If the core of the previous cycle was "proving that blockchain can support stablecoins and DeFi protocols," then the next cycle will focus on "integrating crypto technology into every corner of finance, infrastructure, and culture."
Written by: Jean-Paul Faraj, Bankless
Translated by: Saoirse, Foresight News
Cryptocurrencies are often criticized for "chasing novelty trends," but the following five cutting-edge areas are not only still in their early stages but also possess long-term sustainability potential.
If you have been deeply involved in the cryptocurrency space for a long time, you have undoubtedly witnessed the rise and fall of countless hype cycles. However, beneath the noise, certain areas within the ecosystem are quietly laying the groundwork for development over the next decade.
These areas, while still in their infancy (sometimes even developing slowly, causing frustration), have undeniable potential.
👇 Here are five areas I will continue to focus on:
AVS and Re-staking: Shared Security as a New Fundamental Component
The rise of re-staking networks like EigenLayer and AltLayer marks the birth of a new design field known as "Active Validation Services (AVS)." The core logic is that staked ETH on Ethereum can be "re-staked" to provide security for new networks and applications. This way, projects do not need to build trust systems from scratch but can directly leverage Ethereum's credibility and validator resources.
Re-staking reconstructs the launch model of new protocols: by entrusting the trust aspect to the Ethereum validator community, developers no longer need to expend energy building their own security mechanisms and can focus on application design itself. This not only lowers the entry barrier for innovative experiments but also allows these projects to continuously integrate into Ethereum's economic ecosystem. The opportunities in this field do not stem from a single "hit application," but rather open the floodgates for hundreds of new applications.
Why It Matters:
New Paradigm: Shared security is expected to give rise to entirely new industries — from decentralized computing to AI training, these fields will ultimately be built on Ethereum.
AI Opportunities: The compatibility of AI with this field is extremely high — autonomous agents and decentralized training can directly connect to the re-staking security layer.
Fundamental Support Role: As the application of crypto technology accelerates, projects like EigenLayer and AltLayer will gradually collaborate with large institutions seeking "scalable trust mechanisms."
Challenges:
No Benchmark Applications Yet: Currently, there are no "time-tested" cases proving that AVS can achieve scalable applications.
Oversupply of Funds and Lagging Applications: Early investments have flooded in, but the development of actual application scenarios has been relatively slow, leaving many early investors still waiting for value validation.
Token Unlocking Pressure: A large-scale token unlocking is expected in the future, which may impact market sentiment and token prices.
If successfully advanced, re-staking could have a significance for infrastructure comparable to the transformation stablecoins brought to the payment sector. It will quietly attract the next wave of users like a "Trojan Horse."
DeFi and TradFi: Blurring Boundaries
Not long ago, using DeFi required relying on MetaMask wallets, cross-chain bridges, and enduring the "Gas fee wars." Now, teams like EtherFi, Coinbase, Argent, and Morpho are packaging core DeFi functions such as "lending" and "yield generation" into tools that ordinary users can easily use. Services like credit card payments, fiat deposit channels, and one-click lending markets are continuously narrowing the gap between traditional finance and DeFi.
What once seemed like two clearly defined fields is now increasingly merging. The key opportunity lies in the fact that most users do not need to "actively turn to cryptocurrencies," but will naturally use products that "operate on the underlying crypto technology" simply because these products are faster, cheaper, and more flexible. This trend has also opened up vast distribution channels: traditional financial institutions can "white-label" the foundational functions of DeFi and present them to the public in a user-friendly package. Ultimately, "decentralized finance" will no longer be an independent concept but will return to the essence of "finance."
Why It Matters:
Mature Infrastructure: DeFi has entered a mature phase — protocols like Aave have undergone years of market testing, fully proving their "long-term sustainability" (Lindy effect).
Shift in Regulatory Attitudes: Regulatory bodies in the U.S. and elsewhere have shifted their focus from "whether to allow cryptocurrencies" to "how to regulate cryptocurrencies," which is a significant psychological shift.
Reshaping Trust Dynamics: Trust in traditional finance is continuously declining globally. Every financial scandal, bank run, or fee increase creates space for alternatives (like DeFi) to develop.
