On January 20, 2025, Trump returned to DC. In just a few days, he not only brought multiple executive orders, but also brought $Trump and the Family Coin combination. An unprecedented global financial baptism not only caused drastic changes and shocks, but also caused people to stay up all night in FOMO. Solana was pushed to a record high for a while, and Meme deservedly became the biggest focus.
Putting aside profits and losses and emotions, the question is: Is this the starting point or the end point?
No matter what Trump does, as mentioned in a previous article < The dramatic change in the situation after Trump's victory >, Trump is just borrowing the trend of Crypto to make decisions that are beneficial to himself at historical nodes, but it can be said that the market value price of $Trump coin is based on the global Consensus accumulation habits formed by reversely building value expectations through Narratives in the Crypto market over several cycles. In short, he has reached the pinnacle of Meme and narrative consensus monetization.
Although the Meme craze continued as of the end of January, the value bands and drilling time of a large number of single coins are constantly shortening under the high-risk PVP game. It can be said that the quantitative experience of long-term investors and professional financial practitioners including me has been completely overturned in the face of gmgn and tgbot; but the essential trend is still very clear: the peak is always the summary and archive of the consensus of the previous stage, and the first curve of Crypto growth is about to end.
tl;dr
1. Zero-sum game and the seven giants at the poker table
2. The significance of the first growth curve of Crypto and its last gasp
3. Negative-sum game and the dilemma of VC coins in the “last cycle”
4. RYA/RWA trends and the rise of PayFi
5. Crossing the Chasm: The Second Curve of Crypto Growth
6. Crypto development pattern and situation in various countries under compliance issues
7. Opportunities and challenges in 2025 amid dramatic changes
1. Zero-sum game and the seven giants at the poker table
After 16 years and four cycles, Crypto has obviously slowed down in terms of wealth creation, and the most important manifestation is that it cannot get rid of the 3 trillion curse. Although the passage of ETFs from 2024 has pushed the competition for BTC Reserve from individuals and institutions to the country, the net outflow has offset a large amount of net inflow, and the growth dividend of the first curve has gradually shifted from a positive-sum game to a zero-sum game.
Last year at Token2049 in Singapore, I compared the seven giants on a poker table. There is an interesting situation on the Texas hold 'em table. If you come to the table today and don't know who you are going to cheat, then today you are going to cheat yourself. This is a zero-sum game.
After the Crypto Market gradually moved towards a zero-sum game, the seven giants gradually emerged on the table: No. 1-Exchange, No. 2-Financial institutions (such as lending agreements and custodians), No. 3-Market makers, No. 4-Project parties, No. 5-Whales, No. 6-VC, and No. 7-Retail investors. In the past cycles, the bull-bear alternation was due to the rapid growth trend of the first curve and the large amount of incremental funds, so the overall cross-cycle positive-sum game was in place, and the awkward relationship between the seven giants was not obvious. After entering 2021, the first curve slowed down significantly, and the net growth rate of funds decreased significantly. The table soon entered a zero-sum or even negative-sum game. When the current No. 6 position was staring at the No. 7 position awkwardly, the No. 1 position clearly felt the industry risk of the lips and teeth being cold, so it began to increase the threshold and charge higher security fees to the No. 4 and No. 3 positions. The No. 4 position was helpless and should have served the No. 5 and No. 6 positions well, but due to the change in the rules of the game, it had to turn to play with them. Over time, resentment became a disease, and the game became difficult to maintain.
2. The significance of the first growth curve of Crypto and its last gasp
The significance of the first curve of Crypto growth is similar to the preaching process of the Bible, Buddhist scriptures, and the Koran. It depicts faith with narratives and builds consensus among the first wave of people to trigger gradual changes in subsequent production relations.
However, the world today is different from the past. First, it is developing too fast, and second, the speed of verification of practicism is extremely fast. Therefore, growth without consensus implementation cannot be sustained. Four cycles in 16 years is the limit. In this cycle, whether it is DePIN, RWA, and BTCFi, or AI Agent, DeSci, and ZK; it is difficult to continue to rely on Beta dividends and empty talk about development without real landing of Real Yield and Real Application. Trump's victory is the last continuation of the last gasp under the narrative consensus. $Trump is essentially the end point of the first curve of Crypto growth.
3. Negative-sum game and the dilemma of VC coins in the “last cycle”
At the end of the first curve of Crypto growth, the competition in the remaining battlefield is certainly fierce. Despite the high valuation of VC financing, high FDV and low liquidity, the difficulty of falsifying narratives without products, the difficulty of redeem with high TVL and long pledge, and the high Listing/MM fee, the dilemma is very obvious.
At the end of the zero-sum game, if the boundary of the first curve is not broken, not only will it be impossible to create a miracle out of nothing, but vicious competition will also occur, forming a negative-sum game. The "last cycle" predicted by many people is exactly such a result. The "last cycle" is certainly not the end of Crypto, but the VC coin project with only narrative consensus but no real landing of Real Yield and Real Application is unsustainable.
