What’s next for DeFi in 2025?

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As a seasoned analyst with over two decades of experience in the financial industry, I have witnessed the evolution of technology and its impact on traditional markets. The potential growth of decentralized finance (DeFi) in 2025, as predicted by several industry leaders, is nothing short of fascinating to me.

As a forward-thinking researcher, I foresee that the year 2025 will mark a significant turning point for Decentralized Finance (DeFi), a transformation propelled by three primary forces: Bitcoin staking, real-world asset tokenization, and agentic artificial intelligence (AI). These influential factors are set to accelerate its adoption, as predicted by multiple industry leaders.

2024 marked the historic milestone where Bitcoin reached a value of over $100,000 per coin for the first time. This significant increase was fueled by a massive influx of more than $100 billion from investors, primarily directed towards spot BTC exchange-traded funds (ETFs).

2025 may see increased attention towards cryptocurrencies, particularly Bitcoin (BTC), as its all-time high could reignite institutional and regulatory interest, thereby boosting the overall crypto market, as suggested by Dean Tribble, CEO of Agoric Systems in an interview with CryptoMoon.

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In December, the combined value held in decentralized finance (DeFi) protocols reached a peak of approximately $130 billion, which is almost as high as its record-breaking level of around $175 billion in 2021, based on data from DefiLlama. These professionals within the industry anticipate this growth trend to persist into next year.

By the year 2025, major DeFi infrastructures such as Aave, Maple, Maker will have been functioning at a large scale for over four years, according to Jacob Phillips, co-founder and head of strategy at Bitcoin staking protocol Lombard, as stated in an interview with CryptoMoon.

According to Phillips, these platforms are expected to transform into trustworthy locations where both established institutions and newcomers can utilize Bitcoin effectively.

Bitcoin staking

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The rapidly developing network of Bitcoin’s layer-2 scaling solutions and Decentralized Finance (DeFi) platforms is offering unique chances for investors to generate returns from their Bitcoin holdings.

In terms of Bitcoin’s overall worth, Decentralized Finance (DeFi) currently represents only 0.1%. This means there’s a potential for DeFi in Bitcoin to increase by as much as 300 times its current value, according to Alexei Zamyatin, the co-founder and CEO of Build on Bitcoin, who spoke with CryptoMoon.

“We have spoken with dozens and dozens of large Bitcoin DeFi users and funds keen to put their Bitcoin holdings to work earning yield.”

In simpler terms, platforms such as Babylon and CoreChain, which are layers built on Bitcoin, reward individuals who help secure these networks by pledging Bitcoin as a form of collateral.

Currently, tokens that represent claims on staked Bitcoin (LSTs) are becoming more common. By December 19th, these Bitcoin LSTs had accumulated a combined value of over $2.5 billion, as reported by stakingrewards.com.

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By the year 2025, Exchange-Traded Funds (ETFs) focused on Bitcoin staking could potentially become more popular, according to Matt Hougan, who leads research at Bitwise Asset Management, as he shared this insight with CryptoMoon.

There’s high interest in earning returns from Bitcoin. Whether it will be structured as an Exchange-Traded Fund (ETF) in the U.S. remains uncertain, but in Europe, it’s very likely,” Hougan stated.

RWA tokenization

Digital tokens that symbolize ownership or claims over real-world assets (such as U.S. Treasury bonds and artwork) constitute a potential market worth $30 trillion worldwide, according to Colin Butler, the global head of institutional capital at Polygon, in an interview with CryptoMoon in August.

They already command about $14 billion in TVL, according to RWA.xyz. Yield-bearing tokenized US Treasury bills are especially popular, with TVL of more than $3 billion.

According to the CEO of Zeebu, a Web3 settlement platform, converting tangible assets such as property and carbon credits into digital tokens could provide unparalleled liquidity, and advancements in payment technology would also facilitate smoother cross-border transactions.

The U.S. Treasury Department has also praised tokenization as a means to enhance liquidity and minimize operational and settlement delays or complications.

With President-elect Donald Trump’s win, Brahmbhatt expressed strong optimism that America will take a leading role in space exploration by the end of this year.

Related: Tokenization can transform US markets if Trump clears the way

Agentic AIs

By the year 2024, AI agents with self-directed purposes, collectively amassed approximately $10 billion in total market value, as reported by CoinGecko.

Experts predict that blending Artificial Intelligence (AI) and blockchain technology will revolutionize Web3, resulting in a future where autonomous AI systems construct decentralized apps and interact with human users through transactions.

Agentic AI “has already proven central to the future of the industry,” J.D. Seraphine, CEO of AI protocol Raiinmaker, told CryptoMoon. 

By the year 2025, “AI agents might become more significant players in decentralized societies,” according to Seraphine’s prediction.

The potential universe of AI agents is practically infinite, Hougan said, adding:

“It’s OK if you don’t know exactly what’s going to happen, as long as you know that something is happening that’s really potentially significant and you want exposure to it.”

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2024-12-24 20:04