Written by: Yang Ge Gary
Written in Singapore on December 28, 2025
In Q4 2025, driven by the interplay of market and policy, traditional global finance and emerging open finance collided violently in an increasingly chaotic environment, leading to drastic changes that cleared most of the residual heat from the first curve (Note 1). The emotional wreckage is difficult to digest in a short time. Meanwhile, traditional finance has isolated itself in a bubble narrative of AI and the golden age of chaos, reaching the end of its tether. Central banks around the world have had to rigidly satisfy the market's rigid aesthetic with textbook monetary and fiscal policies, forcing everyone to believe that these outdated economic inertia can still sustain for a little while longer.
In previous articles, I have detailed the failure of conventional economic models at the intersection of the Kondratiev wave cycle, but experiencing it firsthand is even more palpable. Among the noise, only the market outlook report from Coinbase at the end of the year, "2026 Crypto Market Outlook," objectively summarized and predicted the current market and industry. In fact, the big trends are not hard to see; it’s just that too many emotions and aesthetic inertia have obscured the brief gaps. From my current perspective, I am mainly concerned with three questions:
i) The current global situation shows a highly similar trend of entropy increase compared to the period from 1910 to 1935 (Note 2). How long is the corresponding window today, and how should we compare the process rather than mechanically borrowing historical experiences to assess risks and make decisions?
ii) The native development speed of Crypto and Open Finance versus the contradictions arising from their compliance clashes with traditional finance— which potential will become the main contradiction and restrain the other as a secondary contradiction?
iii) The combination of the first two forms a nonlinear problem: Will chaos create a turning point in 2026, becoming an independent growth factor that promotes Crypto and Open Finance to rapidly bridge the gap (Note 3) into the mainstream world and financial markets?
Coinbase mentioned many impressive data points in the report "2026 Crypto Market Outlook," one of which regarding stablecoins is particularly striking: As of Q4 2025, the total global supply of stablecoins has reached $305 billion, with a total transaction volume of $47.6 trillion. We can roughly compare this data with the current global M0 total supply of $15 trillion and the total global monetary transaction volume of $1500 trillion (Note 4). It can be seen that the supply of stablecoins accounts for 2.0%, while its application ratio has reached 3.2% (note that this indicates the average activity of stablecoins is greater than that of traditional fiat by 160%). Coupled with the report's indication of a continuous annualized compound growth of 65% over four years, along with various foreshadowing laid in 2025, we have reason to believe that the node for Open Finance to bridge the gap and enter the Early Majority is just around the corner in the coming year.
tl;dr
- 1011 ends the first curve of Crypto, 2025 ends the last Kondratiev wave cycle.
- The end of traditional finance's aesthetic inertia and social failure under strong data regulation.
- The issues behind the revival of RWA becoming the mainstream narrative in 2025.
- Emerging developing economies and the new global geopolitical landscape.
- DeFi 2.0, DAT 2.0, Tokenomics 2.0.
- A review of 2025 and an analytical outlook for 2026.
1. 1011 ends the first curve of Crypto, 2025 ends the last Kondratiev wave cycle
In the January 2025 article "The Second Curve of Crypto Growth," we discussed the unsustainability of the past Crypto market within the logic of speculation and narrative. Looking back at the entire year, only one giant remains on the table, fighting alone and taking a different path, while various players in the original market have almost completely exited or have begun to transform and develop the second curve.
1011 triggered the largest single-day liquidation in Crypto history, amounting to $19.3 billion, and over the following days, approximately $40 billion was liquidated. On the surface, this was the extreme leverage structure of the first curve market being concentratedly liquidated in a low liquidity environment, but essentially, it was due to too few players in the zero-sum game market leading to the platform's failure to control the mitigation of losses. When only two players remain at the table, all cooperative strategies will fail, and the opponent's dilemma is the inevitable cause of the end of the first curve.
Similar to the market harvesting by the $TRUMP coin, 1011 fundamentally dismantled the faith foundation of the first curve, destroying the residual heat expectations based solely on narrative, indicating that mere gambling-style speculative consensus will come to an end (Note 5); conversely, the second curve has further grown in this process, with all remaining ecological enterprises transforming or innovating to pursue more pragmatic long-term development routes. The DeFi 2.0 market, based on Onchain Asset Management, RWA Finance, and Tokenization, has become the inevitable direction for the next stage of the market, including CEX, public chains, and Top Infra, all rapidly transitioning towards PayFi and RWA.
