By Brett Munster
At the end of 2024, we published an in-depth article highlighting the key tailwinds propelling bitcoin into the new year. While our bullish outlook on bitcoin remains no secret, it’s far from the only aspect of the crypto space that excites us. In this article, I want to explore three other promising sectors within the crypto industry—beyond bitcoin—that we believe have significant potential in the year ahead.
Stablecoins
Stablecoins have undeniably emerged as one of crypto’s killer apps. Since 2019, the market has grown from nearly zero to over $220 billion. In 2024 alone, stablecoins experienced massive growth—the total market capitalization surged by 48% while total transaction volume tripled to $30 trillion, with a record $5 trillion of stablecoins transacted in December alone. For context, stablecoins did more transactional volume than both Visa and Mastercard. Their ability to facilitate faster and cheaper transactions compared to traditional methods has driven increased use for digital payments and remittances, prompting more payment firms to expand their stablecoin infrastructure. We may soon witness a shift in the primary use cases for stablecoins from mere trading to global capital flows and commerce. With a stablecoin bill in the U.S. likely to provide much-needed regulatory clarity later this year, market cap projections suggest that stablecoins could grow to upwards of $500 billion by the end of 2025 and reach $3 trillion over the next five years based on current trends.
USDT (Tether) and USDC (USD Coin) have emerged as the two largest stablecoins within the cryptocurrency ecosystem, playing pivotal roles in providing liquidity, enabling remittances, and facilitating digital trading. Both are pegged to the US dollar and backed by reserves, ensuring their value remains stable relative to fiat currency. Their early market entry and robust partnerships with major crypto exchanges have solidified their dominance. However, there are three reasons to believe that USDT and USDC could face disruption.
The first reason concerns their business model, which centers on earning yield from the reserves backing the tokens. Each issued token is backed by one U.S. dollar or equivalent assets held in reserve, which are invested in short-term financial instruments like U.S. Treasury bills and other highly liquid assets. With rising interest rates in recent years, these assets have generated significant returns—returns that issuers retain as profits. For example, Tether reported $13 billion in profits in 2024, comparable to some of the largest Wall Street firms such as Goldman Sachs, which earned $14 billion in the same period. This model allows issuers to monetize the massive demand for stablecoins without distributing earnings back to token holders, a dynamic that has drawn criticism since users effectively provide the capital (via fiat deposits) driving these earnings while receiving no direct share of the profits. It’s likely that many USDT and USDC users would migrate to an alternative stablecoin if it could reliably maintain its peg while also offering yield, providing them with both stability and a share of the returns currently retained by issuers.
The second reason highlights a significant, unmet global need for dollar-based yielding accounts—an offering neither USDT nor USDC currently provide, as they do not pass on yield. While U.S. citizens enjoy direct access to a $30 trillion Treasury market, individuals in many other regions lack the opportunity to earn yield on dollar-denominated capital. With at least one-quarter of the world’s population unbanked and 87% of the global population residing in regions without stable currency regimes, there is an enormous underserved financial need. People require not only access to dollars but also the ability to earn yield on their savings in a more dependable currency than their local options. In other words, a yield-bearing, permissionless dollar-denominated instrument could, in terms of global adoption, surpass non-interest bearing stablecoins.
The third reason is rooted in the centralized nature of USDT and USDC, which conflicts with the ethos of decentralized finance (DeFi). Both stablecoins are issued and controlled by centralized entities—Tether Ltd. for USDT and Circle for USDC—exposing holders to counterparty risk (such as bank solvency) and censorship risk (the possibility of frozen or blacklisted accounts and arbitrary policy changes). These features run counter to DeFi’s core principles of creating an open, trustless, and permissionless financial system.
Despite these challenges, stablecoins remain integral to the DeFi ecosystem. Their stable value and deep liquidity are indispensable for activities such as liquidity provisioning, serving as collateral in lending protocols, and facilitating trading on decentralized exchanges. In fact, all major trading pairs across both spot and futures markets on centralized and decentralized venues are denominated in stablecoin pairs—with 60% to 80% of on-chain settlements using stablecoins. This reliance, however, exposes DeFi to risks stemming from centralized oversight and regulatory pressures on stablecoin issuers, potentially undermining the decentralization of the broader ecosystem. These tensions have fueled the development of decentralized stablecoin alternatives that better align with DeFi’s principles, and it is likely that a significant share of DeFi users would migrate to a more decentralized stablecoin—provided it could reliably maintain its peg while offering comparable stability and liquidity.
