The truth about encryption in 2025: HODL is dead, DAO becomes a joke, DeFi exits

Author: ignasdefi Translation: Shan Oppa, Bitchain Vision

Part of the reason I love cryptocurrencies, especially in the financial and trading sectors, is that the market will tell you clearly whether you are right or wrong.In this dystopian world where real and falsehood are difficult to distinguish between politics, art, news and many other industries, cryptocurrencies are very direct:

If you are right, you make money; if you are wrong, you lose money.It’s that simple.

But I still fell into a very basic trap: when the market environment changes, I did not reevaluate my investment portfolio in time.While trading altcoins, I am too complacent about my long-term holdings that I “can’t touch or never sell”, especially ETH.

Of course, adapting to new reality is easier said than done.There are too many variables in the market, and we often rely on simple narrative methods like “HODL”, without having to keep an eye on the market or think too much.But what if the meta-narrative of “HODL” is dead?What exactly does cryptocurrency play in this ever-changing world?What else do we have not seen clearly?

This article is my summary of my thoughts on major changes in the market.

The end of HODL

Let’s go back to early 2022:

The price of ETH was about $3,000 at the time, after a sharp drop from its high of $4,800.BTC is $42,000.But with the rise in interest rates, the collapse of centralized finance (CeFi) and the bankruptcy of FTX, both of them were cut in half.

Despite this, the Ethereum community is still optimistic: ETH will be moved to PoS soon, and ETH destroy mechanism (EIP) was launched not long ago.ETH is a popular narrative as an “ultrasound currency” and environmentally friendly and energy-saving blockchain.

By the end of 2022, ETH and BTC will perform poorly, but SOL will be so miserable that it will not be more miserable, plummeting 96% and falling to US$8.

Ethereum won the L1 war, and the other L1s either moved to L2 or perished.

I still remember some of the meetings I attended during the bear market.Most people firmly believe that ETH will rebound the strongest, so they crazily increase their holdings in ETH, ignoring BTC, let alone SOL.

As long as HODL is held on until the peak of the bull market in 2024/25, just sell it.It’s simple.

What’s the result, haha!

Since then, SOL has rebounded sharply, while Ethereum has fallen into the worst FUD in history.The narrative of “ultrasound currency” is dead (for the time being), and the environmental protection (ESG) system has not actually become popular in the market at all.

HODL ETH is my biggest mistake in this cycle.So are many people.

My original bull market logic was that ETH would become the most productive asset in crypto history:

Through the restaking mechanism, ETH can obtain “super powers”, which not only protects the Ethereum main network, but also protects the entire DeFi and encryption infrastructure.ETH’s (re)solution income will soar, and you can continue to get airdrops by re-pairing alone.

As returns increase, demand and price of ETH will also rise.Anyway – to the moon!The reality is that the value logic of re-staking is still unclear, and Eigenlayer also messed up the issuance of tokens.

So, what does this have to do with “HODL is dead”?

For many people, ETH is the kind of asset that “buy it and leave it alone”.If BTC rises, ETH should rise more, so why hold BTC?

I should have made timely adjustments when the ETH bull market narrative – re-pled – failed to achieve it.But I am lazy and unwilling to face mistakes.Anyway, ETH will rebound sooner or later, right?

But HODL is not just a bad suggestion for ETH, it is even worse for any other asset (perhaps except BTC, I will talk about it later).

The crypto market is changing too quickly and is not suitable for long-term holding for several months or even years to wait for retirement.Looking at the trend chart, most altcoins have already given up the gains in this bull market.Obviously, making money depends on selling, not killing.

A successful memecoin trader said that he often holds a memecoin for less than a minute.

Some people are still selling you the “HODL dream”, but the reality is: now is a cycle of “fast in and out” rather than “long-term death”.

BTC is the only macro-level crypto asset

The only exception in the “fast in and out” strategy is Bitcoin (BTC).

Some people think that BTC performs well because of Michael Saylor’s unlimited buying and our successful packaging of BTC into “digital gold” and promoting it to institutional investors.

But the battle is far from over.

Many commentators in the crypto circle still regard BTC as a high-volatility risk asset, essentially a leveraged alternative to S&P500.

