8 Predictions for 2025
VeradiVerdict - Issue #319
Last week, Coindesk published my 8 Predictions for 2025!
I wanted to publish here the full version, including an overview of this year, a review of my 2024 predictions, and my predictions for 2025.
Every year, bulls and bears use short-term case studies to forecast crypto armageddon or exponential growth. And every year, neither group is right.
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, Hyperliquid’s near $2 billion airdrop, Bitcoin hitting $100,000, and SEC Chair Gary Gensler’s January resignation announcement.
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 grow 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.
The diversification of crypto has strengthened its ability to react to shocks. Payments, DeFi, gaming, ZK, infrastructure, consumer, and more, are all growing sub-sections. Each of these now have their own funding ecosystems, their own markets, their own incentives, and their own bottlenecks.
This year, at Pantera, 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 Helika, a gaming analysis platform. Web3 AI products often face adoption challenges because of the fragmentation of the AI stack, so Sahara AI 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 Everclear standardizes the process by connecting all stakeholders. zkVM’s are complicated to integrate, so Nexus 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, the blockchain that directly plugs into Telegram’s 950 million monthly active users.
We enter 2025 on tailwinds of possible regulatory clarity, continued mainstream interest, and rising crypto prices. Even after a bit of a summer slump this year, crypto users are entering the new year with strong optimism (or “greed”).
CoinMarketCap’s Fear and Greed Index
Before we dive into 2025 predictions, let’s take a look back at how I did predicting 2024.
Review of 2024 Predictions:
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
In 2023, Bitcoin went from a low of 16k in January to a high of 40k in December.
Bitcoin is now >90k. Bitcoin dominance peaked at over 60% this year.
There was a Bitcoin DeFi Summer, but defining success comes down to metrics. Less than 1% of Bitcoin is wrapped and used in DeFi, with menial growth from last year. Bitcoin ecosystems like Mezo, Stacks, and Merlin have built communities, but struggle with continued user growth. Last year I predicted that Ordinals, inscriptions, and staking might push up to 1% of Bitcoin users to try DeFi. This arguably did not happen.
However, Babylon, which simply makes users lock their Bitcoin without having to wrap them, launched this year and single handedly attracted ~$2b worth of Bitcoin. Prices also doubled this year, helping to pump TVL to an impressive $3.549b. This is 10x the $300M TVL it was last year, but remains far from the 1% or ~200k Bitcoins (with a current value of $19b) I predicted.
Tokenized social experiences for new consumer use cases
Accuracy: 2/5
If I don’t include memecoins, prediction markets, or gambling as social experiences, then this prediction largely falls flat. The definition of a “tokenized social experience” also evolved this year, with the rise and success of on-chain gaming. Games on TON (Telegram), Arbitrum, and others did very well while integrating tokenization in their games. Farcaster growth (and frames) has plateaued. DePin projects like Helium, grass, and Blackbird are still in their early stages.
But in terms of new consumer use cases? Very few. We invested in Morph, the “global consumer layer” and hope it becomes just that.
An increase in TradFi-DeFi “bridges” such as stablecoins and mirrored assets
Accuracy: 5/5
ETF purchases continue to grow, reaching record highs of over $119 billion worth of Ethereum and Bitcoin ETFs.
The number of RWA’s has increased more than 60% since the start of this year to over $13 billion and stablecoins have reached an all time high of $192b.
Mirrored assets are all the rage, with Ethena, Ondo, and M^0 leading the way. Assets like sUSDe have near 30% APY. Protocols like Morpho and Pendle allow these assets to be leveraged, yield farmed, looped, and more. Protocols like Superstate allow a more direct connection between TradFi and DeFi.
The cross-pollination of modular blockchains and Zero Knowledge Proofs
Accuracy: 4/5
ZK proofs are efficient ways to verify or create proofs. They have been successfully integrated into various chains and protocols as a piece of infrastructure. Polygon, Conduit, and OP Stack are now integrated with SP1 from Succinct. Nexus has partnered with protocols like QED and Caldera, but hasn’t seen explosive growth. It has happened, but not exponentially.
More computationally intensive applications moving on-chain, such as AI and DePIN
Accuracy: 2/5
Prices may have pumped, but few people have actually moved computationally intensive apps on-chain. Few AI projects have gained widespread, permissionless traction outside of their token value. Helium is one of the only companies in the space building a product that legitimately beats web2 alternatives. Grass is arguable, but overall, the DePin wave never really came.
Consolidation of public blockchain ecosystems and a “Hub-and-Spoke” model for appchains
Accuracy: 2/5
Some appchains did choose hub-and-spoke models, but we saw an interesting trend of apps creating their own chains with rollup as a service provider or by choosing an ecosystem, like an Arbitrum Orbit or OP Stack. Unichain, for example, uses the OP stack. Appchains have found that subscribing to a platform that has built-in interop protocol and other features is easier and performs better than creating their own hub-and-spoke chain.
Under the hood, many of these chains may use a hub-and-spoke technology for parts of the stack, like messaging, propagation, and liquidity aggregation, but they do not place the hub-and-spoke model as the central design of the chain.
2025 Predictions:
The opinions expressed are those of the author as of the date of publication and are subject to change. Predictions are not guarantees of future outcomes.
This year, I enlisted the help of investors on the Pantera team. I’ve split my predictions into two categories: rising trends and new ideas.
Rising Trends:
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.
Firstly, private credit is accelerating because of improving infrastructure. Figure accounts for almost all of this, increasing by almost $4 billion worth of assets in 2024. As more companies enter this space, there is increasing ease to use private credit as a means to move money into crypto.
