From grassroots to universal: Summary and outlook of Web3 entrepreneurs

Author: @Web3_Mario

• Abstract: Thank you very much for your support this year. I'm sorry that my year-end summary came a little late. I was delayed in dealing with things. Of course, I also thought for a long time from which angles I should sort out my feelings for everyone this year. In the end, I think it would be more realistic to share my thoughts and feelings with you from the perspective of an ordinary Web3 entrepreneur who is still struggling on the front line. In general, looking at 2024 and looking forward to 2025, I think it is quite appropriate to summarize it in four sentences: from grassroots to universal, from chaos to order, from depression to bubble, and from conservatism to reform. Next, I will use some events that I think are more representative to share my thoughts and prospects.  

From the grassroots to the universal: the approval of the BTC spot ETF has opened the prelude to the universalization of crypto assets

Looking back on 2024, I think the most unusual transformation that the crypto world has experienced is the upgrade from the product of a niche subculture group in the past to an asset class with universal value. This process can be traced back to two landmark events. The first is the approval of the BTC spot ETF on January 10, 2024, which was approved by the SEC after three months of negotiation. The second is that on November 6, 2024, during this round of the US election cycle, the cryptocurrency-friendly Trump was successfully elected as the 47th President of the United States. The corresponding impact of the two can be seen from the two more obvious price trends of BTC this year. The former raised the price of BTC from the $30,000 price range to $60,000, while the latter contributed greatly to the increase of BTC from $60,000 to $100,000.

The most direct impact of this shift is on liquidity. More abundant liquidity is naturally conducive to the trend of risky asset prices, but the process and motivation of liquidity attraction are different from the bull market in 2021. Looking back at the crypto asset bull market in 2021, the core source of its main driving force is the higher capital efficiency brought about by the deregulated nature of crypto assets, which makes the crypto track more efficient in capturing excess liquidity brought about by the $1.9 trillion economic rescue plan promoted by the Biden administration in response to the new crown epidemic, thereby achieving super high speculative returns.

However, in this round of bull market that started in 24 years, it can be seen that the entire transmission process has changed. Relying on the "influential funds" attracted by the bull market in 21 years and the newly-emerged vested interests, a new interest group has been formed, which is actively releasing greater political influence, not limited to numerous crypto policy lobbying groups and massive political donations. Regarding this point, I have made a more in-depth analysis in my previous article "In-depth Analysis of the Value of World Liberty Financial: New Choices under Trump's Campaign Fund Disadvantage". The most direct impact of this is that it has become possible to effectively promote the universal value of cryptocurrency through political means. So in this cycle, you will see that the value discourse of crypto assets is being iterated, and more traditional elites and mainstream media have labeled themselves as "crypto-friendly". This transition from "grassroots" to "universal" has also profoundly affected the motivation for attracting liquidity. Regardless of whether the view has sufficient arguments (which has been discussed in previous articles, "In-depth Analysis of the Underlying Reasons for the Current Crypto Market Fluctuation: Anxiety about the Value Growth of BTC after Breaking New Highs"), in addition to speculation, the purchasing power of BTC in this round is indeed mixed with more words such as "value storage" and "anti-inflation", which will reduce the cyclicality and volatility brought by the speculative attributes of crypto assets, and make the value support more stable. Of course, the crypto assets that can obtain this positive change are currently only a few blue-chip assets including BTC, but with the transmission effect brought by the multiplier effect, the entire crypto asset market will benefit more or less. It may be more intuitive to use a picture to illustrate this change.

In addition to the impact on the top class, this evolution has also brought about a huge positive change in mentality for many practitioners, including the author. The most intuitive example is that when friends and relatives outside the circle ask you about your industry, you don’t have to explain tremblingly that you are not a criminal or a nouveau riche as in the past, but now you can proudly introduce your profession or career. This change in mentality will also make the influx of talents more positive, whether it is starting a business to find partners, recruiting talents, and seeking cooperation with traditional industries. The friction costs in the process will be greatly reduced. So in view of this point, the author is full of confidence in the future development of the industry.

