Author: James Morgan
Compiled by: Bai Hua Blockchain
Cryptocurrencies are now in a more mature and clearer stage than ever before. Although the market still has speculative cycles, many areas within the industry have shown a good product-market fit (PMF) and have practical application value beyond speculation. However, some areas are still in the experimental or problem-solving stage, and unresolved challenges hinder their large-scale adoption.
This article will analyze the key driving factors that drive large-scale adoption, explore the successful sub-sectors, and discuss the areas that still face major obstacles.
1. Core Technology Drivers: The Foundation of Cryptocurrency Growth
1) Low-Cost Block Space: L2 and High-Throughput L1
A major breakthrough in the cryptocurrency industry is the significant reduction in transaction costs. The introduction of scalable Layer 2 (L2) Rollups and high-throughput Layer 1 (L1) blockchains has made it easier for developers to build efficient and user-friendly applications.
L2 scaling solutions - Ethereum Rollup solutions such as Arbitrum (arbitrum.io), Optimism (optimism.io), and Polygon (polygon.com) provide faster and lower-cost transactions while maintaining a high degree of decentralization and openness.
High-throughput L1 alternatives - Solana (solana.com), Aptos (aptosfoundation.org), and Sui (sui.io) use parallel execution and different decentralization tradeoff strategies to achieve high-speed, low-cost transactions.
Growth Drivers: Lower transaction costs have reduced the entry barriers for developers and users, driving the accelerated adoption of DeFi, gaming, and asset tokenization.
2) Wallet Upgrades and Seamless User Experience (UX)
One of the major barriers to cryptocurrency adoption has been the complex onboarding process, but this problem has been greatly improved and will continue to be optimized in the coming months.
Smart Contract Wallets - Smart wallets like Safe (safe.global) and Coinbase Wallet (coinbase-smart-wallet) have introduced features like gas-free transactions, automatic recovery, and multi-sig security, while also supporting user gas fee payment and chain abstraction, significantly improving the user experience.
Social Login and Passwordless Authentication - Using tools like Web3Auth and Privy, users can access their wallets directly through email or phone number, without the need for complex seed phrase management.
Crosschain Intents - Advanced wallets and DApps are integrating cross-chain infrastructure and supporting standards like EIP-7683, allowing users to seamlessly manage multi-chain assets and execute transactions through an "intent mechanism".
Growth Drivers: Lowering the interaction barriers makes it easier for non-technical users to enter the crypto space, and the user experience of crypto applications is gradually converging with traditional fintech, driving broader adoption.
2. The Crypto Landscape in 2025: Validated and High-Growth Crypto Use Cases
ETFs: A Catalyst for Institutional Adoption
One of the most important financial milestones for Bitcoin was the approval and launch of the US spot Bitcoin ETF, which has triggered a significant influx of institutional investment. For the first time, regulatory clarity has not hindered cryptocurrencies, but rather has driven their development.
Institutional ETF Offerings - BlackRock, Fidelity, and Grayscale have already launched regulated Bitcoin and Ethereum ETFs, making it easier for hedge funds, pension funds, and retail investors to gain compliant exposure to crypto assets.
Capital Inflows - These ETFs have attracted billions of dollars in inflows, further solidifying Bitcoin's position as a new asset class in the financial industry, especially in the current uncertain market environment.
Traditional Finance Acceptance - ETFs allow institutions to hold Bitcoin and Ethereum in a compliant and tax-efficient manner, similar to the early adoption of gold ETFs. More crypto-based ETFs are inevitable in the coming years.
Growth Drivers: Bitcoin is now seen as "digital gold," while Ethereum may be compared to a "yield-bearing bond." The widespread institutional interest validates their value as long-term hedges against inflation and fiat instability. As the regulatory framework becomes clearer, the increased comfort of institutional participation brings more liquidity, broader adoption, and deeper integration between the crypto industry and traditional finance.
3. Stablecoins: The "Killer" Application in Payments
Stablecoins have become the most widely adopted financial product in the cryptocurrency space, effectively solving real-world problems and inefficiencies in payments and cross-border remittances.
