Encrypted bar mitzvah: 2025, Reconstruction of institutions, assets and regulations

This vulnerability was further amplified by the boom in 2025. The influx of capital into the revenue-based stable currency, some of which provides annualized rates of return of up to 20 to 60 per cent through complex treasury strategies。@ethena_labsI don't know@sparkdotfiand@pendle_fiThe platform absorbs billions of dollars and traders pursue structural gains based on synthetic dollars. However, with the collapse of deUSD, XUSD and so on, it turns out that DeFi is not really mature, but rather concentrated. Nearly half of the total stock in the ITAL is concentrated in @aave and @LidoFinance, while other funds are concentrated in a small number of strategies related to the revenue-based stabilization currency (YBS). This leads to a fragile ecosystem based on over-leveraging, regressive financial flows and shallow diversification。

As a result, while the stabilization currency provides the system with momentum, it also increases the pressure on the system. We are not saying that the currency of stability is “insolved”; they are vital for the industry. However, 2025 proved that the design of the stabilization currency was as important as its functionality. As we enter 2026, the integrity of dollar-denominated assets has become a primary concern, not only for the DeFi agreement, but also for all participants in the distribution of capital or the construction of the financial infrastructure along the chain。

4. L2 INTEGRATION AND CHAIN COLLAPSE

In 2025, the road map “Rollup as its centre” collided with market realities. There have been dozens of L2Beat projects, which have now evolved into a “winner-for-winner” situation: @arbitrum, @base and @Optimism attracted most of the additional lock-in (TVL) and financial flows, while the smaller Rollup project has reduced its income and activity by 70 to 90 per cent after the incentives were ended. Liquidity, MEV robots and arbitragers follow deep and tight price differentials, reinforcing this flyer effect and drying up the order flow of the marginal chain。

At the same time, the surge in cross-link transactions, which reached $56.1 billion in July 2025 alone, clearly demonstrates that “all is Rollup” still means “all is fragmentation”. Users continue to need to cope with isolated balances, L2 original assets and duplicate liquidity。

It needs to be clear that this is not a failure, but a process of integration. Fusaka has achieved 5-8 times Blob throughput, and the zk application chain, like @Lighter_xyz, reaches 24,000 TPS, as well as some of the emerging solutions (e.g. Aztec/Ten provides privacy, MegaETH provides super high performance), all of which indicate that a few implementation environments are emerging。

Other projects, on the other hand, entered a “sleeping mode” until they proved that their moats were deep enough that the leaders could not simply replicate their advantages through forks。

5. Predicting market rise: from marginal instruments to financial infrastructure

Another big surprise in 2025 was the prediction of formal legalization of markets。

Once seen as a peculiar feature of marginalization, it is now predicted that the market is gradually being integrated into the financial infrastructure. Long-standing industry leaders@PolymarketRe-entering the United States market in a regulated form: its United States branch was approved by the United States Commodity Futures Trading Commission (CFTC) as the designated contracting market (Designated Contract Market). In addition, it was reported that the Intercontinental Exchange (ICE) invested billions of dollars in capital, valued at close to $10 billion. The financial flows followed。

It is predicted that the market has jumped from an “interesting little market” to billions of dollars a week, and @Kalshi's platform alone handled tens of billions of event contracts in 2025。

In my view, this marks a shift in the market from a “toy” to a real financial infrastructure。

Mainstream sports gaming platforms, hedge funds and managers born of DeFi now see Polymarket and Kalshi as predictive tools rather than entertainment products. The encryption project and DAO have also started to view these order books as sources of real-time governance and risk signals。

However, this “weaponization” of DeFi has two sides. Regulatory review will be more rigorous, liquidity will remain highly focused on specific events, and the correlation between “forecasting markets as signals” and real world results has not yet been validated under stress。

Looking ahead to 2026, we can make it clear that the event market has now entered the institutional sphere of concern, along with the right to a permanent contract. The portfolio will need to have a clear view of whether, and how, such exposures should be configured。

6. INTEGRATION OF AI AND ENCRYPTION: FROM HOT CONCEPTS TO PHYSICAL INFRASTRUCTURE CHANGES

IN 2025, THE COMBINATION OF AI AND ENCRYPTION MOVED FROM LOUD NARRATIVES TO STRUCTURED PRACTICAL APPLICATIONS。

I believe that there are three themes that define the development of the year:

First, the proxy economy has moved from a speculative concept to an operational reality. An agreement such as x402 enables AI agents to trade autonomously in stable currency. The formation of the USDC integration of Circle, as well as the emergence of structured frameworks, credit layers and verifiable systems (e.g. EigenAI and Virtuals), highlights the need for useful AI agents to collaborate, not just to reason。

Second, the decentralised AI infrastructure became the core pillar in this area. The dynamics of Bittensor’s upgrading TAO and the events of December’s halving redefined it as “bitcoin of the AI world”; the NEAR’s chain of abstraction (Chain Action) led to actual transaction volumes of intent; and @rendernetwork, ICP and @SentientAGI validated the feasibility of decentrization calculations, model tracers and hybrid AI networks. It is clear that the infrastructure received a premium, while the value of “AI packaging” was declining。

