Author: 0xJeff
Compiled by: Dingdang
2025 will be a challenging year for the crypto industry – despite the current US president’s promise to make the US a global crypto and AI hub, the crypto market will still face significant difficulties this year.
Since Trump officially took office in January, the market has experienced moments of pressure time and time again, the most devastating of which was the flash crash in October—a plunge that nearly paralyzed the entire crypto industry.
Although the chain reaction of this flash crash has not yet been fully resolved, the macroeconomic background and industry tailwinds point to a more positive quarter and a more positive outlook for 2026.
This article will delve into six trends that are reshaping the crypto industry behind the scenes, providing you with an early preview of what 2026 might look like. Let's begin.
1. Prediction Markets = Cryptocurrency Options Products - Finding the Product-Market Fit (PMF)
Prediction markets (PM) have recently seen a breakthrough at the industry level, with their weekly nominal trading volume hitting a new all-time high of $3 billion for the first time two weeks ago.
We are seeing a rapid expansion of market types – politics, sports, esports, popular culture, mentions, macroeconomics, crypto, finance, financial reporting, technology, and more, with success across the board.
@Polymarket and @Kalshi follow the "everything is predictable" approach, covering all popular topics; while emerging PM projects such as @trylimitless and @opinionlabsxyz delve deeper into vertical niches—Opinion focuses on the pure macro market, providing forecasts of economic indicators such as interest rates in the US, EU, and Japan; while Limitless focuses on crypto assets, providing a wider range of currencies and richer timeframes for the market.
Crypto options were all the rage during the 2021 bull market, but subsequently declined due to a number of problems, the most critical of which were poor UI/UX and lack of liquidity.
Prediction markets perfectly fill the gap left by options. They offer an extremely user-friendly interface, allowing people with no financial knowledge to bet on any event; at the same time, they attract user participation by creating interesting markets, allowing anyone to participate as a market maker and trader (betting on both "yes" and "no"). Instead of understanding a bunch of Greek letters and complex terminology, you only need to buy Yes or No shares.
Similar to options, users can also use prediction markets to hedge their asset exposure.
For example:
• You received a large airdrop but want to hedge it in advance? Go to that market and buy No.
• Is your portfolio too long? Buy in the macro or BTC market. No.
You know what I mean.
Prediction markets are essentially repackaging options into a more accessible, universally applicable, and profitable product, and one of the biggest beneficiaries is machine learning/prediction teams.
2. Prediction markets = the perfect proving ground for machine learning teams.
More and more teams are doubling down on their predictions, refining their signals and models, such as @sportstensor, @SynthdataCo, @sire_agent, and @AskBillyBets.
Sportstensor is the liquidity provider layer of Polymarket, where any PM trader can participate in signal competitions. The best-performing signals are rewarded with Alpha tokens, which are then fed back to Sportstensor to further enhance its predictive models for future profitability.
Synth operates on a prediction market-based "high-frequency hedge fund" model, using its own signals to predict the 1-hour and 24-hour prices of crypto assets and placing bets in the prediction market. Preliminary results show a return of 500%, growing from $3,000 to $15,000 in one month.
Sire is building an Alpha Vault, using Sire's model and SN44 Score data for sports predictions, with initial results exceeding 600% PnL. It is currently the best prediction market DeFi vault product ready for public release.
Billy provides analytics and automated betting tools, leveraging the team's sports betting insights (BCS). They are exploring their niche in the Kalshi parlays market and plan to expand their strategies and vault size (future profits will be returned to token holders once the vault size reaches a threshold).
The allure of prediction markets lies in their inherent ability to foster multiple scenarios resembling a "Darwinian AI race," allowing ML teams to prove their strategies in real-world market environments.
Synth, Sire, and Billy can all participate in Sportstensor competitions, and soon they will also be able to participate in War of Markets, which @aion5100's @futuredotfun plans to launch on Polymarket and Kalshi.
Even cooler is that Polymarket is about to launch the Poly token, and new PM projects are also attracting liquidity and trading volume through token incentives. Machine learning teams can simultaneously identify price errors, engage in arbitrage, and casually collect token incentives.
Does this remind you of the early days of Hyperliquid?
The same thing happened again, only this time it happened in the prediction market, not in perpetual contracts.
3. The Neobank War Begins
We are seeing key changes: large Web2 startups and enterprises are launching L1/L2 and integrating stablecoin payment chains to directly serve users. Meanwhile, crypto-native projects are also moving into real-world financial services.
Teams like @ether_fi, @useTria, @AviciMoney, and @UR_global are now offering non-custodial crypto spending cards, allowing users to directly spend their on-chain assets in the real world.
In just one year, this market has transformed from a blue ocean into a crowded battlefield, with 20-30 heavyweight players vying for the same pool of crypto users.
Current differentiation mainly focuses on:
• Cashback/Rebate Rate: Tria offers the highest cashback, but requires an annual fee.
• Exchange rates, transfer fees, ATM fees
• Benefits package (travel, hotel categories, airport lounges, activities)
• Earn/DeFi Integration (Idle Funds Yields, Lending & Spending): EtherFi leads in this area, offering high yields plus lending and spending capabilities.
Nevertheless, most of these products share the same underlying structure. They rely on partner banks/issuers holding Visa/Mastercard licenses, making them more like "user acquisition portals" than true Neobanks.
therefore:
• Compliance is managed by the partner bank, not the project itself.
• The user's balance is a virtual account, not a real bank account.
• Functionality typically stops at "crypto spending," lacking full fiat off-ramp or banking services.
