When we mention that we do blockchain research, people often ask us questions like "What should I buy?" or "Which investments look promising?" In reality, researchers are professionals who analyze blockchain technology and market trends, not investment advisors, so we tend to be hesitant about answering such questions. However, since Four Pillars researchers are both researchers and active traders, we thought that instead of giving "investment advice," it would be much healthier and more productive to share our portfolio compositions and explain why we purchased these assets.
So, what assets do Four Pillars researchers - who spend their days doing nothing but blockchain research and content creation - hold, and what are their reasons for buying and holding these assets?
Before diving into individual reasons, we have visualized the overall portfolio of Four Pillars researchers as shown below.
Looking at the figure above, you can see that the researchers' portfolios are distributed across a diverse range of sectors and ecosystems. Let's now examine one by one why each of these researchers invested in their respective assets and how they view the future potential of these investments.
Featured Project/Token: Sui(@SuiNetwork, $SUI), Injective(Injective, $INJ), Jito(@jito_sol, $JTO), Ethena(@ethena_labs , $ENA), Azuki(@Azuki, #Azuki), Rootlets(@rootlets_nft, #Rootlet), Kumo(@Kumo_TheKat, #Kumo)
2.1.1 The Smart Contract Platform Market Is Not Winner-Takes-All
In May 2023, when Four Pillars was first established, new Layer 1 chains that once seemed poised to challenge Ethereum's position had collapsed miserably following the Terra Collapse and FTX Incident, while Ethereum's dominance effectively ruled the market. Nevertheless, I was confident that Ethereum's dominance would fall to the 30% range in the next bull market because 1) more people would enter the crypto market in the next cycle compared to the previous one, 2) as more people enter, they would bring more diverse values and perspectives, and 3) Ethereum cannot cater to everyone's preferences and tastes. While the ecosystem built around Ethereum prioritizes "decentralization philosophy" above all, I focused on the point that for true "mass adoption," crypto should be accessible even to those who don't consider decentralization as the ultimate value.
Of course, while blockchain technology inherently requires 'some degree of decentralization,' I believed that not everyone would need the same level of decentralization as Ethereum provides. Rather, I thought other values might become more prominent than decentralization, and this 'diversity of values' would create steady demand for chains other than Ethereum. Indeed, Ethereum's dominance has been consistently declining compared to 2023, fluctuating between 20-30% (398.5B/1.35T as of January 9, 2025).
I believe the biggest issue with the Ethereum ecosystem wasn't the technology, but rather the hubris and arrogance that "everything must converge to Ethereum." In a way, this attitude completely contradicted the decentralization they advocate for. The open world that blockchain aims to create will never flow according to any particular group's intentions or thoughts. Therefore, I think there's virtually no possibility that the smart contract platform sector will become winner-takes-all in the future. Given that anyone can create a new Layer 1, new innovations can emerge at any time, and as more people become familiar with blockchain over time, the difficulties in using new blockchains will decrease, the smart contract platform market will likely continue its infinite competition. Of course, this doesn't mean we'll return to the era of random blockchain creation; while fewer blockchains will compete than before, we expect to see continuous emergence of new frameworks and platforms, or existing top blockchains constantly improving their infrastructure.
In this sense, new blockchain frameworks and technologies are always of interest to me, and my interest in Sui, which was at the forefront of "new infrastructure technology," will continue into 2025. Additionally, I believe blockchains like Solana and Injective that are building their unique ecosystems by leveraging their respective strengths (in Solana's case, its overwhelming community and scalability comparable to Sui, and for Injective, its fast speed along with flexible business scalability and unique tokenomics) will definitely receive greater market attention someday.
2.1.2 Already Market-Proven, Yet More Advanced
Source: X (@leptokurtic_)
When someone asks me "What PMF (Product Market Fit) has blockchain validated?" I always point to exchanges, stablecoins, and validators. While finding market potential for new, unproven products is important, I believe that advancing existing proven market opportunities is also an attractive investment bet. From this perspective, I see the stablecoin sector as still having a lot of potential, and if well-designed, there could be significant demand. Since Terra has already proven that there is demand for crypto-native stablecoins beyond Tether and USDC, I believed there would be market potential for products that operate differently from existing stablecoins while avoiding Terra's mistakes.
A prime example of this is Ethena. Ethena succeeded in attracting people with high interest rates derived from funding fees while maintaining a fundamentally different structure from existing stablecoins like Tether and USDC. Furthermore, Ethena increased the utility of their stablecoin USDe by creating environments where people need to use USDe beyond just "high interest" (launching USDe pairs on Bybit is a notable example). Of course, since interest is covered by funding fees, it will be difficult to maintain high interest rates in a bear market, but Ethena is trying to minimize risks from market volatility by creating various products (such as USDtb) besides USDe, considering these risks.
Beyond Ethena, I generally view favorably most attempts to create products in an original way from the three businesses I mentioned above (excluding validators) that can be productized. While I haven't invested in it, Hyperliquid is in a position where we can consistently expect good things from it in the same context.
2.1.3 The Real Community
Few words are as overused in Web3 as "community." While all projects claim to "serve the community," in most cases, the community is merely their "liquidity exit" or a "requirement for listing." It's pretense. And now, most retail investors know that many projects only superficially care about their community.
I'm not criticizing initial airdrops. Airdrops are indeed very useful tools for building initial communities. However, airdrops are just the beginning, and a community can only be sustained when users who join through them feel value beyond just the tokens. While blockchain is similar to nations in many ways, it aligns more closely with religion in that it lacks enforcement power. Beyond incentives, what binds people together without coercion is a compelling story and narrative. This is why Ethereum and Solana have strong and somewhat fanatical communities (because they collapsed and revived through the DAO hack and FTX incident, respectively).
