Authors: IOSG Ventures, Bing Ventures, Waterdrip Capital, HashKey Capital
Compiled by: Scof, ChainCatcher
At the beginning of the new year, the global investment environment continues to change, and various new technologies and market trends are emerging. Against this backdrop, how investors can formulate long-term strategies and how to evaluate and select investment projects have become widely concerned issues in the Crypto industry.
In this regard, RootData, together with ChainCatcher, hosted this interview. In the previous issue, we invited investment institutions such as OKX Ventures and Bixin Ventures to provide constructive responses. In this issue, the invited investment institutions include IOSG Ventures, Bing Ventures, Waterdrip Capital and other representative investment institutions. They engaged in in-depth discussions on investment trends and recommendations for 2025.
What are the investment strategies and favored tracks for 2025? What is the logic behind them?
IOSG Ventures:
- Crypto x AI
Crypto x AI is the most innovative and dynamic field in the industry recently. It has attracted widespread market attention and provides a very broad space for imagination. Sovereign AI (AI systems driven by decentralized crypto infrastructure) represents a revolutionary opportunity (but the empowerment of AI with such great power also poses many risks). These systems can achieve true autonomy, interacting on-chain with non-custodial wallets and other agents and humans. We may even see AI agents purchasing human services for off-chain tasks in the future.
- DePIN
DePIN is a highly innovative and diverse field. It combines crypto-economic models with off-chain hardware to solve many challenges in traditional industries. Although DePIN is a very promising field, not all DePIN projects are equally promising, and their success largely depends on their own merits.
We are excited about DePIN projects that can provide clear and measurable value (such as cost reduction, efficiency improvement, or access to untapped markets). The success of DePIN often comes from the new business models it enables, which are not replicable by centralized systems. This advantage allows projects to have better market penetration, distribution, and accessibility. DePIN can also drive cost-efficiency and better unit economics by reducing operating costs or improving resource utilization, making its decentralized model more competitive and sustainable. In addition, capital expenditure optimization is an important advantage of DePIN projects, as they distribute infrastructure costs to the community through token incentives, enabling faster scaling and broader participation.
On the other hand, we should avoid DePIN projects that misuse tokenization. Their failed token economics often lead to unsustainable ecosystems. Some projects' tokens do not bring actual efficiency improvements or advantages over traditional methods, but solely rely on token incentives to subsidize usage costs in the short term. Tokenization alone cannot prove that decentralization is reasonable, and sometimes the results are worse than the existing centralized models.
- Payments
Stablecoins have become the mainstream payment medium in the crypto industry. And due to their programmability, cross-border utility, and increasingly clear regulatory framework, stablecoins are expected to become the standard settlement currency for global payments.
While stablecoins have clear advantages over fiat in terms of programmability and cross-border liquidity, their broader application is still constrained by regulatory challenges and inefficient on/off-ramp mechanisms. However, the pro-crypto US government may provide regulatory clarity and create a healthier environment for efficient, liquid, and low-cost crypto-to-fiat transactions.
- Consumer Applications
The consumer application domain is highly exploratory, but also more difficult to define, often overlapping with other areas such as AI, DePIN, and payments. This field covers a wide range of applications, including but not limited to AI-driven consumer solutions, consumer-facing DePIN projects, and payment solutions designed for consumers.
In addition to actual use cases, consumer applications in the crypto space also have speculative and gamified elements. A very important category here is blockchain games. They incorporate speculative economic elements and memes, and are currently one of the most successful consumer engagement experiments in the industry. These speculative applications often blur the boundaries between entertainment, finance, and utility, creating unique opportunities for innovation.
Looking ahead, the combination of crypto and new experiments in consumer-facing applications will bring more opportunities. Game mechanics with economic incentives have shown tremendous potential, providing new ways to attract users and drive adoption. The design space in this field is very broad, and we expect it to bring breakthrough innovations by 2025.
Bing Ventures, General Partner, Bruce Lan:
Investment Strategy:
In 2025, our investment strategy will focus on discovering the value of early-stage projects and driving the mainstream adoption of blockchain technology. The logic behind this is simple: the rapid iteration of the blockchain industry means that the earlier you participate and position yourself, the more likely you are to capture exponential growth opportunities.
Specifically, we are more focused on the following directions:
- Priority on Early-Stage Projects:
In the coming years, the core competitiveness in the blockchain field lies in technological innovation and actual implementation capabilities, which are often found in early-stage projects. For us, supporting promising startups is not only an investment, but also an important way to drive the entire industry forward.
- Combination of Web3 and Web2:
The key to the mainstream adoption of blockchain technology is whether it can truly "break out" and integrate into daily life and traditional markets. We are optimistic about projects that can find the intersection of Web3 technology and Web2 user needs, such as applications that optimize user experience and lower the usage threshold.
- New Projects from Experienced Teams:
Many experienced teams in the industry choose to start new projects, and they often have accumulated deep resources and market insights. These projects usually have a high starting point, and therefore also have a higher success rate.