On the other hand, by the end of 2025, global economic inflation has completely transitioned to stagflation, and the effectiveness of monetary and fiscal policy adjustments by central banks in various countries has been reduced to merely the role of emotional value management. The ultimate internal competition of traditional economics and the helplessness of pushing AI expectations have completely equated to the Rockefeller era of 1910, marking the complete end of the last Kondratiev wave cycle (Note 6).
On October 29, 2025, Nvidia's market value surpassed $5 trillion, becoming the first company in history to reach this level. While many continue to be bullish about how much more room this price has, without comparing it to the Rockefeller Standard Oil Company of 1910, I just want to say that you can rationally look at the fact that the entire GDP of the African continent is only about half of this size.
Entering H2 2025, more and more rating agencies, hedge funds, and investment banks have begun to closely monitor Nvidia's financial situation. Setting aside its upstream and downstream production capacity and profitability, purely from the perspective of systemic risk proportion, the comparison of long and short positions on Nvidia has completely become unbalanced; in other words, even if the fundamentals continue to show positive news, this trend is difficult to maintain; moreover, it is evident that the industry facts of AI are not so optimistic.
It is worth noting that when Standard Oil was broken up into 34 companies in 1911, the global understanding of the application demand for oil energy in automobiles, airplanes, and the next generation of automated industries had already become very clear. However, this did not successfully prevent the chaos, depression, and systemic reorganization that lasted for 30 years after 1911. The reason is that the essence of chaotic disorder is the result of the failure of the production relations of the previous stage, manifested in severe monopolies, widespread poverty, imbalanced development, and continuous contradictions, which are irreversible phenomena of social entropy increase.
At the intersection of major cycles, economic policies and short-cycle common sense will fail, and the factors hindering social and economic development and the positive environment are absolutely not due to a lack of feasible growth, but rather the inertia of the monopolistic production relations from the previous cycle obstructing or failing to support the fair and effective combination of productivity and labor in the next stage. Focusing on today, the development of AI is inevitable, but the globally prevalent management mechanism of semi-feudal and semi-monopolistic capitalism can no longer continue to support and adapt (Note 7).
2. The end of traditional finance's aesthetic inertia and social failure under strong data regulation
Even so, one of the surprises that exceeded my expectations is that there are still so many economists and industry experts who are fixated on interest rate cuts to this day. Comparing the period from February 2020 before the pandemic to the peak in April 2022, the increase in the U.S. M2 has exceeded 40%. Faced with such a massive monetary volume, every subsequent QT and QE, in my understanding, is merely a formalistic emotional massage; whether it’s 25 basis points or 100 basis points, it has long lost its original economic value (Note 8).
Interest rate cuts have become a perfect combination of a receiver's emotional aesthetic expectation and a forced decision by policymakers. In simple terms, this is a dual inertia of spiritual kidnapping, a tool to influence the market through emotional value. It is commendable that countries have made the greatest efforts to delay the global entry into chaos and comprehensive disorder while trying to use financial and policy tools based on aesthetic inertia.
However, the process of entropy increase cannot be slowed down because of this. Half a year later, revisiting my previous mention of Greenspan's prophecy: "We must accept that monetary and fiscal policy cannot permanently boost economic growth in the presence of deeply rooted structural constraints," we can find that a large number of policies under the traditional system have rapidly failed.
In mid-December 2025, Nasdaq publicly stated that it would submit an application to the SEC to change stock trading hours to 24/7. This move essentially represents traditional finance's defensive pressure on Crypto and the Onchain Market in the face of significant changes while simultaneously testing the waters with regulators. In fact, many traditional financial institutions in North America and East Asia have been adjusting their positions since the Genius Act in mid-2025, struggling repeatedly between how to embrace the challenges of Crypto Finance and face the risks of transformation while trying to maintain their previous barriers and advantages.
