Dragonfly Partner: Six Predictions for the Cryptocurrency Industry in 2025

Original Author: Haseeb>|<, Dragonfly Partner

Original Translation: Deep Tide TechFlow

These predictions will either make me look like a prophet or make me seem very ignorant, but one thing is for sure, my opinions may not sit well with many "hodlers."

I will divide the predictions into six parts: L1 and L2, Token Issuance, Stablecoins, Regulation, "AI Agent," and the Integration of Cryptography and AI.

The Future Trends of L1 and L2

The boundary between L1 and L2 is becoming increasingly blurred. Users are no longer paying attention to the distinction between the two (in fact, they may have never truly cared). The current blockchain ecosystem, including L1 and L2, has become overly crowded, and the future will usher in a round of consolidation. The key to this consolidation is not technological superiority but finding a unique market position and establishing user stickiness through effective Go-To-Market (GTM) strategies.

Although SVM and Move technologies have shown strong performance, EVM's market share will continue to grow in 2025. This is mainly due to projects such as @base, @monad_xyz, and @berachain driving this growth. The expansion is no longer due to compatibility but because EVM and Solidity have rich training data. In 2025, Large Language Models (LLMs) will dominate the writing of application code, and EVM has already accumulated a large, validated library of cryptographic contracts, which will be a significant advantage.

Solana's low-latency performance will drive more blockchain optimization for response times. The blockchain industry will shift from "transactions per second (TPS)" competition to "latency time" competition—infrastructures like @doublezero and ultra-low latency L2 solutions (such as @megaeth_labs) will push users' expectations of blockchain experience closer to Web2 response times. We will see more application trends related to Optimistic UI, pre-approvals, intent expressions, email registration, in-browser wallets, and progressive security. Special thanks to @privy for driving innovation in this area.

@HyperliquidX has proven that focusing on application-specific dedicated chains, especially emphasizing user experience and cross-chain operability convenience, is a viable model. In the future, more projects will replicate this model, and the idea of "one chain ruling them all" has become a thing of the past.

The New Trend of Token Issuance

The current model of large-scale airdrops through reward programs has come to an end. In the future, there will be two main token distribution models:

· For projects with clear core metrics (such as exchanges or lending protocols), they will rely entirely on points-based token distribution. These projects do not mind whether they will be "farmed" or "gamed" because the token distribution essentially serves as a feedback or discount mechanism based on core metrics, and those who are so-called airdropped are, in a sense, their real users.

· For projects without clear core metrics (such as L1 and L2), they will lean more towards fundraising sales. There may be small-scale airdrops to reward social contributions, but most of the tokens will be distributed through fundraising. Airdrops done for vanity metrics are outdated because these tokens do not truly flow to users but instead to professional airdrop hunters.

Furthermore, the market share of Memecoins will gradually be replaced by "AI Agent" themed tokens. This change can be seen as a shift from "financial nihilism" to "financial hyper-optimism."

The Explosive Growth of Stablecoins

The usage of stablecoins is set to experience explosive growth in 2025, particularly among Small and Medium-sized Businesses (SMBs). Their use cases will no longer be limited to trading and speculation, as more businesses will use on-chain dollars for instant settlements.

Banks are also taking notice of this trend: it is expected that by the end of 2025, some banks will announce the issuance of their own stablecoins to avoid being left behind in the industry. However, under Lutnick's tenure as Secretary of Commerce, Tether will still maintain its dominant position in the market.

Meanwhile, @ethena_labs is expected to attract more capital, especially as government bond yields continue to decline over the next year. When the opportunity cost of capital is reduced, the returns from basis trading will become even more attractive.

Regulation

In 2025, the United States is expected to enact stablecoin-related legislation, while broader market infrastructure reforms (such as the FIT21 Act) may be delayed. The adoption rate of stablecoins will significantly accelerate, but Wall Street's crypto integration, asset tokenization, and progress in Traditional Finance (TradFi) may lag behind.

