Collapse and Rebuild: The Explosion of DeFi 2.0 Under Disordered Restructuring in 2026

Written on December 28, 2025, in Singapore

In Q4 2025, driven by the overlay of market and policy factors, the collision between traditional finance and emerging open finance has intensified in an increasingly disordered environment. The intense changes have cleared most of the residual heat from the first curve ( Note 1), leaving emotional wreckage that is difficult to digest in a short period. Meanwhile, traditional finance has become isolated amid the bubble narrative of AI and the chaos of the golden age, reaching the end of its strength. Central banks worldwide are forced to rigidly satisfy market rigid aesthetic standards with textbook-like monetary and fiscal policies, making people believe that these outdated economic inertias can still sustain for a little longer.

In previous articles, I have detailed the failure of conventional economic models at the junction of Kondratiev cycles, but the real experience of being in it is more visceral. Among the many noises, only Coinbase’s year-end market outlook report <2026 Crypto Market Outlook> objectively summarizes and predicts the current market and industry. The overall trend is not hard to see; it’s just that too many emotions and inertial aesthetics cover the brief gap. From today’s perspective, I mainly focus on three questions:

i) How long is the window period corresponding to the high entropy increase trend in today’s global situation compared to the 1910-1935( Note 2) period, and how will the process compare rather than mechanically referencing historical experience to assess risks and make decisions?

ii) Between the native development speed of Crypto and Open Finance and their collision with traditional financial compliance in positive markets, which one will have greater potential to become the main contradiction and restrain the other as a secondary contradiction?

iii) When combining the first two, a nonlinear problem arises: will chaos form a turning point in 2026, becoming an independent growth factor that promotes Crypto and Open Finance to cross the gap ( Note 3) and rapidly enter the mainstream world and financial markets?

Coinbase’s report <2026 Crypto Market Outlook> mentions many good data points, among which a more eye-catching one about stablecoins: as of Q4 2025, the global stablecoin supply has reached $305 billion, with a total transaction volume of $47.6 trillion. Comparing this roughly with the current global M0 supply $15T and the total global monetary transaction volume of $1500 trillion ( Note 4), it can be seen that the stablecoin supply accounts for 2.0%, and its application ratio has reached 3.2%. ( Note that this indicates the average activity level of stablecoins is greater than 160% of traditional Fiat. Additionally, the report points out a 65% annual compound growth rate over four consecutive years. Coupled with various foreshadowings laid in 2025, we have reason to believe that the crossing of the Open Finance gap into the Early Majority stage is just around the corner, within about a year.

tl;dr

1. 1011 ends the first crypto curve, 2025 ends the last Kondratiev cycle

2. The waning strength of traditional financial inertia aesthetics and societal failure under data-driven regulation

3. The RWA revival in 2025 becomes a core issue behind mainstream narratives

4. Emerging developing economies and new global geopolitical shifts

5. DeFi 2.0, DAT 2.0, Tokenomics 2.0

6. Review of 2025 and outlook for 2026

) 1. 1011 ends the first crypto curve, 2025 ends the last Kondratiev cycle

In January 2025, the article discussed the unsustainability of the past crypto market driven by speculation and narrative logic. Looking back over the year, only position 1 on the table remains fighting alone, forging a new path, while various market players have almost completely exited or transitioned to a more pragmatic development of the second curve.

The 1011 event triggered the largest single-day crypto liquidation in history, with about $193 million wiped out, and several days of liquidations totaling approximately $40 billion. On the surface, this was the extreme leverage structure at the end of the first curve in a low-liquidity environment, but fundamentally it was due to too few players in the zero-sum game market, leading to the failure of platform risk mitigation and control. When only two players remain at the table, all cooperative strategies fail, and the opponent’s dilemma becomes the inevitable end of the first curve.

Similar to the market’s harvest of ### the currency pair, the 1011 event fundamentally undermined the belief in the first curve, destroying the residual heat expectations based solely on narrative. It indicates that speculation-based consensus will come to an end $TRUMP Note 5(; conversely, the second curve further grows during this process, with all remaining ecological enterprises transitioning or innovating toward more pragmatic, long-term development routes. The DeFi 2.0 market based on Onchain Asset Management, RWA Finance, and Tokenization becomes the inevitable direction for the next stage, with CEXs, public chains, and top infrastructure also adapting accordingly, rapidly shifting toward PayFi and RWA.