Thirdly, the operational vertical integration accelerates the advance。

@almanakThe AI group deployed a quantitative-level DeFi strategy, @virtuals_io generated $2.6 million in cost revenue on Base and robotics, forecast markets and geospatial networks became credible proxy environments。

The shift from “AI packaging” to a verifiable integration of agents and robots indicates that the match between the product and the market is maturing. However, trust infrastructure remains a critical missing link, and the risk of hallucination remains a cloud at the top of autonomous trading。

OVERALL, MARKET SENTIMENT AT THE END OF 2025 WAS OPTIMISTIC ABOUT INFRASTRUCTURE, CAUTIOUS ABOUT THE UTILITY OF AGENTS, AND IT WAS WIDELY FELT THAT 2026 COULD BE A BREAKTHROUGH YEAR ON A PROVEN AND ECONOMICALLY VALUABLE CHAIN。

Launching the Platform Return: A New Era of Retail Capital

In our view, the launch of the platform in 2025 was not “the return of ICO”, but the industrialization of ICO. The market's so-called “ICO 2.0”, which is in fact the maturity of an encrypted capital formation stack, has evolved into an Internet Capital Markets, ICM: a programmable, regulated, all-day sales track, rather than simply a “lottery” currency sale。

As a result of the withdrawal of SAB 121, regulatory clarity has been accelerated by transforming tokens into financial instruments with attribution periods, information disclosure and recourse rights, not just simple issues. A platform such as Aligerz embeds equity into the institutional layer: the Hashishization bid, the refund window, a token attribution schedule based on lockout deadlines rather than internal channels. “No VC for sale, no internal gain” is no longer a slogan but a structural choice。

At the same time, we note that the launching of the platform is integrating into the exchange, which is a sign of a structural shift: the relevant platforms of Coinbase, Binance, OKX and Kraken provide compliance with KYC/AML (know your customer/anti-money laundering), liquidity security, and well-planned distribution channels accessible to institutions. Independent start-up platforms are forced to concentrate on vertical areas (e.g. games, memes and early infrastructure)。

At the narrative level, AI, RWA (real-world asset) and DePIN (decentrochemical networking) occupy the main distribution routes, and activate platforms more like narrative routers than machines. The true story is that the encryption sector is secretly building an ICM layer that supports corporate-level distribution and long-term convergence of interests, rather than repeating the tradition of 2017。

8. NON-INVESTMENT IN HIGH-FDV PROJECTS IS STRUCTURAL

For most of 2025, we have witnessed a repetition of a simple rule: high FDV (total diluted valuation, Full Diluted Participation), low-volume projects are structurally non-investmentable。

MANY PROJECTS — IN PARTICULAR THE NEW L1 (FIRST LAYER BLOCK CHAIN), THE FLANK CHAIN AND THE “REAL GAIN” TOKEN — HAVE ENTERED THE MARKET WITH MORE THAN $1 BILLION IN FDV AND A SINGLE-DIGIT FLOW SUPPLY。

AS ONE RESEARCH INSTITUTE HAS SAID, “HIGH FDV, LOW CIRCULATION, IS A MOBILE TIME BOMB”; ANY LARGE-SCALE SALE BY AN EARLY BUYER DIRECTLY DESTROYS THE ORDER BOOK。

The results are not expected. These tokens went up sharply on the line, but with the advent of the unlocking period and the exit of the insiders, prices fell rapidly. Cobie's famous words..“REJECTING THE PURCHASE OF INFLATABLE FDV (TOTAL DILUTION OF VALUATION) TOKENS” - FROM A NETWORK ENGRAVING TO A FRAMEWORK FOR RISK ASSESSMENT。Market traders have increased the price gap and the diaspora has simply ceased to participate, and many such tokens have barely improved in the following year。

IN CONTRAST, THOSE TOKENS THAT HAVE PRACTICAL USES, DEFLATION MECHANISMS OR CASH FLOW-LINKED TOKENS ARE STRUCTURALLY WELL OUTRUNS THOSE THAT ONLY SELL “HIGH” FDVS。

I BELIEVE THAT, IN 2025, THE BUYER'S TOLERANCE OF “COIN ECONOMIC DRAMA” WAS PERMANENTLY RECAST. FDV AND VOLUME ARE NOW CONSIDERED TO BE RIGID, RATHER THAN IRRELEVANT NOTES. IN 2026, A PROJECT COULD NOT ACTUALLY BE INVESTED IF ITS TOKEN SUPPLY COULD NOT BE ABSORBED THROUGH AN EXCHANGE ORDER BOOK WITHOUT UNDERMINING PRICE MOVEMENTS。

9. InfoFi: Rise, fanaticism and collapse

I think that InfoFi's boom and recession in 2025 became the clearest cyclical stress test of "given attention."。

