An end-of-year summary and New Year outlook from a Web3 entrepreneur: from wilderness to universality, from chaos to order, from recession to bubble,

Author: ++@Web3++ ++_Mario++

Abstract: Thank you all for your support over the past year. I apologize for the delay in my year-end summary; I was occupied with various matters. I have also spent a long time contemplating how to share my reflections from this past year. Ultimately, I believe it is more authentic to share my thoughts and feelings from the perspective of an ordinary Web3 entrepreneur still striving on the front lines. Overall, looking at 2024 and anticipating 2025, I think it is appropriate to summarize the situation in four phrases: from grassroots to universal, from chaos to order, from recession to bubble, and from conservatism to reform. Next, I will share my insights and outlook using some events that I consider representative.

From Grassroots to Universal: The Approval of the BTC Spot ETF Marks the Beginning of the Universal Path for Crypto Assets

Looking back at 2024, I believe the most unusual transformation in the crypto world is its evolution from a niche subculture to an asset class with universal value. This journey can be traced back to two landmark events: first, on January 10, 2024, after three months of deliberation, the BTC spot ETF approval was officially granted with the SEC's endorsement. Second, on November 6, 2024, during the current U.S. election cycle, crypto-friendly Donald Trump was successfully elected as the 47th President of the United States. The corresponding impacts of these events can be seen in the two significant price movements of BTC this year. The former raised the BTC price from the $30,000 range to $60,000, while the latter was instrumental in pushing BTC from $60,000 to $100,000.

The most direct impact of this transformation is on liquidity. More abundant liquidity naturally benefits the price movements of risk assets, but the process and motivation for attracting liquidity differ from those during the bull market of 2021. In the 2021 crypto bull market, the main driving force was the higher capital efficiency brought about by the de-regulatory nature of crypto assets, which allowed the crypto sector to capture the excess liquidity generated by the Biden administration's $1.9 trillion economic relief plan more effectively, resulting in extraordinarily high speculative returns.

However, in the current bull market that began in 2024, we can see a shift in the entire transmission process. The "influential capital" attracted during the 2021 bull market, along with newly established vested interests, has formed a new interest group that is actively exerting greater political influence, including numerous crypto policy lobbying groups and vast political donations. I have previously conducted a more in-depth analysis of this in my article ++“In-Depth Analysis of the Value of World Liberty Financial: New Choices Amid Trump's Campaign Funding Disadvantages”++ .

The most direct effect of this is that it has become possible to efficiently promote the universal value of cryptocurrencies through political means. Therefore, in this cycle, you will see iterative discussions about the value of crypto assets emerging, with more traditional elites and mainstream media labeling themselves as "crypto-friendly." This transformation from "grassroots" to "universal" has also profoundly influenced the motivation for attracting liquidity. Regardless of whether the viewpoints are well-supported by evidence (which has been discussed in previous articles, such as ++“In-Depth Analysis of the Underlying Causes of Current Crypto Market Volatility: Value Growth Anxiety After BTC Hits New Highs”++ ), the purchasing power for BTC in this round, besides speculation, indeed includes more terms like "store of value" and "anti-inflation," which will reduce the cyclical and volatile nature brought about by speculative attributes in crypto assets, making value support more robust. Currently, the only crypto assets benefiting from this positive change appear to be a few blue-chip assets, including BTC, but the transmission effect brought about by the multiplier effect will benefit the entire crypto asset market to varying degrees. A chart may illustrate this transformation more intuitively.

In addition to the impact on the upper class, this evolution has also brought about a significant positive mindset shift for many practitioners, including myself. The most direct example is that when friends and relatives outside the industry inquire about your field, you no longer have to explain nervously that you are not a criminal or a nouveau riche, but can now confidently introduce your profession or career. This shift in mindset will also make the inflow of talent more positive, significantly reducing friction costs in processes such as seeking partners for startups, recruiting talent, and collaborating with traditional industries. Therefore, I am very confident about the future development of the industry.