At the same time, by the end of 2025, the global economy has fully transitioned into stagflation. The failure of central banks’ fiscal and monetary policies leaves only emotional value as a tool for regulation. The ultimate internal competition of traditional economics and the powerlessness of AI expectations are now equivalent to the Rockefeller era of 1910, marking the complete end of the previous Kondratiev cycle ) Note 6(.

On October 29, 2025, Nvidia’s market cap surpassed ) dollars, becoming the first company in history to reach that level. While many still bullishly speculate on how many times higher the price could go, without comparing to Rockefeller’s Standard Oil, I just want to say: rationally consider that Africa’s entire GDP for the year is only about half of this size.

Entering H2 2025, more rating agencies, hedge funds, and investment banks are closely monitoring Nvidia’s financials. Aside from its upstream and downstream capacity and profitability, the comparison of EV for long and short positions is completely unbalanced; in other words, even if fundamentals turn positive, this trend is unlikely to sustain. Moreover, industry facts about AI are not as optimistic as they seem.

It’s worth noting that when Standard Oil was broken up into 34 companies in 1911, the global understanding of oil’s application in cars, planes, and next-generation automation was already quite clear. Yet this did not prevent 30 years of chaos, depression, and systemic restructuring after 1911. The core reason is that chaos and disorder are the result of the failure of the previous production relations, manifested in severe monopolies, poverty, imbalance, and contradictions—an irreversible increase in societal entropy.

At major cycle junctions, economic policies and short-term cycle knowledge fail. The factors hindering social and economic development are not the lack of growth potential but the inertia of monopolistic production relations from the previous cycle, which obstruct or cannot support the fair and effective integration of productivity and labor in the next stage. Today, AI development is inevitable; however, the semi-feudal, semi-monopolistic global management mechanisms cannot continue to support or adapt $5T Note 7(.

) 2. The waning strength of traditional financial inertia aesthetics and societal failure under data-driven regulation

Even so, one of the surprises beyond my expectations is that many economists and industry experts still obsess over rate cuts. Comparing the period from February 2020, before the pandemic, to April 2022, at the pandemic’s peak, US M2 increased by over 40%. With such a huge monetary volume, each subsequent QT and QE, in my understanding, is just a formalistic emotional massage. Whether 25bp or 100bp, they have long lost their original economic value ### Note 8(.

Rate cuts have become an emotional expectation of recipients and a forced decision by policymakers, a dual inertial psychological kidnapping—using emotional value to influence markets. Respectfully, in delaying global chaos and disorder, countries have exerted their maximum efforts with financial and policy tools based on inertial aesthetics.

However, the entropy increase process cannot be slowed down because of this. Half a year later, revisiting Greenspan’s prophecy in previous texts: “We must accept that monetary and fiscal policy cannot permanently boost economic growth in the presence of deeply rooted structural constraints.” We find that many policies under the traditional system have already rapidly failed.

By mid-December 2025, Nasdaq publicly announced plans to submit to the SEC for a 7x24 trading hours change, essentially representing traditional finance’s defensive move to pressure Crypto and Onchain Markets and test regulators. Many traditional financial institutions in North America and East Asia have been adjusting since the Genius Act in mid-2025, struggling between embracing the challenge of Crypto Finance and maintaining their previous advantages.

Interestingly, reactions in Q2 2025 were intense, seemingly breaking the original equilibrium and cartel defenses ) Note 9(. Everyone was aware of the inevitable trend: traditional finance systems would be fundamentally changed. But by Q3, the market’s overreaction was apparent, and the iteration process slowed. Traditional finance practitioners and policymakers surprisingly reached a short-term reverse equilibrium, believing that change is inevitable but policy compliance will safeguard a smooth transition and the new moat—by jointly upgrading licenses and policies. This phase was very delicate, like a prisoner’s dilemma where everyone agreed to temporarily reverse their decisions to cope with external pressures. This was just a psychological illusion before the cartel’s true disintegration. By Q4, the most forward players realized that with Hyperliquid and Robinhood’s “eight immortals crossing the sea,” the complete collapse of the traditional financial cartel would come soon. Therefore, Nasdaq and Coinbase have stepped forward to tell the truth, facing more tangible reforms like changing trading hours and building RWA tokenization systems to gain real advantages in the next phase.