Challenges:
User Trust Threshold: For most households, "DeFi" remains a foreign concept, and gaining user trust in its safety will require long-term efforts.
Regional Access Restrictions: Due to policy impacts from different jurisdictions, many DeFi products cannot reach global users.
Winner-Takes-All Effect: The power law will lead to market resources concentrating at the top, potentially overshadowing many quality small and medium products.
For DeFi developers, the core question is not "will users use these tools," but rather "will users realize they are using DeFi."
RWAs: The Largest Capital Bridge
If the core of DeFi is "creating new currency markets," then the goal of Real World Assets (RWAs) is "to bring all traditional assets on-chain." Projects like Ondo, Reserve, Centrifuge, and Maple are building infrastructure to "tokenize" real assets such as U.S. Treasury bonds, corporate bonds, commodities, and even real estate, enabling them to be traded and function within the crypto market.
The tokenization of RWAs breaks the "island effect" of traditional financial markets: a tokenized government bond can simultaneously serve as collateral in DeFi, support the issuance of stablecoins, and enable "fractional ownership" trading globally, all without the involvement of traditional intermediaries. The real opportunity in this field lies in transforming originally "static" assets into "programmable foundational modules," opening up design space for unprecedented new products and risk models.
Why It Matters:
Huge Market Size: The global capital market is worth tens of trillions of dollars; even a small portion of assets on-chain would far exceed the current total value locked (TVL) in DeFi.
New On-chain Yield Sources: RWAs have sparked a new wave of stablecoin yield opportunities. For example, Ondo's tokenized government bonds allow stablecoin holders to earn U.S. government-backed yields without leaving the crypto ecosystem.
Market Stabilizer Role: In the highly volatile crypto market, RWAs can act as a "ballast," providing safer collateral while deepening liquidity pools.
Institutional Trust Bridge: RWAs represent a "narrative that traditional financial institutions like Wall Street can understand"; they are not a threat to traditional finance but a bridge connecting the two.
Challenges:
Regulatory Resistance: The rules regarding securities and asset custody vary greatly across jurisdictions, and compliance processes will slow down development.
Liquidity Mismatch: Although tokenization enhances the trading convenience of assets, underlying assets like real estate and corporate bonds do not inherently possess high liquidity.
Institutional Adoption Bottleneck: Gaining traditional institutions' trust in "on-chain asset packaging models" will take time; currently, most funds remain in a wait-and-see mode.
If DeFi can be likened to a "sandbox for experimentation," then RWAs are the "highway" connecting the crypto ecosystem to the real world. This field may become the most important "crypto entry point" — at that time, cryptocurrencies will no longer be "experimental technology" but a core component deeply integrated into the global financial system.
ZK Technology: Balancing Scalability and Privacy
In the future layout of blockchain infrastructure, "Zero-Knowledge Proofs (ZK)" is an important direction of industry consensus. Institutions like Starknet, Succinct, Linea, and zkSync are competing to prove that ZK systems are not just theoretical but have "production-level application capabilities." The core value of ZK technology lies in "compressing trust costs" — enabling the verification of large-scale computational processes in a low-cost, fast, and secure manner.
Blockchains based on ZK technology open doors for applications that are "impractical or impossible on-chain." By compressing computational loads and reducing data requirements, ZK technology makes it possible for systems that were previously "too large, too costly, or insufficiently secure to go on-chain." Its application space is vast: from more efficient on-chain verification to privacy-centric consumer applications, and to entirely new types of "secure and data-rich" protocols, ZK technology will fundamentally change how we interact and develop on-chain.
Why It Matters:
Core Project Endorsement: Ethereum itself has clearly identified ZK technology as a "scalability solution," providing legitimacy for the development of this technology.
Exponential Cost Reduction: The cost of ZK verification is decreasing exponentially, making it likely to be widely applied in consumer-level scenarios.
Rise of Privacy Applications: Privacy-centric consumer applications are gradually emerging, covering areas such as payments, identity verification, and instant messaging.