Among NFT projects, there's one with such a "narrative" - Azuki. While Azuki's start was tremendously successful, over the past three years of operating NFTs, Azuki and Zagabond have faced various trials and tribulations (refer to Four Pillars Ponyo's Zagabond story for details). Because they overcame all these challenges to build today's community, the Azuki community has been able to maintain an extremely solid base. Thus, a community isn't built just by throwing money at it. People need to feel a sense of belonging beyond incentives through "shared experiences." In this regard, I'm very positive about the sustainability of projects that have built such communities, and I believe projects with solid community bases will continue to perform well in this industry. Because while technology can be forked, communities cannot.
Featured Project/Token: Solana(@solana, $SOL), Sui(@SuiNetwork, $SUI), Jito(@jito_sol, $JTO), Ondo Finance(@OndoFinance, $ONDO), Ethena(@ethena_labs , $ENA), Send(@thesendcoin, $SEND), SOON Girl(SOONGirl_, $SOONGIRL), MadLads(@MadLads, #MadLads), Kumo(@Kumo_TheKat, #Kumo), SOON(@soon_svm, #SOON)
2.2.1 Beyond EVM
The year 2024 marked a significant milestone for the growth of non-EVM ecosystems.
For Solana, represented by its SVM, several DeFi projects and consumer applications, such as Pump.fun, Photon, and Daos.fun, delivered performance that not only rivaled but in some cases surpassed projects within the Ethereum ecosystem. Notably, in the stablecoin payment sector, Solana successfully integrated with major companies like Visa and Shopify, substantially raising expectations for mainstream adoption.
Meanwhile, Sui, with its Move on SUI, bolstered its ecosystem and created groundbreaking technical innovations like the introduction of Mysticeti, which enables extreme latency reduction. Additionally, the announcement of handheld device such as SuiPlay0X1, designed to highlight Sui's concentrated technological prowess to retail users, signaled the start of explosive gaming ecosystem growth.
Beyond these, there is a clear trend of ecosystems stepping away from EVM to develop or combine their own unique virtual machines (VMs), creating tailored ecosystems.
While it is undeniable that Ethereum, as the first smart contract platform, has led the industry and served as the starting point for many ideas, my optimism for the expansion of non-EVM networks over the Ethereum ecosystem lies in the inherent shortcomings of EVM, which has developed without a clear and consistent mission, leaving much room for improvement.
We are now seeing the rise of diverse VMs, enabling innovations that go beyond what the EVM ecosystem can offer. Ultimately, the diversity and quality of applications will hinge on the advancement of sophisticated VMs, with the key challenge being how to leverage the strengths of each VM to build full-stack applications optimized for their specific purposes.
Looking ahead, 2025 promises to be a year of even greater growth for non-EVM infrastructure and the diverse ways these infrastructures will be combined to meet evolving demands.
2.2.2 RWA Projects That Truly Understand the Dynamics of Web2 and Web3
What is the greatest utility of blockchain? I believe it lies in its ability to tokenize all types of assets. Tokenization enables any asset to become liquid, offering numerous advantages such as improved capital efficiency and accessibility, agile infrastructure, automation through smart contracts, enhanced compliance, and transparency. Even the long-standing challenge of mass adoption in the crypto industry fundamentally begins with the mechanisms of tokenization.
However, despite countless projects attempting to tokenize various assets over the years, we have seen very few cases of successful adoption. This is primarily because these projects failed to present a compelling value flow that clearly demonstrates the benefits of tokenization. As interest from traditional industries toward the crypto space continues to grow, the projects most likely to gain attention in the future will be those that effectively implement tokenization.
Source: How Ondo Finance Is Redefining Tokenization to Lead the RWA Market
Take Ondo Finance, a leader in the RWA sector, as an example. Ondo doesn’t merely tokenize U.S. Treasury products on the blockchain networks but also builds partnerships across Web2 and Web3 ecosystems to achieve two key goals: 1) ensuring institutional-grade investor protection for assets, and 2) maximizing utility by facilitating interactions with various protocols. This approach aims to deliver products that create tangible value for both Web2 and Web3 investors.
Projects that deeply understand the characteristics of both off-chain and on-chain domains, leveraging this understanding to meaningfully expand each space and create new synergies, are poised to draw increasing attention in the coming years.
2.2.3 Projects Delivering REAL Benefits to the Community
The launch of Hyperliquid was nothing short of groundbreaking. Without relying on external funding, the team shouldered all development resources internally, growing alongside its community. Despite circulating approximately half of the 70% of total token issuance allocated to the ecosystem at TGE, the project surpassed an FDV of $10 billion within just one week.
The subsequent surge in token prices created a fervent response, resembling a protest against conventional practices. This reaction emphasized the growing importance of community-friendly initiatives in the industry.
So, what defines a community-friendly project? Simply put, it’s a project that provides substantial value to its community. From my perspective, this value can be delivered through two main avenues: economic and cultural benefits.
Let’s first examine the economic aspect. Given the Web3 ecosystem's heightened sensitivity to incentives, projects have long been exploring various mechanisms to sustain their token-holder communities and encourage ongoing participation. As I discussed in my previous article, these economic incentives have historically been delivered in two ways: direct revenue sharing with token holders or indirect methods, such as increasing the value of native tokens through airdrops, buybacks, burns, or DAO treasury allocations.