Key Tracks:
In 2025, we are particularly optimistic about the following areas, as these tracks demonstrate the comprehensive evolution of blockchain technology from the underlying architecture to actual applications:
- ParallelVM (Parallel Virtual Machine Architecture):
We believe that parallel virtual machine architecture is the key to improving blockchain performance. The transaction processing speed of traditional blockchain systems is often a bottleneck, while ParallelVM provides a solution to increase throughput through parallel execution of transactions and contracts. Especially in scenarios with extremely high transaction density, such as DeFi and blockchain games, the potential of ParallelVM is huge. Of course, the challenge in this track is that concurrency management and security issues still need time to be solved.
- Alternative Virtual Machine Architectures:
Blockchain developers have a very clear demand for more efficient and flexible virtual machines. Alternative VMs break the limitations of the Ethereum Virtual Machine (EVM) and support more programming languages, such as Rust and Wasm, which are crucial for attracting developers and creating more complex applications. Although the ecosystem building for new architectures takes time, their potential cannot be ignored.
- Crypto Compliance:
As global regulation of cryptocurrencies becomes increasingly strict, compliance is becoming a necessity. Whether it's KYC, AML, or tax compliance, projects that can simplify these processes and ensure compliance transparency will be very popular, especially as mainstream financial markets seek to adopt crypto.
- DeFi Infrastructure and Innovation:
We have always believed that the improvement of infrastructure is the key to expanding the user base of DeFi. For example, reliable cross-chain bridges, decentralized insurance, and more secure oracle systems can all increase user trust in DeFi.
Here is the English translation of the text, with the terms in <> retained as is:- The Convergence of AI and Crypto (AI x Crypto):
The convergence of AI and blockchain is an emerging direction. We see that AI can be used to optimize blockchain network performance, while blockchain can provide data privacy protection for AI. This cross-technology can lead to unexpected innovations, such as smarter smart contracts or decentralized AI services.
- Bitcoin's Innovation (BTC Innovation):
Bitcoin remains the backbone of the crypto industry, but its potential has not been fully unleashed. We are focused on the development of Bitcoin's Layer 2 scaling and smart contract functionality, which can enable Bitcoin to play a bigger role in payments and DeFi. Of course, the Bitcoin community's acceptance of change is relatively low, and the pace of innovation may be slower.
The selection of these tracks is not accidental, as they reflect the dual drivers of technology and market demand, which are also the core of our investment strategy.
Waterdrip Capital:
2025 will be the year when Crypto moves towards mass adoption and embraces regulation. For the primary market, our investment logic is based on the following core trends:
Compliance and Mainstream Adoption: The gradual clarity of the global regulatory environment and the launch of crypto ETFs mark the transition of cryptocurrencies from the periphery to the mainstream financial system.
Technological Innovation and Integration: The convergence of AI and blockchain will spawn new application scenarios and business models, driving further market expansion.
Cost Efficiency and Market Demand: Stablecoins and the RWA track can significantly reduce transaction costs and improve asset liquidity, meeting the actual needs of enterprises and investors.
Therefore, we will focus on the RWA, AI+Crypto Infra, and the paradigm innovations around stablecoins, such as Pay Fi and DeFai.
The Convergence of Traditional Finance and Blockchain (RWA Track)
As the global regulatory environment becomes clearer and the compliance process of the crypto market accelerates, blockchain technology is deeply integrating with the traditional financial system. We are particularly focused on the track of tokenizing real-world assets (RWA), such as government bonds, real estate, and other financial assets, which can not only improve asset liquidity and transparency, but also provide new collateral for the DeFi ecosystem. Countries like the UK and the US are already exploring the issuance of digital bonds, which provides huge development potential for the RWA track.
In addition, the continued rise in BTC prices has not only led to the outstanding performance of asset-driven crypto concept stocks represented by MicroStrategy in the secondary market, but also triggered a "replication effect" - more and more listed companies are beginning to emulate this model by incorporating Bitcoin or other crypto assets into their balance sheets to enhance their own valuations and market appeal.
AI and Crypto
AI+Crypto will be the next trillion-dollar market opportunity. We focus on the application of AI Agents in blockchain payment infrastructure, as well as AI-driven decentralized finance tools. Stablecoins may become the preferred payment tool for AI agents, and high-throughput blockchains (such as Solana, Lightning Network, BASE) will benefit significantly from the proliferation of AI. In addition, using DID technology to authenticate AI identities and provide fraud protection solutions is also a future direction.
Stablecoins and Payment Innovation
Stablecoins have proven their value as a global payment tool in the past year, especially in reducing transaction costs and improving efficiency. We expect that 2025 will see large-scale adoption of stablecoins in enterprise payments, particularly with small and medium-sized enterprises (such as catering and retail) transitioning from credit card payments to stablecoin payments. Furthermore, as more companies become aware of the cost advantages of stablecoins, the business of stablecoin issuance and payment integration will see new growth opportunities.
In terms of investment strategy, we tend to focus on projects that are in the early stage and have the potential for future large-scale adoption. We are very optimistic about the AI+Crypto direction, which includes infrastructure projects like TEE (Trusted Execution Environment) and Data Labeling, as well as AI Agent applications in specific vertical business scenarios. Waterdrip Capital has already started to systematically layout this field since 2023-2024, such as SWAN Chain as an AI computing chain, BAS as a Green Field-based certification service, and Alsa as an AI+payment integration solution.
