Token 2049 reveals five intertwined arenas shaping the future of DeFi. There doesn’t seem to be much stagnation in cryptocurrencies.
It looks like Token 2025 will differ greatly from the quiet, contained anticipation the crypto community has had over the past two years. A quintet of intertwined vectors: DeFi, stablecoins, artificial intelligence, regulation and liquidity are big themes that bounce around and pose barriers and big opportunities. It didn’t seem like DeFi TVL was down: the conviction and action of believers, stayers, and builders were making DeFi.
Below are the five main conclusions of what is developing.
DeFi Vital for Cryptocurrencies
DeFi is a cornerstone of cryptocurrencies, and for any L1 or L2 to thrive in any crypto vertical, such as gaming or NFTs, the DeFi ecosystem on chains must be vibrant. DeFi is the financial channel of cryptocurrencies. While tokenization, fractionalization, and on-chain RWAs become larger emerging themes, DeFi in its original form must exist but evolve because DeFi in its current form will not be able to onboard the next 100 million users.
It should be less complex (abstraction), less fragmented (aggregation), and UX-focused. Building next-generation DeFi is an existential essentiality for L1, L2, and protocols to serve as a framework.
Stablecoins Will Evolve
To date, stablecoins have been the most accepted use case for DeFi. They serve multiple objectives in the lifecycle of a user’s digital assets, from increasing to maintaining liquidity without exposure to market volatility to trading cross-chain with arguably easier bridging.
However, stablecoins are non-interest bearing and, for the most part, are not only denominated in dollars, but are also fully backed by dollars. These two dimensions will change.
Stablecoins will emerge, which could still be denominated in US dollars but backed by crypto assets (we are not talking about something stable here) and bear interest. This thought is not new, but sometimes ideas come ahead of time, and now it begins to feel that time is ripe for this.
AI + Cryptocurrencies Are for Real
The AI narrative, like the rumors around the convergence of AI and cryptocurrencies, is overused everywhere. From automated agents natively interacting with smart contracts to AI-managed asset management to distributed storage and computing running on blockchains via protocols, large-scale AI models must be operated and be resistant to sanctions and not endure concentrated exposure to centralized storage and computing.
Regulation Beyond the US
This is one of the biggest problems in the world of cryptocurrencies, and it’s not just about the SEC and its whims in the US, but almost every country with its relationship with cryptocurrencies. The founders of the DeFi protocol are being noticed from time to time in the US, and all legitimate players are forced to be deeply concerned, and to explore the possibility of moving.
It is necessary to reach progressive regulation and consider cryptocurrencies as a tokenized economy, not as a currency. DeFi regulation should be led by other countries, not the United States.
Liquidity Remains Suffocating at All Stages
The big concern revolves around liquidity and speed. Legitimate market makers are struggling to access capital.
Larger market makers that have conventionally only focused on CEx are probably struggling to capture DeFi’s liquidity provision, and newer DeFi projects are prevented from bringing higher-order innovations to the market, which could trigger the cycle of new user acquisition, rumors, and liquidity.
By Leonardo Pérez