InfoFi platforms like@KaitoAII don't know@cookiedotfunI don't know@stayloudioThe commitment is to pay for “knowledge work” by analysts, creators and community administrators through points and coins. In a short window of time, the concept became the subject of a hot and risky venture, with significant investment being made by institutions such as Sequoia (Redwood Capital), Pantera (Trust Capital) and Spartan (Sparta Capital)。

The prevailing trend of overloading the encryption industry and the combination of AI and DeFi makes the display of content on the chain look like an obvious missing basic module。

However, this focus as a unit of measure design choice is a double-edged sword: when attention becomes the core measure, content quality collapses. Platforms such as Loud and its kind are flooded by the poor content generated by AI, robotic farms and interactive alliances; a few accounts capture most of the rewards, while long-term users realize that the rules of the game are against them。

The price of multiple tokens has been reversed by 80 to 90 per cent, and there has even been a complete collapse (for example, when WAGMI Hub raised nine digits of money and suffered a major breach), further undermining the credibility of the field。

The final conclusions show that the first generation of InfoFi (information finance) is structurally unstable. While the core concept — the monetization of valuable encrypted signals — remains attractive, the incentive mechanism needs to be redesigned and priced on the basis of proven contributions rather than relying solely on hits。

I am confident that by 2026, the next generation of projects will have learned these lessons and will have made improvements。

10. The return of consumer encryption: a new paradigm led by new banks

In 2025, the return of consumer encryption was increasingly seen as a structural shift driven by new banking (Neobanks) rather than by local Web2 applications。

In my view, this shift reflects a deeper understanding that when users enter through the financial language that they already know (e.g. deposits, proceeds), the rate of adoption accelerates, while the bottom track of settlements, gains and liquidity moves quietly into the chain。

Ultimately, a hybrid bank stack (Hybrid Banking Stack) was presented, with new types of banks blocking the complexity of Gas fees, hosting and cross-chain bridges, while providing users with direct access to stable currency gains, currencyization of national debt and global payment tracks. As a result, a consumer funnel that can attract millions of users “in deeper chains” does not need to allow them to think like senior users about complex technical details。

The mainstream view across the industry suggests that new types of banks (Neobanks) are gradually becoming a de facto standard interface for mainstream encryption needs。

@other_fiI don't know@PlasmaI don't know@UR_globalI don't know@SolidYieldI don't know@raincardsAnd platforms such as Metamask Card are typical representatives of this shift: they provide instant access to gold, 3-4% return cards, 5-16% annualized return (APY) through monetization of national debt, and self-hosting smart accounts, all of which are packaged in a compliant and supportive environment。

THESE APPLICATIONS BENEFITED FROM REGULATORY REPLACEMENTS IN 2025, INCLUDING THE WITHDRAWAL OF SAB 121, THE ESTABLISHMENT OF A STABLE CURRENCY FRAMEWORK AND CLEARER GUIDANCE FOR A MONETIZATION FUND. THESE CHANGES HAVE REDUCED OPERATIONAL FRICTION AND EXPANDED THEIR POTENTIAL MARKET SIZE IN EMERGING ECONOMIES, ESPECIALLY IN AREAS WHERE REAL PAINS ARE HIGH, SUCH AS RATES OF RETURN, FOREIGN EXCHANGE SAVINGS AND REMITTANCES。

Normalization of global regulation of encryption

I think 2025 is the year in which encryption regulation finally normalizes。

Conflicting regulatory directives have evolved into three identifiable regulatory models:

1. European FrameworkThese include the Market Encrypted Assets Act (MiCA) and the Digital Operating Resilience Act (DORA), over 50 MiCA licences have been issued and the issuer of stabilization currency is considered an electronic money agency。
2. United States Framework: Includes stabilization currency laws similar to GENIUS Act, guidance from SEC/CFTC and introduction of spot bitcoin ETF。
3. A collage pattern in Asia and the PacificFOR EXAMPLE, HONG KONG ' S FULL RESERVE STABILIZATION CURRENCY REGULATIONS, SINGAPORE ' S LICENSE OPTIMIZATION, AND THE WIDER FATF TRAVEL RULES。

This is not superficial, but a complete remodelling of the risk model。

Stabilizing currencies move from “shadow banks” to regulated cash equivalents; banks such as Citi (Citi) and Bank of America (BoA) can now run a cash-for-currency pilot under clear rules; platforms such as Polymark can be re-entered under the supervision of the Commodity Futures Trading Commission (CFTC); and United States spot bitcoin ETF can attract more than $35 billion in stable inflows without the risk of survival。

Compliance has changed from a drag to a moat: institutions with strong regulatory science and technology (regtech) structures, clear equity tables (cap table) and auditable reserves can suddenly enjoy lower capital costs and faster institutional access。

In 2025, encrypted assets changed from grey area curiosity to a regulated target. Looking ahead to 2026, the focus of the debate has shifted from “is the industry allowed to exist” to “how to implement specific structural, disclosure and risk control”。