However, we will still keep an eye on other tracks, and expect to see more breakthrough technologies and business models emerge in 2025.
For the secondary market, we tend to buy targets that have real-world scenarios and self-sustaining capabilities, including public chains, service providers, and protocol projects. We will also pay attention to crypto-related concepts in the stock market, such as asset-driven crypto concept stocks like MicroStrategy, as well as mining, infrastructure, and payment concepts.
HashKey Capital, Partner, Xiao Xiao:
2025 Investment Outlook:
Focus on application areas, especially various out-of-the-box tracks and community-driven scenarios. Starting from the second half of 2025, gradually summarize the pain points in applications and explore a new round of infrastructure/tools.
Continue to adopt a primary and secondary market linkage strategy, focusing on discovering early-stage projects with reasonable or undervalued valuations in the primary market, and using more flexible methods such as lending and derivatives to expand the investment scope and control risks in the secondary market.
Key tracks:
- Crypto AI: autonomous agents and multi-agent systems, intent-based trading agents, smart money agents, the combination of agents and tools, data services, agent platforms (launchpad, marketplace, etc.).
- Consumer dapps: applications with out-of-the-box potential, such as payments/stablecoins, RWA, trading, games, advertising, Depin, etc.
- New Concepts: small-scale layout of concepts that are easy to attract attention based on user interest.
- Ecosystems: continue to focus on the Solana, Ethereum, and Bitcoin ecosystems, and explore new opportunities in emerging ecosystems like Base, Sui, Berachain, Monad, and Movement.
What suggestions can you share for projects planning to raise funds in 2025?
IOSG Ventures:
- Distinguish the real from the false, first consider the structure and capabilities of your own team, find the right positioning and PMF, and clearly demonstrate it to investors, while maintaining a flexible mindset to adjust the direction.
- Have a clear profit model and token economic model, think about why the token is needed and what the token is used for. Investors will be concerned about how the project generates revenue, how the token appreciates, and the design of a reasonable incentive mechanism.
- The Crypto financing environment in 2025 will be more focused on creating real value rather than concept hype, requiring differentiated competitive strategies and community-driven GTM logic.
Bing Ventures, General Partner, Bruce Lan:
For startup teams, the financing environment in 2025 will be more complex but also full of opportunities. Here are a few suggestions:
Suggestion 1: Deeply Involve the Community
Currently, community users have become an important driving force for the success of projects. The team needs to design a fair and transparent token distribution mechanism to not only incentivize investors, but also attract core users to join. Users are no longer just investors in the project, they are also part of the ecosystem and directly affect the future development of the project.
Suggestion 2: Keep up with the trend of Dex
The mainstream trend of decentralized exchanges cannot be ignored. Dex provides better liquidity and transparency, and many popular projects will prioritize listing on Dex, forming market heat, and then forcing centralized exchanges to follow up and support. This trend brings greater autonomy to the project, and also expands the financing channels.
Suggestion 3: Clearly tell your story
In the highly competitive track, clear narration is crucial. The team needs to be able to accurately convey the core value of the project, especially the combination of technological innovation and market demand. A good story can help the team stand out among investors and community users.
Suggestion 4: Focus on long-term community value
Financing is not only to solve short-term funding needs, but also an opportunity to establish long-term community trust. Through transparent governance and fair mechanism design, the team can attract users to continuously support the project ecosystem and lay the foundation for future development.
Summary:
From an investment perspective, we are optimistic about the overall trend in 2025. Especially in the areas of the integration of blockchain and AI, the improvement of DeFi infrastructure, and the gradual entry of Web3 technology into the mainstream market, we see a lot of opportunities. At the same time, for projects planning to raise funds, we suggest that the team pay more attention to community building, keep up with the trend of decentralized trading, and win the trust of the market through clear project narration. Future competition is not only a competition of technology, but also a manifestation of trust and value.
Waterdrip Capital:
- Adhere to long-term thinking and strengthen cash flow management
The current crypto market may be in a bull market cycle, but project parties need to be prepared to face a flat market outlook for the next 2-3 years. Good cash flow management and self-sustaining ability will be the key to the survival and development of the project. If the goal is to build a real business, then consider the efficiency of fund use and develop a long-term financial plan during the financing process.
- Focus on opportunities for integration with traditional industries
As blockchain technology deeply integrates with other industries, project parties should actively seek cooperation or financing opportunities with traditional industries. Financing from traditional VCs can bring more support to the project.
- Establish communication channels with regulators and pay attention to regulatory policies in the crypto industry
As the global regulatory environment becomes clearer, project parties should actively communicate with regulators to ensure the compliance of the project. Compliance is not only the foundation for the long-term development of the project, but also the key to attracting traditional capital and institutional investors.
HashKey Capital, Partner, Xiao Xiao:
Successful projects in 2024 are basically community driven, focusing on and grasping the needs of the community and users is the key.
