It has been exactly half a year since the 10K Beta Fund raised funds in May. Thanks to the support of all LPs, we can quickly raise funds in the first half of 2024 and let the 10K Family & Friends fund run quickly in small steps.

2024 is a year full of turning points and hope for us. We and our portfolios have taken this opportunity to make good progress in this half year. , and gradually expanded our ecological layout. 2025 is believed to be a more promising year for the bull market. In the previous article, we reviewed the industry trends in 2024. This article will share our predictions for the industry in 2025, which mainly include:

(1) Cooperation Regulations

(2) Exchange pattern

(3) The future of AI agent

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(4) Stablecoins’ changes to cross-border payments

(5) BTCFi’s battle for leadership

（6）Why Application not Infra

01. The importance of compliance has reached a new level

After FTX, the industry is "opaque" Tolerance is getting lower and lower. For example, in the field of managed wallets of exchanges, trading venues/fund custody have become more and more like the traditional separation of powers and responsibilities model. For example, many institutional customers' money is now stored in ceffu, transaction matching occurs in Binance, and the exchanges are all public own proof of reserve.

At the beginning of 2024, in the United States, since the BTC/ETH ETF was gradually passed, we have seen that the Trump regime has become increasingly friendly to crypto, and Gary Genler is about to Resigned in January. In Asia, HK started a stablecoin sandbox in April this year, giving companies such as RD/JD.com the opportunity to initially explore stablecoins. OKX will also become the first exchange in the world to obtain a full operating license in the United Arab Emirates in 2024.

Let’s not discuss some very fictitious macros, but if some modifications can be made to the Token utility during Trump’s term, we will think that this will be a great benefit to the industry’s copycat projects.

Utilities currently accepted by the SEC: 1. Gas fee; 2. Staking (but LST is Security); 3. Governance

If the SEC can clearly accept tokenomics in the future: 1. revenue sharing; 2. Buy back; 3. ETH/SOL ETF can be staking/restaking, etc. in the future. Once the SEC can make changes, Asian crypto centers such as HK/SG will continue to follow suit, which will be a great benefit to copycat projects.

2. Changes in the spot pattern of CEX

I have always said that CEX, as a public traffic market, and the flywheel effect of Maker + Taker, make it difficult to change the competitive pattern once it is formed. . For CEX to defeat the flywheel effect of Binance, there is only a very small probability of events. For example, all middle and senior management of BN are wanted by the FBI, and Binance is exposed to misappropriate user assets to long and short the market, etc.

But after the evolution in the past 2-3 years, we believe:

2.1 The penetration rate of the Korean market can also increase at least 1 times to 60%

According to Upbit, the Bank of Korea , Bithumb, Coin One, Cobit and Gopax Statistics on the number of investors with accounts on the five major Korean exchanges concluded that as of November this year, the number of people holding cryptocurrencies on Korean exchanges exceeded 15.59 million, an increase of 610,000 from 14.98 million in October. Currently, the total population of South Korea is estimated to be around 51.23 million. This means that the number of people holding cryptocurrencies is equivalent to more than 30% of the total population.

There is also more interesting data. According to statistics, in August last year, the number of active stock accounts in South Korea exceeded 50 million for the first time. By February this yearIn September, the number of active stock accounts in South Korea exceeded 60 million, which is 8 million more than the total population and equivalent to 1.16 times the total population.

South Korea's traditional large institutions and whales have not yet fully entered the market. As a market where the trading pairs are all XXX/KRW, in the extremely crazy bull market and wealth effect Next year, we believe that the penetration rate of the Korean market will increase significantly next year. The most typical case is the fluctuation and trading volume of UXLINK on the Korean exchange around Christmas, which are outrageously exaggerated. It is strongly recommended that the CEO of the project team, in addition to speaking Chinese and English, must speak Korean and go to Korea for on-site CX.

2.2 Bitget, “Pinduoduo” in the currency circle, is expected to become the top three CEX

BG’s trading volume has increased this year, from a daily trading volume of US$500-1 billion at the beginning of the year. Billions of transactions per day in 12 months (only 20% The left and right trading volume is contributed by the great stand-alone coin BGB, the rest is perfect competition). Market share increased from 2.8% at the beginning of the year to 7.8% in December, becoming the world’s fourth largest exchange for non-USD trading pairs, surpassing OKX.

Bitget is doing the right thing, or future growth will come from:

1. Handsome The core management represented by the boss + Grace thinks very clearly. Based on platform currency empowerment (such as launchpool+poolx 1-2 times a month), Bitget is continuously empowered around investment (FV) + media (FN) + Bitget Wallet (wallet) + Morph (L2). Let me see the shadow of Binance in 20-21. The projects invested by FV are constantly listed on BG; now the token BWB of bitget wallet has been replaced by BGB; is it possible for Morph, a consumer-grade L2, to break out of the circle in the future?

