The Key Narratives Set to Redefine the Crypto Market in 2025

Details: 09 January 2025

Recently, we summarised key events of 2024 for the cryptocurrency market. One of the dominant themes was the rapid financial success of ETFs, and the ongoing growth of stablecoins, driven by a surge in institutional interest seeking on-chain exposure.

Looking ahead to 2025, we remain optimistic about the trajectory of the crypto market. We anticipate that capital flows will increasingly migrate on-chain, fuelling further innovation and adoption across the sector.

Here are the major narratives that we believe will define the crypto landscape this year:

Stablecoins.
Decentralised Finance (DeFi).
Consumer Applications.
Artificial Intelligence (AI).

Below, we break each of these down in more detail.

Stablecoins

Stablecoins have long been a foundational pillar of the crypto market, with Tether and Circle leading the charge in this space. Traditionally viewed as a medium of exchange for trading and payments, stablecoins are increasingly being perceived as assets in their own right.

The sustained profitability of leading issuers like Tether and Circle has attracted attention from traditional fintech companies. Stripe’s acquisition of the stablecoin-focused startup Bridge in October 2024 highlights this growing interest, while PayPal’s PYUSD token, which reached the $1 billion market cap in August, has further cemented the presence of stablecoins in mainstream finance. Notably, PayPal incentivised adoption on Solana by offering yields as high as 20%, signalling a serious commitment to integrating stablecoins within its ecosystem.

High-yield stablecoin projects are also gaining traction. For instance, Ethena Labs' partnership with BlackRock to launch USDtb presents a novel way for traditional funds to access real-world asset (RWA) yields through innovative DeFi products. Usual Money's USD0 launch further bridges the gap between regulated finance and DeFi by offering high-yield opportunities to traditional investors.

DWF Labs is actively incubating a new high-yield stablecoin project, Falcon Stable, set to launch in 2025. We believe that institutional adoption will drive massive growth in stablecoins, with enhanced yields providing benefits across the user spectrum.

Decentralised Finance (DeFi)

The rising prominence of stablecoins has had a cascading effect on the DeFi sector. Utilisation of DeFi protocols has grown significantly, with platforms such as Aave and Pendle hitting record revenue figures. The ratio of decentralised exchange (DEX) to centralised exchange (CEX) volumes, both spot and perpetual, has more than doubled since the start of the year. Uniswap, Raydium, and Hyperliquid have been at the forefront of this trend.

As liquidity flows into DeFi, we expect to see continued innovation in yield generation and lending mechanisms. The next wave of advancements will likely focus on improving throughput, reducing latency, and enhancing execution efficiency. Upcoming launches such as Monad, MegaETH Labs, and Hyperliquid’s HyperEVM are expected to serve as catalysts for further innovation within the DeFi space.

DeFAI

A rising narrative in recent months is DeFAI. It is a fusion of AI and crypto technologies that’s reshaping decentralized finance, encompassing projects that develop AI-driven agents designed to automate and optimise various DeFi activities: swapping, lending, yield farming, and more.

DWF Labs actively collaborates with Hey Anon on developing this sector. As the first step of this collaboration, two companies have curated a list of DeFAI tokens on CoinGecko. The Managing Partner of DWF Labs, Andrei Grachev, announced the company seeks opportunities to support and invest in DeFAI projects.

Consumer Crypto Applications

An emerging sector of consumer crypto will play a crucial role in reducing the friction associated with onboarding non-crypto native users. One of the most notable examples is TON blockchain’s mini-app ecosystem within Telegram. By leveraging a familiar platform, users can access blockchain services without needing to create wallets or manage seed phrases, which is still a significant barrier to entry for many newcomers.

The TON’s milestones in 2024 achieved mainly in the the consumer crypto space. Source: TON

The trend towards mobile-centric experiences is also becoming more pronounced. Protocols like Jupiter Exchange and trading tools such as Moonshot, Photon, BonkBot, and ApePro are seeing increased popularity due to their focus on user-friendly interfaces and seamless experiences.

We believe that protocols that prioritise user experience and introduce effective retention mechanisms will gain a competitive edge in 2025. Enhancing accessibility and simplifying interactions will be key to driving mass adoption.

AI and Crypto

The emergence of AI agents has taken the crypto world by storm in recent months. These autonomous bots, such as

The AIXBT Agent, have garnered significant mindshare in the crypto community due to their ability to process information and produce content at unparalleled speeds, operating around the clock without fatigue.

AI agents are being deployed across various fields, including security audits, code evaluation, no-code development frameworks, data analysis, and investment strategies. The next wave of AI innovation is expected to focus on monetisation opportunities, with OpenAI’s o1 project enabling more human-like interactions and behaviours from AI systems.

As the number of AI agents grows, competition will intensify. Projects that succeed in identifying the right product-market fit will stand out from the crowd. We anticipate a surge in decentralised AI infrastructure as utilisation of these agents expands exponentially across multiple sectors within the crypto industry.

Overall

The convergence of stablecoins, DeFi, consumer crypto, and AI will significantly influence the crypto market in 2025. Institutional adoption and technological advancements are expected to drive these sectors.

We are dedicated to supporting projects that contribute to this evolving landscape. We invite builders and innovators seeking a crypto venture capital partner to reach out to DWF Ventures.