We believe that a more—or fully—decentralized, yield-bearing stablecoin has the potential to disrupt and capture market share from centralized incumbents like USDT and USDC by better aligning with DeFi principles and offering superior economic benefits to users. Such a stablecoin would not only capitalize on the immense growth of the overall stablecoin market but would simultaneously also likely steal market share from the two largest players.
Early indications of this shift emerged in 2024. At the start of last year, Ethena launched its yield-bearing stablecoin, USDe (Disclosure: Blockforce is an investor in ENA), which grew to over $5 billion in market cap in less than a year. Ethena reached this milestone faster than any other stablecoin ever launched and is now the third-largest stablecoin in the market. Despite its rapid growth, Ethena currently holds only a 3% market share, highlighting the vast potential for yield-bearing stablecoins.
With growing usage and interest in crypto, coupled with increasing regulatory clarity, the entire stablecoin market is poised for substantial growth in 2025. The biggest beneficiaries of this expansion, however, will likely be decentralized, yield-bearing stablecoins that better align with user interests and the core ideals of the crypto community.
DeFi
Decentralized Finance (DeFi) was one of the earliest crypto innovations to gain real market traction after bitcoin. Though initially introduced around 2017, DeFi truly gained prominence during the “DeFi Summer” of 2020. Some of today’s largest and most influential crypto projects, such as Aave and Uniswap, emerged during this period.
At its core, DeFi aims to create financial products and services that operate without intermediaries. By functioning in an open, peer-to-peer manner, DeFi has the potential to achieve far greater efficiencies than traditional financial infrastructure. By eliminating rent-seeking middlemen, DeFi significantly reduces the costs associated with transactions, borrowing, and trading. Moreover, DeFi operates on public blockchains, making it far more transparent than traditional finance. Transactions, smart contract codes, and protocols are openly accessible for anyone to inspect, improving compliance and fostering trust. In contrast, traditional finance relies on opaque institutions, closed systems, and regulatory bodies that control access to financial data.
Perhaps the most critical aspect of DeFi is its non-custodial nature, allowing users to maintain full control over their assets—an essential distinction from traditional financial services. In DeFi, users interact directly with smart contracts, ensuring that they retain ownership of their funds without relying on centralized entities. This eliminates counterparty risk, preventing institutions from freezing funds, mismanaging deposits, or leveraging assets without user consent. Traditional finance, by contrast, requires users to trust centralized institutions, which assume legal ownership of assets, exposing depositors to potential insolvencies and financial mismanagement.
The importance of DeFi became particularly evident in 2022, a year marked by the collapse of several centralized crypto lenders and the infamous downfall of FTX. While centralized exchanges and lending platforms collapsed—many due to fraud or mismanagement—decentralized exchanges and lending protocols functioned as intended, without interruption. For every major centralized failure, there was a DeFi alternative that remained solvent and fully operational. While lenders such as Celsius, BlockFi, and Voyager declared bankruptcy, DeFi protocols like Aave and Compound were the first to recover their funds. Following FTX’s collapse, Uniswap, the leading decentralized exchange, experienced a significant surge in trading volume as users moved their assets away from centralized platforms and into self-custody. None of the major DeFi protocols defaulted on their users, none accumulated debt beyond their collateralized assets, and none required bailouts. Despite the broader market turmoil caused by fraudulent off-chain activities, DeFi demonstrated the resilience and benefits of decentralization. These protocols remained fully functional and continued to showcase the security and reliability of smart contract-based financial services.
Since then, the DeFi sector has only continued to grow. Decentralized exchanges (DEXs), which allow users to trade assets directly through self-executing smart contracts, have become the cornerstone of DeFi. Uniswap, the largest DEX, saw its monthly active users surge from just over 1 million at the beginning of 2024 to an astounding 18.8 million at its peak in October, reflecting the increasing demand for decentralized trading and liquidity solutions. Over the past year, DEXs have steadily gained market share from centralized exchanges like Coinbase. (Disclosure: Blockforce is an investor in UNI.)
