The Life and Death Test of the Crypto World: When the Myth of Financing Breaks, What is the Real Moat?

2025 is a year of thorough liquidation for the cryptocurrency industry. The once glamorous financing stories and the star projects endorsed by top VCs fell one after another this year. Data from RootData shows that while the number of recorded project deaths this year is not as high as the peaks during the FTX collapse in 2022 and the Luna crash in 2023, this wave of bankruptcies is fundamentally different—it is no longer a chain reaction triggered by black swan events, but a complete collapse of business logic under extreme pressure.

Those once highly anticipated GameFi projects, such as COMBO, Nyan Heroes, and Ember Sword, have all shut down; the NFT sector is in shambles, with platforms like Royal, RECUR, and X2Y2 exiting the market one after another. Even more alarming is that even projects that received tens of millions of dollars in investments from top institutions like a16z, Polychain, and Coinbase Ventures could not escape this survival crisis. Vega Protocol, which raised over $100 million, ultimately shut down its mainnet due to weak user growth, while RECUR, valued at over $300 million, and the DeFi protocol DELV also reached their end. These cases send a clear signal: in the current climate of conservative investment attitudes, the scale of financing and the halo of institutions are no longer a protective charm.

From Speculative Frenzy to Value Return

The entire industry is undergoing a painful but necessary paradigm shift. The collapse in the GameFi sector is the most representative, with the market size shrinking from $23.75 billion at the beginning of the year to $9.03 billion by the end, a decline of over 60%. The once-popular "play-to-earn" model, lacking sustained external funding, saw its high-inflation token economic model not only fail to maintain itself but also accelerate user loss. Many projects attempted to seek new life by turning to Telegram mini-programs, but these attempts mostly ended in failure due to the ecological break caused by stagnant main chain business.

The collapse of the NFT market is even more shocking. The total valuation plummeted from $9.2 billion in January to $2.5 billion, a staggering drop of 72%. Market activity showed a cliff-like shrinkage, with the number of sellers falling below 100,000 for the first time since April 2021. The root cause is the lack of practicality, which has become a fatal flaw. When the speculative frenzy subsided, people found that these digital artworks had little actual value beyond speculation. The elite group in the crypto circle has begun to reallocate assets, shifting their attention from digital art to more certain physical scarce assets.

The DeFi sector has also not been spared, with the total value locked (TVL) dropping by over 20% throughout the year. Frequent hacking attacks have shaken users' trust in protocol security, while the exhaustion of yields under stock game dynamics has accelerated the outflow of capital chasing high interest. This growing pain proves that those "low effort, high leverage" projects have lost their survival soil.

What is the True Value of Cryptocurrency Technology?

As the speculative bubble bursts, we need to rethink a fundamental question: what is the true value of cryptocurrency? Where does its inherent advantage lie compared to the traditional financial system?

The answer is not complicated. The core advantages of cryptocurrency technology lie in the free flow of global capital—cross-border transfers without foreign exchange fees and not subject to any capital control restrictions; in real-time settlement—transfers can be received instantly without waiting for several working days; in extremely low transaction costs—not only eliminating credit card fees, but low rates also give rise to innovative applications like streaming payments that cannot be realized under traditional models; in programmability and composability—digital assets are controlled by code rather than intermediaries, allowing free flow across decentralized applications and generating more functions; in permissionless openness—anyone, anywhere, at any time can access the cryptocurrency network.

Based on these core advantages, some truly valuable directions are emerging. The internet capital market is one of the most promising fields. This does not refer to those meme coins filled with poor token economic models, but rather to the realization of native investability for cash flow on the internet. Imagine that not only on-chain DeFi applications but also enterprises generating stable cash flow in the real economy, dividend stocks, royalty income streams, real estate projects, and various applications can all be tokenized, becoming investable and tradable, and can be recombined to form new financial products.

Finding the True Value Gap

The current changes in social structure have rendered the traditional "friends and family fundraising" model increasingly ineffective—family sizes are shrinking, friends are scattered globally, and relatives live in different countries. Nowadays, fundraising from friends and family is not only cumbersome and raises compliance concerns, but even the operational processes for gathering funds are fraught with difficulties. The internet capital market makes global fundraising possible again, and this model is applicable to various asset classes. Financing for small and medium-sized enterprises, micro-subscription software, securitization of royalty income streams, and financing of creator revenue rights are all subfields that urgently need someone to create on-chain fundraising tools and investor cash flow distribution applications.

Stablecoins are the least controversial golden track. The total supply of global stablecoins has surpassed $300 billion, growing by hundreds of billions over the past two years. According to predictions from the Treasury, this figure is expected to approach $3 trillion by 2030. The payment advantages of stablecoins are significant: instant settlement, no cross-border fees, extremely low transaction costs, and availability around the clock. Scenarios such as gig economy platforms, cross-border remittances, and disaster relief aid are all excellent landing scenarios for stablecoin payment solutions. More importantly, the programmability of stablecoins has given rise to continuous streaming payment models—when employees clock in, the payment stream automatically starts, and when they clock out, the payment stream stops, allowing salaries to be settled by the second and received in real-time, without waiting for a two-week payroll cycle.

Decentralized Science (DeSci) is the intersection of AI and the internet capital market. The development of AI has significantly lowered the barriers for individuals and small teams to conduct original scientific research, but bringing research results to market requires capital support. Many rare or niche diseases are often overlooked by pharmaceutical giants due to their small patient base and limited short-term commercial value. However, with the permissionless global capital market, we can find those who truly care about these diseases and inject funding into research projects. When AI combines with DeSci, individuals and small teams can effectively carry out cutting-edge scientific research.

Survival is the Only Narrative

The pain of 2025 is a necessary path toward maturity. In the crypto world, high financing, star VCs, and popular sectors cannot guarantee survival. Projects lacking real user retention and sustainable business models, regardless of their high entry barriers, will quickly fall into the endgame of cash flow breakage once they lose external capital infusion.

However, this liquidation is also accelerating the evolution of the industry. Every bit of cash flow from the real economy going on-chain will make the technical architecture of decentralized finance more valuable. When tens of millions of real economy enterprises complete their on-chain transformation, the various financial primitives that have been tested in the DeFi field over the past five years will be re-empowered to serve these external cash flows, giving rise to a new financial ecosystem.

This is the worst of times and the best of times. As the speculative bubble bursts, the true builders are just beginning their journey. There is no eternal winter or summer in crypto; surviving and finding the true value is the only narrative. Projects that can grasp the core advantages of cryptocurrency technology and solve real-world problems will ultimately stand out in this wave of sifting through the sands.