Decentralized Finance (DeFi) on the Cusp of a Major Shift by 2025
Decentralized finance (DeFi) is anticipated to reach a pivotal moment in 2025, driven by significant developments such as Bitcoin staking, the tokenization of real-world assets (RWAs), and the growth of agentic artificial intelligence (AI). Industry leaders have shared their insights with Cointelegraph, forecasting a transformative period for DeFi adoption and innovation.
In 2024, Bitcoin made headlines by surpassing the $100,000 mark for the first time, fueled by a substantial influx of over $100 billion into spot Bitcoin exchange-traded funds (ETFs). This landmark achievement is expected to reignite institutional and regulatory interest in cryptocurrencies, propelling the sector forward in 2025, according to Dean Tribble, CEO of layer-1 network Agoric Systems.
The total value locked (TVL) in DeFi protocols climbed to $130 billion in December, approaching its previous peak of approximately $175 billion recorded in 2021, as reported by DefiLlama. Industry figures predict a continued upward trajectory for DeFi in the coming year.
“By 2025, DeFi infrastructure and blue-chip protocols like Aave, Maple, and Maker will have been operating at scale for over four years,” stated Jacob Phillips, co-founder and head of strategy at Bitcoin staking protocol Lombard. “These platforms will become reliable venues where institutions and new users put Bitcoin to work.”
Source: DefiLlama
Bitcoin Staking
The burgeoning ecosystem of Bitcoin’s layer-2 (L2) scaling networks and DeFi protocols is unveiling unprecedented opportunities for investors to earn yields on Bitcoin. Alexei Zamyatin, co-founder and CEO of Build on Bitcoin, highlighted the substantial growth potential, noting that Bitcoin DeFi currently represents just 0.1% of its total asset value, signifying a 300-fold opportunity for expansion.
Bitcoin L2s such as Babylon and CoreChain incentivize stakers to secure their networks by locking up BTC as collateral. Liquid staking tokens (LSTs), which serve as claims on staked BTC, are gaining traction, amassing over $2.5 billion in TVL by December 19, according to stakingrewards.com.
Matt Hougan, head of research at asset manager Bitwise, anticipates the rise of Bitcoin staking ETFs, especially in Europe, acknowledging the robust demand for Bitcoin yield.
Source: Stakingrewards.com
RWA Tokenization
Tokenized real-world assets (RWAs) present a global market opportunity valued at $30 trillion, according to Colin Butler, Polygon’s global head of institutional capital. As of now, these digital tokens, which represent claims on assets ranging from US Treasury bonds to artworks, command approximately $14 billion in TVL, as per RWA.xyz.
Yield-bearing tokenized US Treasury bills have particularly gained popularity, with a TVL exceeding $3 billion. Raj Brahmbhatt, CEO of Web3 settlement platform Zeebu, emphasized the liquidity unlocking potential of tokenizing assets like real estate and carbon credits, alongside advancements in payments streamlining cross-border transfers.
Even the US Treasury Department has recognized tokenization’s potential to enhance liquidity and reduce “operational and settlement frictions.” Brahmbhatt expressed optimism about the US emerging as a global leader in this space under the leadership of President-elect Donald Trump.
Source: RWA.xyz
Agentic AIs
In 2024, tokens associated with agentic AIs, which autonomously pursue complex goals, collectively amassed a market capitalization nearing $10 billion, according to CoinGecko. The integration of AI and blockchain technology is anticipated to revolutionize Web3, fostering a future where self-directed AIs develop decentralized applications and engage with human users.
J.D. Seraphine, CEO of AI protocol Raiinmaker, asserted the pivotal role of agentic AI in the industry’s future, with AI agents expected to assume a more prominent position within decentralized communities by 2025.
Matt Hougan highlighted the vast potential of AI agents, emphasizing the significance of staying informed about this transformative development in the crypto landscape.
For further insights, visit Cointelegraph.
