Pantera Managing Partner: Eight Predictions for Crypto in 2025

Author: Pantera Capital Managing Partner Paul Veradittkit, Coindesk; Compiler: Tao Zhu, Golden Finance

Every year, bulls and bears use short-term case studies to predict the end of the world or exponential growth for cryptocurrencies. Every year, neither dimension is true.

Some notable events this year: Ethereum’s Dencun upgrade; election, crypto ETFs, Wyoming’s DUNA, wBTC controversy, Robinhood’s Wells notification, Hyperliquid’s nearly $2 billion airdrop, Bitcoin hitting $100,000, and SEC Chairman Gary ·Gary Gensler’s resignation announcement in January.

2024 is a year without major market shocks. And, while it didn’t lead to an explosion of new capital, it proved that a growing number of companies in the crypto ecosystem were sustainable. Bitcoin is worth $1.9 trillion and all other cryptocurrencies are worth $1.6 trillion. The market capitalization of all cryptocurrencies has doubled since the beginning of the year.

The diversification of cryptocurrencies increases their resilience to shocks. Payment, DeFi, games, ZK, infrastructure, consumers, etc. are all growing segments. Now, every country has its own financing ecosystem, its own markets, its own incentives and its own bottlenecks.

This year, at Pantera, we have invested in companies that address these ecosystem-specific problems. Crypto gaming companies are facing problems adopting Web3 data analysis tools, so we invested in Helika, a gaming analytics platform. Web3 AI products often face adoption challenges due to the fragmentation of the AI ​​stack, so Sahara AI aims to create an all-in-one platform that allows permissionless contributions while maintaining a seamless Web2-like user experience.

Intent infrastructure is cluttered and order flow is fragmented, so Everclear standardizes the process by connecting all stakeholders. Integrating zkVM is complex, so Nexus uses modularity to accommodate customers who only need part of the hyper-scalable layer. Building consumer applications faces the problem of attracting users, so we made our largest ever investment in TON, a blockchain directly owned by Telegram's 950 million monthly active users.

We enter 2025 driven by possible regulatory clarity, continued mainstream interest, and rising cryptocurrency prices. Even after this summer’s slump, cryptocurrency users are heading into the new year with a strong sense of optimism (or “greed”).

2024 Forecast Review:

Before we dive into 2025 predictions, let's review how I predicted 2024. I rate myself with 1 being the least accurate and 5 being the most accurate.

• Bitcoin’s resurgence and “DeFi Summer 2.0”. Accuracy: 4/5

• Tokenized social experiences for new consumer use cases. Accuracy: 2/5

• The increase in TradFi-DeFi “bridges” such as stablecoins and mirror assets. Accuracy: 5/5

• The intersection of modular blockchain and zero-knowledge proofs. Accuracy: 4/5

• More computationally intensive applications move on-chain, such as AI and DePIN. Accuracy: 2/5

• A "hub and spoke" model that integrates public blockchain ecosystems and application chains. Accuracy: 2/5

2025 Forecast

This year, I enlisted the help of investors from the Pantera team. I divide my predictions into two categories: Uptrends and New Ideas.

Uptrend:

**By the end of the year, RWA (excluding stablecoins) will account for

30% of on-chain TVL (currently 15%)**

This year, on-chain RWA has grown by more than 60%, reaching $13.7 billion. About 70% of RWA is private credit, with most of the remainder in Treasury bills and commodities. Inflows into these categories are accelerating and more complex RWAs may be introduced by 2025.

First, private credit is accelerating due to infrastructure improvements. The number pretty much says it all, with assets set to increase in value by nearly $4 billion by 2024. As more and more companies enter the space, it is becoming increasingly easier to use private credit as a means of moving funds into cryptocurrencies.

Second, there are trillions of dollars worth of Treasury bills and off-chain commodities. Treasury bills are only worth $2.67 billion on-chain, and their ability to generate yield (as opposed to stablecoins, which allow minters to earn interest), makes them a more attractive alternative to stablecoins. Blackrock’s BUIDL T-Bill fund only has $500 million on the chain, while it holds tens of billions of dollars in government bills off the chain. Now that DeFi infrastructure has thoroughly embraced stablecoins and treasury bill RWAs (integrating them into DeFi pools, lending markets, and Perps), the friction of adopting them has been significantly reduced. The same goes for commodities.

Finally, the current scope of RWA is limited to these basic products. The infrastructure for developing and maintaining RWA protocols has been greatly simplified, and operators have a better understanding of the risks posed by on-chain operations and appropriate mitigation measures. There are dedicated companies managing wallets, minting mechanisms, witch inductions, crypto neobanks, etc., which means that introducing stocks, ETFs, bonds, and other more complex financial products on-chain may eventually be possible and feasible. These trends will only accelerate the use of RWA until 2025.