Surpassing $2.2 Trillion in Circulation - USDT (tether.to) and USDC (circle.com) dominate global crypto payment transactions.
Payments and Remittances - Applications like Strike (strike.me) leverage stablecoins to enable instant, cross-border money transfers at near-zero fees, significantly reducing the cost of international payments.
Traditional Finance (TradFi) Adoption - Coinbase's Base connects TradFi and DeFi, PayPal has launched PYUSD, and major banks are also exploring token-based deposit applications.
Improved Payment Networks - SpaceX uses USDC to process payments for Starlink customers, especially in countries with high currency volatility, avoiding foreign exchange risks and optimizing the payment flow.
Growth Drivers: Stablecoins provide faster, cheaper, and more efficient money transfer solutions, with inherent advantages over traditional banking systems. Ultimately, users may not even notice which payment network they are using, but stablecoins will undoubtedly replace the traditional, slow, and inefficient payment infrastructure.
4. DeFi: The Cornerstone of On-Chain Finance
Despite facing security vulnerabilities and market volatility, DeFi protocols remain the core pillars of on-chain finance and continue to grow. I remain convinced of the immense advantages of DeFi in terms of permissionless, decentralized, and fair financial services.
On-Chain Lending - Protocols like Aave and Compound provide instant, permissionless credit markets without the need for traditional financial institutions.
Automated Market Makers (AMMs) - Decentralized trading protocols like Uniswap and Curve process billions of dollars in transactions daily without intermediaries, improving market liquidity.
Real-World Asset (RWA) Tokenization - Projects like Ondo Finance and Maple Finance are bringing traditional financial assets onto the blockchain, creating more efficient financial infrastructure.
Growth Drivers: DeFi offers a faster, more efficient, and globally accessible financial system, while providing higher yields than traditional banks. Composability (Composable Money) allows for more flexible capital flows, driving the continuous emergence of innovative financial models, as well as the integration with existing financial concepts to create new growth opportunities.
5. Real-World Asset (RWA) Tokenization: The Future of Institutional Adoption
RWAs are one of the areas of greatest interest to institutions, as major financial institutions are actively tokenizing assets such as bonds, real estate, and originated credit, driving the migration of traditional finance onto the blockchain.
Originated Credit & Bonds - Companies like Centrifuge (centrifuge.io) are tokenizing debt instruments, lowering financing thresholds and making capital more accessible.
Fractional Ownership - Relevant platforms allow users to hold fractional ownership of real-world assets like real estate, lowering investment barriers and increasing market liquidity.
Collectibles as RWAs - Platforms like Courtyard.io support physical asset custody, tokenization, and trading, making the collectibles market more transparent and tradable.
Growth Drivers: Bringing traditional financial assets onto the blockchain makes capital markets more liquid, efficient, and transparent, creating new opportunities for institutional investors.
6. Memecoins: Turning Speculation into "Function"
Despite criticism, Memecoins remain the most persistent speculative assets in the crypto market, continuously attracting capital and attention.
Breakout Token Rises - PEPE, DOGE, SHIBA, and other Memecoins have reached multi-billion dollar market caps, with thousands of new Meme Tokens emerging daily.
Trading Volume Exceeding "Serious" Tokens - At times, the trading volume of Memecoins has even surpassed that of mainstream crypto assets, with even the President and his team participating, fueling market sentiment.
Growth Drivers: Speculation is a human instinct, and Memecoins cleverly combine viral propagation, cultural resonance, and "gamified" trading experiences, making the crypto market more entertaining. "Meme Tokens" and "Meme Infrastructure" will continue to rise and fall in the market, becoming an undeniable part of the ecosystem.
7. Digital Product Passports (DPPs) and Tokenization of Commodities
Luxury brands and enterprises are using blockchain-based verification systems to enhance product authenticity and supply chain transparency.
DPP as a Service (DPPasS) -- Platforms like Arianee and Crossmint are driving the development of DPP solutions, and there are also several non-blockchain DPP service platforms (DPaS) joining the competition.
Luxury brands leading the trend -- Luxury brands such as LVMH, Prada, Breitling, and Cartier have been early adopters of DPP technology, and are driving the entire high-end consumer goods industry towards blockchain-based verification.