Currently, everyone is subject to these restrictions, so the impact is minimal. However, as competition intensifies, whoever can become a "real bank" will possess a core advantage. Projects that can control their own compliance and regulatory systems will be able to provide genuine bank accounts, multi-currency deposit and withdrawal channels, and achieve seamless integration between crypto and traditional finance.
In this regard, UR (from the Mantle ecosystem) is ahead of the curve, currently operating under FINMA regulation, with Swiss banking authority, supporting seven fiat currencies, and simultaneously supporting real-world and crypto financial services (such as transfers across the traditional banking system in seven currencies).
4. Breakthrough applications in the crypto industry are clearer than ever before.
•trade
•predict
•DeFi Yields
Stablecoins
• Asset tokenization
We have progressed from CEX → spot DEX → perpetual DEX, and finally arrived at the era of Hyperliquid.
Pumpdotfun's "super-speculative launchpad" wave has sparked the rise of numerous narrative-driven on-chain launch platforms.
The market is growing rapidly and has reached mainstream users for the first time (we have never seen such viral spread since the NFT era, and this time people really like the product).
DeFi has made a full-scale entry into Wall Street in areas such as structured yields, interest products, stablecoins, RWA/DePIN, and asset tokenization. People realize that they can "own a piece of the future" and earn returns on it (or even use it as collateral to borrow money).
All key crypto applications are being further amplified: CEX is launching wallet super apps such as Base App, Binance, OKX, etc., and other wallets are also rapidly expanding their capabilities to make them easier for ordinary users to get started.
ICOs are making a comeback – Coinbase has launched its first Monad ICO, and other platforms (Legion, Kaito) are also experiencing rapid growth.
5. Crypto AI finds PMF
In its early days, crypto AI was dominated by a bunch of AI Meme coins and GPT-backed projects that called themselves "AI Agents," but now that noise has faded away.
Today, blockchain payments and stablecoins are supporting automated transactions between agents; cryptographic technologies such as TEE and ZK, coupled with token incentive and penalty mechanisms, are making AI systems verifiable, controllable, and predictable.
Supporting layers (such as x402, ERC-8004, programmable wallets, billing frameworks, and verifiable inference/computation) are laying the foundation for "seamless collaboration between AI and humans" (infrastructure that enables AI and humans to transact and collaborate seamlessly anytime, anywhere, and provides safeguards to prevent AI from going out of control).
Meanwhile, "Darwinian AI" is emerging as a meta-level competition, driving agent evolution, optimizing signals, and improving performance through real incentives. Currently, the most successful use cases remain trading and signal prediction, which aligns perfectly with the DNA of the crypto industry.
More and more ecosystems are adopting this Darwinian model, using token incentives to attract developers, reward contributors, and subsidize R&D, thereby driving higher-quality AI products. Although still in its early stages, some subnets of the Bittensor ecosystem have already shown remarkable performance.
Nevertheless, the token performance of most Crypto AI projects has not kept pace with these developments – many projects are still trading 30–90% below TGE, even as they are delivering real infrastructure and practical utility.
6. DeFi enters the era of "Dynamic DeFi"
DeFi has long been a core pillar of the crypto industry, with a total value exceeding $130 billion, encompassing DEXs, lending, yield products, and stablecoins.
DeFi's advantages lie in its programmability, verifiability, and high composability; its top-level protocols are the most robust systems in the entire industry. However, the underlying mechanisms of DeFi have remained largely unchanged over the past five years; for example, centralized liquidity making or lending mechanisms are relatively static.
But now imagine this: what if a new DeFi protocol could automatically leverage/de-leverage based on the predicted price of the underlying asset, automatically rebalance LP positions, and automatically enter and exit the market?
This marks the beginning of the "Dynamic DeFi Era," driven by AI and machine learning.
Machine learning-enhanced DeFi
@AlloraNetwork is a core player, collaborating with top protocols to inject machine learning intelligence into traditional DeFi:
• Machine learning-driven centralized LP strategy
• Dynamic leverage management
• Return optimization based on forward-looking risk signals
These predictions and signals are generated by the Allora inference network, where AI/ML engineers can contribute models and receive token rewards through a Darwinian incentive mechanism that rewards better-performing models.
AI-Generated and AI-Managed DeFi Strategies
@gizatechxyz and @almanak are also pushing a new product category:
• Giza is an AI asset manager that intelligently allocates funds across multiple DeFi protocols.
Almanak enables AI agents to deploy tokenized strategic Vaults within minutes, making them both a capital allocator and a strategy creation platform. This allows Almanak to function as both a capital allocator (bringing TVL to DeFi projects) and a vault creation platform for fund managers.
As TradeFi and DeFi become more deeply integrated, machine learning enhances the core value and risk management of DeFi, and AI designs more complex strategies, we may see a faster pace of DeFi expansion in 2026, with a smarter, more autonomous, and more adaptive internet finance layer emerging.
What's next?
In 2026, we may see the convergence of multiple narratives—Crypto, AI, DeFi, RWA, DePIN, robots, and others are converging into an interoperable digital economy run by both humans and agents.
•DeFi becomes dynamic
AI drives DeFi to reach more users
• Crypto payment chains, stablecoins, and key applications gain a larger user base
• Neobank integrates Web2 and Web3.
• The market for predictions continues to grow, and machine learning teams are becoming a core component.
Natural selection accelerates, and only a few assets can truly appreciate in value.
Crypto projects are more likely to choose an IPO rather than an ICO, in order to obtain liquidity, compliance and scale through traditional capital markets.
The next cycle = a cycle of deep integration between TradFi and DeFi.