Under the leadership of the Trump administration, Fortune 100 companies may be more actively providing crypto services to consumers, while tech companies and startups may show a higher risk tolerance. Trump's inauguration may bring about a brief "regulatory vacuum period," during which the market will have a more relaxed attitude towards the integration of crypto technology due to a lack of clear rules and enforcement priorities. It is expected that during this window of opportunity, crypto technology will see a widespread application expansion on Web2 platforms.

AI Agent

(This section is longer as my views may be controversial—please read patiently!)

The trend of "AI Agents" is expected to span throughout the entire year 2025 but will eventually fade away. This is not due to the true long-term disruption brought by AI but rather because of its social attributes, making it a focal point of the Crypto Twitter (CT) community.

The current "AI Agents" are not truly intelligent beings. They are, in fact, chatbots with a Memecoin attached, with minimal autonomy beyond posting on Twitter. Furthermore, existing "AI Agents" are mostly "Wizard of Oz" models—backed by humans behind the scenes to ensure the AI does not err. This situation is unlikely to change in the near term as current AI technology still faces numerous issues (even Fortune 100 companies have yet to deploy agents in production). For instance, these agents are easily manipulated, susceptible to making inappropriate statements that could tarnish a brand's image, or be hacked to exploit their resources. Genuine autonomous AI can be seen in the case of @freysa_ai—if an AI has not been hacked, it's likely due to human intervention.

Nevertheless, I believe this trend will continue to accelerate. Chatbots do have the potential to replace many internet personalities as they do not need rest, maintain consistent messaging, and are more "cost-effective" than humans. Additionally, most internet personalities are not particularly known for their originality. The real-time collection and dissemination of information can already be easily achieved through algorithms (e.g., @aixbt_agent).

Currently, these chatbots feel novel because their concept is so unique, akin to seeing an elephant painting. The first time you see it, you may not care much about how well it paints because the process itself is awe-inspiring. However, after a thousand times, this novelty will gradually fade. I believe this will happen as chatbot technology matures and stabilizes.

Take aixbt, for example; it is now quite proficient at aggregating data from different projects. By next year, with the advent of the next generation of agents, aixbt may reduce misinformation (i.e., "hallucinations"), delve deeper into analyses, and provide more insightful perspectives. But for most users, these enhancements may not seem particularly significant or even notably different from now.

I believe this novelty and market enthusiasm will persist throughout the year 2025, as the crypto industry tends to maintain interest in novelty for extended periods. However, in 2026, I anticipate a shift: chatbots become oversaturated, leading users to grow weary of them. A backlash may occur. As users witness human Key Opinion Leaders (KOLs) they admire losing ground due to chatbot competition, a sense of "class consciousness" may emerge. Users may gradually lean towards supporting human KOLs, even if the quality and consistency of their content may not match that of chatbots.

In order to address this preference for human-like content, future chatbots may hide their AI identity, attempting to disguise themselves as humans to compete for a larger share of the attention market. Unlike the current reliance on Memecoin monetization, future chatbots may adopt a profit model similar to human Key Opinion Leaders (KOLs), such as through sponsorships, affiliate links, and promoting their own held Tokens. At that time, incidents where KOLs are accused of being chatbots may occur frequently, and scandals of AI identity disclosure may even arise. This trend may become very complex and bizarre.

However, behind this there is an even darker trend. Currently, Large Language Models (LLMs) excel in text processing, but they are not yet mature in other areas. In the crypto field, one of the easiest ways for text ability to monetize is to become an influencer, while another is to become a scammer. In the future, with technological advancement, we may see a surge of autonomous scammer bots (scambots). This situation may become a serious societal issue, similar to the outbreak of ransomware and cryptojacking after 2017.

Although chatbots may still be a focal point in 2025, the long-term disruptive impact of AI will not be seen at the social level.

Likewise, AI's long-term impact will not be seen in the trading realm. AI will not enable everyone to have a "trading intelligence" or mini hedge fund. While AI can indeed enhance individual capabilities, this enhancement is proportional to the user's capital, data, and infrastructure. Therefore, we can expect AI to further strengthen existing large trading firms, as they have greater capital and data advantages. In other words, large trading firms will become more adept at making profits. Additionally, AI will narrow the technological gap between trading firms, as all companies can use "cloud-based advanced quant tools."