EU regulation driving large-scale adoption -- The EU's DPP regulatory framework is an important driver of growth in this field. However, if the EU relaxes regulations, this process may be delayed. Nevertheless, regardless of how regulations evolve, blockchain remains the ideal technological support for product passports (DPPs) in authenticity verification, traceability, and other scenarios.
Reasons for growth: Enterprises need transparent, tamper-proof product tracking systems, and upcoming regulations (such as the EU's DPP plan) are accelerating the adoption of this trend.
8. Remaining Problem Areas
Although some areas of the crypto industry have proven their value, there are still some tracks that are in a state of uncertainty, over-hype, or early experimentation. These areas face challenges in technology, regulation, or adoption, and cannot achieve large-scale popularization until these issues are resolved.
DAOs (Decentralized Autonomous Organizations) -- Low governance participation, low decision-making efficiency, and chaotic fund management remain the main pain points of DAOs. Although projects like ENS and Gitcoin are well-run DAOs, most DAOs still struggle to find a balance between decentralization and governance efficiency. I am optimistic about the combination of AI and DAOs as a possible solution -- ironically, DAOs may need AI to truly unleash their value, and even expose the true nature of decentralized governance.
AI & Crypto -- Apart from speculative hype, current real-world application cases of AI + crypto are still limited. While decentralized AI projects like Bittensor and Render Network are interesting, they are still niche tracks, and the adoption of most AI Tokens is still limited to low-value applications like Meme AI bots. The intersection of AI and crypto needs breakthrough real-world use cases to truly take off.
Gaming & Metaverse -- Web3 games have not yet fulfilled their promises, the Play-to-Earn model has almost disappeared, and the integration of blockchain has actually reduced the gaming experience. The hype around the Metaverse has cooled down, and the failures of some high-profile projects (such as Meta's VR strategy shift and the stagnation of Decentraland) indicate that users are not willing to enter virtual worlds just for the "Metaverse". However, I still look forward to the development of AR (Augmented Reality) glasses, which may bring a hybrid "meta-metaverse" experience and drive a new round of industry exploration.
9. Final Thoughts: What's Next?
As the crypto industry continues to evolve, the next round of growth is likely to be driven by major technological breakthroughs, regulatory changes, and emerging narratives. Here are some thoughts on the future...
On-Chain Finance will further expand -- Stablecoins are still growing rapidly, and the tokenization of Real-World Assets (RWAs) will integrate traditional capital markets with DeFi, potentially attracting trillions of dollars in institutional capital. The key question is the pace of regulatory progress, which will determine whether this transformation can truly take root.
The role of Bitcoin will change -- With ETFs attracting institutional investment, Bitcoin may gradually erode the global digital reserve asset market share, or it may still remain just a value storage tool lacking scalability, being replaced by more functional blockchains.
Staked ETH ETFs will disrupt Traditional Finance (TradFi) -- Once ETFs supporting staking rewards are launched, Ethereum may become the first cryptocurrency viewed as a "yield-bearing asset", changing investment portfolio structures and directly challenging the bond market.
Identity authentication will become a critical area -- With the explosive growth of AI-powered deep fakes, fraud, and bot activity, crypto-native identity solutions (zero-knowledge proofs, Worldcoin, DID standards) either gain widespread adoption, or become a regulatory nightmare. If the latter happens, we may become "digital puppets" of AI or governments/enterprises.
Tokenization of Commodities & Consumer-level Adoption -- Can NFTs break out of their collectible nature and integrate into real-world business scenarios? If brands and enterprises can successfully deeply integrate DPPs (Digital Product Passports) and create sufficient value for users, blockchain may quietly become the infrastructure for the retail e-commerce sector.
Memecoins and speculation will not disappear -- Although controversial, Memecoins have proven the essence of the crypto market: speculation, community-driven, and viral narratives. In the future, they may evolve into a new form of social finance, or just an endless cycle of hype. But in any case, I won't easily bet on the failure of the casino.
The next few years will determine whether cryptocurrencies will be fully integrated into the global financial system, or continue to exist as a high-risk, high-return "niche market". What narratives will dominate the next cycle? The answer is still being written.