This process is a classic example of a psychological sandbox of the Gartner Curve, where all players participate in a game before a major transformation.

The waning strength of traditional financial inertia is not about the failure of economic principles. On the contrary, Crypto Economy and Open Finance are further developments based on economic principles. The bottleneck lies in the systemic issues of management economics and market production relations, especially after entering the digital age, where the existing management system cannot adapt to balance regulation and freedom. The global overuse of digital regulation has led to a rapid acceleration of entropy increase within just ten years.

Over the past decade, most regions worldwide have fallen into the huge misconception of “using data whenever available, regulating whenever methods exist.” The rules and thresholds of outdated systems have far exceeded opportunity and risk costs. Rigid data management has reinforced doctrinal reliance on historical paths, which not only fails to break but incurs higher costs—creating a terrifying “Data Medieval” effect.

This phenomenon infiltrates every industry and corner globally. Excessive digital abuse and financial restrictions hinder development. For example, in my 15+ years of VC experience, if you judge a company’s funding eligibility solely based on a person’s bank KYC, 99% of enterprises and innovations would be wiped out.

Faced with the entropy failure of the global financial and social management environment, 2026 will inevitably enter further disorder and restructuring, rewriting many rules and industries, and plunging into a chaotic transition period lasting at least 10 years.

) 3. The RWA revival in 2025 becomes a core issue behind mainstream narratives

The RWA narrative made a remarkable comeback in 2025, for a simple reason: the credit collapse of the first curve, and the lack of a new consensus term for the second curve, temporarily made RWA the MVP of this year.

Two months ago, after discussing with a Silicon Valley OG friend, he suggested I focus on RWA Finance upon learning that Cicada Finance was about to announce an IPO plan. I followed his advice and also retained Onchain Asset Management as the main entity, leading to today’s Onchain Asset Management for RWA Finance. Undoubtedly, both Onchain Asset Management and RWA Finance will remain strong mainstream tracks in 2026.

Beyond the name, RWA is not a revival but a rebuild from scratch. The problem is that people’s understanding of RWA varies widely. As of H2 2025, most of the world’s understanding still approaches it as a crowdfunding activity for tokenized assets.

Most participants in RWA are driven by personal needs rather than industry building, which is understandable. But as with P2P and E-commerce crowdfunding, demand-driven markets tend to cause one-sided development of platforms, channels, and markets, leading the industry to develop in the wrong direction rapidly.

What’s the difference between RWA without fair value and equity crowdfunding of the past? Do illiquid RWA assets need tokenization? Conversely, do all RWA assets require liquidity? These questions remain unresolved in the market in 2025, and deeper commercial confidentiality issues are also temporarily beyond discussion.

Coinbase’s report provides detailed analysis of current RWA asset distribution. T-Bills, commodities, liquid funds, and credit loans remain the four main categories, indicating the importance of quantifiable financial assets in RWA. We believe that the RWA landscape in 2026 will change proportionally, with these assets still present, but the actual business brought by emerging developing economies—DeFi and Crypto Finance—will be integrated into the RWA market as asset suppliers, with Stablecoin Payment and SupplyChainFi becoming fast-growing directions.

4. Emerging developing economies and new global geopolitical shifts

In 2025, while developed countries and regions struggle to formulate management policies for Stablecoins and Crypto Finance, the development speed of emerging developing countries and regions is astonishing and beyond imagination.

“They all want stablecoins, or platform coins too,” is the consistent feedback from cross-border trade and payment companies this year. Besides Nigeria, India, Brazil, Indonesia, and Bangladesh, many other countries and regions in Africa, South America, South Asia, Southeast Asia, Eastern Europe, and the Middle East have shown exponential growth in Stablecoin and Crypto Finance applications for three consecutive years, with actual usage far exceeding that of developed economies, many surpassing or catching up with local mainstream fiat currency usage ### Note 10(.

These emerging economies are rapidly expanding through “off-balance-sheet assets,” forming a stark contrast with the current mainstream management dilemma. Despite long-standing historical reasons causing significant differences in economic strength and consumption capacity across regions, it’s clear that global mainstream economic data has long been distorted. Facing over-regulation-induced stagflation and rapidly growing new environments, the global economic landscape will be reshaped within five years, and geopolitical relations will undergo dramatic changes.

