The crypto track pattern in 2025: What works and what doesn’t work?

Author: James Morgan

Compilation: Vernacular Blockchain

Cryptocurrencies are now in a more mature and clearer stage than ever before. Although there is still a hype cycle in the market, many areas in the industry have shown product-market fit (PMF) and have practical application value beyond speculation. While other areas are still in the experimental or problem stage, unsolved challenges hinder their massive adoption.

This article will analyze the key drivers that drive large-scale adoption and explore the segments that have been successful, and those that are still facing significant obstacles.

1. Core technology driving force: the cornerstone of cryptocurrency

growth

1) Low-cost block space: L2 and high throughput L1

One of the biggest breakthroughs in the crypto industry is the significant reduction in transaction costs. The introduction of scalable Layer 2 (L2) Rollup and high-throughput Layer 1 (L1) blockchains enable developers to build efficient and easy-to-use applications more easily.

L2 expansion solutions – Ethereum Rollup solutions such as Arbitrum (arbitrum.io), Optimism (optimism.io) and Polygon (polygon.com) provide faster and lower-cost transactions while maintaining a high degree of decentralization and Openness.

High-throughput L1 alternatives – Solana (solana.com), Aptos (aptosfoundation.org) and Sui (sui.io) adopt parallel execution and different decentralized trade-offs to achieve high-speed and low-cost transactions.

Reason for growth: Lower transaction costs reduce the entry barriers for developers and users, and promote the accelerated popularization of fields such as DeFi, games and asset tokenization.

2) Wallet upgrade and seamless user experience (UX)

One of the major obstacles to cryptocurrencies’ adoption is the complex introductory process, but this issue has been greatly improved and will continue to be optimized in the coming months.

Smart contract wallets—Smart wallets such as Safe (safe.global) and Coinbase Wallet (coinbase-smart-wallet) have introduced gas-free transactions, automatic recovery, and multiple sign-up security mechanisms, and also support user gas fee payment and chain abstraction. Greatly improves the user experience.

Social login and keyless authentication - With tools such as Web3Auth, Privy, etc., users can directly access their wallet through their email or mobile phone numbers, without the need for cumbersome mnemonic management.

Crosschain Intents - Advanced wallets and DApps are integrating cross-chain infrastructure and supporting standards such as EIP-7683, enabling users to seamlessly manage multi-chain assets and execute transactions through the "intention mechanism".

Reason for growth: lowering the interaction threshold and making it easier for non-technical users to enter. The user experience of encrypted applications is gradually moving closer to traditional financial technology, promoting wider adoption (adoption).

2. The crypto industry landscape in 2025: successful and rapid growth of

crypto use cases Bitcoin

ETF: Catalyst for institutional entry

One of the most important financial milestones for Bitcoin is the approval and launch of US spot Bitcoin ETFs, which has triggered a large amount of institutional investment. For the first time, the clarity of regulation has not only not hindered cryptocurrencies, but has driven its development.

Institutional ETF Layout – BlackRock, Fidelity, Grayscale has now launched regulated Bitcoin and Ethereum ETFs, making it easier for hedge funds, pension funds and retail investors to obtain compliant crypto assets exposure.

Capital Influx – These ETFs have attracted billions of dollars inflows, further consolidating Bitcoin’s position as a new asset class in the financial industry, especially in the current uncertain market environment.

Recognition of traditional finance - ETFs allow institutions to hold Bitcoin and Ethereum in a compliant and tax-efficient manner, similar to the adoption model of early gold ETFs. More cryptocurrency-based ETFs will also inevitably be launched in the next few years.

Reason for growth: Bitcoin is now regarded as "digital gold", and Ethereum may be compared to "yield bonds". The widespread interest of institutions verifies its value as a long-term hedge against inflation and fiat currency instability. As the regulatory framework becomes clearer, the sense of security of institutional entry has increased, bringing more liquidity, wider adoption (adoption), and deep integration of the crypto industry and traditional finance.

3. Stablecoin: "killer" application in the payment field

Stablecoins have become the most widely used financial product in the cryptocurrency field, effectively solving the practical problems and inefficient links in payments and cross-border remittances.

