The following is a guest post by Srikumar Misra, founder of aarnâ protocol.
A quintet of intertwined vectors: DeFi, stablecoins, AI, regulation and liquidity are big themes bouncing around, creating barriers and deep opportunities. The building energy remains phenomenal. It feels like Token 2025 will be vastly different from the hushed, bated breath the crypto community has had for the past two years.
First of all, I have to admit that conferences are not my thing! I’m an INTJ (that’s Myer’s Briggs Type Indicators – check it out if you haven’t already, interesting old world psychological science), and I need my space and time, and do 12 hours of endless conversations, meetings, networking, and listening to the same speakers saying largely the same things, well, that can be taxing.
But the atmosphere and energy at Token 2049 this year kept even the INTJ in me going! It doesn’t seem like there is a major stagnation in crypto; it didn’t look like DeFi TVL was bankrupt: the belief and action of the believers, the stayers and the builders were DeFi’ing. You know some people like you are building with their heads down and getting ready to strike back to build a new participatory creator and financial system.
So, here are my top five of what’s coming up:
1. DeFi is essential for crypto
DeFi is a cornerstone of crypto, and for any L1 or L2 to thrive in any crypto sector, like gaming or NFTs, the on-chain DeFi ecosystem needs to be vibrant. DeFi is the financial pipeline of crypto. While tokenization, fractionalization, and on-chain RWAs become bigger emerging themes, DeFi must exist in its original form and still evolve because DeFi in its current form will not be able to onboard the next 100 million users.
It should be less complex (abstraction), less fragmented (aggregation) and UX-oriented. Building next-generation DeFi is an existential essence for L1s, L2s, and protocols to be carried as a framework.
2. Stablecoins will evolve
To date, stablecoins are the most widely accepted use case for DeFi. They serve multiple purposes in a user’s digital asset lifecycle, from ramping up to maintaining liquidity without exposure to market volatility, to operating cross-chain with arguably easier bridging.
However, stablecoins are not interest-bearing and are for the most part not only denominated in USD, but also fully backed by USD. And these two dimensions will change. Stablecoins will emerge, which can still be denominated in USD, but are backed by crypto assets (we’re not talking about algo stables here) and are interest-bearing. This idea is not new, but sometimes ideas are ahead of their time, and now people are beginning to feel that the time has come.
3. AI + crypto are real
The AI story, like the buzz around the convergence of AI and crypto, is overused everywhere. From automated agents interacting natively with smart contracts to AI-managed asset management to distributed storage and computation running via blockchains via protocols, large-scale AI models that need to be managed and sanction-proof and not subject to concentrated exposure to centralized storage and computation .
It’s especially important to me and the validation of the work we’ve been doing for over eighteen months now building aarnâ AI at the intersection of DeFi and AI for autonomous asset management.
4. Regulation outside the US
This is of course one of the biggest overhangs in the crypto world, and it’s not just about the SEC and its whims in the US, but almost all countries with their slap-hot slap-cold crypto and more DeFi relationship. I chatted briefly with Larry Cermak, the tall man from The Block. It was obvious to investigate how the founders of the DeFi protocol are spotted in the US every now and then, and it simply forces all legitimate players to be very concerned and explore a move.
We need progressive regulation – and consider crypto as crypto, i.e. a tokenized economy, not a currency. DeFi regulation should be led by other countries, not the US.
5. Liquidity remains stifling at all stages
Finally, the major concern is about liquidity and speed. Liquidity is under pressure. Legitimate market makers struggle to access capital. With volumes falling, CEXs are under pressure. Although top DEXs like Uniswap started gaining significant volume growth earlier this year, the continued sideways movement of the markets is draining active liquidity.
Larger market makers who have traditionally focused only on CExs are likely to struggle to understand DeFi’s liquidity provision as it is more layered (although directly on-chain) and does not help matters. And VCs? In freeze mode, not crouching to break away from the herd, just huddled. That keeps newer DeFi projects from bringing higher order innovation to the market, which could create the newer user acquisition – buzz – liquidity loop.
Intimidating themes, all of them, and also fruitful opportunities. There are deep thinkers and brash doers in this field. Token 2025 will be very different. You can see it, hear it and feel it.