The following is a guest article from Srikumar Misra, founder of the aarnâ protocol.
A quintet of intertwined vectors: DeFi, stablecoins, AI, regulation and liquidity are big themes that bounce around, posing barriers and profound opportunities. The construction energy continues to be phenomenal. It appears that Token 2025 will be very different from the crypto community’s muted and restrained anticipation over the past two years.
From the outset, I must admit that conferences are not my thing! I’m an INTJ (that’s Myer’s Briggs Type Indicators – take a look if you haven’t, interesting old world psychological science), and I need my space and of my time, and doing 12 hours of endless catch-ups, meetings, networking, and listening to the same speakers say essentially the same things, well, that can be taxing.
But the vibe and energy of Token 2049 this year kept even the INTJ in me going! There doesn’t seem to be much stagnation in the crypto space; it didn’t seem like DeFi TVL was down: the belief and action of believers, stayers, and builders was DeFi’ing. You know that some people like you have their heads down and are building, preparing to fight back to build a new participatory creative and financial system.
So here are my five main takeaways from what’s coming:
1. DeFi is vital for crypto
DeFi is the cornerstone of crypto, and for any L1 or L2 to thrive in any crypto industry vertical like gaming or NFTs, the DeFi ecosystem on the chains should be vibrating. DeFi is the financial pipeline of crypto. As on-chain tokenization, splitting, and RWAs become larger emerging themes, DeFi in its original form must exist but evolve because DeFi in its current form will not be able to onboard the next 100 million users.
It must be less complex (abstraction), less fragmented (aggregation) and UX-focused. Building next-generation DeFi is an existential necessity that L1, L2 and protocols must serve as a framework.
2. Stablecoins will evolve
Nowadays, stable coins have been the most widely accepted use case for DeFi. They serve multiple purposes in the lifecycle of a user’s digital assets, from increasing liquidity, to retaining liquidity without exposure to market volatility, to cross-chain mining with a bypass undoubtedly easier.
However, stablecoins do not bear interest and, for the most part, are not only denominated in USD, but also fully backed by it. And these two dimensions will change. There will be stablecoins that emerge, which could still be denominated in USD but backed by crypto assets (we are not talking about algo stablecoins here) and bear interest. This thought is not new, but sometimes ideas are ahead of time, and now we begin to feel that the time has come to mature for this.
3. AI + crypto is real
THE AI Story, much like the buzz around the convergence of AI and crypto, is overused everywhere. From automated agents natively interacting with smart contracts to AI-driven asset management to distributed storage and computing running on blockchains via protocols, large-scale AI models must be leveraged and resilient to sanctions and not supporting concentrated exposure to centralized storage and computing.
This particularly interests me and is validation of the work we have done to build aarnâ AI at the intersection of DeFi and AI for autonomous asset management for over eighteen months now.
4. Regulation beyond the United States
This is of course one of the biggest overhangs in the crypto world, and it’s not just about the SEC and its vagaries in the US, but almost every country with its crypto coup hot, cold snap, and more, their DeFi relationship. I briefly spoke with Larry Cermak, the big man from The Block. It was the obvious line of discussion to delve into how DeFi protocol founders get noticed from time to time in the United States, and it just forces all legitimate players to be deeply concerned and consider moving.
We need progressive regulation – and see crypto as crypto, that is, a tokenized economy, not as a currency. DeFi regulation should be led by other countries, not the United States.
5. Liquidity remains stifling at all stages
Finally, the main concern concerns liquidity and speed. Liquidity is under severe strain. Legitimate market makers have difficulty accessing capital. With declining volumes, CEXs are under pressure. Although major DEXs like Uniswap began gaining volume earlier this year, the continued sideways movement of markets is sucking up active liquidity.
Larger market makers who have traditionally focused solely on CEx are likely struggling to understand the DeFi liquidity offering as it is more stratified (although directly on-chain) and does not help the cause. And the VCs? In freeze mode, do not crouch to free yourself from the herd, but simply huddle. This prevents new DeFi projects from commercializing higher-order innovations, which could trigger the new user acquisition – buzz – liquidity loop.
Intimidating themes, every one of them, and prolific opportunities too. There are deep thinkers in this space and brash doers too. Token 2025 will be very different. You can see it, hear it and feel it.