The circulation scale exceeded $220 billion - USDT (tether.to) and USDC (circle.com) dominate global crypto payment transactions.

Payment and remittance - Applications such as Strike (strike.me) use stablecoins to achieve instant cross-border transfers with almost zero handling fees, greatly reducing international payment costs.

Traditional Finance (TradFi) adopts - Coinbase connects TradFi and DeFi through Base, PayPal launched PYUSD, and major banks are also exploring the application of tokenized deposits.

Better payment network - SpaceX uses USDC to process payments for Starlink customers, especially in countries with large currency fluctuations, to avoid foreign exchange risks through stable currencies and optimize payment processes.

Reason for growth: Stablecoins provide faster, cheaper and more efficient ways to transfer funds, which has natural advantages compared to traditional banking systems. Ultimately, users may not be aware of which payment network they are using, but stablecoins will undoubtedly replace traditional, slow and inefficient payment infrastructure.

4. DeFi: The cornerstone of on-chain finance

Despite the security breaches and market volatility, the DeFi protocol remains the core pillar of on-chain finance and continues to grow. I always believe in the huge advantages of DeFi in permissionless, decentralized and equitable financial services.

On-chain borrowing - Aave, Compound and other agreements provide instant, licenseless credit markets without the intervention of traditional financial institutions.

Automated Market Maker (AMM) - Decentralized trading protocols such as Uniswap and Curve handle billions of dollars in transactions every day without intermediary, improving market liquidity.

Real-world Assets (RWA) Tokenization - Ondo Finance and Maple Finance introduce traditional financial assets to the chain to achieve more efficient financial infrastructure.

Reason for growth: DeFi has a faster, more efficient, globally accessible financial system, while providing higher yields than traditional banks. Composable Money makes capital flow more flexible, promotes the continuous emergence of innovative financial models, and can also integrate with existing financial concepts to create new growth points.

5. Real-world Assets (RWA) Tokenization: the future adopted by

institutions

RWA is one of the areas of interest to institutions. Major financial institutions are actively tokenizing assets such as bonds, real estate and credit raising to promote the migration of traditional finance to the chain.

Centrifuge (centrifuge.io) and other companies tokenize debt instruments, lowering financing thresholds, and making capital easier to obtain.

Fragmented ownership - Relevant platforms allow users to hold real-world assets such as real estate based on their share, lowering investment thresholds, and improving market liquidity.

Collectibles, as a platform such as RWA - Courtyard.io, support physical asset custody, tokenization and transaction, making the collectibles market more transparent and tradable.

Reason for growth: Introducing traditional financial assets into the chain makes the capital market more liquid, efficient and transparent, creating new opportunities for institutional investors.

6. Memecoins: Turn speculation into "function"

Despite its criticism, Memecoins is the most lasting speculative asset in the crypto market and continues to attract capital and attention.

The rise of hot tokens - Memecoins such as PEPE, DOGE, SHIBA have market value of billions of dollars, and even thousands of new Meme tokens emerge every day.

Trading volumes surpass "serious" Tokens - In some periods, Memecoins' trading volumes exceeded mainstream crypto assets, and even the president and his team were involved to boost market sentiment.

Reason for growth: Speculation is human instinct, and Memecoins cleverly combines viral transmission, cultural resonance and "gambling" trading experience to make the crypto market more entertaining. "Meme Token" and "Meme Infrastructure" will continue to rise and fall in the market and become an important part of the ecosystem.

7. Digital product passports (DPPs) and product tokenization

Luxury brands and businesses are leveraging blockchain-based verification systems to improve product authenticity and supply chain transparency.

DPP as a Service (DPPasS) ——Arianee, Crossmint and other platforms are promoting the development of DPP solutions, and there are also multiple non-blockchain DPP service platforms (DPaS) joining the competition.

Luxury brands lead the trend - luxury brands such as LVMH, Prada, Breitling, and Cartier have taken the lead in adopting DPP technology and pushed the entire high-end consumer goods industry to move closer to blockchain verification.