2. The employee roll is a real roll. Every week, you work hard every day, and you are given a lot. Hire people from Bn, OKX, and bybit with a salary exceeding 30%-50%.

Judging from the market share of DEX on the chain, thanks to the emergence of Pumpfun, Raydium's market share has increased significantly, and it once occupied 28% of the DEX market share of the entire chain. %. Since this year Ethereum

2.3 has gained from the invisible winner of VC coins, Bybit

Bybit’s market share at the beginning of the year was 8.79%, reaching 16% by the middle of the year, and 11% by the end of the year, making it the third largest transaction after BN and Upbit. Place. This year, many VC projects were unable to go to Binance and settled for the next best thing. Everyone found that they could get a lot of trading volume by going to Bybit. Moreover, after joining Bybit, it is also a good choice to join the Korean exchange +Binance. In addition, we have recently seen that Mantle has begun to make moves to recruit Kol to cooperate with the announcement.

Can Bybit continue to climb to the next level in 25 years and become a small Binance?

3. AI solves the core contradictions of the industry

Exchange with a senior in Shanghai at the end of this year A question raised in the article made me think deeply. What core contradictions has the industry solved?

I realized at that time that figuring out this question would also give our fund the answer to the industry, and how we should face the next primary market. I firmly believe that "In trustless we trust", if the essence of the AI ​​era is that people obtain low-cost advanced intelligence, then Crypto will be able to help open source AI and solve mathematical trust problems such as: (1) through cryptography principles and codes. Core issues include how to generate trust in Agents (2) how Agents interact with each other (3) how the Agentic economy unfolds.

We believe that great opportunities will arise in AI+Crypto. It is precisely because the essence of the encryption network is to build and transmit trust. The encryption network not only uses cryptography and code It provides a reliable trust foundation for Agents. Its decentralized openness and inclusive definition of subject identity create a digital space where Agents can act autonomously.Fundamentally solves the Agent's lack of identity and trust dilemma, and opens a door to true autonomy for the Agent.

3.1 Agent Economy

We think Agent Economy will be the sexiest in the AI+Crypto track direction, AI Agent is reshaping the boundary between technology and business. This is not only a technical concept, but also a brand-new productivity form and organizational method. Multi-Agent collaboration is a key feature of future technology architecture. Imagine an ecosystem composed of hundreds of professional Agents, including:

Specialized Solidity programming Agent

Agent who is good at Python development

A project management agent responsible for overall coordination

These Agents may not know each other directly, but through the central coordinator, they can achieve efficient collaboration on complex tasks. This organizational form is similar to an intelligent container orchestration system and will completely change the traditional work model.

The boundaries of business imagination are constantly being expanded. Taking IP operation as an example, AI Agent can achieve unprecedented innovation models:

Acquire IP with historical value at low cost

AI Agent plays the role of IP broker

Precision marketing on social networks

Explore diversified monetization paths

3.2 Autonomous agent on the chain, an intelligent system that thinks and executes independently

In the Web3 field, the potential of AI Agent is the same Exciting things like Crypto Enabled AI Autonomous Agent's mission is extremely broad. It may be a simple USDC payment, it may be the need to independently deploy batch transfer contracts to save gas fees, or it may involve multi-step on-chain interactions and complex contract creation. Although many operations can be implemented using technical indicators, we cannot foresee and exhaust all scenarios. Therefore, a truly autonomous agent needs to be able to understand the task, decide on its own what tools to use, what information to obtain, and ultimately transform it into a multi-step action plan, perform operations, and finally complete the task.

Based on autonomous agents driven by AI models that perform tasks autonomously in the field of encryption, the ideal of technology is to build intelligent systems that can think and execute autonomously. An ideal AI Agent should have:

In-depth understanding of complex tasks

Autonomous performance Task decomposition

Independent writing of implementation code

Ability to integrate interdisciplinary knowledge

Complete smart contract deployment independently

Carry out complex on-chain asset management

Achieve cross-chain intelligent operations

3.3 AI agent + payment, the economic model of future human-machine collaboration

With the formation of a large and complex Agent ecological network, there are many challenges between Agents and between Agents and humans. The interactions between them will be more frequent, in-depth and diverse. Payment is one of the foundations of Agent's economic network. However, the existing technology stack and payment system cannot support Agent's independent payment. Agent requires cryptocurrency payment.