Finally, we should also mention some prospects for this narrative path. In 2025, the discussion on the value of crypto assets represented by BTC will be more active. In previous articles, we have analyzed that BTC's storage value and taking over AI will become the core of US stock growth. Therefore, we need to be sensitive to relevant information, which may include the following aspects: 

• Progress of relevant bills on Bitcoin reserves at the national, regional, organizational, and corporate levels;

• Related speeches or opinions expressed by key figures with political influence;

• The configuration of BTC in the balance sheets of US listed companies; 

From chaos to order: The regulatory framework of the crypto industry in sovereign countries around the world will be further improved, and Web3 business scenarios have a basis for breaking the circle 

The author's second observation path is "from chaos to order". We know that for a long time, a core narrative of the cryptocurrency industry has been the ability to resist censorship due to decentralization and anonymity. You can find similar arguments in most Web3 applications in the last cycle. This naturally made an important contribution to the Web3 industry in finding value support in the early stage, but it also caused considerable harm to the industry, such as fraud, money laundering and other crimes.

However, the author believes that the development of the industry will be iterated in this direction. It does not mean that Web3 fundamentalism is completely abandoned. It is just that the author believes that from a pragmatic point of view, the current encryption industry will experience a transition from chaos to order, and this transition is accompanied by the further improvement of the encryption industry regulatory framework of sovereign countries around the world. We know that among the many "cryptocurrency game hotspots" in 2024, the change of SEC Chairman Gary Gensler has attracted much attention. Over a long period of time, under the leadership of this crypto-unfriendly chairman, the SEC has sued a large number of US crypto companies, such as Ripple and Consensys, which has caused bottlenecks in the business development and expansion of these giants. In the previous article "Buy the rumor series: The expectation of improving the regulatory environment is rising, which cryptocurrency will benefit most directly?", Lido was used as an example to clearly analyze the progress in this direction. However, with Trump's inauguration, his policy preference for deregulation, and the change of Gary Gensler, a more relaxed, inclusive, and crypto-friendly regulatory framework is worth looking forward to. Judging from the progress of recent judgments in related cases, such as Ripple and Tornado Cash, the introduction of this framework will not be too far away. The most direct benefit brought by this change is that it makes it possible for Web3 business scenarios to break through the circle without having to bear many potential legal risks. In the coming 2025, I will pay special attention to the progress of such events, and everyone needs to be sensitive to similar information, including the verdicts of other lawsuits, the introduction and promotion of relevant bills, changes in SEC personnel appointments, and the speeches and opinions of key decision makers. In terms of potential breakthrough businesses, I am very interested in two aspects: Ce-DeFi scenarios: connecting traditional financial instruments with on-chain tools such as crypto assets to solve capital efficiency and reduce transaction friction costs. From the perspective of capital flow, it can be divided into two categories. One is from the traditional financial world to on-chain crypto assets, such as MicroStrategy's financial innovation. The second is from on-chain crypto assets to the traditional financial world, specifically referring to bond-based RWA, on-chain financing channels similar to Usual Money, and TradeFi fields such as stablecoins.

From depression to bubble: The development of traditional Web3 business focuses on three main axes, a more novel grand narrative, a more stable business revenue, and a more balanced interest game model

The author's third observation path is "from depression to bubble". We know that in 2024, the traditional Web3 business hotspots have undergone a relatively large transformation. Represented by the LRT market driven by EigenLayer in the first half of the year, it mainly presents the characteristics of an industry recession. Due to the lack of a general money-making effect, in the context of stock game, capital has gathered together and chosen to gather in the few Infra sectors with huge potential market size but longer actual business landing period, exchanging time for space, and avoiding chip dilution by raising valuations and combining "points strategy", thereby exploiting users. This has been analyzed in the author's previous "Web3 oligarchs are exploiting users: from Tokenomics to Pointomics".  