EU regulation drives mass adoption – EU’s DPP regulatory framework is an important driver of growth in this sector. However, if the EU relaxes regulation, the process may be delayed. However, no matter how the regulation changes, blockchain is still an ideal technical support for product passports (DPP) in multiple scenarios such as authenticity verification and traceability.

Reason for growth: Businesses need transparent, anti-counterfeiting product tracking systems, and upcoming regulations (such as the EU's DPP program) are accelerating adoption (adoption) of this trend.

8. Still-existing problem areas

While some areas of the crypto industry have proven their value, there are still some tracks in uncertainty, overhype or early experimental stages. These areas face technical, regulatory or adoption challenges, and it is still difficult to achieve large-scale popularization until these problems are solved.

DAO (Decentralized Autonomous Organization) — Low governance participation, inefficient decision-making, and chaotic fund management are still the main pain points of DAO. Although DAOs such as ENS and Gitcoin operate well, most DAOs still have difficulty finding a balance between decentralization and governance efficiency. I am optimistic about the combination of AI and DAO as a possible solution – ironically, DAO may need AI to truly demonstrate its value and even expose the true nature of decentralized governance.

AI & Crypto - In addition to speculation, the current practical application cases of AI + encryption are still limited. Although decentralized AI projects such as Bittensor and Render Network are interesting, they are still niche tracks, and most AI token adoption still stays in low-value-added applications such as Meme AI robots. The intersection of AI and encryption still requires breakthrough practical use cases to truly explode.

Gaming & Metaverse - Web3 games have not fulfilled their promises, the Play-to-Earn mode has almost disappeared, and the integration of blockchain has actually reduced the gaming experience. The hype of the metaverse has cooled down, and the failures of some high-profile projects (such as Meta's strategic transformation of VR and the stagnation of Decentraland) show that users are not willing to enter the virtual world just for the "meta". However, I still look forward to the development of AR (Augmented Reality) glasses, which may bring a hybrid "meta-meta universe" experience to promote a new round of industry exploration.

9. Final thought: What is the next step?

As the crypto industry continues to evolve, the next round of growth is likely to be driven by major technological breakthroughs, regulatory changes and emerging narratives. Here are some thoughts on the future...

On-Chain Finance will further expand - stablecoins are still growing rapidly, and RWA tokenization will integrate traditional capital markets and DeFi, which is expected to attract trillions of dollars of institutional capital inflows. The key issue is the speed of regulatory progress, which will determine whether this change can be truly implemented.

Bitcoin’s role will change – as ETFs attract institutional investment, Bitcoin may gradually erode the share of the global digital reserve asset market, or it may still be just a store of value that lacks scalability, being more functional. Blockchain replaced.

Pledged ETH ETFs Will Subvert Traditional Finance (TradFi) — Once ETFs that support pledged income go online, Ethereum may become the first cryptocurrency to be regarded as a "yield-based asset", changing the portfolio structure and posing a direct challenge to the bond market .

Identity authentication will become a key area – With the explosive growth of deep fakes, fraud and robotic activity in AI, encrypted native identity solutions (zero knowledge proof, WorldCoin, DID standards) will either receive wide adoption (adoption) or become a regulatory nightmare. If the latter happens, we may become a "digital puppet" of AI or governments and enterprises.

Tokenized products & consumer adoption (adoption) —— Can NFT break through the attributes of collectibles and integrate them into real business scenarios? If brands and enterprises can successfully integrate DPP (digital product passport) and create sufficient value for users, blockchain may quietly become the infrastructure in the retail e-commerce field.

Memecoins and speculation won’t go away – Despite its controversy, Memecoins proves the nature of crypto markets: speculation, community-driven, and viral narrative. In the future, they may evolve into new social finance, or they may just be an endless cycle of hype. But no matter what, I won't bet on the failure of the casino easily.

The next few years will determine whether cryptocurrencies are fully integrated into the global financial system or continue to exist as a "niche market" with high risks and high returns. In the next cycle, which narratives will dominate? The answer is still being written.