An interesting phenomenon is that this contradiction was met with intense reactions from various institutions in Q2 this year, as if the Genius Act suddenly shattered the existing game equilibrium and the cartel alliance's protective moat (Note 9). Everyone felt insecure, knowing that this trend was inevitable and that the traditional financial system was about to be completely transformed. However, as time progressed to Q3, people realized that the market's reaction was overblown; the market iteration process would not be as fast as imagined. Traditional finance practitioners and policymakers miraculously reached a temporary reverse equilibrium, with the main logic being: change is inevitable, but policy compliance will become the stabilizing factor that helps everyone smoothly transition to the new equilibrium and protective moat. As long as the licensed parties and policymakers upgrade together, they can successfully transition. This phase in Q3 was very subtle, akin to everyone participating in a prisoner's dilemma, agreeing midway to temporarily reverse their decisions to cope with greater external pressure. This was merely a psychological illusion of the cartel alliance before its real disintegration. By Q4, the most advanced players understood that, through methods like Hyperliquid and Robinhood, the complete disintegration of the traditional financial cartel alliance would soon arrive. Therefore, both Nasdaq and Coinbase stepped forward to speak the truth, facing more realistic transformative changes, such as altering trading hours and building their own RWA tokenization systems, to gain real advantages in the next phase.
The above process is actually very classic; it represents a psychological sandbox formed by all players before facing a major transformation, participating in a game.
The end of traditional finance's aesthetic inertia does not refer to the failure of economic principles. On the contrary, the Crypto Economy and Open Finance are a further development based entirely on economic principles. However, the bottleneck lies in the systemic issues within the management economics and market production relations mechanisms, especially after fully entering the digital age, where the original management systems can no longer adapt to finding a balance between regulation and freedom. The world has fallen into a significant misunderstanding regarding the erroneous use of stringent digital regulation, leading to an accelerated deterioration of entropy within just a decade.
Over the past ten years, regions around the globe have gradually entered the huge misconception of "utilizing data when available, regulating when methods exist." The cost of rules and thresholds in outdated systems has far exceeded opportunity costs and risk costs. The rigidity of data management has made reliance on historical paths not only unbreakable but also requires payment or incurs greater costs, forming a terrifying "data medieval" effect.
This phenomenon permeates every corner of various industries globally, with excessive digital misuse and financial restrictions hindering development in every sector. To give a simple example, based on my experience in VC for over 15 years, if you rigidly judge whether a person can secure financing based on their bank KYC, then 99% of businesses and innovations in the world will be extinguished.
In the face of the entropy increase failure of the global financial system and social management environment, 2026 will inevitably enter a further state of disorder and reorganization. A large number of rules and industries will be rewritten, and it will be difficult to avoid falling into a chaotic transition period lasting at least 10 years.
3. The Issues Behind the Revival of RWA as a Mainstream Narrative in 2025
The narrative of RWA made a remarkable comeback in 2025 for a simple reason: the credit collapse of the first curve and the absence of a new term with consensus for the second curve led RWA to temporarily step in and win this year's MVP.
Two months ago, while communicating with an industry OG friend from Silicon Valley, he suggested that I focus on RWA Finance after learning about Cicada Finance's upcoming announcement of its listing plan. I followed his advice while also retaining Onchain Asset Management as the main focus, resulting in today's Onchain Asset Management for RWA Finance. Undoubtedly, both Onchain Asset Management and RWA Finance will remain strong mainstream tracks in the 2026 market.
RWA, aside from its name, is not a revival but a complete reconstruction. The issue is that the understanding of the term RWA varies widely among those who use it. As of H2 2025, the understanding in most parts of the world is still close to: a crowdfunding behavior that tokenizes assets.
Most people who engage with RWA do so not from an industry-building perspective but from their own needs, which is understandable. However, just like the issues faced by P2P and E-commerce during the Crowd Funding era, a demand-driven market will force platforms, channels, and the market itself to present a one-sided problem, leading the industry to develop rapidly in the wrong direction.
What is the difference between RWA without fair value and the equity crowdfunding of the past? Is there a necessity for tokenization of RWA assets that lack liquidity? Conversely, do all RWA assets truly need liquidity? These questions have evidently not been thoroughly considered or reached a consensus within the overall market in 2025, and some deeper commercial confidentiality issues cannot be discussed here for the time being.
The current asset distribution data for RWA is provided with a detailed analysis in Coinbase's report. T-Bills, Commodities, Liquid Funds, and Credit Loans remain the four mainstays, indicating the importance of quantifiable financial assets in RWA. In our view, the RWA landscape in 2026 will undergo a certain degree of change; the aforementioned assets will still exist, but the actual business brought by emerging developing economies in DeFi and Crypto Finance will enter the RWA market as asset suppliers, with Stablecoin Payment and SupplyChainFi becoming rapid growth directions.