Secondly, there are trillions of dollars worth of T-Bills and commodities off-chain. There is only $2.67 billion worth of T-Bills on-chain, and their ability to generate yield (as opposed to stablecoins, which allow the ones who mint the coin to capture the interest), makes it a more attractive alternative to stablecoins. Blackrock’s BUIDL T-Bill fund only has $500 million on-chain, as opposed to the tens of billions of government bills it owns off-chain. Now that DeFi infrastructure has thoroughly embraced stablecoins and T-Bill RWA’s (integrating them into DeFi pools, lending markets, and perps), the friction to adopt them has drastically decreased. The same goes for commodities.
Finally, the current extent of RWAs is limited to these basic products. 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. There are specialized companies that manage wallets, minting mechanisms, sybil sensing, crypto neo-banks, and more, meaning it may finally be possible and feasible to introduce stocks, ETFs, bonds, and other more complex financial products on-chain. These trends will only accelerate the use of RWA’s heading into 2025.
1% of Bitcoins will participate in Bitcoin-Fi
Last year, my prediction of Bitcoin finance was strong but didn’t reach the 1-2% of all Bitcoins TVL mark. This year, pushed by Bitcoin-native finance protocols that do not require bridging (like Babylon), high returns, high Bitcoin prices, and increased appetite for more BTC assets (runes, Ordinals, BRC20), 1% of Bitcoins will participate in Bitcoin-Fi.
Fintechs become crypto gateways
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; in effect, they can act as simplified entryways into crypto. 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.
Felix, which operates on Whatsapp, allows instant money transfers via a message, to be either digitally transferred or can be picked up in cash at partner locations (like 7-Eleven). Under the hood, they use stablecoins and Bitso on Stellar. Users can now buy crypto on Metamask using Venmo, Stripe acquired Bridge (a stablecoin company), and Robinhood acquired Bitstamp (a crypto exchange).
Whether intentionally or because of their ability to support third-party apps, every fintech will become a crypto gateway. Fintechs will grow in prevalence and may perhaps rival smaller centralized exchanges in crypto holdings.
Unichain becomes the leading L2 by transaction volume
Uniswap has a TVL of almost $6.5b, 50-80k transactions per day, and volume of $1-4 billion daily. Arbitrum has ~$1.4 billion of transaction volume a day (a third of which is Uniswap) and Base has ~$1.5 billion 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 L2s to become the leading L2 by transaction volume.
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 is a restaurant rewards app that integrates NFT’s into customer identification in their platform of connecting Web3 into dining. By integrating the open, liquid, and identifiable blockchain with restaurants, they can provide consumer behavior data to restaurants, and easily create/mint subscriptions, memberships, and discounts for customers.
Sofamon creates web3 bitmoji’s (which are NFT’s), called wearables, unlocking the financial layer of the emoji market. They recognize the increasing relevance of IP on chain and embrace collaboration with top KOL’s and K-pop stars, for example, to fight digital counterfeiting. Story Protocol, which recently raised $80 million at a $2.25 billion 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 that buys access to an exclusive community and events.
NFTs can be integrated to ID transactions, transfers, ownership, memberships, but can also be used to represent and value assets, leading to monetary, possibly speculative growth. This flexibility is what brings NFTs power.
Its use cases will only increase.
Restaking launches
In 2025, restaking protocols like Eigenlayer, Symbiotic, and Karak 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. If protocols use infra that is powered by a particular restaking protocol, it derives value from that connection, even if it is not direct. 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.
New Ideas:
zkTLS bringing offchain data on-chain
zkTLS uses zero knowledge proofs to prove the validity of data from the Web2 world. This new technology has yet to be fully implemented, but when it (hopefully) does this year, it will bring in new types of data.
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 tech takes advantage of advancements made in TEE’s and MPC’s, and may be further improved to allow some of the data to be private.
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.
Regulatory support
For the first time, the U.S. regulatory environment seems crypto-positive. 278 pro-crypto house candidates were elected versus 122 anti-crypto candidates. Gary Gensler, an anti-crypto SEC chair, announced that he will be resigning in January. Reportedly, Trump is set to nominate Paul Atkins to lead the SEC. He was previously an SEC Commissioner from 2002-2008 and is outspokenly supportive of the crypto industry and an advisor to the Chamber of Digital Commerce, an institution focused on promoting the acceptance of crypto. Trump also named David Sacks, a tech investor and former CEO of Yammer and COO of PayPal, to head the new role of “AI & crypto czar.”. Notably, in Trump’s announcement, he said that “[David Sacks] will work on a legal framework so the Crypto industry has the clarity it has been asking for.”
We hope for a winding down of SEC lawsuits, clear definitions of crypto as a particular asset class, and tax considerations.
- Paul Veradittakit
THIS WEEK AT PANTERA
Dan Morehead on Fast Money
Crypto is 'just a new asset class people don't have exposure to', says Pantera's Dan Morehead
Escape Velocity
“I wouldn’t bet my entire life savings that bitcoin is going to go up, but it’s been averaging almost doubling every year for eleven years. What if it does it one more year?” says Pantera’s Dan Morehead
Reflecting on Pantera Catalyze 2024
Presenting Pantera’s Research Fellowship 2024 Finalists
Bankless
Pantera Founder and Managing Partner Dan Morehead shares his rationale for launching Pantera Bitcoin Fund in 2013 and reflects on how far the industry has come since.
ABOUT ME
Hi, I’m Paul Veradittakit, a Managing Partner at Pantera Capital, one of the oldest and largest institutional investors focused on investing in blockchain companies and cryptocurrencies. I’ve been in the industry since 2014, and the firm invests in equity, early stage token projects, and liquid cryptocurrencies on exchanges. I focus on early-stage investments and share my thoughts on what’s going on in the industry in this weekly newsletter.