Core investment themes worth following in the encryption area in 2025: Decentralized Finance and AI

Compilation: Deep Tide TechFlow

Pure dry goods, no false hope.

Before you start reading, I hope you can temporarily set aside your preconceptions and take a few minutes to carefully read what I am about to share.

From a macro perspective, Web3 investment themes can be divided into two categories: underlying infrastructure (infra) and application scenarios (apps).

Investments can essentially be divided into two types: one that may seem unremarkable in the short term but can bring substantial returns in the long run, and another that may be exciting in the short term but ultimately worthless.

Most cryptocurrency investors enter this market in pursuit of fast and substantial returns, and are willing to take corresponding risks.

Therefore, people tend to prefer cyclical investments - these types of investments are usually short-term and only effective during specific bull market cycles.

2025 will be the ‘year of regulation’ in the cryptocurrency field.

The United States and some other major economies plan to introduce relevant regulations domestically. The introduction of these regulations will not only enhance the trust of traditional investors (especially the older generation) but also filter out a few truly promising cryptocurrencies - only projects with solid fundamentals and stable cash flow support can stand out.

We can expect a new wave of traditional investors in the market. These investors have “old money” in their hands and will be venturing into the cryptocurrency space for the first time.

They will not blindly invest just because of market speculation, but will carefully study the project, read reports and data carefully, and only make investment decisions in logical circumstances.

Against this background, decentralized finance (DeFi) will become an investment theme favored by traditional investors, as will be the first-layer protocol (L1) of blockchain.

However, due to the lower market capitalization limit of DeFi projects, there is greater growth potential, and it is highly aligned with fundamentals and data. This year, some DeFi projects have already generated over 100 million dollars in revenue, which undoubtedly attracts the attention of traditional investors.

Traditional investors have a huge amount of capital, and sufficient funds are the key to healthy market growth. Don’t forget that many institutional investors are also dominated by traditional investors.

It can be foreseen that DeFi will eventually become one of the important layout directions for top institutional investors.

BlackRock has begun collaborating with DeFi projects, and this trend is gradually taking shape.

DeFi is not a cyclical investment; it is more like a long-term investment, just like how investors used to view BTC and ETH.

The long-term potential of AAVE may be considered comparable to ETH.

When investing in blue-chip DeFi projects, you can focus on long-term development;

When you choose to invest in a brand new DeFi native project, you can consider short-term returns, which may also bring several times or even higher returns.

In a DeFi-dominated crypto market, many emerging projects will continue to emerge, and some established projects will also regain attention. You will see a surge in prices surrounding these projects.

In the DeFi field, many blue-chip applications (such as Uniswap) are planning to transition into underlying infrastructure projects. This transition will further enhance the value potential of tokens, and some projects may announce adjustments to the fee mechanism next year. You need to be prepared for this.

These changes will inject strong momentum into the narrative of DeFi’s development.

I expect DeFi to dominate at least the next two quarters, just like AI’s performance this year.

As for AI, I think 2025 will be the year when AI receives widespread criticism in popular culture due to its rapid and uncontrolled expansion.

“Responsible AI” discussion will be the focus.

Market activities surrounding encrypted AI infrastructure, AI agents, and Initial Agentic Offerings (IAOs) may enter a period of adjustment due to the narrative of “responsible AI”.

But before that, I expect AI intelligent agents to go through a bubble-like growth.

Currently there are 13,000 smart agents in the market, and I expect this number to increase to at least 100,000.

Later, we may enter a bubble phase and burst the following year.

Which quarter this happens will depend on the timing of AI regulatory events.

Regulation will also spark interest in privacy infrastructure, so some key projects involving confidential DeFi, privacy computing, privacy storage, and privacy inference will receive more attention, and this attention will also be reflected in their asset performance ().

The Meme market will continue to be active.

Although regulatory agencies may not support it, people will always find ways to enter, because complete blockade is impossible.

Speculators will continue to search for opportunities among the 100,000 new coins added daily.

However, some established memes, such as DOGE and PEPE, may attract more serious investor attention.

Even if you don’t like memes, you should consider allocating a portion of your investment to them.

2025 will also be the year when mobile Web3 wallets and super apps emerge.

Recently, Exodus, a Web3 wallet company, went public on NASDAQ with a valuation of $1.2 billion, which may drive speculation on Web3 wallet-related tokens with strong revenue performance next year.

AI and DeFi will be the two core narratives next year:

• DeFi is expected to take the lead;
• AI intelligent agents may enter a bubble phase;
• Meme speculation will attract more participants;
• Privacy and DePIN (Decentralized Physical Infrastructure Network) will come to the fore in a quarter;

Web3 wallets will receive more attention and promote mainstream adoption through more convenient user guidance and better user experience.

That’s all for my sharing.

Please note that I am neither an astrologer nor an expert in the field of cryptocurrency. I am just an ordinary person with some random thoughts about the market, so don’t take my views too seriously.

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