4. Emerging Developing Economies and the New Global Geopolitical Landscape
In 2025, while developed countries and regions in the global economy and finance struggled with how to formulate management policies regarding Stablecoin and Crypto Finance, the development speed of emerging developing countries and regions was astonishing and beyond imagination.
"What they all want is stablecoins, or platform tokens will do." This was the consistent feedback from cross-border trade and payment companies this year. In addition to Nigeria, India, Brazil, Indonesia, and Bangladesh, many other countries and regions in Africa, South America, South Asia, Southeast Asia, Eastern Europe, and the Middle East have also shown exponential growth in the application of Stablecoin and Crypto Finance for three consecutive years, with actual proportions far exceeding those of developed economies, many surpassing or catching up with the usage volume of local mainstream fiat currencies (Note 10).
These numerous new economic entities in emerging developing economies are rapidly expanding as "off-balance-sheet assets," forming a stark contrast to the management dilemmas in the current mainstream world environment. Although there are still significant differences in economic strength and consumption capacity across different global regions due to historical accumulations, it is evident that the analytical data of the global mainstream economy has long been completely distorted. Faced with excessive regulation leading to stagflation on one side and rapidly growing new environments on the other, it will take no more than five years for the global economic landscape to be reshaped, and geopolitical relationships will undergo drastic changes.
Regarding the initial question ii), I clearly have an answer. The true Nash equilibrium reconstruction will not occur by breaking and reshaping within the existing global economic system but will certainly be formed through external forces breaking the global new pattern, resulting in a complex new reconstruction. The native development speed of Crypto and Open Finance will far exceed the speed at which traditional economic entities and markets can accept and understand, and 2026 is likely to become a crucial turning point for this disorderly reconstruction.
5. DeFi 2.0, DAT 2.0, Tokenomics 2.0
In this report, Coinbase began to bet on some new terms, including DAT 2.0 and Tokenomics 2.0, which are essentially branches of DeFi 2.0 that the industry is already familiar with. The definitions of these concepts are quite good, and I will elaborate on them here.
In 2025, the DAT concept successfully spread from MSTR to the global mainstream financial market, with a very simple underlying logic: DAT premium multiple = market capitalization of the stock ÷ NAV (net asset value) of its held BTC (or other mainstream Crypto); however, this premium multiple rapidly declined or even inverted from Q3 to Q4, quickly ending the global DAT 1.0 craze this year.
The fundamental reason for the decline in DAT 1.0 value and the end of its financial effects is that the capital multiplier's friction coefficient is too small, the story is simple, and price transparency expectations are limited. The Davis double-click and double-kill are too direct; once the confidence shifts between bull and bear, it will quickly dissipate.
The industry value of the DAT concept in 2025 lies in the exhaustion of traditional financial stock market concepts, where the bubble is too large for EV to support, and the credit collapse of the Crypto first curve, with both markets shifting their focus and huddling together for warmth.
Why can DAT 2.0 continue the value of the coin-stock linkage? Simply put, DAT 1.0 is the value transfer from the Crypto first curve to traditional finance, while DAT 2.0 is the value integration from the Crypto second curve to traditional finance. Unlike the former, the latter's value is sustainable for long-term development. In 2025, Ondo, Ethena, Maple, Robinhood, and Figure have already made good samples in DAT 2.0, and more emerging enterprises will rapidly develop within this space in 2026.
Tokenomics 2.0 is a broader concept. This year, we proposed various derivative products related to Tokenomics, such as Liquid Engineering and Yield Engineering, which are essentially further evolutions of Financial Engineering. In different actual financial cases, Tokenomics continuously corrects and optimizes each financial scenario like a financial circuit (Note 11), with each case being different. However, in the overall evolution of the industry, it will gradually form innovative universal protocols with overall significance, like the PT-YT provided by Pendle.
In this report, Coinbase only briefly touched on several issues when mentioning Tokenomics 2.0: Value Capture, Token Buybacks, Financial Engineering, Regulatory Clarity as Catalyst, and Protocol P&L, without logical connections or detailed elaboration.
Let’s break this down simply:
Value Capture is actually not related to Tokenomics 2.0; it is merely a necessary condition for the application and promotion of assets on the second curve. Tokenomics exists independently of value capture; in other words, Tokenomics without sustainable value capture has already been proven to be Ponzinomics on the first curve, and it will no longer be a mainstream market in the Crypto Market and Open Finance after this year.
