State of Crypto

Useful Crypto Products

Consider the top projects by market cap listed on CoinGecko. Review the top 300 projects and evaluate how many genuinely provide impactful utility or value to end users. Many of these projects serve as infrastructure providers, enabling safe and reliable application development, similar to cloud infrastructure providers. Cloud providers have gained substantial market share over the last 15 years because they support real projects that address genuine user problems. Similarly, to stand the test of time, crypto projects must develop applications that address real financial (issuance, trading, verification, and settlement), incentive, or coordination issues.

Crypto as an Asset Class

Crypto is a $2 trillion asset class, but it's important to understand that about 50% of this is represented by Bitcoin, another ~15% by Ethereum, and another 20-25% by various other chains. While we can justify the market caps of BTC as digital gold and ETH and a few other chains as enablers of a global financial system, the value of other assets can be harder to justify when assessed by traditional asset managers on the basis of cost, revenue, and benefit.

There is only one "Gold" as an asset class, and similarly, there can be only one "digital gold" and a few major infrastructure providers in the crypto landscape. For the crypto market cap to truly expand, at least 50-90% of the market cap should consist of traditional assets represented on-chain. Only then can we justify the market cap of infrastructure providers like ETH, BNB, SOL, UNI, etc., which facilitate the representation and movement of traditional assets on-chain.

Crypto winter of 2023-2025

The crypto winter of 2023-2025 presents a significant reality check, differing from previous downturns in several key ways:

In earlier crypto winters, the market size was much smaller and there were no widely adopted use cases for crypto. It wasn't clear what would catch on until 2020-2021 when DeFi and NFTs emerged as genuine, crypto-native applications that didn't rely on external factors. Builders now have stronger confidence that the crypto market is a viable alternative asset class that is here to stay.

Previous crypto winters occurred independently of broader economic conditions. From 2010 to 2022, public markets generally remained strong, and crypto downturns were isolated events. In contrast, the current winter is closely tied to macroeconomic conditions, with significant valuation drops in public market stocks and other private projects as well.

There has been a strong recovery in Bitcoin, Ethereum, and other top crypto projects, similar to the rebound seen in major public market stocks, which demonstrates a high level of user confidence in top crypto assets and projects.

In 2021, many in the crypto community believed that all projects and platforms would be reimagined or rebuilt because decentralized projects seemed to offer better engagement. This winter has shown that decentralization itself is not a key feature unless it solves real problems or provides tangible solutions. The downturn has also highlighted both the positive and negative aspects of Decentralized Autonomous Organizations (DAOs).

Due to the drop in token valuations, many unsustainable yields also disappeared, revealing a genuine need for assets that can provide consistent, good yields. This led to several projects starting to offer Treasury-Bills on-chain, which yielded about 5% in 2024.

In traditional finance, many asset classes offered double-digit yields, and there is a strong demand for these assets to be trustworthily bridged to on-chain.

Understanding what works and what doesn't is invaluable for builders. This crypto winter has clarified the real utility of DeFi and reinforced that the primary use case for crypto remains the issuance and movement of assets.