In a decentralized encrypted network, these obstacles faced by Agents are almost easily solved. Permissionless networks and open ecosystems greatly expand the scope of Agent capabilities. Therefore, I think that among all the directions of integrating AI and encryption technology, allowing AI Agents to use encrypted networks is a direction that is very close to practical needs and has practical prospects.

In the short term, giving Agents the ability to make encrypted payments more conveniently is enough to expand their scope of actions. In the medium to long term, digital identities based on encrypted networks, permission-free protocols, decentralized applications, and the capabilities conferred by smart contracts will enable Agents to operate autonomously in the digital world, cooperating, competing, and gaming with humans and other Agents. The encrypted network not only provides the basis for Agents to act autonomously, but also opens up new possibilities for the future economic model of human-machine collaboration - when Agents can autonomously participate in economic activities, this development will bring huge changes to society. (The above is written by our LP Brother Wang Chao. It is so well written that I have to post the original text.)

3.4 AI Data, do left and right approaches lead to the same goal through different approaches?

With our first major investment in Sahara in 2023 and Portfolio Vana listing in BN/Upbit, which we invested in mid-2024, we are more aware of the importance of the AI ​​data layer to The importance of AI companies. Today, algorithms and computing power are no longer the core factors restricting model capabilities. At the beginning of 2023-24, computing power was very tight. AI companies had very high demand for A100/H100, and it was hard to find one. A large number of A100/H100s are smuggled into China, and cloud vendors’ machine rentals start at 1-2 years. Therefore, a large number of decentralized computing power projects were born in 2023, such as IO/Aethir.

Under the gradual evolution, the market has begun to talk about decentralized algorithms and token incentive developers to contribute model algorithms for revenue sharing. This batch of projects We won’t comment much on the reliability or storytelling, and you can think for yourself whether it is reliable or not. On December 27, 2024, Deepsake, a subsidiary of Magic Square, was born. It only used 1/10 of the pre-training cost of other large models in North America to train capabilities and reasoning capabilities that are not inferior to those of North American head closed-source large models in various indicators. Stronger and lower cost. This also gradually shows that algorithms are no longer the core factor restricting model capabilities.

We always believe that the only thing that can truly restrict the capabilities of a model is data. We believe that in 2024, whether it is web2 or web3 AI dataThe company will highlight its value even more.

In the world of web2 AI, there are more and more leading players in the data track. Scale.AI has become the leader in data annotation. Synthetic data companies represented by Nimbus Intelligence are working hard in the fields of embodied intelligence and autonomous driving, and have won many orders from large overseas companies.

In the world of web3 AI, the same is true for our Portfolio Sahara, which won the top model company Wisdom/Dark Side of the Moon in 2024 / Aishi Technology, as well as orders from leading overseas AI companies such as snapchat and microsoft, have also won orders from a certain sovereign and department, making rapid progress. Sahara is the most right-wing link in the AI ​​Data track. It is extremely top-down. After taking orders, it distributes them to users for labeling. The current alpha test contains more long text annotations. For details, see the Sahara screenshot in 1.3.3. Vana is the leftmost link in the AI ​​Data track. VANA's data comes from user contributions in the ecosystem. Users participating in the VANA ecosystem contribute X, LinkedIn and other social media or IoT data to DataDAO. These data will be securely stored in Off the chain. The data is validated, cleaned and labeled and then used for model development.

Whether companies in the AI ​​data track can transcend the cycle and become an evergreen company similar to Chainlink still depends on whether the company can be commercialized in the long term. (2B, taking orders) and the ability to listen to the community (2C, making products that users can perceive), rather than the ability to tell stories.

4. Stablecoin is changing cross-border payments

Fiat currency-collateralized stablecoins are changing from top to bottom Changing the payment industry, stablecoins are a dimensionality reduction attack on core issues such as the settlement cycle of traditional payment channels and transaction friction.

The company we are working on at the end of this year is a fiat-backed stablecoin company. Among the stablecoin companies I have seen in the past two years, it is the most likely to be cross-border in web2. A team that has made a breakthrough in the payment field. In the stablecoin track of crypto native, I have talked about Ethena and Usual in the past two years. I think ethena may have systemic risks and token utility is too weak; Usual is a bit nondescript as a decentralized Tether, its income is not as good as that of pure delta neutral Ethena, and its AUM is not as good as FDUSD. In the fiat back stablecoin track, we talked about FDUSD and RD in depth, and we believe that each has its own problems. The problem with FD is that the team is neither crypto native nor understands traditional payments. The problem with RD is that it is not crypto native at all.