Recently, however, more sophisticated and community-oriented strategies have emerged. For instance, projects are increasingly offering investment opportunities to the public during early stages at low valuations, fostering a mutually beneficial value flow with their communities. Examples include Legion, Echo, and others. Projects employing such refined strategies to carefully design their relationship with the community are likely to attract significant attention right from their initial launch phases.
While economic incentives effectively attract users in an outbound manner, cultural benefits focus on instilling a sense of belonging to the protocol. They aim to establish and unify the community’s identity. This process, akin to how religious communities unite under a shared ethos, serves as a powerful driver for maintaining momentum and pursuing innovative and ambitious initiatives.
To achieve this, projects must go beyond creating online slogans or sharing memes. They should host a variety of events, both large and small, that transcend borders, actively fostering meaningful interactions among members. Additionally, they need to create an environment that empowers community members to independently organize activities that strengthen their bonds. This proactive approach will be essential and effective for shaping cohesive and enduring communities in the long term rather than just imposing nonspontaneous activities for one-time-airdropping stuffs.
Featured Project/Token: Ethena(@ethena_labs, $ENA), LayerZero(@LayerZero_Core, $ZRO), Morpho(@MorphoLabs, $MORPHO), Ondo Finance(@OndoFinance, $ONDO), Uniswap(@Uniswap, $UNI)
I'm in crypto for the long game—not just 2-3 years, but rather a decade or more. DeFi is what I believe is the very core of crypto. Without DeFi, blockchain will remain limited to a niche audience. Most of the people are in crypto to make money, and to earn higher yields from their assets, not to mention the benefit self-custody. All activities stem from financial participation. That's why I focus on and hold projects that are building better DeFi services.
DeFi's history is brief but has evolved in a fast pace. It gained momentum with on-chain trading through AMMs, followed by other primitives like lending and perpetual futures. Various mechanisms were tested for each primitives, particularly in on-chain swaps where both AMM and orderbook-based DEXs explored different designs. Now, as successful primitives like DEXs, perpetual DEXs, and lending protocols achieve consistent volume, they're entering a phase of expansion to capture more value.
This explains my focus on DeFi infra. Given crypto's open and permissionless nature, it's natural for projects to expand their infra to capture more value. While DeFi apps were once just smart contracts, this perception is shifting. These apps are expanding their infrastructure to address value leakage from issues like transaction sequencing limitations and high gas fees. With new tools like Rollup Framework, Application Specific Sequencing (ASS), and Interop frameworks, building this infrastructure has become more accessible.
Let's look into how I think this is evolving, and which projects I think are leading the way.
Source: Application Activity | Artemis Terminal
2.3.1 DeFi Money Lego is Getting Fatter (Feat. Morpho, Ethena)
Money Legos in crypto refers to the concept of composability in DeFi. This term describes how different DeFi protocols can be combined to create more complex financial products. Prominent example could be a cross-chain swap aggregators like LI.FI. LI.FI allows users to swap or bridge tokens from 15+ DEX and 20+ bridges in a single interface. This wouldn’t be possible if the swap and bridge infrastructure restricted access, this was possible due to the open nature of smart contract DeFi dapps.
The ability to mix and match different DeFi building blocks enables protocols to create tailored solutions that address specific market needs while leveraging the strengths of multiple platforms. This is illustrated in the recent collaboration between Morpho($MORPHO), Maker($MKR), Spark, and Ethena($ENA). Where Morpho's infrastructure (Morpho Blue & MetaMorpho) serves as the foundation, allowing Spark to allocate Maker's liquidity to gain yields of Ethena's sUSDe. These collaboration highlights how composability allows the creation of financial instruments that would be difficult or impossible to achieve in traditional finance.
With established DeFi protocols building strong track records and simpler integrations, the trend toward composability between DeFi protocols will accelerate. Protocols such as Morpho($MORPHO), which offers customizable lending infrastructure, and Ethena, which offers the highest stablecoin yields, will lead this integration across protocols and DAOs.
Source: DeFi Value Flows: Understanding DeFi Business Models and Revenues | by Aw Kai Shin
2.3.2 DeFi Infra is Getting Fatter (Feat. Uniswap, Ethena, LayerZero)
In 2022, Dan Elitzer, wrote about the inevitability of Unichain which he said stemed from the current inefficiencies and value leakage in the existing DEX system. As it is stated in the article, Uniswap($UNI) traders face three main costs: swap fees paid to liquidity providers, transaction fees paid to Ethereum validators, and MEV costs.
As Uniswap has announced its own Layer 2 in 2024, Unichain has come to a real thing. This Layer 2 is designed to address key challenges, particularly those related to execution quality, user experience, and liquidity fragmentation. This positions Unichain to capture more values from their userbase and add utilities for their $UNI token. Not just Uniswap, but other DeFi protocols have also announced their own Layer 2s - Fraxtal by Frax Finance, Swellchain by Swell Protocol, Worchain by Wordcoin, Zero Network by Zerion, etc.
What is unique about crypto infra is that no entity can control the "value flow." Each participant can build or expand their infra to maximize the value they can capture. In the traditional business, how the value is captured by others or how much values that can be captured more by expanding are very vague. Not much public information is disclosed. However, in crypto it is different. Protocols can assert their sovereignty, and this market changes by the supply and demand.