Similarly, Aave, the leading decentralized, non-custodial lending protocol, has witnessed a significant rise in borrowing activity. The total borrowing volume on Aave grew from $2 billion in early 2023 to nearly $16 billion by the end of 2024—clear evidence of the increasing demand for DeFi lending services. (Disclosure: Blockforce is an investor in AAVE.)
Beyond adoption, DeFi ranks among the highest revenue-generating sectors in the entire crypto ecosystem. In 2024, Aave generated $86 million in revenue—a staggering 190% increase from the previous year. Uniswap’s revenue also grew substantially, surpassing $78 million in 2024, up from $50 million in 2023 and just $24 million in 2022. Meanwhile, Raydium, the leading decentralized exchange on Solana, generated nearly $30 million in revenue in a single week amid the trading frenzy surrounding memecoins. (Disclosure: Blockforce is an investor in RAY.) Unlike traditional financial institutions, DeFi protocols operate as autonomous code, meaning they do not have employees, rent, or significant operational costs, making their revenue almost pure profit. This efficiency has resulted in some of the strongest underlying fundamentals in the crypto industry.
Yet, despite these impressive fundamentals, the price appreciation of DeFi tokens has significantly lagged behind the broader crypto market in recent years. The primary reason for this stagnation has been the regulatory uncertainty surrounding DeFi. For years, DeFi protocols avoided sharing network-generated revenue with token holders out of fear that doing so would classify them as securities, exposing them to enforcement actions from the SEC. Given the regulatory climate, this caution was justified.
However, the landscape is now changing. The new SEC leadership has signaled a more collaborative approach toward crypto regulation, and a pro-crypto Congress is expected to pass a market structure bill that will provide clear guidelines on how DeFi tokens can capture and distribute value while remaining compliant with the law. This shift in regulatory clarity presents a new paradigm—one in which DeFi protocols can finally align their tokenomics with the immense value they generate.
Looking ahead, DeFi is poised for a potential resurgence in 2025, fueled by regulatory tailwinds, growing fundamentals, and increasing institutional adoption of on-chain financial infrastructure. The introduction of revenue-sharing mechanisms, which transform governance tokens into yield-generating assets, will create a compelling value proposition for investors. As regulatory barriers ease, the market is likely to recognize DeFi’s true potential, and no sector in crypto—aside from bitcoin—has stronger fundamentals than DeFi.
Decentralized AI
In the 2000s, cloud computing, mobile technology, and social media emerged in parallel, reinforcing each other and reshaping the digital landscape. Cloud computing, spearheaded by platforms like AWS, provided scalable infrastructure for mobile apps and social networks. The rise of smartphones, driven by the iPhone and Android, enabled seamless connectivity, allowing social media to extend beyond desktops and into users’ daily lives. Platforms like Facebook and Twitter capitalized on this convergence, leveraging both mobile accessibility and cloud scalability to reach billions. This technological fusion revolutionized online interaction, laying the foundation for the digital world as we know it today.
Now, a similar convergence is unfolding—this time between crypto and artificial intelligence (AI). While traditionally seen as separate domains—AI excelling in automation and decision-making, and crypto enabling decentralized finance and security—their intersection is fostering new synergies that could redefine the future of technology.
One of the biggest barriers in AI today is the enormous computational cost required to train advanced models. OpenAI estimates that training a state-of-the-art AI model can cost up to $30 million, with even larger models demanding exponentially more resources. This financial burden has concentrated AI development in the hands of a few powerful corporations, limiting access and stifling competition.
Beyond cost, centralization creates silos. Proprietary AI models are locked within corporate walls, lacking interoperability and preventing collective progress. In contrast, traditional scientific research thrives on collaboration, shared knowledge, and cumulative innovation. Furthermore, when AI is controlled by a handful of entities, transparency, bias, and unchecked influence become growing concerns, shaping AI systems in ways that reflect corporate priorities rather than public benefit.
