Variant: Major Trends and Opportunities in the Encryption Industry in 2025

Author: Alana Levin, Partner at Variant Fund; Translated by: @Golden Finance xz

The core viewpoint of this issue's cryptocurrency trend report is: the growth of the cryptocurrency industry can be seen as an evolutionary trilogy composed of three composite S-curves, namely asset creation, asset accumulation, and asset utilization.

Stage One is the Creation Phase: The process of tokenization of value. This phase began with the birth of Bitcoin in 2009 and has since encompassed a diverse range of categories including Layer 1 currency assets, project tokens, stablecoins, content tokens, meme coins, NFTs, and tokenized equity. Between 2024 and 2025, the industry will have crossed the steepest growth segment of the S-curve—within just a few years, the number of tradable tokens surged from about 20,000 to millions. Although there is still vast room for innovation (such as tokenized credit, on-chain structured products, and real asset tokenization), the most disruptive breakthrough from zero to one has essentially been completed.

Stage Two: Accumulation Phase: The more diverse and valuable the asset types, the stronger the holding demand. This provides tailwinds for multiple subfields within the industry: custody products, exchanges, and security solutions. Different custody solutions serve different user groups: applications supporting stablecoins may use embedded wallets like Turnkey, institutional investors often adopt qualified custodians, while active on-chain users may use super app wallets like Phantom. The growing demand for buying, selling, and holding crypto assets has also catalyzed the expansion of distribution channels. Trading volumes have surged at several established exchanges (such as Coinbase), traditional fintech companies (such as Robinhood) are doubling down on crypto channels, and emerging platforms (such as Axiom) are experiencing explosive growth. Asset management firms are offering crypto asset allocations in retirement accounts, public companies are beginning to include Bitcoin and stablecoins on their balance sheets, and even some sovereign wealth funds have started accumulating such assets. We have just begun to climb the steepest part of this phase's S-curve.

Stage Three - Utilization Period: Let assets create value. Once people hold assets, they will begin to use them. Crypto assets are the most composable, accessible, and programmable financial assets to date. Many exciting mature use cases have started to emerge: stablecoin payments, supplying and borrowing funds in lending protocols like Morpho, providing liquidity for on-chain exchanges, and network staking. However, we are still in a very early stage regarding the diverse ways tokenized assets may and will be used - the ascent of this stage's S-curve has only just begun. I believe that in the coming years, expanding and enhancing the design space for asset utility will be one of the largest and most exciting blue ocean opportunities.

This report is divided into five main sections: macro trends, stablecoins, centralized exchanges, on-chain activities, and future outlook. Each section uses a three-repetition S-curve framework to help understand the major trends and opportunities in the current cryptocurrency industry. Below are the main trends we have summarized in the current cryptocurrency field:

1**, Macroeconomic Trends**

Mainstream crypto assets continue to expand in scale. Even as the total market capitalization of cryptocurrencies keeps growing, the market concentration of the top ten assets remains remarkably stable. New assets find it difficult to break into the top five. Many top assets demonstrate a true Lindy effect and imitation momentum.

2**, Stablecoin

Stablecoins have experienced explosive growth, traversing three S-curves: new issuance (asset creation) is advancing at a record pace, funding channels (asset accumulation) are becoming increasingly diverse, and stablecoin application scenarios (asset utilization) are continuously expanding. This category has a strong network effect—the larger the circulation, the higher the practical value. Similarly, the more entities that hold stablecoins, the stronger the ability to build products and services around these assets. Currently, the productization benefits of stablecoins have been evident in areas such as payments, yield products (like lending protocols), and exchanges. However, we believe that there is still ample room for innovation within the three S-curves.

3**、Centralized Exchange**

Centralized exchanges are the most significant beneficiaries in the “accumulation” S-curve. Over the past five years, both trading volume and revenue have seen substantial growth. Notably, the secondary effect brought by trading activity is that users retain their assets on the exchanges — this allows trading to expand its range of services (such as staking, yield, and lending products). Although many new application scenarios for crypto assets will be built directly on-chain, integration with centralized exchanges may provide powerful distribution channels.

4**, On-chain Activities**

Want to explore innovative applications of crypto assets? Please pay attention to the on-chain ecosystem. This is a breeding ground for innovative experiments. Every stage of the asset lifecycle—issuance, liquidity provision, trading, listing, and productization—is permissionless and open on the blockchain, while every step in traditional finance has access barriers. This setup greatly expands the design space for asset creation and utilization. In addition, various on-chain protocols have gradually matured into fundamentally sound business entities. Decentralized exchanges, lending platforms, token launch pads, and perpetual contract exchanges all demonstrate significant product-market fit.

5**, Future Outlook**

The development based on encrypted infrastructure can transform products into platforms. This section uses the growth of prediction markets as an example to demonstrate the typical paradigm of how encryption technology empowers new economic models, and summarizes the entrepreneurial opportunities that Variant is focusing on (not an exhaustive list).

Within the framework of the triple compound S-curve (asset creation, asset accumulation, and asset utility), we have witnessed numerous achievements, but there is still a vast territory waiting to be explored: