The 2025 encryption wave is about to hit! Experts reveal 14 major predictions: Are you ready for the fifth wave of applications?

1. Introduction

When we stand at the forefront of 2025, the landscape of Crypto Assets is slowly taking shape as the blueprint for the future of finance, governance, and technology. Now, 617 million users have accessed the Decentralization system, and $845 billion has flowed through the on-chain economy. We are witnessing the birth of a brand-new global infrastructure. Transformation is imperative; the Block chain processes transactions 50 times faster than before, stablecoins have become the backbone of 32% of encryption activities, and Decentralized Finance is reshaping cross-border capital flows. This article expounds on the future design, as encryption technology advances, it will become a framework. Here, I introduce you to 14 predictions for the development of the encryption industry in 2025, co-authored with Mckinsey Crypto.

Key Highlights

Activate passive encryption users by simplifying access and reducing barriers.

Bridge the gap between on-chain activities and ownership.

Platform should prioritize user-friendly mobile solutions and Stable Coin products in high inflation areas.

Political candidates should formulate clear encryption policies to attract more voters who prioritize digital asset regulation.

By ensuring a strong regulatory framework to harness the growing adoption of Stable Coin.

The government should accelerate the implementation of clear encryption regulations to promote adoption by institutions.

Ethereum projects should use the cost of drop to target cost-sensitive markets, especially in developing regions.

Developers should leverage enhanced scalability to innovate new applications, especially in high-demand industries.

Build privacy-centric, scalable Decentralization applications using ZK technology, focusing on industries such as finance and healthcare.

Focus on integrating Stable Coin into traditional systems to accelerate the global adoption of Cryptocurrency, especially in high inflation and developing markets.

By leveraging blockchain to enhance artificial intelligence applications, new market opportunities are created in industries such as Decentralized Finance, supply chain management, and digital identity.

By improving user experience, Liquidity, and Cross-Chain Interaction trading, make full use of the transition to DEX.

Priority should be given to developer-friendly tools and infrastructure to attract and retain builders.

Get ready for the fifth wave of Cryptocurrency adoption by 2025.

2. The current scale and adoption of Crypto Assets

In 2024, the growth and adoption of Cryptocurrency are very significant, and key indicators indicate that Cryptocurrency ownership, active participation, and global trends are increasing. In particular, the industry has seen significant growth in developing countries, and infrastructure improvements have laid the foundation for future large-scale adoption. This section delves into the current scale of the encryption ecosystem, with a focus on global ownership, active users, and mobile Wallet adoption.

2.1 Activate passive encryption users by simplifying access and reducing barriers

In recent years, the ownership of Crypto Assets has increased significantly, with millions of users holding encryption assets on various platforms.

Global Crypto Assets holders estimate: As of 2024, the estimated number of global Crypto Assets holders is about 617 million. This figure accounts for approximately 12% of the total number of global Internet users (approximately 5 billion people).

Image Source: Mars Finance

Although the encryption industry has covered a considerable portion of Internet users, it is still in the early stages of application. Most Internet users have not yet come into contact with Crypto Assets, which provides an opportunity for further development.

Image Source: Mars Finance

The data also shows that many Crypto Asset holders are passive holders, meaning they hold digital assets but do not actively interact with blockchain applications (such as Decentralized Finance protocol or Decentralization exchange)

Passive ownership and active usage: Many individuals who hold Cryptocurrency have not fully embraced the Block-chain ecosystem beyond buying and holding assets. This represents a potential market that developers and startups have yet to tap into, aiming to transform Crypto Asset holders into active participants by building applications that appeal to a wider audience.

There are great opportunities for encryption projects in startups, focusing on integrating these passive users into an active ecosystem by simplifying access to decentralized applications (dApps) and reducing barriers such as high costs, complex user interfaces, and technical knowledge requirements.

The gap between on-chain activities and ownership is active CryptoCurrencyAddress every month 01928374656574839201

Image Source: Mars Finance

The monthly active Address count of each blockchain network has reached a historical high of about 220 million. However, it is important to note that a single user may control multiple Addresses, so this number is not directly related to the unique number of users.