It is worth mentioning that Meme is a special mezzanine product here. From the perspective of narrative consensus, it still belongs to the first curve, but it is breaking through people’s understanding of finance in an unprecedented way. Through rapid launch and rapid game, it abruptly breaks the problems of VC high valuation financing, high FDV and low liquidity, high TVL and long pledge, and the need for Listing and MM costs. It uses destructive methods to set an end milestone for the first curve, and at the same time uses global breakthroughs to lay a foundation for the legitimacy of the second curve .
4. RYA/RWA trends and the rise of PayFi
In mid-January 2025, I met a project founder from Nigeria at an LP meeting in Salt Lake City. David demonstrated his popular PayFi product to me and told me that currently in Nigeria, the use of Crypto in payment, finance and assets has exceeded 50% (together with legal currency). Since a large number of people are not eligible to pass the KYC of the traditional financial system, they directly use Crypto tools.
I remember hearing Robin Li (Baidu CEO) say at a conference in Beijing in 2014 that China is a place where the basic industrial revolution and the Internet are happening at the same time, so new things like Internet finance will happen quickly in China. It is obvious that more than ten years later, the combination of more basic industrial development + Web3 revolution is also happening rapidly in Africa, South Asia, Southeast Asia, the Middle East and South America. Logistics, trade, manufacturing and financial settlement companies including China, the United States and Russia have been forced to adapt to the needs of partners and quickly get involved in this change.
Therefore, the mainstream Crypto market does not need to prove any adjustment conditions. The data from Nigeria and India have already told us that the speed of change brought about by 2025 will be faster than we can imagine. The second curve of Crypto growth under the rise of Real Yield Asset, Real World Application, and PayFi is just around the corner.
5. Crossing the Chasm: The Second Curve of Crypto Growth
Obviously, the second curve of Crypto’s growth is the application of real yield and real application.
The book "Crossing the Chasm" mentions that there are five stages in the development and popularization of a new thing: 1. Innovator, 2. Early Adopter, 3. Early Majority, 4. Late Majority, 5. Laggards.
In the stage from 2 to 3, there will be a big gap, which is difficult for most products to cross or takes a long time to cross. For Crypto, it is obvious that the 3 trillion curse is the gap itself. Early Adopter is the group that accepts the narrative, while Early Majority is the group that must see the actual landing application produce economic effects.
Once Real Yield & Real Application are achieved, the second curve of Crypto growth will explode rapidly until it becomes the transaction and settlement basis for the world's mainstream economy, finance, assets and payments.
$Trump magically plays a milestone role at this point. It is both the end and the starting point. In addition, Trump himself has gradually fulfilled his election promise to loosen Crypto restrictions. Measures such as rescinding SAB 121 have also paved the way for the growth of the second curve and provided sufficient legitimacy.
6. Crypto development pattern under compliance issues and the situation in various countries (and regions)
Faced with such sudden changes, it is difficult for most countries and regions to come up with a clear preemptive legislation for management. For many regions mentioned above, such as Africa, South Asia, Southeast Asia, the Middle East and South America, Trump's victory and open policies provide the most comfortable decision-making conditions for the management of Crypto by reactive legislation, so the rapid outbreak will also accelerate this year.
Singapore and Hong Kong still tend to adopt pre-emptive legislation in financial management, but after Trump came to power and issued Crypto-related executive orders, there was also a corresponding easing trend. The Ethereum ETF and 1.9 license upgrade issued by Hong Kong in 2024 are both forward-looking and have certain risk pressures. This pressure has gradually eased at this stage, and the issuance and use of stablecoins will be further regulated in the management regulations that MSO will continue to introduce in the near future; Singapore will tend to be more post-emptive in this process based on existing bills. For example, the DPT regulatory framework under PSA has not made further detailed agreements on the issuance and use of stablecoins other than payments, and it is likely that this space will continue to be reserved.
In summary, as of the end of January 2025, the global compliance supervision has generally become friendly to the development of Crypto under the influence of Trump's inauguration. This situation cannot be said to be a stable state, but it has bought a certain amount of time for the second curve transformation of Crypto's growth.
7. Opportunities and challenges in 2025 amid dramatic changes
The turning point brought about by the second curve is two-way, that is, it will have a qualitative change and far-reaching impact on both the Crypto Market and TradFi.
For the Crypto Market, this is a habitual shift similar to a gear shift. This process is likely to change the original 4-year halving cycle, or at least change the impact of emotions and consensus on the fluctuations of bull and bear markets on the original basis, and will definitely change the basis for judging the value of projects, assets and applications in the industry. For the economy, finance, assets and payments in the global environment, it is a more fundamental challenge. This challenge will change the dollar-based financial credit system based on the US credit since the Bretton Woods Law, as well as a large number of economic realities dominated by Keynesian ideas.