Regarding question ii) from the opening, I have a clear answer. The true Nash equilibrium reshaping is not about breaking and rebuilding within the existing global economic system but about being broken by external forces under a new global pattern, forming a complex new restructuring. The native development speed of Crypto and Open Finance will far surpass the understanding and acceptance of traditional economies and markets, and 2026 is likely to be a crucial turning point in this disorderly reconstruction.

) 5. DeFi 2.0, DAT 2.0, Tokenomics 2.0

Coinbase’s report begins to introduce some new terms, including DAT 2.0 and Tokenomics 2.0, which are essentially familiar branches of DeFi 2.0. Their definitions are quite good; here I will elaborate separately.

In 2025, the DAT concept successfully spread from MSTR to mainstream financial markets worldwide, with a very simple logic: DAT premium multiple = stock market cap ÷ NAV of its held BTC### or other major Crypto( assets; however, this premium rapidly declined and inverted from Q3 to Q4, ending the global DAT 1.0 craze this year.

The decline in DAT 1.0 value and the end of its financial effect are mainly due to the very small capital multiplier resistance coefficient. The story is simple: limited price transparency expectations, Davis double-doubles and double-kills are too direct, and once bullish or bearish confidence shifts, the trend dissipates quickly.

The core value of the DAT concept in 2025 lies in the fact that traditional financial stock market concepts are exhausted, with bubbles too large to support EV, and the crypto first curve bubble and credit collapse, with two markets shifting focus and seeking warmth together.

Why can DAT 2.0 continue to link the value of coins and stocks? Simply put, DAT 1.0 is the transfer of value from the Crypto first curve to traditional finance, while DAT 2.0 is the integration of Crypto’s second curve into traditional finance. Unlike the former, the latter’s value is sustainable for long-term development. In 2025, Ondo, Ethena, Maple, Robinhood, and Figure have already demonstrated good prototypes in DAT 2.0, and more emerging enterprises will develop rapidly in 2026.

Tokenomics 2.0 is a broader concept. This year, we proposed derivatives related to Tokenomics, such as Liquid Engineering and Yield Engineering, which are further evolutions of Financial Engineering. In various real financial cases, Tokenomics acts like a financial circuit ) Note 11(, constantly refining and optimizing each financial scenario case by case, with different implementations. Over time, industry-wide, it will gradually form innovative, impactful, universal protocols like Pendle’s PT-YT.

Coinbase’s report only briefly touches on a few issues regarding Tokenomics 2.0, such as Value Capture, Token Buybacks, Financial Engineering, Regulatory Clarification as Catalyst, and Protocol P&L, without detailed logical connections.

Here’s a brief breakdown:

Value Capture is not directly related to Tokenomics 2.0 but is a necessary condition for the application and promotion of assets in the second curve. Tokenomics exists independently of value capture; in other words, Tokenomics without sustainable value capture, as proven in the first curve, is Ponzinomics. After 2025, it will no longer be mainstream in Crypto Market and Open Finance.

Token Buybacks are crucial for Asset Tokenization in RWA and DAT 2.0, and in my view, a necessary condition. More precisely, Asset Clearing Capability ) is a necessary condition for all asset investments. The healthy development of RWA Finance next year largely depends on market consensus on this point.

Regarding Regulatory Clarification, as discussed earlier in chapters 2 and 4, it should objectively be expressed as Pros and Cons. Coinbase’s perspective is specific, but as discussed, the larger and faster development of flexibility is actually in emerging developing economies and new economies.

Additionally, the process of Protocol Finance is not determined solely by Regulatory Clarification but is highly relevant in some developed regions like North America and East Asia. Protocol Finance’s P&L is a market phenomenon of an upgraded Open Finance market, decided by the market itself.

Both DAT 2.0 and Tokenomics 2.0 are just temporary terms. The second curve and DeFi 2.0 similarly describe the fundamental shift and inevitable trend of Crypto Market and Open Finance after 2025.

