Author | @Defi0xJeff

Compiled | Odaily Planet Daily (@OdailyChina)

Translator | Dingdang (@XiaMiPP)

The year 2025 is set to be a challenging one for the crypto industry—despite the current U.S. president's promise to make the U.S. a global hub for crypto and AI, the crypto market has remained quite difficult this year.

Since Trump officially took office in January, the market has faced pressure moments repeatedly, with the most devastating being the flash crash in October—this plunge nearly paralyzed the entire crypto industry.

Although the chain reaction from this flash crash has not yet been fully resolved, the macro backdrop and favorable industry factors are pointing towards a more positive quarter and a more optimistic 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 get started.

1. Prediction Markets = Crypto Options Products Finding PMF

Prediction markets (PM) have recently made breakthroughs at the industry level, with their weekly nominal trading volume hitting a new historical high of $3 billion for the first time two weeks ago.

We are witnessing a rapid expansion of market types—politics, sports, esports, pop culture, mention markets, macroeconomics, crypto, finance, earnings reports, technology, and more, all flourishing.

@Polymarket and @Kalshi are developing in the direction of "everything is predictable," covering all hot topics; while emerging PM projects like @trylimitless and @opinionlabsxyz are digging deep into vertical niches—Opinion focuses on pure macro markets, providing predictions for economic indicators like interest rates in the U.S., EU, and Japan; Limitless focuses on crypto assets, offering a wider range of currencies and richer time frames for the market.

Crypto options were once all the rage during the bull market of 2021 but subsequently declined due to multiple issues, the most critical being poor UI/UX and lack of liquidity.

Prediction markets perfectly fill the gap left by options. They provide an extremely user-friendly interface that allows anyone without any financial knowledge to bet on any event; at the same time, they attract user participation by creating interesting markets, allowing anyone to get involved as market makers and traders (betting on both "yes" and "no"). Instead of grappling with a bunch of Greek letters and complex terminology, you simply need to buy Yes or No shares.

Similar to options, users can also use prediction markets to hedge their asset exposure.

For example:

• Did you receive a large airdrop but want to hedge early? Go to the market and buy No.
• Is your portfolio too long? Go to the macro or BTC market and buy No.

You get the idea.

Prediction markets essentially repackage options into a more popular, participatory, and profitable product, with one of the biggest beneficiaries being machine learning/prediction teams.

2. Prediction Markets = The Perfect Testing Ground for Machine Learning Teams

More and more teams are doubling down on prediction markets, refining their signals and models, such as: @sportstensor, @SynthdataCo, @sire_agent, @AskBillyBets, etc.

Sportstensor serves as the liquidity provider layer for Polymarket, allowing any PM trader to participate in signal competitions. The best-performing signals can earn Alpha token incentives, and these signals will also feed back into Sportstensor to further enhance its prediction models for future profitability.

Synth is taking the "high-frequency hedge fund" route in prediction markets, using its own signals to predict the prices of crypto assets over 1 hour and 24 hours, and betting in the prediction market. Preliminary results show—growing from $3,000 to $15,000 in one month, yielding a 500% return.

Sire is building an Alpha Vault, utilizing Sire's models and SN44 Score data for sports predictions, with current preliminary results exceeding 600% PnL. It is currently the best prediction market DeFi vault product ready for public release.

Billy provides analysis and automated betting tools, leveraging the team's sports betting insights (BCS). They are looking for their advantages in Kalshi's parlays market and plan to expand their strategy 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 natural breeding of multiple scenarios akin to "Darwinian AI competitions," where ML teams can prove their strategies in real market environments.

Synth, Sire, and Billy can all participate in Sportstensor's competitions and will soon be able to join @aion5100 in the @futuredotfun planned launch on Polymarket and Kalshi called War of Markets.

Even cooler, 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 find mispricings and arbitrage while also reaping token incentives.

Does this remind you of the early days of Hyperliquid?

The same thing is happening again, but this time in prediction markets instead of perpetual contracts.

3. The Neobank War Begins

We are seeing a key change: large Web2 startups and enterprises are launching L1/L2 and integrating stablecoin payment links to directly serve users. At the same time, crypto-native projects are also pushing into real-world financial services.

Teams like @etherfi, @useTria, @AviciMoney, @URglobal, etc., are now offering non-custodial crypto spending cards, allowing users to spend on-chain assets in the real world.

In just one year, this market has transformed from a blue ocean to a crowded battlefield, with 20-30 heavyweight players competing for the same batch of crypto users.

Current differentiation mainly focuses on:

• Cashback / Rebate Rates: Tria offers the highest cashback but requires an annual fee.
• Exchange Rates, Transfer, ATM Fees
• Benefits System (travel, hotel tiers, airport lounges, events)
• Earn / DeFi Integration (idle fund earnings, borrowing for spending): EtherFi leads in this direction, offering high yields + borrowing for spending capabilities.

Despite this, most products have the same underlying structure. They rely on partner banks/issuers holding Visa/Mastercard licenses, making them more like "user acquisition gateways" rather than true Neobanks.