This is contrary to Blackrock’s research results – they found that the risk-return drivers of BTC are different from traditional high-risk assets, so it is not appropriate to use the traditional financial “risk assets/help assets” framework to explain BTC.

Then what do you think is the truth?

I think Bitcoin is changing from the perspective of “a gambler in the crypto circle” to the perspective of “digital gold and safe-haven assets”.Mexican billionaire Ricardo Salinas is a good example of his firm holding on to BTC.

It is the only truly “macro-level” crypto asset.ETH and SOL are still measured by indicators such as TVL, transaction volume, and handling fees. BTC has long surpassed these frameworks and became something that even Peter Schiff could understand.

This transformation is not over yet, but this stage of switching between “risk assets to safe-haven assets” is a huge opportunity.Once BTC is recognized as a safe-haven asset worldwide, its price will be $1 million.

The Rot of Private Equity Market

When I found that every KOL who was doing well began to transform into “VC”, buy at a super low valuation, and waited for TGE to directly smash the market and ship it, I knew something was wrong.

But nothing can accurately portray the current state of the crypto private equity market like the summary of this post.

I suggest you read the original text, but here is the focus of my summary – the evolution of the private equity market over the years.

2015–2019: Faith Stage

The players at that time were true believers.They invest in Ethereum, fund DeFi pioneers such as MakerDAO and ETHLend (Aave), emphasize HODL.The goal is not to make quick money, but to do something meaningful.

2020–2022: Greedy Stage (Summer of DeFi)

Everything has changed.Everyone is chasing newer, more popular tokens.VCs began to invest in projects with outrageous valuations and uselessness.

The gameplay is very simple: buy private equity at a low price, hype up high popularity, and then throw it to retail investors.When the project collapsed, we should have reflected on the cleanup, but… nothing changed.

2023–2025: Nothing Stage (after FTX)

Today’s VCs are investing in “soul-free token machine”: the project uses old ideas, the founder’s origin is unknown (Movement!), and the project has no use cases.

Private equity valuations can be opened to a revenue multiple of 50 times (if there is income), and then the public equity market will take over.The result is: 80% of the tokens issued in 2024 fell below the private equity price within six months.

This is the complete “harvest phase”.

Now, the trust of retail investors is gone, and VCs are losing money.

Many VC projects have fallen below the seed round, and the KOL friends I know have also been trapped.

But there are some positive signals:

• Movement co-founder and Gabagool (formerly the leader of the Aerodrome Rug project) were raised against and kicked out of the project, and we need more of this cleaning.

• The valuations of both private and public markets are being downgraded.

In the first quarter of 2025, Crypto VC financing finally recovered:The total amount reached US$4.8 billion, the highest quarterly financing since Q3 2022.

Binance’s $2 billion deal is key, but there are still 12 large rounds of financing over $50 million, indicating that institutional interest is returning.

Funds mainly flow to areas with practical uses and revenue potential, including CeFi, blockchain infrastructure and services.

New key directions: AI, DePIN (Decentralized Physical Infrastructure Network) and Real-World Assets (RWA) have also attracted a lot of capital.

DeFi is still the track with the most rounds, but the financing scale has become smaller and the valuation is more conservative.

— Excerpted from CryptoRank’s “2025 Q1 Crypto Venture Capital Market Report”

We have also begun to try new token issuance models, preferring to reward early supporters rather than insiders.Echo and Legion are at the forefront, and Base has already established exclusive groups on Echo.Kaito’s InfoFi model is also very bullish – even if you don’t have money, as long as you have social influence, you can benefit.

It seems that the market has finally received a signal that the ecosystem is being restored (although KOL is still the first batch to eat meat).

Say goodbye to DeFi and welcome the financial on-chain

Do you still remember the short-term craze of Yield Aggregator?Yearn Finance was the leader, and then there were a bunch of forked projects.

Now we have entered the era of “Revenue Aggregators 2.0”, but now we call them “Vault strategies”.

As DeFi becomes more complex and protocols become more and more, Vaults becomes more attractive: if you deposit assets, it will help you find the most suitable risk-return ratio.But the biggest difference between the first generation and current aggregators is that the degree of centralization of asset management has been greatly improved.

Vault has “stringers”—usually a group of “institutional investors” who take your money to chase opportunities and earn fees from them.It is a sure thing for them: use your money and charge their management fees.