Image Source: DappRadar

After adjusting for users with multiple Addresses, it is estimated that there are 30 to 60 million unique active users interacting with the blockchain network every month. Although the number of active Addresses is impressive, the difference between the number of Addresses and the number of unique users highlights that the encryption ecosystem is still relatively small compared to the total number of internet users. This gap indicates that the industry has not yet reached mainstream adoption. On-chain activities and ownership: Despite the large number of individuals holding Crypto Assets, the level of active participation in on-chain activities is much lower. This may be due to high Money Laundering costs, lack of user-friendly interfaces, and limited practical applications of Crypto Assets beyond speculation.

2.3 encryption platforms should prioritize user-friendly mobile solutions and stablecoin products in inflationary regions.

Mobile Wallet has become an important entry point for Cryptocurrency users, especially in developing countries where TradFi infrastructure is less convenient.

Regions with leading adoption rates of mobile Wallets:

Nigeria, India, and Argentina have become the main regions for mobile Wallet usage, leading in adoption and activity.

US mobile Wallet market share: The market share of US mobile Wallet usage has dropped to below 15%, reflecting a shift in adoption patterns towards developing markets.

The increasing reliance on mobile Wallet in regions such as Africa, Asia, and Latin America reflects the actual use of Cryptocurrency in these economies. In many of these regions, Cryptocurrency is used to hedge against inflation, transfer funds across borders, and access Financial Services that were previously unavailable.

Stable Coin in the Era of High Inflation: The sharp increase in the usage rate of mobile wallets in countries like Argentina highlights the role of Stable Coin in hedging against the depreciation of local coins. With an annual inflation rate as high as 80%, Stable Coins pegged to the US dollar provide users in these regions with a more stable store of value.

3. Political landscape and regulatory environment

With the continuous development of Crypto Assets, its impact on the political landscape is becoming increasingly evident, especially in the United States. This section explores how Crypto Assets have become an important political issue, the role of Stablecoin in maintaining the dominance of the US dollar, and the latest regulatory developments shaping the industry.

3.1 Politicians should develop clear encryption policies to attract voters who prioritize digital asset regulation.

Before the 2024 US presidential election, Cryptocurrency has become a hot topic, especially in key swing states. Swing state influence

Image Source: Mars Finance

Pennsylvania, Wisconsin, and Michigan saw the most significant growth in encryption-related searches from 2020 to 2024, making them key battlegrounds where encryption policies may impact voter turnout and decisions.

Google Trends data: In-depth research into search trends shows that interest in Cryptocurrency is rising sharply in these states, indicating that some voters see Cryptocurrency as an important issue.

The politically crucial states' growing interest in cryptocurrency indicates that it may impact the outcome of the 2024 election. With the rise of candidates supporting cryptocurrency and discussions surrounding the role of digital currency in the US economy, cryptocurrency could become a decisive issue in the election.

The politicians' stance: Both the Democratic and Republican parties have begun integrating Cryptocurrency into their platforms, and are discussing innovation, regulatory transparency, and the economic benefits of embracing digital assets. The interest of both parties in Cryptocurrency indicates its importance as a mainstream issue that transcends traditional political divisions.

By ensuring a strong regulatory framework to leverage the increasing trend of Stablecoin, the US dollar's position as the global reserve coin is strategically significant, but its dominant position is being impacted by other coins and emerging digital assets.

Stablecoin as a tool for the dominance of the US dollar:

Stable Coin pegged to the US dollar: Over 99% of Stable Coins are pegged to the US dollar, making it an important tool for maintaining the dominant position of the US dollar in the global economy.

Strengthening the US Dollar: With the rise of foreign Central Bank Digital Currencies (CBDC), Stablecoin has become a digital standard for cross-border transactions, providing the United States with a means to maintain its influence.

Key indicator: Stable Coin holding US debt

Image source: JPMorgan

Stable Coin is currently the 20th largest holder of US government debt, surpassing major economies such as Germany. With increasing adoption, Stable Coin may continue to play a key role in supporting US government debt and become one of the largest holders in the future. This shift highlights the growing influence of Stable Coin in the encryption and TradFi ecosystems. As a digital extension of the US dollar, Stable Coin is widely used and provides the US with a unique opportunity to strengthen its global economic influence, even as other countries are attempting to use Central Bank Digital Currencies (CBDCs). By adopting Stable Coin, the US can enhance the position of the US dollar in global trade and finance, while also providing a more flexible digital alternative to traditional banking systems.

Future Challenges: Although Stable Coins have significant advantages, regulatory uncertainty and concerns about their systemic impact on TradFi are still obstacles that need to be addressed. Ensuring that Stable Coins are well-regulated and supported by appropriate reserves is crucial to maintaining people's confidence in their use as digital dollars.

3.3 The government should accelerate the implementation of clear encryption regulations to promote institutional adoption.

In 2024, the regulatory environment for crypto assets has both progressed and faced challenges. Governments around the world are striving to solve how to regulate this rapidly developing industry. The United States has made significant progress in developing a clearer regulatory framework for cryptocurrency, but challenges still remain.

Both parties' support for encryption legislation:

FIT-21 Bill: A major development is that the U.S. House of Representatives has passed the FIT-21 Bill with broad bipartisan support. The bill outlines the regulatory framework for cryptocurrencies and aims to clarify issues such as taxation, consumer protection, and regulation of decentralized finance (DeFi) platforms.

Stable Coin legislation: Both parties are increasingly interested in enacting Stable Coin legislation, and some members of Congress recognize the importance of ensuring that Stable Coins are regulated and operate within a safe and sound financial system.

The passage of the FIT-21 bill and the increasing follow of stablecoin regulation symbolize a positive step forward for the US Cryptocurrency industry. Regulatory clarity is crucial to promoting innovation and ensuring consumer protection. However, the speed of implementation of the new law and the final regulatory framework remain uncertain.

Global Regulatory Trends:

Europe and Asia: Several countries in Europe and Asia are also moving towards a more comprehensive Cryptocurrency regulatory framework. The European Union's Crypto Assets Market (MiCA) regulation is a typical example, indicating that regions are seeking to regulate the industry and create a stable regulatory environment that encourages growth.

CBDC and Cryptocurrency Regulation: With more and more countries attempting or launching Central Bank Digital Coins (CBDCs), the interaction between national digital coins and decentralized stablecoins will become an important regulatory focus. Governments around the world need to find a balance between promoting innovation and maintaining control over the currency system.

Due to the need for security in operating in a clear regulatory environment for enterprises and Financial Institutions, clearer regulation may increase the adoption of Crypto Assets by institutions. At the same time, regulatory clarity will help attract more users by providing safeguards against fraud and abuse.

4. Infrastructure Development

4.1 Ether project should use drop fees to target cost-sensitive markets, especially in developing regions

The Ethereum network underwent a major upgrade in 2024, and one of the most significant changes was EIP-4844 (Proto-Danksharding). This upgrade greatly dropped Money Laundering in the Layer 2 (L2) solution and improved the overall scalability of the Ethereum ecosystem.

EIP-4844 Implementation:

Proto-Danksharding: This upgrade introduces a new data availability layer to Ethereum specifically designed to support the needs of aggregation (Layer 2 scaling solutions). By allowing more efficient storage of data, EIP-4844 significantly reduces the Ethereum usage cost for developers and end users.

Impact on the second layer solution:

降低EthercoinTransaction Cost

Image Source: Mars Finance

The cost of using second-layer networks such as Arbitrum or Optimism has significantly decreased. For example, the cost of transferring stablecoins using second-layer solutions is now less than a cent, while in 2021, the cost on Ethereum Mainnet was $12. This is a game-changing move for users in developing countries, as the previously high costs made many Ethereum-based services inaccessible. The success of EIP-4844 is a key milestone for Ethereum as it continues to address the challenges of high fees and network congestion. By making transactions on second-layer networks more affordable, Ethereum can better compete with newer first-layer blockchains that offer faster and cheaper transactions. This infrastructure upgrade also opens the door for new Decentralization applications (dApps) that require low Transaction Cost to operate effectively.

4.2 Developers should use enhanced scalability to innovate new applications, especially in high-demand industries

Block chain scalability has always been a focus of attention in the industry, because the network needs to handle more and more transactions without sacrificing speed or security. In 2024, the overall scalability of the Block chain network made significant progress.

Trading volume growth:

50x Growth: The Block chain network can now process 50 times more transactions per second (TPS) than four years ago. This improvement is due to the progress of Ethereum's Layer 2 expansion solution and optimizations of alternative Layer 1 Block chains such as Solana, Tron, and Avalanche.

Scalable contributors:

Layer 2 Expansion: Ethereum's layer 2 solutions, such as rollups, have played a crucial role in increasing network transaction throughput without overloading the mainchain. As more users migrate to layer 2 networks, Ethereum's capacity to handle dApp activity has grown exponentially.

Solana and other Layer 1: Solana and other platforms focus on improving the speed and efficiency of base layer transactions. Solana's Proof of History (PoH) mechanism allows the network to process thousands of transactions per second, making it a popular choice for high-frequency trading and gaming applications.

These advances in blockchain technology enable Blockchain to support a wider range of applications, from Decentralized Finance to games, without encountering the bottlenecks that plagued the industry during the previous bull market. As blockchain becomes more efficient and affordable, we are likely to see more experiments with decentralized applications that were previously unattainable due to high costs and slow transaction speeds.

4.3 Building decentralized applications with a focus on privacy and scalability using ZK technology, with a particular emphasis on following industries such as finance and healthcare

Zero-Knowledge Proof（ZKP）represents a breakthrough in encryption technology, providing solutions to some of the most pressing challenges for blockchain: scalability, privacy, and Interoperability. What is Zero-Knowledge Proof?

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Zero-Knowledge Proof allows one party to prove the validity of a statement to another party without revealing any other information. In the context of blockchain, ZKP can be used to verify transactions without exposing sensitive data.

Applications of ZKP:

Privacy: ZKP supports private transactions on the public Blockon-chain, protecting user confidentiality without compromising network transparency.

Extension: By allowing certain computations to be processed off-chain and verified on-chain, ZKP can significantly reduce the amount of data that needs to be stored on-chain in Blocks, thereby improving efficiency.

Interoperability: ZKP can facilitate cross-chain interaction by verifying data between different blockchains without exposing underlying information.

Technological progress:

K Virtual Machine (ZKVM): The development of ZKVM is an important milestone in making zero-knowledge technology more accessible. ZKVM allows developers to build Decentralization applications that use ZKP to enhance privacy and scalability.

Performance indicators: ZKVM is still in the early stages of development and performance is comparable to early stages of traditional computing. However, improvements are happening rapidly and it is expected that ZK technology will play a significant role in the next wave of Block chain innovation.

ZKP is the focus of the future blockchain technology industry. They can solve privacy issues while improving scalability, making them a key innovation for the next generation of decentralized applications. As ZK technology matures, we can expect it to be more widely used in various industries, from finance to healthcare, and so on.

5. Emerging Applications and Trends

5.1 focuses on expanding the integration of stablecoins with traditional systems to accelerate the adoption of cryptocurrencies worldwide, especially in high inflation and developing markets.

Decentralization finance (DeFi) and stablecoins will continue to dominate the cryptocurrency industry in 2024. These two industries represent the majority of on-chain activities and have become key driving factors in the entire cryptocurrency ecosystem.

Usage details:

DeFi: accounting for 34% of the activities on the chain, it is the most prominent application of blockchain technology.

Stable Coin: Stable Coin accounts for 32% of the activity, mainly due to its role as a medium of value transfer, especially in high inflation economies and cross-border remittances.

Infrastructure Services (Bridges, Oracles, Smart Contract Wallets): These account for 14% of blockchain activities, highlighting the increasing importance of infrastructure solutions in connecting different blockchain ecosystems and ensuring seamless functionality for dApps.

Token Transfer: General Token Transfer accounts for 13% of usage, demonstrating the continuous flow of value in the blockchain network.

Other Categories:

Centralized exchange (CEX): Only 3% of blockchain activities are related to centralized exchanges, indicating that people are turning to decentralized alternatives.

Gaming and NFTs: These emerging industries together account for less than 3% of total activity, but have enormous growth potential in the coming years.

Social Applications: Social dApps are still in the early stages, accounting for less than 1% of blockchain activities.

Decentralized Finance and Stable Coin have proven to be the most powerful and widely used applications of blockchain technology. The success of Decentralized Finance lies in its ability to provide Financial Services without intermediaries, allowing users to easily borrow and trade. On the other hand, Stable Coin provides a reliable medium of exchange and serves as a hedge against the fluctuation of local coins in high inflation markets. With improved infrastructure and more users joining Decentralization platforms, these two industries are expected to continue driving the adoption of Cryptocurrency in 2025.

Growth potential:

DeFi: With the maturity of the DeFi ecosystem, it is expected that more complex financial products (such as derivative financial products, insurance, and cross-chain interaction lending) will emerge, attracting institutional investors.

Stable Coin: The demand for Stable Coin continues to grow, especially the demand from developing countries and institutional participants, which may drive further adoption. The integration of Stable Coin with the TradFi system, along with clearer regulation, may stimulate further adoption.

Enhancing artificial intelligence applications with blockchain in industries such as Decentralized Finance, supply chain management, and digital identity creates new market opportunities.

The intersection of artificial intelligence (AI) and blockchain has become one of the most exciting frontier industries in 2024, with a significant overlap between user groups and emerging applications.

User overlap:

correlation high: Data shows a high degree of overlap between users of artificial intelligence technologies such as ChatGPT and active participants in the Crypto Assets industry. This overlap indicates that Crypto Assets users are early adopters of artificial intelligence and are likely driving innovation at the intersection of these two technologies.

Applications and Synergies:

Authenticity and Verification: One of the most promising applications of Blockchain in artificial intelligence is to verify the authenticity of AI-generated content. As Deepfake and AI-generated media become increasingly common, the demand for a trusted system to verify the source and accuracy of content will increase. Blockchain has encryption features and can serve as a verification layer to ensure the legitimacy of AI outputs.

Data Ownership and Control: Blockchains can also address concerns around data ownership in AI applications. Decentralized systems allow individuals to control their own personal data, which can then be used to train AI models without compromising privacy or sovereignty.

Decentralization AI Agents: Blockchain can facilitate the creation of Decentralization AI agents independent of any central authority. These agents can be used for various applications, from automated trading to Decentralization customer service, without the risk of censorship or tampering.

Many startups and established companies are beginning to explore how blockchain can improve the functionality and security of artificial intelligence applications. The integration of these two cutting-edge technologies could open up new markets and applications that were previously impossible to achieve, especially in industries such as DeFi, supply chain management, and digital identity verification.

By improving user experience and liquidity, as well as cross-chain interaction trading, the transition to DEX is utilized.

One of the most significant changes in 2024 is the increasing market share of Decentralized Exchange (DEX) compared to Centralized Exchange (CEX). This trend reflects the widespread trend of the encryption ecosystem moving towards decentralization.

Market Share Trend

DEX: In 2020, Decentralized exchange accounted for 0% of the Cryptocurrency volume. By 2024, DEX will account for more than 10% of the total Cryptocurrency volume, and some estimates suggest that this figure could rise to 30-40% in the coming years.

Centralized exchange: Although centralized exchanges still dominate the market, as more and more users seek Decentralization as an alternative to gain higher security, transparency, and control over funds, the market share of centralized exchanges is gradually declining.

Image Source: Artemis

Advantages of DEX:

Security: DEX eliminates the need for users to entrust funds to central authorities, thereby dropping the hacker attacks or fraud risks that have plagued many centralized exchanges in recent years.