Over time, AI will make the market extremely efficient—even in some niche markets. This will leave ordinary traders with hardly any advantage, even if they have homemade AI assistants. The value of original research will therefore plummet. However, for regular users, increased market competition and liquidity might be good news, meaning more trading opportunities and a more active market. (For example, @Polymarket could achieve higher liquidity across all domains!)

If the future buzz is not chatbots or trading bots, then what else is there to look forward to? Here are my key points, even though almost no one is currently mentioning it: AI Agents that truly have a disruptive impact will emerge in the software engineering field.

Why is this point so important? Let's ask ourselves: What is the most important input in our industry? What expensive resource limits the emergence of more applications, wallets, and higher quality infrastructure? The answer is software. If an AI Agent can significantly reduce the cost of software development, it will change the entire industry landscape.

In the post-AI era, seed funding may no longer require raising millions of dollars. Just spending $10,000 on AI cloud computing costs, you can launch an application. Self-funded projects like Hyperliquid and Jupiter will shift from rare exceptions to mainstream. On-chain application development and innovation attempts will see explosive growth. For a software-driven industry, this cost reduction impact will trigger an innovation wave in the blockchain space.

This change will also have a profound impact on security. AI-driven static analysis and monitoring tools will become ubiquitous, making security more widespread. These AIs will be optimized for codebases like EVM/Solidity or Rust and trained on a large number of security audit and attack case databases. They will also enhance their capabilities through reinforcement learning (RL) in simulated adversarial blockchain environments. I increasingly believe that, in terms of security, AI tools will ultimately be more favorable to defenders than attackers. AI will continue to conduct "red team testing" on smart contracts, while other AIs will focus on strengthening contracts, formally verifying their properties, and enhancing incident response and remediation capabilities.

At the same time, while you can continue to trade those meme coins with an AI twist, real intelligent entities will be much more than tweeting and hyping tokens, their impact will be more profound.

True Crypto x AI

Above, we mainly discussed the impact of AI on the crypto industry (which is the main direction of impact), but cryptographic technology will also have a reciprocal effect on AI.

In the future, true autonomous intelligent agents may use cryptocurrency for peer-to-peer payments. Once the regulatory policies around stablecoins become more lenient, this trend will become more pronounced—even large companies running AI Agents may choose to use stablecoins for inter-agent payments, as this method is more convenient than traditional bank accounts.

Furthermore, we will see more large-scale experiments around decentralized training and inference. Some emerging projects, such as @exolabs, @NousResearch, and @PrimeIntellect, will provide true alternatives to centralized training and proprietary models. @NEARProtocol is also working tirelessly to build a trusted, neutral, and permissionless full AI tech stack.

Another intersection of Crypto and AI is in User Experience (UX). Post-AI era wallets will undergo a complete overhaul—a wallet driven by AI will be able to automatically handle cross-chain bridging, optimize transaction paths, minimize fees, solve interoperability issues or front-end bugs, and help users avoid obvious scams or rug pulls. Users will no longer need to switch between multiple wallets, change RPC, or rebalance stablecoins—AI will do it all automatically. This transformation may not be mature enough until 2026, fundamentally changing the user experience of the crypto industry. But when all this is in place, what impact will it have on the network effects of blockchain? What will happen when users no longer care which chain an application runs on, or may not even notice?

This field is still in its early stages, but I am excited about its future and hope to see it truly take off soon. In the long run (e.g., by the mid-2020s), I believe that most of the market value in the "AI x Crypto" field will be concentrated in this direction.

Those are all my predictions. I promised to complete this article before reaching 100,000 followers, and although I'm a bit late, I managed to finish it just before the new year!

Happy New Year, everyone! Hopefully by this time next year, I'll have been replaced by AI and officially "unemployed"!

Disclaimer: The content of this article is solely my personal opinion and does not represent Dragonfly's stance; Dragonfly has investments in many of the projects mentioned in the article. This article is not financial advice; please do your research (DYOR). As for whether I am an AI? I'll leave that question for you to judge.

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