But it was not until recently that after we had a chat with the executives of this team, I saw the real crypto native+web2 cross-border payment solution that met my expectations. use case. After interviews with senior executives of my team and interviews with upstream and downstream (payment companies, bulk traders), let’s summarize and share some interesting points:

1. Issues that need to be addressed in the traditional trade industry:

In traditional trade, the settlement cycle is a headache. It is necessary to arrange the flow of funds and determine the time of arrival. , ship delivery settlement time, the next batch of collection and payment will be carried out after the arrival of the flyers. The remittance time is usually 1-5 days, and the friction is 1%-3% depending on the strength of the fiat currency. When importing or exporting to some small currencies, you need to pay attention to the real-time exchange rate. If the conflict is serious, it can be quite risky for both parties. In the past, transactions have been done in U.S. dollars. However, there are problems with cross-border transactions in U.S. dollars, and we also need to worry about time differences. In addition, the intermediary bank is contacted by one's own bank and the other party's bank. Sometimes there is insufficient liquidity, and payments and collections are often delayed, making it difficult to calculate the cost of capital flows. There are also exchange rate deviations, and a series of problems where the goods have arrived but the payment has not yet been received.

For example, one of the suppliers of an international trader in Africa we researched, their local financial system is so rubbish, they can’t even trust banks, they only trust USDC, because USDC Can be converted into US dollars through CB.

A customer of another trader we surveyed in Latin America told us that after their customer paid US dollars into their Argentinian account, the money was then transferred out. It is very difficult because Argentina is so short of US dollars and it is easy to transfer them into the banking system, but the process of remittance is very complicated.

2. The demand for stablecoins is completely generated from the bottom up, and payment institutions must close down to accept stablecoins.

Initially, there were not many demands from customers, but with the development of the past two years, the demand has gradually increased. When I went to Yiwu for inspection, I found that there were many small vendors in Yiwu, and they would give foreigners two QR codes. , one is the payment code, and the other is the stablecoin address. You will find that it is used in more and more scenarios.

Especially in some emerging markets, stablecoins are actually products that replace the US dollar. Many local users will accept stablecoins. Compared with the US dollar, whether it is bank accounts or liquidity, it is not an order of magnitude. p>

So after many users at the end have U, for For enterprises going overseas, when they go overseas in Africa or along the Belt and Road and other places, local suppliers will give them money to choose local legal currency or stable currency. I believe many enterprises will choose to charge stable currency. This is a bottom-up approach. process. As the following becomes more and more popular, these companies also gradually Gradually receiving stablecoins. And during the collection process, he found that stablecoins can indeed solve the payment problem, so he tried to force the payment institutions to ask them if they were willing to accept this thing, and even helped them handle matters such as foreign exchange settlement. Finally, the payment institutions began to reflect and react. Push and start processing related business.

3. The competitiveness of different fiat-backed stablecoins in cross-border payments in web2 comes from localized 2B and whether they can serve customers in real time.

Being able to find a team when something goes wrong is a core competitiveness. Most traditional customers and traders know nothing about U. The concept is another dollar. Therefore, this process involves whether the product can allow people who have never used it to immediately understand how to operate it, whether the operation is safe, and the maintenance of the customer relationship by the service provider itself is very important.

What the customer is most worried about is that after paying the money, he cannot receive a reply for a long time. Today, he really needs to pay for the goods. At this time, you told me that the funds flow is insufficient. We have this and that problem. Another day of delay will result in an additional fine of 20,000 yuan. 30,000.

5. Who will become the leader of BTCFi?

Continuing with what we talked about in the November quarterly report, we have always attached great importance to the Bitcoin ecosystem. Risk-free interest earning (congratulations to our Portfolio Solv for being listed on Binance). Based on first principles, we believe that this is the most essential need of Bitcoin holders.The first direction of our bullish is to earn interest from Bitcoin (re)staking, and the other is how to transfer Bitcoin trustless to other chains to provide liquidity (the result of cross-chain is also to provide liquidity for financial management).

We will not do too much analysis on the fundamentals of Babylon and Solv. We will put forward a few points:

1. Solv's income comes more from the actual trading side, such as funding rate arbitrage, JLP's Delta neutral and BTC currency-based option arbitrage. This type of income is very high in the bull market, starting at 15%-20%, but the yield in the bear market will be relatively low, starting at 3%-5%.

Babylon's revenue comes more from customers' own coins and BBN's coins. BBN's bull market may have a flywheel effect, and in a bear market, Babylon ecosystem's income may be bleak.

2. During the bear market, you need to look for financial income in traditional web2 scenarios. At present, there may be opportunities in supply chain finance and other scenarios we are looking at.

