Crypto is Real Business in 2025

Happy New Year!

I’m hoping to write a lot more this year, particularly about random things I find interesting in crypto. Everything I write will be in 5 paragraph essays that are easy to digest - maybe I’ll even attempt to draw some diagrams. My first piece ever is on a few areas I’m excited about going into 2025, I hope you enjoy!

Dino and I were initially going to partner on this blog, but he’s a much better writer than I am and he will be starting his own blog to demonstrate his deep knowledge in the space. The hope is this year I can catch up to him.

The intersection of crypto and traditional markets/businesses is giving rise to groundbreaking innovations, reshaping finance, business models, and yield seeking money. Real-World Assets (RWAs) are making their mark by tokenizing treasuries, loans, and other assets, offering increased transparency and liquidity. Meanwhile, Decentralized Physical Infrastructure Networks (DePIN) are transforming how real-world services like data storage/compute and telecommunications are financed and managed through distributed networks. In the realm of decentralized finance (DeFi), on-chain hedge fund strategies are breaking down barriers for sophisticated yield strategies, albeit with risks such as yield compression. These are three sectors within crypto I will be watching closely this year for adoption and growing product market fit.

RWAs have shown growth potential, with the market currently estimated at $15.3 billion, as reported by RWA.xyz. Protocols like Figure dominate the space by bringing home equity lines of credit (HELOCs) on-chain. Figure’s platform improves efficiency, reduces overhead costs, and enhances transparency by streamlining loan and mortgage processes. Through tokenization of HELOCs, Figure attracts global investors, increases liquidity, and enables frictionless capital flow in traditionally opaque markets. My investment thesis focuses on companies offering white-label solutions for compliant RWA tokenization. These platforms can provide an end-to-end tokenization platform with built-in compliance and structured financial products that bridge TradFi and DeFi, enabling regulated, transparent capital markets on-chain. Expect to see a lot more assets come on-chain this year.

DePIN is another sector I’ll be keeping a close eye on in 2025, with a number of breakout projects in 2024. With a market cap of $33 billion, 295 active projects, and over 19.5 million operational devices, its clear that DePIN has gained traction and the attention of consumers, tinkerers and investors. This technology relies on peer-to-peer or distributed models to create scalable and competitive alternatives to traditional companies. In turn the businesses behind the protocol can choose the token distribution mechanism to reward nodes, along with token burns or buybacks with revenue to support the token flywheel. DePIN applications span diverse real-world services, including mapping, data storage, telecommunications, weather stations, aircraft tracking, advanced web scraping for AI, and more. While the sector is still in its early stages, the potential to redefine infrastructure financing and management is immense, paving the way for efficiencies and entirely new industries or business models that reward participants. DePIN's evolution could reshape how physical and virtual infrastructure is built and incentivized to create companies. This is the sector I’m most excited about going into 2025.

In 2024, protocols like Ethena, Usual Labs, and Resolv demonstrated strong product market fit for on-chain hedge fund strategies, driven by the demand for high yield. Ethena employs a delta-neutral strategy using staked ETH to generate stable yields via synthetic dollars (USDe) and governance tokens (ENA). Usual Labs, on the other hand, uses a dual-token model where one token represents the principal and the other captures yield, offering returns on stablecoin investments through mechanisms like USD0++ staking. Resolv offers yield through a dual-token system integrating with Pendle for yield trading, issuing $USR for stable returns and $RLP as an insurance mechanism. These platforms have made advanced financial strategies more accessible and transparent for participants seeking yield. However, one risk going into 2025 is an influx of new protocols and additional capital seeking yield, which could lead to significant yield compression and narrower arbitrage opportunities. I anticipate that as more on-chain users and off-chain capital learn about these opportunities, the yield potential could shrink.

In conclusion, RWAs, DePIN, and on-chain hedge fund strategies are some of the the evolving opportunities within the crypto ecosystem that showed promise in 2024, and that I believe will shine in 2025. RWAs can streamline the traditional asset management industry through tokenization and international 24/7 liquid markets. DePIN offers an innovative new business model for physical and virtual infrastructure that has the potential to rival traditional frameworks. Meanwhile, on-chain hedge fund strategies currently provide strong yield opportunities but risk contending with market saturation and competition this year. All in all, I think 2025 is an exciting year for crypto with lots of excitement around future policy and market growth. Best of luck this year!

Disclaimer: These statements reflect my personal opinions and are not financial advice. I may hold positions in some of the projects or assets mentioned. Always do your own research before making any financial decisions.