Transparency: All trades on DEX are executed on-chain, meaning they are publicly visible and verifiable, thus dropping the risk of market manipulation or opaque behavior.

User Control: DEX allows users to retain custody of their assets throughout the entire transaction process, thereby mitigating the risk of loss due to exchange bankruptcy or mismanagement.

Prediction: With the continuous improvement of user experience and liquidity of DEX, it is expected that they will occupy a larger market share. The introduction of features such as Automated Market Maker (AMM) and Cross-Chain Interaction has made DEX more competitive, and the further development of decentralized financial infrastructure may accelerate this trend.

6. Prioritize developer-friendly tools and infrastructure to attract and retain builders.

Developers' interest in the encryption industry is a key indicator of its long-term growth potential. In 2024, with the advancement of infrastructure and the increase in innovative potential, the number of builders focusing on encryption projects will significantly increase.

Builder Energy Dashboard: A16Z's proprietary Builder Energy Dashboard tracks developer activity across blockchains, categories, and regions. The tool shows that the number of active builders in the encryption industry is growing year by year, reflecting the increasing maturity and expanding functionality of the ecosystem.

Platform preference:

Ethereum and Layer 2: Ethereum and its Layer 2 solutions continue to attract the interest of most developers, with a focus on scalability and improving user experience. The success of aggregated solutions such as EIP-4844, Optimism, and Arbitrum has attracted developers who wish to build on these efficient and scalable platforms.

Base: Base is a groundbreaking ecosystem in 2024. Due to its performance and innovation in the second-layer expansion function, developer interest is growing rapidly.

Other ecosystems: While Ethereum and its layer 2 dominate, other platforms like Bitcoin, Solana, and newcomers continue to gain follow, especially for applications that require high throughput and low Transaction Cost.

The growth of Builder Energy: The increasing interest of developers indicates a healthy and evolving ecosystem. With the launch of more projects and an increasing number of tools created for developers, the encryption space is becoming easier to access and innovate.

7. 2025 Trends

With the continuous development of the encryption industry, several key trends and predictions emerged in 2025. It is expected that these will affect the next stage of growth and innovation in the industry.

Infrastructure utilization: With the enhancement of expandable functionality by 2024, the widespread application of Blockchain technology is ready. With the drop of Money Laundering and the improvement of network efficiency, more users and applications will enter the industry.

New applications: The drop of Money Laundering will enable the development of more applications of Decentralization in industries such as social media, gaming, and supply chain management. These industries currently lack representative on-chain activities, but they may experience significant growth as the infrastructure becomes more robust.

Regulatory clarity: Regulatory developments in the United States and around the world will play a crucial role in determining adoption speed. Clearer regulations will attract more institutional investors and bring greater legitimacy to the industry, while also protecting consumers and ensuring market stability.

The integration of artificial intelligence and Blockchain: The integration of artificial intelligence and Blockchain is expected to accelerate in 2025, and there will be more applications at the intersection of these two technologies. From AI-driven DeFi applications to AI model verification systems based on Blockchain, the synergy between these technologies may bring new opportunities for innovation.

The fifth wave of applications in the cryptocurrency market is expected to usher in a new wave of growth, driven by the maturity of Decentralization applications, increased institutional participation, and improved global regulatory transparency. If the industry continues its current momentum, 2025 may see the next important growth and innovation cycle.

8. Conclusion

2024 is a transitional period for the cryptocurrency industry, characterized by significant improvements in infrastructure, advancements in regulation, and the maturation of key applications. With the continuous expansion of blockchain technology and decreasing costs, the industry is expected to have broader applications in finance, gaming, and other industries. Although challenges still exist, particularly in regulatory transparency and user experience, the overall outlook for the industry is positive.

Disclaimer: This article does not constitute investment advice. Users should consider whether any opinions, viewpoints, or conclusions in this article are applicable to their specific circumstances and comply with relevant laws and regulations in their country or region.

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Original author: arndxt