Why 2025 will be the year of DeFi M&A

Author: Mona El Source: coindesk Translation: Shan Ouba, Golden Finance

Enzyme Finance co-founder Mona El Isa said that recent M&A activities show that we are entering a new era in which traditional finance and decentralized finance will work together to build a unified and dynamically evolving financial ecosystem.

In the fourth quarter of 2024, M&A activity in the cryptocurrency field surged, and this trend suggests that the new year may usher in more transactions driven by market sentiment after the US election.

M&A activity has been on an upward trend, and Stripe's recent acquisition of Bridge is an important milestone, highlighting the trend of increasingly blurred boundaries between traditional finance and digital assets.

According to data from The Block Pro, transaction activity in 2024 still lags behind the all-time high of 271 transactions set in 2022, indicating steady but subdued growth, but there are signs that the record could be broken in 2025.

With major institutions such as BlackRock, Fidelity and Grayscale launching Bitcoin and Ethereum ETPs, and optimism sparked by Trump's election, a new wave of mergers and acquisitions is about to rise.

The key question now is - what does M&A mean for driving innovation in the DeFi space?

Bridging the Gap

Recent high-profile acquisitions, such as Stripe's acquisition of Bridge and Robinhood's acquisition of Bitstamp, have highlighted the undeniable intersection between traditional finance and digital assets. These deals are not just about expansion, they are also a clear signal that companies are looking to strengthen their product services to meet the growing needs of institutional clients who want secure custody and strong risk management.

For a long time, discussions have often pitted DeFi against traditional finance, but recent M&A activity heralds a whole new possibility for convergence. However, traditional finance faces many challenges in transitioning to the DeFi space, especially in terms of regulatory compliance and accessibility. To meet these challenges, traditional finance requires enterprise-grade solutions that not only meet strict regulatory requirements but also greatly simplify the user experience.

While DeFi platforms are powerful, complex interfaces are often daunting for non-crypto native users. Platforms like Enzyme significantly lower the barrier to entry by combining smart contracts, automated investment strategies, and risk management tools in an easy-to-use interface through transparent on-chain infrastructure. This approach not only simplifies the digital asset management process, but also ensures technical compliance while avoiding the complexity common to blockchain technology.

Composability: A Catalyst for Change

For developers and managers, integration can greatly simplify the process of innovation by providing more resources in a secure, integrated infrastructure. This global trend is bridging the gap between Web2 and Web3, gradually eliminating the boundaries between the two, and forming a unified and innovative space. This trend is also happening within the decentralized field.

In DeFi, mergers and acquisitions (M&A) have promoted the realization of composability by integrating resources, technology, and expertise from multiple projects, thereby strengthening the interoperability between different protocols. Composability refers to the ability of different protocols and applications to integrate seamlessly and work together, which enables users to build complex financial solutions and has also become an important catalyst for the growth of the DeFi space. This growing ability to integrate protocols and resources enables developers to create new financial products and lowers the entry barrier. Developers can build powerful applications without starting from scratch, and users can easily enjoy the convenience brought by interconnected services.

Liquid Staking Tokens are a prime example of composability and a key trend expected to grow rapidly in 2025. Users can not only earn staking rewards with these tokens, but also use them as liquidity or collateral, thereby improving capital efficiency and maximizing the utility of assets in the DeFi ecosystem.

The Future of DeFi in 2025

The future of decentralized finance is bright. The mature Ethereum protocol continues to build and improve. These advances, coupled with a more favorable regulatory environment and improved user experience, lay the foundation for major growth in DeFi.

The future of decentralized finance lies in composability and interoperability. Networks should not be a barrier to investment, but switching between multiple networks can sometimes be complicated. Simplified interfaces can help users focus on seizing opportunities rather than being bothered by technical obstacles.

As M&A activity continues, companies need to balance DeFi innovation with the realities of regulation, governance, and market competition. This integration is critical to building a secure ecosystem while also meeting the growing expectations of investors and developers.