Token Buybacks are an important condition for Asset Tokenization in RWA and DAT 2.0, and in my view, they are even a necessary condition. More precisely, Asset Clearing Capability is a prerequisite for all asset investments. The healthy development of RWA Finance next year will largely depend on whether the market can reach a consensus on this point.
Regarding Regulatory Clarity, this has been discussed in Chapters 2 and 4 of this article, and it should be objectively expressed as Pros and Cons. Coinbase's discussion perspective has its uniqueness, but as discussed, the greater and faster flexibility development globally is actually occurring in emerging developing countries and new economic entities.
Moreover, the process of financial protocolization is not determined by Regulatory Clarity; it is only highly correlated in certain financially developed regions of North America and East Asia. The P&L of Protocol Finance is entirely a trading phenomenon of an upgraded Open Finance Market, determined by the market itself.
Whether it is DAT 2.0 or Tokenomics 2.0, they are merely temporary terms. The second curve and DeFi 2.0 are the same, describing a fundamental shift and inevitable trend in the current Crypto Market and Open Finance after experiencing 2025.
6. Review and Summary of 2025 and Analysis Outlook for 2026
As 2025 comes to an end, here is a review and summary of the predictions and analyses from this year:
February The Second Curve of Crypto Growth >
"Zero-Sum Game and the Seven Giants at the Table," "The Trend of RYA/RWA and the Rise of PayFi," "Crossing the Chasm: The Second Curve of Crypto Growth," "The Development Pattern of Crypto Under Compliance Issues and the Situations in Various Countries";
"The Triple Kill Problem of Debt, Stocks, and Currency and the Failure of the Merrill Clock," "The Thucydides Trap and the Comparison of the Historical End of Five Kondratiev Cycles," "Greenspan's Prophecy and the Significance of Crypto at the Intersection of the Kondratiev Cycle," "The Correlation Shift Between Bitcoin and Chaos: The Shift in Inertia Cognition and Similarities with the Merrill Clock Issue";
May The GENIUS Act and On-Chain Shadow Currency >
"The Essential Reason for the Decline of Traditional Dollar Control," "The Nominal and Substantive Purposes of the GENIUS Act," "The Insights of DeFi Restaking for the Fiat World and the Currency Multiplier of Shadow Currency," "Gold, the Dollar, and Crypto Stablecoins";
September The Trend of Asset On-Chainization Under Stablecoin Pricing Methods >
"The Essence of the Genius Act is to Delegate the Issuance and Settlement Rights of Currency, Thus Gaining Enhanced Currency Pricing Power," "Stablecoins Trigger Global Financial On-Chainization and Asset On-Chainization Reforms Through Changes in Currency Pricing Forms," "Reforms Rapidly Disintegrate the Long-Term Cartel Alliance of Traditional Finance, Bringing Opportunities for Interest Restructuring Amid Chaos," "The Two Directions of Coin-Stock Linkage: Securitization and Tokenization and Market Characteristics," "The Industry Characteristics and Issues of Stablecoins, DAT, Stock Tokenization, RWA, and On-Chain Asset Management."
The outlook for 2026 has been extensively discussed in this article, and aside from question i), sufficient viewpoint analysis has likely been provided. The further disorderly reorganization of the macro environment and the consequent promotion of DeFi 2.0 both exhibit clear trends and inevitability.
Question i) is indeed a headache, whether in social economy or financial assets; trends and directions are always easier to judge compared to time and degree. Unlike the two Kondratiev cycles of the last century, the main differences under a similar paradigm environment are as follows:
a) The speed of information interaction to situation evolution is much faster, with gaps of over 5-5 times in various aspects (Note 12);
b) The spillover space of global geopolitical contradictions is completely different, increasing the inevitability of conflict eruptions;
c) The nonlinear effects brought by AI and Crypto far exceed those of industrial electrical automation.
On the other hand, many aspects remain largely unchanged compared to a hundred years ago, such as the hardware conditions for social management, the natural lifespan of humans, the ability of a generation to digest long-term emotions, and the political and economic management cycles under different social forms, which remain broadly similar.
In this context, during the management of enterprises over the past two years, I have often discussed with partners and gradually accepted a fact: it is essential to pay attention to nonlinear issues, learn to respond to and master nonlinear triggering situations, and incorporate unexpected changes into part of the plan.
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