Two protocols that I think are capturing the most value in this trend are Ethena and LayerZero. Ethena has grown from $0 TVL to $6 billion in a year and has been the most successful DeFi project in this cycle. They are now preparing to launch their own network to add more utilities to their ENA token and build an ecosystem for their crypto dollar USDe. As they launch their network and expand their token deployment with OFT, a token framework by LayerZero, they’re revenue will start to increas more. Additionally, while DeFi protocols are expanding their infrastructure by building their own rollups, chains, or deploying to new chains, having the most secure connectivity is also essential. In this trend, LayerZero ($ZRO) is best positioned to provide the best infra.
2.3.3 DeFi Is Getting Fatter with TradFi (Feat. Ondo, Ethena)
In the past, the users of crypto were just limited to anti-government people and degen traders. However, as the ease of managing assets and use cases from DeFi became apparent, TradFi is also entering crypto. Two major TradFi groups are approaching the DeFi ecosystem.
First are the fintech companies, which have been pushing the boundaries of conventional finance within regulatory boundary. The proliferation of fintech is relatively recent—before 2010, payments were largely limited to bank transfers and cash. The mobile era drove rapid development, with companies like Stripe, Robinhood, and Revolut emerging to provide better service for payment, trading, and asset management. While DeFi protocols similarly aim to improve the financial system—albeit outside regulatory boundaries— the experimental spirit of fintech companies' are making them to get involved in crypto. Notable examples include the launch of PayPal's stablecoin, PYUSD in the Solana ecosystem, now reaching $500M TVL, and Stripe's $1.1 billion acquisition of bridge.xyz. This convergence between DeFi and Fintech is accelerating as Robinhood prepares to launch a stablecoin and Revolut is participating in DeFi activities.
Second, traditional financial institutions like BlackRock and JP Morgan are exploring the crypto ecosystem. After witnessing Tether, a stablecoin issuer, generate $5.2 billion in 2024 H1—compared to BlackRock's net income of$3.126 billion for H1 2024—these institutions are seeking their share of opportunities. Notably, BlackRock has launched its own stablecoin, $BUIDL, which pays treasury yields. Crypto-native protocols like Ondo Finance ($ONDO) are working closely with financial institutions within regulatory boundaries, while protocols like Ethena have integrated with BUIDL to provide broader access to treasury yields for on-chain users. With lower regulatory hurdles expected and as stablecoin market is set to grow more, the convergence of DeFi and TradFi will accelerate.
Featured Projects/Coins: Pengu (@PudgyPenguins, $PENGU), Abstract (@AbstractChain, $ABS), MegaETH (@megaeth_labs)
2.4.1 Speculation as a Product and the Rise of Consumer Applications
2025 is expected to be a breakthrough year for consumer applications in the crypto space. Historically, crypto has always evolved through a familiar pattern: it starts with early adopters (degens) before gradually expanding to reach broader audiences. We've seen this pattern play out with Bitcoin, stablecoins, and DeFi. Now, it's consumer applications' turn to take center stage.
For crypto to evolve beyond being just a competitive space where experienced traders try to outmaneuver each other, it needs to expand its reach and attract new users and capital to grow the overall ecosystem. This evolution is likely to come through more accessible applications that leverage crypto's unique advantages - including memes, social features, NFTs, and games - which are expected to gain renewed attention, but in more mature and sophisticated ways compared to the previous cycles.
It's promising to see the industry's shift towards developing products that focus on user acquisition and engagement, whether through memes, NFTs, or AI applications. We're seeing a new wave of applications that effectively capitalize on crypto's distinct advantages while creating unique user experiences. Importantly, the space has evolved beyond its origins as a niche domain exclusively for enthusiasts focused on decentralization ethos or technical development.
Memes, AI agents, and DeSci projects that began gaining traction in 2024 can be seen as examples of speculation evolving into distinct categories. Users who initially enter the space due to speculative interests often find themselves exploring broader crypto use cases like DeFi, stablecoin payments, and prediction markets.
The market conditions are particularly ripe for mainstream consumer applications in crypto. The user experience has evolved significantly: crypto wallets are now much more intuitive and seamless, mobile accessibility has improved dramatically, and previous technical barriers around scalability have been largely resolved. These improvements have brought the user experience much closer to what people expect from traditional financial services.
With the broader market sentiment being highly positive, we're likely to see sustained growth in user adoption as the market cycle progresses toward its peak. Moreover, the potential shift toward more crypto-friendly regulations under a Trump administration could create a more favorable regulatory environment, beginning in the United States but potentially catalyzing positive regulatory changes across global markets.
2.4.2 The Rise and Fall of AI Agents
The AI agent sector, which became one of crypto's biggest success stories in late 2024 after the launch of $GOAT, looks set to reach even greater heights in 2025. As we've seen time and again, new technologies excel at capturing public imagination and spawning powerful memes. From the metaverse boom to modular blockchains and now AI agents - each represents a wave of extreme optimism fueled by the perfect storm of technological innovation and speculative fervor. It's important to note that we're specifically talking about AI agents and Sentient AI within the crypto space, not the broader AI industry.
However, there's a crucial distinction to be made. While sectors like DeFi and modular blockchains managed to find their footing after their respective bubbles burst - entering a "Slope of Enlightenment" phase with steady adoption based on real utility - today's AI agents seem to be following a path more similar to the metaverse hype cycle. They're plagued by the same issues: poorly defined use cases, unclear target users, and vague value propositions hidden behind buzzwords.
Looking ahead, while AI agents will likely continue to dominate market attention and see rapid price appreciation driven by technical narratives, the sector faces significant risks. Without meaningful long-term growth drivers or concrete use cases, we could see a dramatic decline with no promise of recovery. The market may well devolve into a chicken game, with success determined by who can cash out their profits and exit before the bubble bursts.