Representatives of these strategists include: MEV Capital, Seven Seas, Gauntlet, Veda, etc. They work with projects such as Etherfi, Upshift, Mellow Protocol, etc.

Veda’s asset size alone makes it the 17th largest “protocol” in DeFi, larger than Curve, Pancakeswap, and Compound.

But Vault is just the tip of the iceberg.The vision of DeFi decentralization has long been dead, and it has evolved intoOn-chain finance.

Think about it, the fastest growing DeFi and crypto tracks now are real-world assets (RWA), stablecoins with income, neutral income coins such as Ethena, and even Blackrock’s BUIDL.All of this is inseparable from DeFi’s original vision.Or look at BTCFi and Bitcoin L2, which are essentially multi-signature custody systems, and you can only trust the custodian and will not run away.

This trend has begun since Maker switched DAI from a decentralized stablecoin to a profit-based RWA protocol.True decentralized protocols are already rare, such as Liquity, which is one of the few examples.

This is not necessarily a bad thing: RWA and asset tokenization can help us get rid of the previous DeFi Ponzi phase of the cyclic leveraged doll.

However, this also means that the risk structure is more complicated, and it is difficult to explain where your money is.I would not be surprised to see CeDeFi projects secretly misappropriate user assets in the future.

remember:Hidden leverage always finds opportunities to drill into the system.

DAO?Now it’s more like LMAO

DAO’s decentralized fantasy is also collapsing.The popular theory of “gradual decentralization” in the past was proposed by a16z in January 2020: the project first finds a market match → the community gradually takes over → the team gradually withdraws to achieve sufficient decentralization.

Five years later,But we are walking back to the old path of centralization.Look at the Ethereum Foundation, they are stepping into the L1 expansion efforts more actively.

I talked about the issue of DAO in my previous article “The Fear State of Markets and What Will Come Next”:

• Voters’ indifference

• Canvassing behavior (buying tickets) is becoming more and more serious

• Decisions cannot be implemented

Both Arbitrum and Lido’s DAOs are beginning to move closer to more centralized control (such as teams more directly involved, or using BORG structures), but Uniswap DAO is experiencing a major earthquake.

Uniswap Foundation has passed a $165 million liquidity mining proposal to support Uniswap v4 and Unichain.

But another conspiracy theory is: they are trying to meet the liquidity threshold for Optimism OP subsidies.

In short, DAO representatives were very angry: Why did the foundation pay $UNI rewards, while Uniswap Labs (a centralized company) made millions of dollars from front-end services?

Recently, a top 20 DAO representative announced his withdrawal from Uniswap’s governance.In his exit statement, he said:

• Governance performance: Uniswap DAO looks democratic, but in fact it is marginalized opposition.Although there are discussions, voting, and forums for proposals, everything is like a process and has been decided long ago.

• Concentrated power: Uniswap Foundation rewards loyalists, suppresses critics, and focuses on image rather than responsibility.

• Decentralization failed: If DAO prioritizes brand packaging over actual responsibilities, it will only end up becoming a “authoritarian system with a few more steps.”

Ironically, a16z is Uniswap’s largest token holder, but Uniswap is far from “gradual decentralization”.

Maybe it’s not an exaggeration to say that DAO is just a smokescreen — we just need a beautiful narrative to avoid regulators’ scrutiny of centralized crypto companies.

Therefore, tokens that rely solely on “voting rights” have no investment value.Truly valuable tokens can either be dividends or have practical uses.

DAO no longer exists, nowLMAO: An oligarchy that has been lobbied, over-controlled, and manipulated by a few people.

DEX (Hyperliquid) is challenging CEX

Now, I’ll talk about a conspiracy theory.

FTX started Sushiswap back then because they were afraid that Uniswap would seize the spot trading market.Even if it wasn’t done directly by FTX, they are likely to provide funding and development support behind the scenes.

Similarly, Binance (whether you call it team or BNB) has launched PancakeSwap for the same motivation.

Uniswap once posed a threat to centralized exchanges, but was eventually “de-armed” because it did not threaten CEX’s more profitable perpetual contract market.

How much money does a perpetual contract make?It’s hard to say, but you’ll understand it by looking at the comment section.

Hyperliquid (HL for short) is another threat: itStarting with perpetual contracts, they are also planning spot trading, and building their own smart contract platform.