3. The first-mover advantage will be significant. As the leader of the track, babylon/solv will be the first to issue coins and bring considerable wealth effects ( Pulling the market is marketing), whoever is likely to be the first to occupy the user's mind.

4. From the growth of ETF holdings, it can be seen that more and more BTC is beginning to be in the hands of large institutions. Babylon/Solv Whoever can be more compliant and meet the needs of large institutions will be more likely to be the first in BTCFi in the long run.

6.Application Infra

Speaking of this topic, we can take a look at how much it costs to build a good ecosystem. Hyperliquid has been raised from 3 yuan to 30 yuan. A conservative estimate of the cost is $100M+. In this cycle, the funds required to build a top-level public chain ecosystem have far exceeded the cost that ordinary infra projects can afford. We do not believe that the underlying blockchain technology has a high possibility of paradigm breakthrough. As an early VC The winning rate of the bet infra project is also unbearably low. We will treat in with caution in the future.fra area of ​​early investment opportunities and will come to Bet application applications.

But looking back at the performance of Application in 2024, it is really impressive. This year, the record of days that revenue break $100m has been continuously broken, first by Ethena (8 months), and then by Pump.fun (7 months), both showing the extremely powerful explosive power of the blockchain industry - as long as the direction and products are right Yes, the market will give you the fastest reply. But have you ever wondered why the following lists are all related to trading?

It is because of the accounting rights. The blockchain industry is more about accounting rights. . After the first barter transaction occurred tens of thousands of years ago, trading and accounting have been passed down along with human civilization, from single accounting to the double-entry accounting method produced during the Renaissance, and now Blockchain accounting essentially distributes accounting rights to everyone in a more decentralized manner.

(The following are the original words of our LP, they are so well written)

Most Mainstream assets are generated from the most important power. Bitcoin is used to account for the scarcity of fixed output. Ethereum and Tron are used to account for currency codes. In fact, they are mainly US dollar stable coins and related transactions. Sol is used to account for high-end assets. Frequently traded spinach meme When it comes to accounting, here comes the problem. This industry currently only accounts for about 0.3% of the global assets and less than 1% of the transactions. The remaining 99.7% of the assets and 99% of the transactions have not yet been accounted for. This is A true beta is also an alpha. RWA needs to think from this perspective. What’s more interesting is that the so-called tokenization and valuation that cannot be analyzed using traditional fundamentals give a premium to this accounting power. This premium is the only means to ensure that this power will not flow back to the traditional system, that is, human nature and Innate greed.

Looking back at the applications that have broken the circle in recent years, they are actually accounting upgrades of assets in different application scenarios - DeFi (financial assets) Accounting), GameFi (accounting of game assets), NFT (accounting of artworks/pictures), Friend.tech (accounting of quantified social value). Meme (accounting for spinach). When the underlying technology of the blockchain continues to iterate and has verified a large number of commercialization capabilities in 20-24 yearsand products, we are likely to see new asset accounting upgrades in 2025 and beyond, such as AI x Crypto (accounting for computing power and data), DeSci (accounting for science/charity), RWA (house/office building) Accounting), PayFi (accounting for supply chain finance), SocialFi (accounting after quantification of social value).

7. Traditional giants begin to enter the crypto industry

In this year, we have observed more and more traditional companies entering the crypto track from various angles, such as Paypal through PYUSD Stablecoin track; JD.com’s stablecoin entered the Hong Kong stablecoin sandbox; a large number of US listed companies began to reserve BTC, etc.; traditional cross-border payment companies began to accept stablecoin payments.

Does this bring us a new round of thinking: How to serve this group of new players entering crypto? Will this new group of players have new ideas? Our focus next year will be on observing the demand for crypto from this large group of new players.

8. What do you think?

In the process of preparing this annual report, we collected the opinions of some friends in the industry on primary and secondary investment opportunities next year.

The following is a summary of their main points for your reference:

1. AI and Crypto The combination of AI and AI is still the direction that most people think has potential in the future, especially AI Agent, which is regarded as an important application in the next round of bull market. Multi-AI Agent coordination, the shift of Web2 AI startups, the combination of AI and MEME, AI and payment, AI and TEE, AI and stable coins are all exciting.

2. Payment and RWA

3. New public chain ecology, focusing on Hyperliquid, Monad, Berachain, Base and Solana

< p style="text-align: left;">4. ICO returns

5. BTC is a deterministic opportunity

6. Risk-free arbitrage

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7. DEX trading terminals (such as Dexx, GMGN, Infinex) and intent-based chain abstractions (such as Across, Near Intent for Base and SOL)

8. Options related, can have real income and inside and outside profits

9. Combination of user acquisition tools and MEME, MEMEFi