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

2025 will be a year of thorough reckoning for the cryptocurrency industry. Those once-glamorous financing stories and star projects endorsed by top VCs fell one after another this year. Data from RootData shows that while the number of recorded project failures this year is not as high as during the peaks of 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.

Once-promising GameFi projects like COMBO, Nyan Heroes, and Ember Sword have all shut down; the NFT sector is in tatters, with platforms like Royal, RECUR, and X2Y2 exiting the market one after another. Even more alarming is that even those 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 conservative investment climate, financing scale and institutional halo 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, has seen its high-inflation token economic model not only fail to maintain itself but also accelerate user attrition. Many projects attempted to seek revival by turning to Telegram mini-programs, but due to the ecological breakdown caused by stagnant main chain business, these attempts mostly ended in failure.

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 has seen 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. As the speculative frenzy subsides, people realize that these digital artworks have little actual value beyond speculation. The elite group in the crypto circle has begun to reallocate assets, shifting attention from digital art to more certain physical scarce assets.

The DeFi sector has also not been spared, with the total locked value dropping by over 20% throughout the year. Frequent hacking attacks have shaken users' trust in protocol security, while the exhaustion of yields in a stagnant game has accelerated the outflow of capital chasing high interest. This growing pain proves that projects characterized by "low effort, high leverage" 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? What inherent advantages does it have compared to traditional financial systems?

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 several business 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 are not achievable 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; and in permissionless openness—anyone, anywhere, at any time can access the cryptocurrency network.

Based on these core advantages, some genuinely 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 making cash flow investable 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 entirely 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—families are smaller, friends are scattered globally, and relatives live in different countries. Nowadays, fundraising from friends and family is not only cumbersome and questionable in compliance, but even the operational processes for gathering funds are fraught with difficulties. The internet capital market makes global fundraising possible again, applicable to various asset classes. Financing for small and medium-sized enterprises, micro-subscription software, securitization of royalty income streams, and financing for creator revenue rights are all niche areas 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, due to their small patient base and limited short-term commercial value, are often overlooked by pharmaceutical giants. However, with a permissionless global capital market, we can find those who genuinely care about these diseases and inject funding into research projects. When AI combines with DeSci, individuals and small teams can effectively conduct cutting-edge research.

Survival is the Only Narrative

The growing pains of 2025 are a necessary path toward maturity. In the crypto world, high financing, star VCs, and popular tracks 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 reckoning is also accelerating the evolution of the industry. Every instance of real economy cash flow being brought 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 space 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淘沙.