However, with the improvement of the market environment in the middle of the year and the unsatisfactory performance of the token price of the LRT sector, the focus gradually shifted to the application layer represented by TON Mini App. Compared with infra, the application layer is respected by capital due to its more target options, lower development costs, shorter landing cycle, and easier to control iteration benefits. The market at this time quickly emerged from the shadow of the depression.

In the second half of the year, as the Federal Reserve entered the interest rate cut cycle and with the Fud problem of VC coins, the traditional capital exit path was broken, the market quickly entered the bubble, and capital chased Meme coins with shorter exit cycles to pursue higher capital turnover. In addition to Meme coin itself, launch platforms represented by Pumpfun and newer tools with superimposed narratives such as AI Agent are also being pursued by the market.

Looking forward to the next year, I believe that traditional Web3 businesses will develop in the same way as the bubble cycle:

• A newer grand narrative: We know that capital likes to pursue high-growth tracks. The core reason is the huge imagination potential and tolerance for current delivery, which makes the valuation bubble bigger. It is also easier to attract market traders and new capital to enter, making it easier for investors to exit through the secondary market at the right time. Therefore, whether or not the long-term value of a track is recognized, as long as it is logical, it can become a target for capital speculation during the bull market bubble period. Therefore, from the perspective of chasing capital gains, we should maintain sensitivity.

• More stable business revenue: For some tracks that have undergone a round of iterations, the valuation model will return to a reasonable range. At that time, the pursuit of real income will become the main theme of industry iteration, which puts higher requirements on the extraction of demand with commercial potential, but if a certain scenario can be truly explored, the market potential will be endless. Here, I specifically refer to the DeFi track, or the Ce-DeFi track. I am personally quite interested in the interest rate trading market. Friends with similar ideas are welcome to discuss with me.

• More balanced interest game model: We know that the current traditional VC coins are suffering from Fud. The more problems are that the current traditional financing model makes the game relationship between the project party, the primary market VC and the secondary market investors appear in the individual optimal strategy of the prisoner's dilemma. Each prisoner believes that the other party may betray, so he chooses to betray (to ensure his release or reduce his sentence). Therefore, whether a better model can be found in the new environment is also worth paying attention to. For example, I think HyperLiquid is very likely to have discovered some of the mysteries, which is also a focus of my next study.  

From Conservatism to Change: Rare Risk Assets Escape Slope Opportunities Brought by Great Uncertainty

The fourth observation path of the author is "from conservatism to change". It needs to be explained that conservatism and change here are just neutral words. Conservatism is worth following the existing rules, while change means breaking. The main theme of 2025 must be the great changes in the economic and cultural fields caused by political changes. The whole process is full of uncertainty brought about by the collapse of the old order. For example, the uncertainty of the debt crisis of the Chinese and American governments, the uncertainty of monetary policies of various countries, the uncertainty of changes in mainstream social values, and the uncertainty of international relations. These uncertainties bring huge volatility in the risk market. Of course, if the rotation of sectors puts the industry in a positive state of promotion, this volatility brings good things, and vice versa. A piece of news two days ago also made the author interested in this direction. That is, the FTX restructuring plan will take effect on January 3 and will allow users to start receiving repayments. We know that in the last cycle, the mainstream political spectrum in the technology industry is still relatively biased towards the Democratic Party. Therefore, it is believed that many bigwigs who entered the last bull market will not have a good time after Trump's return. Therefore, it is understandable that they took advantage of the window period before he officially took office to drive up the relevant prices as much as possible and hedge their own risky assets to escape. Here is a little conspiracy theory. Some Deep State Capital suffered huge losses due to the bankruptcy of FTX and the collapse of the crypto industry. Therefore, after Trump won the election, he did not hesitate to use many political means to raise the price of crypto assets to an exaggerated level. This allowed some already dilapidated balance sheets to revive and avoid their own losses. I also got some inspiration from the FTX case, so I am also very interested in the development of the NFT track in 2025. It seems that the two have some similarities. At the same time, combined with new speculative narratives such as AI Agent, it is not impossible for the NFT market to have a second spring.