Therefore:

• Compliance is managed by partner banks, not the projects themselves.
• Users' balances are just virtual accounts, not real bank accounts.
• Functionality usually stops at "crypto spending," lacking a complete fiat off-ramp or banking services.

Currently, everyone is constrained by these limitations, so the impact is minimal. However, as competition intensifies, whoever can become the "real bank" will have a core advantage. Projects that can control their own compliance and regulatory frameworks will be able to offer real 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 a step ahead, currently operating under FINMA regulation, holding Swiss banking permissions, supporting seven fiat currencies, and simultaneously supporting real-world and crypto financial services (such as transfers across seven traditional banking currencies).

4. Breakthrough Applications in the Crypto Industry Are Clearer Than Ever

• Trading
• Prediction
• DeFi Yields
• Stablecoins
• Asset Tokenization

We have transitioned from CEX → Spot DEX → Perpetual DEX, all the way to the era of Hyperliquid.

The wave of "super speculative Launchpads" led by Pumpdotfun has triggered the rise of numerous narrative-driven on-chain launch platforms.

Prediction markets are developing rapidly, genuinely reaching mainstream users for the first time (we haven't seen such viral spread since the NFT era, and this time people really like the product).

DeFi is fully entering Wall Street with structured yields, interest products, stablecoins, RWA/DePIN, asset tokenization, etc. People are realizing they can "own a piece of the future" and earn yields on it (even using it as collateral to borrow money).

All key crypto applications are being further amplified: CEXs are launching wallet super apps, such as Base App, Binance, OKX, etc., while other wallets are rapidly expanding capabilities, making it easier for ordinary users to get started.

ICOs are making a comeback—Coinbase has launched the first Monad ICO, and other platforms (Legion, Kaito) are also growing rapidly.

5. Crypto AI Finds PMF

Crypto AI was initially occupied by a bunch of AI meme coins and GPT shell projects, which called themselves "AI Agents," but now this noise has faded away.

Today, blockchain payments and stablecoins are supporting automated trading between agents; cryptographic technologies like TEE and ZK, combined with token incentives and penalty mechanisms, make AI systems verifiable, controllable, and predictable.

Support layers (such as x402, ERC-8004, programmable wallets, billing frameworks, verifiable reasoning/computation) are laying the groundwork for "seamless collaboration between AI and humans," enabling AI and humans to trade and collaborate seamlessly anytime and anywhere, while providing protective mechanisms to prevent AI from going out of control.

At the same time, "Darwinian AI" is emerging as a meta-layer competition, driving agent evolution, optimizing signals, and improving performance through real incentives. The most successful use cases so far remain trading and predictive signals, which align closely with the genetic makeup of the crypto industry.

An increasing number of ecosystems are adopting this Darwinian model, using token incentives to attract developers, reward contributors, and subsidize R&D, driving higher quality AI products. Although still in the early stages, some subnets within the Bittensor ecosystem have already shown impressive performance.

Despite this, the token performance of most Crypto AI projects has not synchronously reflected these advancements—many projects are still 30-90% lower than their TGE prices, even as they deliver real infrastructure and practical utility.

6. DeFi Enters the "Dynamic DeFi" Era

DeFi has long been a core pillar of the crypto industry, with a TVL exceeding $130 billion, covering DEX, lending, yield products, and stablecoins.

The advantages of DeFi lie in its programmability, verifiability, and high composability, with top protocols being the most resilient systems in the entire industry. However, the underlying mechanisms of DeFi have remained largely unchanged over the past five years, with centralized liquidity market-making or lending mechanisms being relatively static.

But now imagine: what if new DeFi protocols 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 strategies
• Dynamic leverage management
• Yield optimization based on forward risk signals

These predictions and signals are generated by the Allora reasoning network, where AI/ML engineers can contribute models and earn token rewards through a Darwinian incentive mechanism, designed to reward better-performing models.

AI-Generated and AI-Managed DeFi Strategies

@gizatechxyz and @almanak are also promoting a new class of products:

• Giza is an AI asset manager that intelligently allocates funds across various DeFi protocols.
• Almanak allows AI agents to deploy tokenized strategy Vaults within minutes, making it both a fund allocator and a strategy creation platform. This enables Almanak to serve as both a capital allocator (bringing TVL into DeFi projects) and a vault creation platform for fund managers.

As TradFi and DeFi merge more deeply, machine learning enhances DeFi's core value and risk management, while AI designs more complex strategies. We may see a faster pace of DeFi expansion in 2026, with a more intelligent, autonomous, and adaptive layer of internet finance emerging.

What's Next?

In 2026, we may witness the convergence of multiple narratives—Crypto, AI, DeFi, RWA, DePIN, robotics, etc., coalescing into an interoperable digital economy run by both humans and agents.

• DeFi becomes dynamic
• AI drives DeFi expansion to more users
• Crypto payment links, stablecoins, and key applications gain larger user bases
• Neobanks integrate Web2 and Web3
• The scale of prediction markets continues to grow, with machine learning teams becoming a core component

Natural selection accelerates, and only a few assets will truly appreciate.

Crypto projects are more likely to choose IPOs over ICOs to gain liquidity, compliance, and scale through traditional capital markets.

The next cycle = a deep integration cycle of TradFi and DeFi.

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