2.4.3 Changing Dynamics Between Chains and Applications
In 2025, the crypto industry is expected to undergo a fundamental shift in the traditional relationship between chains and applications. The long-held notion of chains being the ecosystem's center of gravity is being challenged, as we see an accelerating transition toward an application-driven paradigm.
The industry has traditionally operated on a top-down model, with blockchain networks serving as the foundation for ecosystem development. While 2025 will welcome several highly anticipated chains - including Monad, Bera, MegaETH, and Initia - these could well be the last generation of successful general-purpose blockchains.
The future of blockchain development is shifting away from general-purpose chains toward two distinct models: established applications like HyperLiquid and Ethena expanding into full ecosystems, and successful protocols like Uniswap launching their own blockchains.
The industry's funding landscape is evolving in parallel with this shift. Community-centric token distribution is gaining prominence, as evidenced by MegaETH's successful revival of the ICO model and the massive airdrops from HyperLiquid and Pudgy Penguins. The focus has shifted away from traditional VC funding toward user adoption and community engagement as key success metrics. Established applications, in particular, can leverage their existing user base to generate liquidity and network effects when launching their own tokens or chains, reducing their reliance on traditional funding routes.
Featured Projects/Coins: Ethereum (@ethereum, $ETH), Solana (@solana, $SOL), Ethena (@ethena_labs, $ENA), Mantle (@0xMantle, $MNT), EigenLayer (@eigenlayer, $EIGEN), Puffer Finance (@puffer_finance, $PUFFER), Zircuit (@ZircuitL2, $ZRC), EtherFi (@ether_fi, $ETHFI)
Bitcoin experienced a price increase of over 2.4x from its previous lows during the 2024 bull market. While factors such as Bitcoin's four-year halving cycle and Trump’s reelection as U.S. President brought positive news to the crypto market, the larger drivers of this growth were the gradual shift in public perception of cryptocurrencies, the strengthening blockchain industry, and the establishment of infrastructure that allowed traditional finance to participate in the ecosystem.
As the barometer of the blockchain industry, Bitcoin's price surge naturally drove up the prices of other cryptocurrencies. However, as reflected in Bitcoin dominance, the heavy concentration of market capital in Bitcoin shows that capital redistribution across other sectors of the crypto industry has yet to fully occur. In past bull market cycles, Bitcoin's price increase was typically followed by a decrease in its dominance as capital flowed into other areas of the industry.
While many remain focused on Bitcoin’s continued rise, the year 2025 is shaping up to be the year of capital redistribution into infrastructure-related projects such as Ethereum and other L1 and L2 chains. These projects have been quietly preparing their technological and ecosystem foundations in Bitcoin’s shadow, and this year could finally be their moment to shine as capital shifts into their ecosystems.
My portfolio is aligned with this perspective, and I will outline my views on some of the standout projects.
2.5.1 Key Infrastructure Chains: Ethereum and Solana
Ethereum is facing a challenging time during this bull market. Despite high expectations from Ethereum holders and the ambitious unveiling of the Beam Chain and its future roadmap at Devcon 2024, Ethereum's progress has been overshadowed by the continuous advancements of L1 chains, led by Solana. This contrast has resulted in a difficult 2024, as reflected in Ethereum's price performance.
Looking at the ETH/BTC price trend, Ethereum has been on a downward trajectory recently. While it still holds its position as the second-largest cryptocurrency by market capitalization, just behind Bitcoin, its momentum has visibly waned.
That said, I believe Ethereum is nearing a comeback. Although many L1s are vying for Ethereum's throne, Ethereum still holds an overwhelming lead in terms of scale. Among the contenders for its position, Solana stands as the strongest rival. However, Ethereum’s market capitalization (as of January 14, 2025) is still over four times larger than Solana’s, and the amount of assets locked in Ethereum's DeFi ecosystem surpasses Solana’s by more than sevenfold.
Additionally, Ethereum is the first crypto asset after Bitcoin to secure ETF approval, making it highly accessible to traditional financial institutions and institutional investors. Inflows through Ethereum ETFs have been steadily increasing, with a record net inflow of $2.08 billion in December 2024, more than doubling November's $1 billion. Notably, BlackRock’s ETHA fund saw $1.4 billion in inflows in December, while Fidelity’s FETH fund recorded $752 million.
Internally and externally, Ethereum is continuing to strengthen its foundation. The previously unstable L2 ecosystem has now matured and is carving out its role, while Ethereum's emphasis on zero-knowledge (ZK) technology has been steadily growing, supported by numerous projects. Ethereum's restaking services, which originated within its ecosystem, remain uniquely positioned and are also progressing.
One of the biggest concerns for those considering holding Ethereum—the issue of unlimited issuance—has been largely mitigated. Since the London Hard Fork in August 2021, Ethereum’s issuance has decreased, and its current circulating supply is now partially deflationary, contributing to greater stability.
Is the beginning of 2025 a crisis for Ethereum? My answer is yes. But crises often lead to the brightest moments of opportunity. Ethereum, which has introduced the concept of global computing that Bitcoin has structurally been unable to achieve, and has persistently refined itself, will overcome this crisis in 2025 and prove its worth as it bears the weight of the crown.
Continuing, Solana, Ethereum's most formidable rival, is aggressively catching up in various sectors within the blockchain ecosystem. Solana's ecosystem, which has already grown to a substantial size, is unparalleled among later L1 chains, boasting a unique scale that sets it apart.