( 6. Review of 2025 and outlook for 2026

As 2025 concludes, I review and summarize the predictions and analyses of this year:

February <crypto’s second growth curve=“”>

“Zero-sum game and the seven giants at the table,” “RYA/RWA trend and the rise of PayFi,” “Crossing the gap: Crypto’s second growth curve,” “Crypto development pattern and national situations under compliance issues”;

April <trump tariffs will trigger the end of Kondratiev and Bitcoin’s qualitative change=“”>

“Debt-equity-trade triple kill and the failure of the Minsky clock,” “Thucydides trap and the end of five Kondratiev cycles in history,” “Greenspan’s prophecy and the significance of Crypto at Kondratiev cycle intersections,” “The shift in correlation between Bitcoin and chaos: change in inertia cognition and similarities with the Minsky clock”;

May

“Decline of traditional dollar control,” “Nominal and substantive purposes of the GENIUS Act,” “DeFi Restaking’s insights for fiat and the monetary multiplier of shadow currencies,” “Gold, dollar, and Crypto stablecoins”;

September

“The essence of the Genius Act is to delegate issuance and settlement rights, gaining strengthened monetary pricing power,” “Changes in stablecoin monetary pricing trigger reforms in global financial on-chain and asset on-chain,” “Reforms rapidly dismantle long-standing cartel alliances in traditional finance, creating chaos and opportunities for利益重组,” “Two directions of coin-stock linkage: securitization ) and tokenization (, and market features,” “Industry characteristics and issues of stablecoins, DAT, stock tokenization, RWA, and on-chain asset management.”

The outlook for 2026 has been extensively discussed in this article. Besides question i), which I believe has been sufficiently analyzed, the further disorder and restructuring of the macro environment and the consequent explosion of DeFi 2.0 are clear trends and inevitable.

Question i### is indeed a headache. Compared to the time and degree, trends and directions are easier to judge than specifics. Unlike the two previous Kondratiev cycles in the last century, under similar paradigms, the main differences are:

a( The speed of information exchange and evolution has increased significantly, with a gap of 2.5-5 times in various aspects ) Note 12(;

b) The spillover space of global geopolitical contradictions is vastly different, increasing the inevitability of conflicts;

c) Nonlinear effects brought by AI and Crypto are much higher than industrial automation.

From another perspective, many aspects remain unchanged compared to a hundred years ago, such as hardware conditions for social management, human lifespan, emotional digestion of generational differences, and political-economic cycles under different social forms.

In this context, over the past two years of enterprise management, I have often discussed and gradually accepted a fact: to pay attention to nonlinear problems, learn to respond to and master nonlinear trigger situations, and incorporate unexpected changes into plans.

Author: Yang Ge Gary

Date: December 28, 2025

Note 1: The first curve refers to the speculative environment created by consensus expectations over the 16 years of crypto development, continuously pushing expectations and forming wealth effects.

Note 2: The choice of 1935 instead of 1945 (end of WWII) is because gold prices experienced a cliff-like rise in 1934 after decades.

Note 3: is a classic paradigm for innovation development; here it is used as a metaphor for the crypto and open finance stages still being in the Early Adopter phase.

Note 4: The estimates here use annualized trading volume in forex and securities markets as a rough basis for financial scale.

Note 5: The prediction market is essentially an extension of the first curve, where, after the virtual consensus no longer supports a shared credit, short-term pragmatic event-based bets become a new consensus credit for risk appetite.

Note 6: The end and junction of Kondratiev cycles are mentioned multiple times in previous articles, e.g., <<Trump tariffs will trigger the end of Kondratiev and Bitcoin’s qualitative change>> chapter 2 . From 2020 to 2025, the world is at the junction of the last Kondratiev cycle’s end and the next cycle’s beginning. The main difference here is that 2025’s end and the accompanying socio-economic phenomena mark the conclusion of the previous Kondratiev cycle.

Note 7: In the November 2024 <>, the phrase “by the end of 2024, most countries and stakeholders are still in semi-feudal semi-centralized state capitalism” was first mentioned. This has been revised to “semi-feudal semi-monopoly capitalism.”

Note 8: Objectively, emotional value itself has become an important factor in today’s global secondary financial markets, with economic policies and market confidence causally linked through emotional value.

Note 9: The detailed explanation of the breaking of traditional financial cartel alliances is in chapter 3 of <> in May 2025.

Note 10: Data on the economies of underdeveloped emerging countries are not publicly available; information is based on confidential corporate data.

Note 11: , written in October 2022, details the underlying framework and mechanisms of Web3 tokenomics construction.

Note 12: This multiple has limited reference value: macroscopically, 2.5x = Minsky cycle 10 years / Bitcoin cycle 4 years; microscopically, 5x = 7x24 trading hours / 5x6.5 hours trading. It does not effectively represent actual production and social iteration differences.