In a time when everyone is asking wen next bull?, you should be asking why next bull?
Crypto moves in cycles, and each big crypto bull run
had its narrative
Santiago is a successful venture capitalist
and one of the most respected voices in the crypto industry. He correctly pointed out that each cycle had a niche doing particularly well — and also had some ideas on what the next niche could be:
Crypto is ailing at the moment, but the sector has bounced back from every bear market beatdown in the past. There is no reason to think next time will be different. The macro is currently not looking promising, but a lot can change in three years.
This article will cover industry-specific trends that could ring in the next bull market. We will look at:
- Opportunities and threats of tokenization: we can now tokenize anything, but is it working?
- Current Web3 use cases: taking stock of what crypto is actually good for at the moment.
- Future Web3 use cases: what could crypto be good for in 2025?
Note: the article does not differentiate between crypto (the financial use cases of blockchain) and Web3 (non-financials like gaming or decentralized social media). These two are merging, thus the terms are used interchangeably.
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The biggest innovation of cryptocurrencies — beyond decentralized P2P
payments — is the tokenization of digital and real-world assets
tokens enable you to trade any asset without friction. Non-fungible tokens
can represent real or digital scarcity on the blockchain.
Traditional tech startups usually build following this route:
Market research → Product design → User acquisition → Monetization
But crypto companies, with tokens as their main monetization mechanism, flip the script:
User acquisition → Monetization → Market research → Product design
Just think about the countless play-to-earn
games that only offer a barely functional alpha version (at best) but already sell "digital assets" (NFTs) and have a traded token. Tascha
, who holds a PhD in macroeconomics and is an expert at the crypto/macro intersection, calls this effect the "truth and bullsh*t of Web3." The threats of tokenization are
The Exploitation of FOMO Culture Through Buzzwords and Busywork
Many metaverse white papers
read like a potpourri of our glossary
. The more buzzwords, the merrier! You'll be able to do such amazing things in our super-scarce virtual land! Just make sure to buy the token first…
Many metaverse tokens do exactly what they are designed to do: make the insiders money and go to zero.
Equally bad are blockchain games that pretend clicking buttons every day for a minute is fun gameplay and economically sustainable. Not far behind is many a yield farm that bribes users with virtually worthless governance tokens
to provide liquidity
We all know most of it is a scam, but we go along with it as long as the music is playing.
The collapse of Terra should have convinced even the most optimistic crypto Ponzi connoisseurs: no token is too big to fail if the tokenomics are unsustainable. It's just a matter of time. Tascha provides a simple rule of thumb:
What’s left in this product/project if you take the token away?
Because many crypto companies start from a token-first perspective, they receive little market feedback, and users are left with poor UX and sometimes an empty wallet.
Decentralization for the Sake of Decentralization
A decentralized Twitter would be cool and useful. But all too often, particularly in the GameFi
space, decentralization is the entire value pitch. Would a game like Grand Theft Auto V, which has grossed over $6 billion
, need to be decentralized?
Decentralization and tokenization can add value, but they should not be the main value pitch.
But tokenization also provides a lot of opportunities:
Tokenization can nudge and reward good behavior
. Look at move-to-earn
tokens, which were the hottest thing in crypto for a while. The idea, in principle, is laudable: people don't get enough exercise, so let's reward them for working out.
In economic terms, exercise is a positive externality, and move-to-earn projects lets users capture its value of exercise by rewarding them with tokens. If more DApps
rewarded positive externalities (like fitness), cryptocurrencies would develop a new use case. And let's be honest: working out is much easier when you get paid for it.
Equity for Everyone
Crypto companies rightfully often take the flak for having excessive insider allocations. But many
still have a much fairer share of ownership than classic startups
. Astute investors, who are prepared to sift through the mud to find a few token gems with real use cases and solid roadmaps, still get a better deal than with startups. Especially considering that you can directly influence the development of a protocol by being involved.
At its core, tokenized companies are the most democratic governance model
are sometimes too democratic
and paralyzed by too many people having a say in them. But only in crypto can you find a promising project early, contribute to its development and be directly rewarded if it's successful.
When you're bullish on crypto as financial and technological innovation, it's easy to overlook the fact that not everyone shares that optimistic outlook:
Web3 naysayers like Diehl cite computational and logistical problems
as reasons why crypto-based technology is bullsh*t
. They're not entirely wrong either.
The truth is that cryptocurrencies are a technological and financial innovation, at least on the scale they have now broken through. Problematic as they may be, that innovation can mature and improve — if only we knew what to focus on. Is crypto primarily better money? Or are blockchains the backbone of a more egalitarian internet?
Because of this ambiguity, several non-overlapping use cases have developed. Though critics like Stephen Diehl will dismiss those as scams, the economic demand is there — for better or worse.
The only real
use case of NFTs
thus far that has seen widespread adoption are artificially scarce JPEGs. Call that a scam or a Ponzi all day, but people are trading them. Speculation can be a use case in itself.