Source: Solscan
In particular, Solana has developed by prioritizing performance and user-friendliness over the full decentralization emphasized by Ethereum. While this means Solana operates with a slightly more centralized structure, it also allows the network to achieve an impressive transaction processing speed of nearly 45,000 transactions per second (TPS). This provides Solana users with a more seamless and faster environment for utilizing blockchain applications without bearing unnecessary risks.
Additionally, Solana continues to stay ahead of trends by leveraging its vast developer and user community. During the early stages of this bull market, Solana led the trend in the meme coin meta, surpassing other L1 chains through faster cultural adoption. Most recently, Solana has aligned itself with the AI meta by organizing events like the Solana AI Hackathon, demonstrating its continuous efforts to lead and adopt new metas.
Solana, which has grown with a narrative distinct from Ethereum’s, has been a key player in reshaping how the crypto space perceives decentralization. It has raised a fundamental question: If the full decentralization that Ethereum champions ends up negatively impacting users, should decentralization still be pursued at all costs? Solana's journey to explore this answer will continue in 2025.
Caught between a powerful rival in Ethereum above and the ambitious challenges from various L1 chains below, Solana’s next moves will be crucial. As it continues to carve its unique path, I will also be keeping a close eye on how Solana navigates its journey in the crypto landscape.
2.5.2 Continuous Growth of the Restaking Ecosystem
“Restaking is a mechanism that allows users to reuse already staked assets to provide additional security to multiple blockchain networks or applications. This enables the recycling of staked assets, increasing scalability and liquidity while earning additional rewards.”
— Restaking Stack: Categorizing the Restaking Ecosystem | 4Pillars
As described in the quote above, restaking is a new form of network security based on financial engineering. Restaking achieved remarkable growth in 2024 by introducing a novel concept that enhances scalability and liquidity through the reuse of staked assets.
Notably, projects such as EigenLayer, which serves as infrastructure for the restaking ecosystem, and platforms like EtherFi, PufferFi, and Zircuit have attracted significant capital, driving the expansion of the restaking market.
If the keywords for restaking in 2024 were “the debut of restaking” and “the activation of restaking centered around the Ethereum ecosystem,” the keywords for 2025 are likely to be “the emergence of more restaking players” and “the expansion of restaking to other L1 chains.”
Within Ethereum—the home of restaking—competition is intensifying among infrastructure providers like EigenLayer, Symbiotic, and Karak. While Symbiotic and Karak are newer entrants and currently manage fewer staked assets compared to EigenLayer, they are carving out their niches.
For example, Symbiotic supports the restaking of diverse assets such as Ethena (ENA) to attract more deposits, while Karak differentiates itself by enabling asset staking across multiple chains, including Arbitrum, Mantle, and Binance Smart Chain.
As a result, 2025 is expected to witness fierce competition among restaking infrastructure players within the Ethereum ecosystem. At the same time, the restaking narrative is likely to spread beyond Ethereum to other L1 ecosystems, signaling a new phase of growth for this innovative market.
The influence of restaking is expanding beyond Ethereum to other L1 chains. Among these, Bitcoin and Solana are emerging as key ecosystems where the restaking narrative is gaining traction.
First, Bitcoin is leveraging its unmatched total asset scale to utilize restaking as a means of generating additional profitability on other blockchains. Babylon is a project that uses Bitcoin’s staking and restaking mechanisms to enhance the security of other proof-of-stake (PoS) blockchains. Notably, Babylon allows Bitcoin to be staked directly on the Bitcoin blockchain without requiring bridging or wrapping, offering greater usability and simplicity.
Meanwhile, Solana’s exceptional transaction speed and low fees have fostered the development of numerous restaking infrastructure services, such as Jito and Solayer. Jito, already well-known as a staking infrastructure provider within the Solana ecosystem, has extended its expertise to include restaking services, building on its established staking know-how to offer a stable and reliable restaking solution. Similarly, Solayer, inspired by EigenLayer, focuses on improving user convenience while utilizing restaking to further Solana’s ecosystem development.
In 2025, restaking competition is expected to intensify, not only within Ethereum but also across other L1 chains like Bitcoin and Solana. These developments suggest that restaking will continue to evolve as a critical innovation in blockchain ecosystems.
2.5.3 Blockchain Infrastructure Projects to Watch in the New Year
2024 was a year of numerous new project launches, with many showcasing their unique strengths. In 2025, the stage is set for a battle between projects that solidified their foundations in 2024 and those emerging this year. From this perspective, let's examine Ethena and Mantle.
Ethena has emerged as a standout in the era of crypto dollars, becoming one of the fastest-growing projects. It achieved significant growth in 2024 through its unique high-yield strategies, BlackRock BUIDL-backed secure collateral management, U.S. Treasury-backed stablecoins, and comprehensive expansion plans for the Ethena network.
Source: The Verge of Crypto Dollar War and Strategy of Ethena (Feat. UStb, Network) | 4Pillars
Ethena’s dollar-pegged stablecoin, USDe, stands out by offering clear benefits to users through staking rewards, delta-neutral market strategies, and liquid stablecoin yields. This has led to significant capital flows away from other dollar-pegged stablecoins like USDT and USDC into USDe.
As the use cases for stablecoins continue to grow and as major fintech companies increasingly adopt them, the dominance of crypto dollars appears set to persist. Given these trends, the growth of Ethena and USDe is likely to continue in 2025.
