarity for the Crypto industry, which has been a long-standing demand of the sector."

We expect to see: a gradual reduction in SEC lawsuits, a clear definition of Cryptos as a specific asset class, and further clarification of tax policies.

2025 may become an important turning point for the development of the Crypto industry in the USA.