DEXes are another speculation-related use case. They do allow permissionless trading of financial assets, but only the most stone-faced crypto enthusiasts can maintain that these create real economic value. In principle, decentralized exchanges could allow those locked out of traditional financial markets to acquire equity. But in practice, they just allow speculation on the circular crypto economy.
largely overlaps with DEXes, since it provides only more infrastructure facilitating speculation, such as overcollateralized lending. Some DeFi protocols try to connect the crypto economy with the real-world economy. For instance, Goldfinch
provides crypto loans to emerging markets. Teller Finance supports USDC
for crypto-backed mortgages in Texas. Still largely a bet on the future, DeFi is at least attempting to create real-world value.
Stablecoins are probably the biggest and most tangible use case in Web3. They reduce friction when settling payments and could upend the existing banking infrastructure. Some argue that centralized stablecoins like USDC
are not real cryptocurrencies. But that may be the reason why established financial institutions like BlackRock
Decentralized Talent Hiring & Decentralized File Storage
Companies like Braintrust
successfully leverage blockchain technology to create more efficient versions of existing hiring platforms like Upwork. On the other hand, decentralized file storage
has not taken off as much as was hoped for, though it remains a fringe use case of blockchain tech.
Let's respawn three years from now. The world is in a much better place, inflation has subsided, supply chains are back to normal and geopolitical tensions have eased. The economy is growing on hopes that tech will save the day, and blockchains have made big strides toward scaling. Which use cases could scale blockchain’s power?
ReFi is the latest buzzword and is short for Regenerative Finance. In short, it encapsulates the idea of cryptocurrencies used "for good causes," like putting a price on carbon emissions. The crypto industry has already dabbled with putting a price on negative externalities and rewarding positive ones (remember move-to earn?).
Scaled chains would reduce the friction of trading these externalities and level the playing field. Nowadays, these markets are either hard to access for outsiders or don't exist at all — say, a diet-to-earn market. Imagine a 100X times bigger and more efficient version of Klima DAO
(the protocol buying carbon emissions certificates with protocol-owned liquidity).
Metaverse (powered by VR/AR)
This is a contentious one but only because the metaverse has been abused as a buzzword thus far.
The data says that time spent online is only going up
. The more attention we dedicate to online activities, the more money goes towards keeping us there. Tech giants keep pushing out VR/AR innovation
, which is simply a way of making time spent online more fun.
This is where the metaverse comes in. The metaverse could be thought of as the next iteration of online communities, which went from forums to social media, and now seem to be going towards the metaverse. Private Telegram groups and Discord servers could be upgraded to becoming token-gated communities with engaging virtual worlds. You could argue these would be better built on centralized platforms, but that is a problem that the metaverse will have to figure out.
Web3 Social Media
Even though the Musk takeover of Twitter fell through
— and with it a possible blockchainization of the platform — social media is ripe for innovation. Disruption could easily start at the low end of the market by targeting those already eager to jump ship from centralized social media (like all of Crypto Twitter). If platforms prove to be sound products, it would not take much for normies
to give them a shot. The blueprint is already out there:
Social media monetizes user data, but almost all of the revenue goes to platform owners (tech companies). Scaled blockchains can disrupt that ownership model and, with it, change the way we interact online.
The gaming market is massive
, and, in principle, decentralization has utility. Today's games already have ownership aspects, although financialization stays behind the walled garden of the game itself. Scaled blockchains could help put the in-game economies (though likely not the games themselves) on crypto payment rails. Think FIFA Ultimate Team, but you actually own your team.
However, gaming communities have thus far been largely hostile to crypto: how much that will change remains to be seen.
DeSci is still an overlooked part of Web3, but decentralized science could improve existing structures in several ways:
- Communication: provide more subject-driven and real-time communication compared to social media/email.
- Publishing: streamline the time spent in peer review.
- Financing: help overcome the "valley of death" between innovation and development.
Scaled blockchains would mainly facilitate coordination and cooperation in the form of DAOs
We cover decentralized science in more detail in this video:
The ZK-proof technology already exists, so it’s not a question of when we’ll use them, but to what extent we’ll use them. ZK-proofs allow sharing data without compromising privacy, and their application at scale would be a big step toward improving DeFi. For instance, on-chain credit scores
and integrating off-chain data will benefit from the privacy and scale of ZK-proofs.
This is an idea popularized by Vitalik Buterin
in a blog post. In essence, soulbound tokens would allow the identification of people on-chain
and would be non-transferable tokens confirming their owner's identity. Their use cases are still undefined, but one possible application would be more equal on-chain governance mechanisms than the quite inegalitarian models today. Soulbound tokens would allow a true one person:one vote mechanism instead of centralizing power like in proof-of-stake mechanisms.
Another example could be token-gated communities like the metaverse mentioned above. Soulbound tokens could also be used as a registry of your medical/financial/legal record or even merely for loyalty programs. They’re in essence your unique virtual identifier and use cases could be utopian or dystopian.
Although crypto critics have a fair point that today's crypto economy is largely circular and speculation-based, this doesn't need to be the case in 2025. In fact, none of the described use cases are related to speculation, which already makes one thing crystal clear. If crypto and Web3 are to evolve, the next bull run will be driven by more than just gambling on s***coins
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