Mantle spent 2024 expanding its reach through the launch of Mainnet V2, offering staking rewards, and distributing airdrops of other tokens. These efforts helped Mantle grow its user base and establish a strong presence in the crypto space.
Technologically, Mantle collaborated with Succinct to explore transitioning from an Optimism-based rollup model to a zero-knowledge (ZK) rollup model. Additionally, Mantle partnered with Chainlink to integrate Chainlink Cross-Chain Interoperability Protocol (CCIP), laying the groundwork for upgrading the Mantle ecosystem into a multi-chain ecosystem.
Source: Mantle Reward Station
From an ecosystem perspective, Mantle solidified its partnership with the centralized exchange Bybit, expanding use cases for Mantle and increasing its holder base. Furthermore, Mantle’s staking program allows users to earn MNT Power (MP) as rewards, which can then be used to participate in other airdrops, fostering a high level of engagement. These initiatives have been highly effective in promoting Mantle to crypto holders, and this momentum is expected to carry over into 2025.
Mantle’s close relationship with Bybit—a centralized exchange rapidly catching up to Binance—positions it well for further growth. The increasing number of Mantle holders is likely to lead to more activity on the Mantle mainnet, creating a positive feedback loop that benefits the entire Mantle ecosystem. Building on this momentum, 2025 is poised to be a year of significant expansion for the Mantle ecosystem.
Featured Projects/Coins: Virtuals Protocol (@virtuals_io, $VIRTUAL), Axal (@Gekko_Agent, $AXAL), Tetsuo (@7etsuo, $TETSUO), Redacted Research and Development (@rndterminal, $█ █ █)
2.6.1 A Catalyst for Retail Inflow: On-chain Small cap Trading
On-chain liquidity flow into small and medium-sized assets is expected to accelerate further. These assets will offer more diversified market opportunities compared to large-cap assets listed on CEXs, and moreover, are projected to become a key driver attracting retail investors to the crypto market with their high expected returns.
This pattern has already become visible through last year's meme coin cycle. Excessive project valuations led to the practice of ‘High FDV’, and the resulting backlash and limited expected returns prompted market participants to shift their attention from major project tokens on large CEXs to on-chain meme coin trading.
Against this backdrop, perhaps the most impressive market scene from the past year was when meme coins based on themes not limited to the crypto ecosystem, such as Chillguy and Moodeng, saw significant price increases while Phantom Wallet reached top rankings in app store downloads. This demonstrated that even users with no prior on-chain experience began actively utilizing tools like on-chain wallets and Moonshot to trade high-risk assets like meme coins with high expected returns.
This scene signals an important turning point in crypto adoption methods. While previously we expected infrastructure development and innovative applications to secure on-chain users, the crypto market's distinctive speculative nature and resulting high expected returns can serve as the most effective catalyst in driving crypto adoption.
Consequently, the change that will become more evident in 2025 is that on-chain small and medium-cap asset trading is no longer exclusive to crypto degens but acts as a powerful catalyst accelerating retail inflow. The resulting market trends deserve close attention. For instance, DEX trading volume compared to CEXs is expected to continuously increase, and new narratives suitable for creating small and medium-cap assets could emerge, just as AI agents and DeSci followed meme coins. Additionally, innovative methods enabling sustainable project building while maintaining fair launches, like how Daos.Fun integrated the fundraising process beyond the Pump.fun model, are expected to become mainstream.
2.6.2 AI Agents: What Will Survive and What Won't in the Flood of AI Agents
Last year, AI agents secured over 70% mindshare in the overall market, establishing themselves as the most prominent narrative. Even now in 2025, the AI agent cycle continues, and the combination of crypto and AI agents will remain a crucial topic as AI is considered a key keyword in almost every industry. However, assuming the overall crypto market bull run gradually subsides and enters a long-term correction phase, we expect a clear distinction between surviving and non-surviving AI agents once the interest inflated by short-term speculative demand subsides.
Projects that will survive in such market conditions will be those creating tangible value beyond technical imagination and novel ideas. Virtuals Protocol serves as a prime example. When considering the long-term viability of crypto and AI agent combinations in creating sustainable use cases and businesses, Virtuals Protocol, providing integrated services for AI agent development frameworks and launch pads for AI agent token creation, is expected to maintain its unique market position as a foundational layer of the AI agent ecosystem. Notably, $VIRTUAL is traded as a pair with all agent tokens and is consumed like a base currency when utilizing tools including the launchpad. This tokenomics, accumulating value from all platform interactions, represents a crucial fundamental supporting Virtuals Protocol's sustainable growth.
Meanwhile, from the perspective that the AI agent ecosystem must generate tangible profits, the combination of DeFi and AI agents appears to be the most rational approach. Trading fees, lending-borrowing margins, and yield generation through structured products in DeFi protocols are already clearly validated PMFs. Therefore, rather than AI agents pioneering new businesses in areas like gaming or social, it's more practical to introduce them as solutions addressing inefficiencies in DeFi, which has already found PMF. Particularly, AI agents functioning as autonomous portfolio management tools, natural language-based user experience improvements, and automated trading tools are expected to become key use cases leading the integration of AI agents and crypto.
Featured Projects/Coins: Pudgy Penguins (@pudgypenguins, $PENGU), Ethena (@ethena_labs, $ENA), FARM(@thefarmdotfun, $FARM), MIZUKI(@_AnonDev, $MIZUKI)
Three key trends shaping the crypto landscape this year are: (1) the convergence of crypto and AI, (2) a DeFi Renaissance driven by the activation of fee switch models, and (3) the resurgence of airdrops and ICOs, catalyzed by Hyperliquid’s success. While the first trend has already drawn significant attention from leading AI research analysts, this section will delve into the latter two themes.