Challenges:
Fragmentation of Technical Standards: Multiple ZK technology standards coexist, and it is currently unclear which technology stack will ultimately prevail.
Hype Over Implementation: For developers and users, the "moment of ZK technology explosion" has not yet arrived, and actual applications still lag behind market expectations.
High Technical Complexity: Adding ZK verification systems to the blockchain's underlying architecture introduces new technical barriers to an already complex technical structure.
ZK technology is both "infrastructure-level innovation" and "consumer-level application tools." It promises to achieve both "high throughput" and "privacy protection" — two characteristics that Web2 has struggled to balance.
Decentralized Social: Breaking the Limitations of "Money-Related Only"
The crypto space has long been "heavy on finance, light on social," but this pattern is gradually changing. Applications like Zora, Lens, Mirror, Farcaster, Base App, and the emerging Thousands Network are building the foundational framework for a "decentralized social layer." Their goal is to create platforms that offer experiences comparable to Twitter (X), Instagram, or TikTok, but where creators truly own their content, reputation, and earnings.
The value of decentralized social lies not only in "creator revenue distribution" but also in reconstructing the "social graph" as a "public good." No longer will each platform lock data in "information silos," but rather allow users' reputations, fan relationships, and content to flow freely between different applications. This fundamentally disrupts the current platform logic: platforms no longer "compete for users," but instead "compete by serving users." The opportunity in this field is that even small progress can form an "ecosystem that cannot be ignored" — because creators and communities have a strong incentive to migrate to platforms that "retain more of their own earnings."
Why It Matters:
Insensitive to Market Cycles: The development of consumer-level applications does not entirely depend on crypto market cycles; high-quality social platforms can still achieve user growth even in bear markets.
Support from Leading Institutions: Coinbase's recent integration with Zora is significant — leveraging Coinbase's scale, millions of users will be introduced to the crypto social space for the first time.
Maturing Market Window: The creator economy on Web2 platforms is gradually declining (e.g., reduced revenue sharing, stringent content review), providing development space for decentralized alternatives.
Significant User Experience Optimization: Over the past 18 months, the user experience (UX) of decentralized social has significantly improved, overcoming core barriers that previously hindered user adoption.
Challenges:
User Inertia Resistance: Convincing users to leave familiar platforms like Instagram and switch to new applications is extremely costly.
Reliance on Speculative Drivers: Many decentralized social projects are launched through "tokenization," making them susceptible to "price increase cycles" and lacking long-term stable development momentum.
Remaining Entry Barriers: Wallet operations, cross-chain transfers, and mnemonic phrase management are still too complex for mainstream users, leading to resistance.
Decentralized social may not "replace Instagram" in the short term, but as Web2 platforms continue to "exploit" creators, the allure for users to migrate to "user-owned networks" will grow stronger.
Summary
Cryptocurrencies are often criticized for "chasing novelty trends," but beneath the noise, the following five cutting-edge areas are not only still in their early stages but also possess long-term sustainability potential:
Re-staking / AVS: Expected to redefine network security mechanisms and open development doors for new industries like decentralized AI.
Integration of DeFi and TradFi: Continuously narrowing the gap between crypto technology and everyday financial products, driving financial system innovation.
RWAs: Directly bringing the "largest cake" of the global capital market on-chain, unlocking new sources of yield and institutional trust.
ZK Technology: Enhancing blockchain scalability while ensuring privacy, opening space for new application designs.
Decentralized Social: Providing an "ownership-based" alternative for Web2 platforms that "no longer serve creators and users."
These areas face severe challenges — technical bottlenecks, regulatory complexities, market saturation, etc. But at the same time, they also carry "asymmetric yield potential," which is a core characteristic of the "top winners" in the crypto space.
If the core of the previous cycle was "proving that blockchain can support stablecoins and DeFi protocols," then the next cycle will focus on "integrating crypto technology into every corner of finance, infrastructure, and culture." The developers in these five areas are not "chasing narrative trends," but are paving the "necessary path" for the next generation of applications, users, and capital.
For both investors and developers, these areas are worth long-term attention.
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