Blockchain and crypto offer a compelling alternative. One of crypto’s key attributes lies in its ability to coordinate decentralized networks through incentive mechanisms—exemplified by Bitcoin, which has mobilized a computing network vastly exceeding the scale of those operated by Google, Amazon, or Meta. Applying similar principles, decentralized AI networks can pool computational power and intelligence, creating a more open and collaborative ecosystem.
A leading example of decentralized AI is Bittensor (Disclosure – Blockforce is an investor in TAO). Bittensor is a blockchain-based AI network that democratizes access to computational resources and intelligence. Unlike proprietary AI models that operate in silos, Bittensor enables a distributed network of nodes to collaborate in training AI models, compounding incremental contributions over time and accelerating innovation.
Bittensor’s decentralized structure is powered by TAO tokens, which incentivize participation. Developers, miners, and validators are rewarded for their contributions, creating a meritocratic system where AI performance—not corporate ownership—determines success. This approach lowers barriers to entry, making cutting-edge AI accessible to individuals, small businesses, and independent researchers.
Furthermore, blockchain technology enhances AI transparency and security. Decentralized AI models built on blockchain offer verifiable, tamper-proof records of training data, model updates, and decision-making processes. This is particularly valuable in industries like healthcare and finance, where privacy and accountability are critical.
Another groundbreaking development at the intersection of AI and crypto is AI agents—autonomous, AI-powered software programs that operate in blockchain ecosystems. Unlike traditional bots, which follow pre-programmed rules, AI agents learn, adapt, and make independent decisions based on real-time data. With on chain wallet integrations, the scope of AI agent activity drastically expands by incorporating payments services into their toolkit.
AI agents have already showcased impressive capabilities across various domains, demonstrating their potential to operate independently and participate in digital economies. They are capable of executing autonomous transactions, such as ordering food to be delivered, planning trips and booking flights, and trading financial assets without human intervention. Beyond simple automation, AI agents are also forming self-sustaining economies by hiring and compensating other AI agents to complete tasks, creating an interconnected network of digital labor. Perhaps most notably, AI agents can be structured as tokenized assets, allowing them to function as autonomous economic participants in decentralized markets. By leveraging blockchain technology, these agents can manage digital assets, execute trades, and optimize financial strategies, fundamentally reshaping how AI interacts with the economy.
A notable early example was Truth Terminal, an AI agent trained on internet subcultures. By structuring itself as a tradable token, it attracted $50,000 in initial capital and leveraged Twitter and decentralized exchanges to grow that into over $1 million. This experiment proved that AI agents can achieve real-world economic influence when deployed as open, tokenized software rather than being controlled by centralized entities.
Without crypto, such AI autonomy would be impossible. Traditional financial systems require human identification, passports, and bank accounts—all barriers for AI entities. In contrast, blockchains enable AI agents to own and trade digital assets freely, interact with smart contracts, and become independent economic actors.
The convergence of AI and crypto represents a fundamental shift in how intelligence is developed, distributed, and monetized. Decentralized AI offers a path toward greater accessibility, collaboration, and innovation, ensuring that AI’s benefits extend beyond corporate walls and reach a global, open-source community. By leveraging blockchain’s transparency, incentive structures, and permissionless financial rails, decentralized AI and AI agents are poised to reshape industries, redefine automation, and unlock unprecedented economic possibilities.
The future of AI isn’t just smart—it’s open source, decentralized, and on-chain.
In Other News
US Senate confirms pro-crypto Scott Bessent as new Treasury secretary.
Illinois becomes the 13th state to introduce Strategic Bitcoin Reserve legislation.
Apollo unveils tokenized private credit fund.
Bitcoin hashrate hits all-time high defying analyst expectations.
Crypto Czar David Sacks says ‘Golden Age’ is coming.
US Senator Hagerty introduces ‘GENIUS’ stablecoin bill.
Disclaimer: This is not investment advice. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. All Content is information of a general nature and does not address the circumstances of any particular individual or entity. Opinions expressed are solely my own and do not express the views or opinions of Blockforce Capital.
Disclaimer: This is not investment advice. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. All Content is information of a general nature and does not address the circumstances of any particular individual or entity. Opinions expressed are solely my own and do not express the views or opinions of Blockforce Capital or Onramp Invest.
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