2.7.1 DeFi Renaissance: The Fee Switch Revolution
Today, the majority of DeFi tokens serve primarily as governance tools. While this aligns with the ethos of decentralization, it offers little in terms of tangible economic value to token holders. Despite the strong operational performance of many DeFi protocols, their token prices have remained undervalued, reflecting the limited utility of these assets. Against this backdrop, the fee switch model—allocating a portion of protocol revenues directly to token holders—has long been considered a potential catalyst for revaluing DeFi tokens and boosting investor appeal.
Historically, however, regulatory hurdles have stymied the adoption of such mechanisms. The SEC’s classification of revenue-distributing tokens as securities has imposed significant compliance burdens on protocols. Uniswap’s multiple attempts to activate fee switch functionality, through three separate governance votes, were thwarted by concerns over regulatory risks. Notably, influential stakeholders such as a16z have opposed these proposals, underscoring a broader apprehension within the DeFi sector.
This narrative took a dramatic turn following Donald Trump’s presidential victory in 2024. With the Republican Party securing control over the White House, Congress, and the Supreme Court, the prospects for crypto-friendly policies have improved markedly. The new administration has signaled its intention to position the United States as a global “crypto capital,” even exploring the inclusion of Bitcoin in its strategic reserves.
Key appointments reflect this policy shift. Paul Atkins, as the new SEC Chair, and David Sacks, as the White House Crypto Policy Advisor, have introduced a more constructive approach. Initiatives such as dismantling “Chokepoint 2.0” and forming a dedicated crypto advisory council aim to provide much-needed regulatory clarity. The departure of Gary Gensler and the subsequent transformation of the SEC’s stance have significantly alleviated compliance pressures for market participants.
Buoyed by this optimism, several leading DeFi protocols are actively revisiting the fee switch model. Established names like $ENA, $UNI, $AAVE, and $RAY—protocols with proven revenue streams—are engaging in governance discussions to implement revenue-sharing mechanisms. With enhanced regulatory clarity, these protocols are positioned to anchor their tokenomics to sustainable revenue distribution, thereby bridging the gap between speculative value and fundamental financial metrics.
This evolution signals the dawn of a new DeFi Renaissance, distinct from the explosive “DeFi Summer” of 2020. Unlike the explosive growth driven by liquidity mining and the surge of innovative products during that era, this resurgence prioritizes sustainable models, consistent revenue generation, and the revaluation of DeFi tokens. As these changes unfold, DeFi protocols have the opportunity to fortify their competitive edge against traditional financial systems, offering decentralized solutions grounded in tangible economic benefits.
2.7.2 A Resurgence of Airdrops and ICOs Catalyzed by Hyperliquid’s Success
One of the defining moments in the crypto market of 2024 was the rise of Hyperliquid. Following its TGE on November 29, the $HYPE token surpassed a FDV of $34 billion within a month and now trades around $20 billion as of January 14, 2025. Yet, Hyperliquid’s influence extends far beyond its impressive valuation. Its steadfast commitment to a community-first philosophy has set a precedent that could redefine the trajectory of Web3 projects in the years ahead.
Hyperliquid’s decision to operate entirely through self-funding disrupted conventional norms. By ensuring equal opportunities for all participants and rejecting allocations to private investors or market makers, the project directly challenged the common practice of inflating valuations through VC funding, which often left retail investors bearing the brunt of token dumps at artificially high prices. This approach forced a reexamination of token distribution standards, pushing the industry toward greater fairness and transparency.
As we move into 2025, the revival of community-based funding models seems inevitable. While the ICO boom of 2018 was marred by scams and regulatory ambiguity, clearer regulations under the Trump administration could reinstate trust and structure in the market. Platforms like Echo and Legion are already leveraging this shift, signaling a broader return to Web3’s decentralized ethos.
Hyperliquid also reshaped perceptions around airdrops. Traditionally, airdrops faced criticism for failing to foster long-term communities, often serving as short-term incentives with limited lasting impact. Some project founders viewed them skeptically, labeling them as cost-inefficient campaigns that accelerated user churn rather than promoting retention. Indeed, many users engaged with airdrops solely for one-off rewards, quickly exiting the ecosystem afterward. This led to a consensus within the market that airdrops were an ineffective and unsustainable marketing tool.
However, Hyperliquid challenged this narrative by allocating 70% of its $HYPE token supply to the community and demonstrating how airdrops could be leveraged to share rewards and foster growth collectively. By prioritizing the community, Hyperliquid illustrated the potential for airdrops to build loyalty and long-term engagement. Inspired by this success, other projects have begun adopting similar strategies. For example, Azuki’s recent announcement to allocate 50.5% of $ANIME tokens to the community reflects this growing trend. As a result, the airdrop meta is poised for a resurgence, potentially becoming one of the defining themes of 2025.
Hyperliquid’s success was underpinned by its commitment to product quality. By achieving product-market fit before token issuance, it prioritized utility and community trust over speculative gains. This strategy not only cemented its reputation but also offers a roadmap for projects aiming for long-term viability in Web3.
Hyperliquid’s groundbreaking approach serves as a blueprint for the future of Web3. While replicating its success may be challenging, its principles of fairness, transparency, and product-first growth are set to influence a new generation of projects. As these methodologies gain traction, 2025 could mark a significant step toward realizing Web3’s foundational ideals of decentralized value creation and equitable participation.
Solana