Currently, Hyperliquid accounts for 12.5% ​​of the sustainable market.What shocked me was that Binance and OKX actually directly attacked Hyperliquid with “JELLYJELLY”.Although HL has withstood it, HYPE investors must begin to seriously consider the risk of further attacks in the future.

It may not be a similar attack, or it may be regulatory pressure. For example, CZ has now become a “national strategic encryption consultant”. What do you think he will say to politicians?”These perpetual trading platforms that don’t do KYC are very bad?”

In any case, I hope Hyperliquid can continue to impact CEX’s spot trading business and launch a more transparent and costly token launch mechanism, so as not to cause the agreement finance to be broken by the listing of coins.

I have a lot to say about HYPE – after all, it is my biggest altcoin holding.

But no matter what,Hyperliquid has become a force, is challenging centralized exchanges, especially after being attacked by Binance and OKX.

Agreement → Platform

If you follow me on X (formerly Twitter), you may have seen me “bringing” Fluid by the way when I was talking about how the protocol evolved into a platform.The core view is: the agreement is facing the risk of “infrastructure commodification”, and most of the benefits are harvested by user-oriented applications.

Has Ethereum fallen into the commodity trap?

To get rid of this trap, the protocol needs to become like the App Store, allowing third-party developers to build products on it and keep value in the ecosystem.

Both Uniswap v4 and Fluid tried to achieve this through Hooks; the 1inch and Jupiter teams also began to make their own mobile wallets.LayerZero just announced vApps (composite on-chain apps).

I think this trend will only accelerate.Projects that can gather liquidity, attract users, find monetization paths and give back to token holders will become the biggest winners.

Encryption is in the changing world order

I wanted to talk more about changes in other fields, such as the development of stablecoins, or why Crypto Twitter (CT) has become increasingly “confused”, but the core reason is:Encryption becomes complicated, and CT loses its alpha.

In the past, we could post a “Ponzi game” on CT, but the rules were simple and no one cared about it.Regulation is either confused or pretending to be invisible, hoping that the industry will disappear by itself.

But year after year, regulatory discussions are becoming more frequent on CT.Fortunately, the United States is now moving towards “supporting encryption.”Stablecoins, asset tokenization, and Bitcoin becoming storage value tools all make people feel that we are heading towards the critical point of mass adoption.

But everything may change soon:Once the US government realizes that Bitcoin is really weakening the hegemony of the US dollar, its attitude may turn 180 degrees.

Outside the United States, the cultural and regulatory environment is more complex:

• China: There is currently no sign of turning to “encryption support” (correction is welcome).

• EU: It is increasingly moving towards “control”, transforming from a welfare state to a war state, and many policies are forcibly promoted under the banner of “national security”.

The EU now regards encryption as a threat, not an opportunity:

• “ECB warns: U.S. push for encryption may bring financial contagion risks”

• “EU plans to ban anonymous encrypted accounts and privacy coins by 2027”

• “Can’t blockchain data be deleted separately? Then just delete the entire chain.”

• “EU regulator: Insurers holding crypto assets will face punitive capital rules”

We need toCountries’ attitudes towards encryptionPutGlobal political trendsAssessed in the assessment.The reality is: the world is movingDeglobalization, countries began to close their borders.

• “The EU plans to cancel visa-free policy for countries with ‘investment and nationality’”

• “European Court of Justice to Combat Golden Visa Program”

• “Under strengthening political control, the exit ban surges”

The biggest uncertainty at present is what role encryption plays in the “New World Order” and this transitional period.

Is it a tool of capital freedom?(especially when capital controls really begin)Or will countries use increasingly strict laws to force encryption to submit and move towards complete supervision?

Vitalik once published an article talking about the “year ring model of culture and politics”, pointing out that the crypto industry is still in its early stages and has not yet been “institutionalized” like bank regulations and intellectual property rights.

The Internet in the 1990s was “letting go”;

From the 2000s to the 2010s, social media became “this thing is harmful, you have to worry about it!”;

In the 2020s,Encryption and AI are in the tug-of-war of “open vs control”.

The government was once behind, but now it has begun to catch up.

Of course I hope that all countries will embrace an open route.But seeing the world closing its doors,I really can’t help but worry.