Bitcoin-Fi

Last year, my predictions for Bitcoin Finance were strong but fell short of 1-2% of all Bitcoin TVL. This year , 1% of Bitcoin will be driven by Bitcoin-native financial protocols that don’t require bridging (like Babylon), high returns, high Bitcoin prices, and increased demand for more BTC assets (Rune, Ordinal, BRC20) Get involved with Bitcoin-Fi.

Fintech becomes cryptocurrency gateway

TON, Venmo, Paypal, Whatsapp have witnessed the growth of cryptocurrencies due to their neutrality. They are gateways through which users can interact with cryptocurrencies but do not push specific applications or protocols; in fact, they can act as a streamlined onramp for cryptocurrencies. They attract different users; TON has 950 million existing Telegram users, Venmo and Paypal have 500 million payment users each, and Whatsapp has 2.95 billion monthly active users.

Felix runs on Whatsapp and allows for instant transfers via messages, allowing for digital transfers and cash pickup at partner locations such as 7-Eleven. Behind the scenes, they use stablecoins and Name on Stellar. Users can now use Venmo to buy cryptocurrencies on Metamask, Stripe acquired Bridge (a stablecoin company), and Robinhood acquired Bitstamp (a cryptocurrency exchange).

Whether intentionally or because of its ability to support third-party applications, every fintech will become a cryptocurrency gateway. Fintech will become increasingly popular and may rival smaller centralized exchanges in crypto assets.

Unichain becomes L2 transaction volume leader

Uniswap's TVL is close to $6.5 billion, with 500,000-80,000 transactions per day, and a daily transaction volume of $1-4 billion. Arbitrum's daily trading volume is approximately US$1.4 billion (of which Uniswap accounts for one- third), and Base's daily trading volume is approximately US$1.5 billion (of which Uniswap accounts for one-quarter).

If Unichain only accounts for half of Uniswap's transaction volume, it will easily surpass the largest L2 and become the leading L2 in transaction volume.

NFT resurgence, but in an application-specific way

NFTs are a tool in cryptocurrency, not a means to an end. NFTs are used as utility in on-chain gaming, artificial intelligence (transaction model ownership), identity, and consumer applications.

Blackbird is a restaurant rewards app that integrates NFTs into customer recognition in its platform that connects Web3 to dining. By integrating an open, liquid, identifiable blockchain with restaurants, they can provide consumer behavior data to restaurants and easily create/create subscriptions, memberships, and discounts for customers.

Sofamon creates web3 bitmoji, or NFTs, called wearables that unlock the financial layer of the emoji market. They recognize the growing relevance of on-chain intellectual property and are willing to work with top KOLs and K-pop stars, for example to combat digital counterfeiting. Story Protocol, which recently raised $80 million at a $2.25 billion valuation, has the broader goal of tokenizing the world’s intellectual property, putting originality back at the core of creative exploration and creators. IWC (Swiss luxury watch brand) has member NFTs that can be used to purchase exclusive community and event rights.

NFTs can be integrated into ID transactions, transfers, ownership, memberships, but can also be used to represent and value assets, leading to monetary and perhaps even speculative growth. This flexibility brings the power of NFTs. Use cases will only increase.

Restart

By 2025, staking protocols such as Eigenlayer, Symbiotic, and Karak will finally launch their mainnets, which will pay AVS and slash fees to operators.

Re-staking attracts power as more and more networks use it. If a protocol uses infrastructure powered by a specific restaking protocol, it will derive value from that connection, even if it is not direct. It is through this power that protocols can lose relevance but still hold huge valuations. We believe restaking remains a multi-billion dollar market as more and more applications become application chains that leverage the restaking protocol or other protocols built on top of the restaking protocol.

New ideas:

zkTLS brings off-chain 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 does (hopefully) this year, it will bring new types of data.

For example, zkTLS can be used to prove to other websites that data comes from a certain website. Currently, there is no way to do this. This technology leverages advances in TEE and MPC and can be further improved to allow certain data confidentiality.

This is a new idea, but we predict that companies will step up to start building this idea and integrating it into on-chain services, such as verifiable oracles for non-financial data or cryptographically protected data oracles.

regulatory support

The U.S. regulatory environment appears to be positive toward cryptocurrencies for the first time. 278 pro-cryptocurrency House candidates were elected, while 122 anti-cryptocurrency candidates were elected. Anti-cryptocurrency SEC Chairman Gary Gensler announced that he will resign in January. Trump will reportedly nominate Paul Atkins to lead the Securities and Exchange Commission. He served as an SEC commissioner from 2002 to 2008, was an outspoken supporter of the crypto industry, and served as an advisor to the Chamber of Commerce for Digital, an organization dedicated to promoting cryptocurrency acceptance. Trump also tapped David Sacks, a tech investor, former CEO of Yammer and COO of PayPal, to lead a new role as “artificial intelligence and cryptocurrency czar.” Trump’s statement said, “[David Sacks] will create a legal framework so that the cryptocurrency industry gets the clarity it has been asking for.”

We hope that the SEC litigation will lead to a clear definition of cryptocurrencies as a specific asset class and tax considerations.