Finally, I would like to mention some outlooks on this narrative path. In mid-2025, discussions about the value of crypto assets represented by BTC will become more positive. I have analyzed this in previous articles, specifically referring to BTC's store of value and its potential to become the core of U.S. stock market growth, following AI. Therefore, it is essential to remain sensitive to relevant information, which may include the following aspects:

• Progress on Bitcoin reserve-related legislation at the national, regional, organizational, and corporate levels;
• Statements or viewpoints expressed by key political figures with influence;
• The allocation of BTC in the balance sheets of U.S. listed companies;

From Chaos to Order: The Global Regulatory Framework for the Crypto Industry Will Be Further Improved, Providing Evidence for Web3 Business Scenarios to Break Out

My second observation path is "from chaos to order." For a long time, a core narrative in the cryptocurrency industry has been its resistance to censorship due to decentralization and anonymity. You can find similar discussions in most Web3 applications from the previous cycle, which naturally contributed significantly to the early value support for the Web3 industry but also brought considerable harm to the industry, such as fraud and money laundering.

However, I believe the industry will iterate in this direction. This does not mean completely abandoning Web3 fundamentalism; rather, I think that from a pragmatic perspective, the current crypto industry will undergo a transformation from chaos to order, accompanied by the further improvement of the global regulatory framework for the crypto industry by sovereign nations. We know that among the many "crypto game hotspots" in 2024, the transition of SEC Chairman Gary Gensler has attracted significant attention. For a long time, under this crypto-unfriendly chairman, the SEC has prosecuted numerous U.S. crypto companies, such as Ripple and Consensys, creating bottlenecks for these giants' business operations and expansions. In my previous article ++“Buy the Rumor Series: Expectations for Improved Regulatory Environment Heat Up, Which Cryptocurrency Benefits the Most?”++ , I analyzed this direction using Lido as an example.

However, with Trump's assumption of office and his deregulatory policy preferences, combined with Gary Gensler's transition, a more lenient, inclusive, and crypto-friendly regulatory framework is to be expected. Recent developments in related case rulings, such as those involving Ripple and Tornado Cash, suggest that the introduction of this framework is not far off.

The most direct benefit of this change is that it will make it possible for Web3 business scenarios to break out with a solid basis, without having to bear many potential legal risks. In the upcoming year of 2025, I will pay special attention to the progress of such events, and everyone should remain sensitive to similar information, including the outcomes of other lawsuits, the introduction and advancement of related legislation, changes in SEC personnel appointments, and statements and viewpoints from key decision-makers. Regarding potential breakout businesses, I am particularly interested in two areas:

• Ce-DeFi Scenarios: Connecting traditional financial instruments with crypto assets and other on-chain tools to improve capital efficiency and reduce transaction friction costs. From the perspective of capital flow, this can be divided into two categories: first, the flow from the traditional financial world to on-chain crypto assets, such as MicroStrategy's financial innovations. Second, the transmission of on-chain crypto assets back to the traditional financial world, specifically referring to RWA based on bonds, on-chain financing channels similar to Usual Money, and stablecoins in the TradeFi sector.

• DAO in Off-Chain Entity Business Management Scenarios: This direction is somewhat speculative. Due to Trump's policies relaxing regulatory measures related to cryptocurrencies, coupled with the "America First" approach to boosting domestic demand, will more organizations or companies inclined towards traditional businesses choose to operate through the DAO model for internal governance to obtain cheaper financial services? For example, if someone wants to open a Chinese restaurant, they could choose to operate through a DAO and integrate a stablecoin-based payment system, making all cash flows transparent. If regulatory policies are further relaxed, the company's financing and dividend processes could also be managed through the DAO.

From Recession to Bubble: Traditional Web3 Business Development Focused on Three Main Axes: More Novel Grand Narratives, More Robust Business Revenue, and More Balanced Interest Game Models

My third observation path is "from recession to bubble." We know that in 2024, traditional Web3 business hotspots underwent a significant transformation. In the first half of the year, represented by the LRT market driven by EigenLayer, the industry exhibited characteristics of a recession. Due to the lack of a widespread profit effect, in the context of stock game dynamics, capital clustered together, choosing to concentrate on a few potential markets with enormous scale but longer-term actual business implementation in the Infra sector, trading time for space, raising valuations, and employing "points strategies" to avoid dilution of holdings, thus exploiting users. This was analyzed in my previous article ++“Web3 Oligarchs Are Exploiting Users: From Tokenomics to Pointomics”++ .

However, with the improvement of market conditions in the middle of the year and the unsatisfactory performance of LRT sector token prices, the focus gradually shifted to the application layer represented by TON Mini App. Compared to Infra, the application layer, with more target options, lower development costs, shorter implementation cycles, and more manageable iterative benefits, has gained favor from capital. The market quickly emerged from the shadows of the recession.

As we entered the second half of the year, with the Federal Reserve entering a rate-cutting cycle and the FUD issues surrounding VC coins, traditional capital exit paths were disrupted, and the market quickly entered a bubble phase, with capital chasing after meme coins that offered higher turnover rates. In addition to meme coins themselves, launch platforms represented by Pumpfun and new tools incorporating narratives like AI Agents are also being pursued by the market.

Looking ahead to the coming year, I believe traditional Web3 businesses will follow the development model of bubble cycles:

• More Novel Grand Narratives: We know that capital likes to chase high-growth sectors, primarily due to their enormous imaginative potential and tolerance for current delivery, allowing valuation bubbles to inflate further. This also makes it easier to attract market traders and new capital, enabling investors to exit through secondary markets at opportune moments. Therefore, regardless of whether one recognizes the long-term value of a particular sector, as long as it is logical, it can become a target for capital speculation during the bull market bubble. Thus, from the perspective of chasing capital gains, one should remain sensitive.

• More Robust Business Revenue: For some sectors that have undergone a round of iteration, valuation models will revert to reasonable ranges, and the pursuit of real income will become the main theme of industry iteration. This raises higher demands for refining commercially viable needs, but if a particular scenario can be genuinely explored, the market potential will be limitless. Here, I specifically refer to the DeFi sector or Ce-DeFi sector. I am personally very interested in the interest rate trading market, and I welcome anyone with similar ideas to discuss with me.

• More Balanced Interest Game Models: We know that current traditional VC coins are facing FUD, and more issues arise from the traditional financing model, which has led to a prisoner’s dilemma in the game relationship between project parties, primary market VCs, and secondary market investors. Each prisoner believes the other may betray, leading to mutual betrayal (ensuring their own release or reducing their punishment). Therefore, in the new environment, finding a better model is also worth attention. For example, I believe HyperLiquid may have discovered some of these secrets, which will be a key focus of my research moving forward.

From Conservatism to Reform: Rare Opportunities for Risk Assets Amidst Great Uncertainty

My fourth observation path is "from conservatism to reform." It is necessary to clarify that conservatism and reform are neutral terms here; conservatism refers to compliance with existing rules, while reform implies breaking them. The main theme of 2025 will undoubtedly be significant changes in the economic and cultural fields triggered by political reforms, with the entire process filled with uncertainties arising from the collapse of the old order. For example, uncertainties surrounding the U.S.-China government debt crisis, uncertainties in monetary policies of various countries, uncertainties in changes to mainstream social values, and uncertainties in international relations.

The uncertainties brought about by these factors lead to significant volatility in the risk market. Of course, if sector rotation places the industry in a positive driving state, this volatility can be a good thing; conversely, it can be detrimental. A recent news flash piqued my interest in this direction: the FTX restructuring plan will take effect on January 3 and will allow users to begin receiving repayments.

We know that in the previous cycle, the mainstream political spectrum in the tech industry was relatively Democratic. Therefore, I believe many of the big players who entered during the last bull market will not fare well after Trump's return. Thus, it is understandable that they would seek to inflate relevant prices as much as possible during the window before his official assumption of office, treating their risk assets as a hedge.

Here, I will indulge in a bit of conspiracy theory: some Deep State capital suffered enormous losses due to the FTX bankruptcy and the collapse of the crypto industry. Therefore, after Trump's victory, they might resort to numerous political means to inflate crypto asset prices to an exaggerated level, thereby reviving some already devastated balance sheets and avoiding their losses.

From the FTX case, I have also gained some insights. Therefore, in 2025, I am quite interested in the development of the NFT sector, as it seems there are some similarities between the two. Coupled with new speculative narratives like AI Agents, it is not impossible for the NFT market to experience a renaissance.