Original: Ignas

Translation: Yuliya, PANews

On the surface, cryptocurrency seems to be thriving: after years of rejection, spot ETFs have finally launched, and Bitcoin (BTC) and Ethereum (ETH) ETFs have set new records for fund inflows. Trump's victory has brought cryptocurrency closer to mainstream power in the U.S., and lobbying groups have successfully pushed for the ousting of Gary Gensler and skeptics. Today, cryptocurrency has become a recognized industry, and Bitcoin may even be considered a national reserve asset by some countries.

While the price outlook for cryptocurrency is optimistic, most of the increases are driven by external macro factors. However, the internal innovation engine of the cryptocurrency industry is gradually slowing down. As the industry matures, innovation naturally slows, but even with a slowdown in innovation, prices may still rise.

However, the slowdown in innovation is not the fundamental issue; it is a symptom. The real problem lies in the weakening of ambition and an increasing risk-averse mentality. Once upon a time, cryptocurrency was driven by radical ideas aimed at changing the world. Now, the entire industry seems content to pursue regulatory approval and institutional adoption.

This point is supported by Vitalik Buterin in his 2023 blog post “Rekindling the Cyberpunk Spirit of Ethereum”: “We are not just creating isolated tools and games, but are building a more free and open society and economy, where the different parts of technology, society, and economy can integrate with each other.”

Think about it: what is the innovation of the current cycle? AI x Crypto is one of them. But AI is an external innovation; without it, this cycle might have been different, possibly continuing to focus on meme coin trading.

The only true goal of meme coins is to get rich quickly, not to change the world. Once wealth is achieved, the problems of the external world seem to no longer trouble the participants. Notably, today, declarations like “[Project Name] is the most egalitarian thing we have seen. It is ambitious and, if successful, could truly reshape social structures.” are no longer frequent. In contrast, the previous cycle did witness several radical innovations:

• Decentralized Finance (DeFi)

• Non-Fungible Tokens (NFTs)

• DeFi Yield Farms

• P2E Games (like Axie Infinity)

• Metaverse

The 2020-2021 cycle was also the peak of tokenomics innovation, with concepts like Ampleforth's Rebasing Tokens, veTokenomics, (3,3) model, liquidity mining, and SNX as collateral for sUSD emerging, along with various algorithmic stablecoins.

However, current crypto projects and their backing venture capital firms tend to adopt proven simple economic models to reduce risk, as they typically have only one opportunity for a Token Generation Event (TGE). The $EIGEN Intersubjective Token is a rare innovative exception.

In contrast, the ICO boom of 2017 is considered the peak of ambition in the crypto industry, when many projects attempted to decentralize everything, but most failed due to being overly radical, with only a few projects surviving, having to scale back their visions.

These crazy ideas find it increasingly difficult to secure funding in today's more risk-averse cryptocurrency industry. However, these radical concepts once attracted a group of dreamers aiming to change the world.

B. Hobart and T. Huber point out in their book “Prosperity: The End of Bubbles and Stagnation” that transformative progress often comes from small groups with a unified vision, who typically have ample funding but lack strict accountability mechanisms. They argue that while financial bubbles are often viewed negatively, history shows that many significant breakthroughs have been driven by bubbles.

Although the days of low accountability are not over, regulation has brought more risk aversion, and this cycle may be the last opportunity to generate substantial innovation in a major bubble. The AI x Crypto bubble could at least produce one or two killer applications.

The Most Ambitious Cryptocurrency Projects Today

Despite this, there are still many ambitious cryptocurrency projects today, including:

• Ethena: Integrating DeFi, CeFi, and traditional finance (TradFi)

• Chainlink: Bridging blockchain and real-world data for immutable smart contracts

• Pudgy Penguins: Leading Web3 IP brand expanding into Web2

• WorldCoin: Bringing everyone on-chain, potentially achieving AI-funded UBI

• Liquity/RAI: The last decentralized stablecoin

• Arweave/Filecoin: Permanent storage and censorship resistance

• Farcaster/Lens: Reimagining social media

• Polymarket: A source of truth in a world of fake news

• Bio protocol (DeSci): Innovating science by changing incentive mechanisms

• Bitcoin: A revolutionary currency, digital gold

Among these, projects like WorldCoin's eye-scanning Orb and Liquity v2 with the $BOLD stablecoin, while appearing radical, are precisely the risks that ambitious protocols are willing to take. These projects showcase the most egalitarian ideas, ambitious, and if successful, could reshape social structures.

The Dilemma of Ethereum

Ethereum appears absent from this list of innovative projects. Perhaps the assessment of Ethereum is a bit harsh, but Vitalik's vision of a “cyberpunk Ethereum” is hardly felt on social platforms.

The upcoming fork (upgrade) offers only minor changes for ordinary users; Ethereum has abandoned sharding and main chain scaling, and recently has only slightly increased the gas limit for blocks.

It seems that Ethereum has handed over transaction execution and ambition to Layer 2 networks (L2). The future direction of Ethereum remains unclear.

In contrast, Solana's attitude is more aggressive, choosing to continue pushing the “integrated blockchain” model without compromise.

However, the network expansion solutions that Ethereum plans to launch in the future may prove that its modular path is correct. We hope to see Ethereum become great again and witness the emergence of radical new ideas.

Humanity Needs Boundaries

The world, especially the West, seems to be in stagnation. From stagnant wages, repetitive music, new iPhones that no longer feel novel, to endlessly remade movies, people seem to be afraid of innovation, as new content often means greater risk. In some ways, we are actually regressing. For example, due to the grounding of Concorde planes, the flight time from London to New York is now longer than in the 1970s.

However, cryptocurrency remains one of the fastest-growing and most innovative industries globally, perhaps second only to AI.

Nevertheless, the pace of innovation and ambition in the industry is clearly declining. Part of the reason is the maturity of the aforementioned industry, but a deeper reason is that the limitations of many technologies seem to have been accepted and not sufficiently challenged. For example:

• The fact that DeFi and DAOs are no longer fully decentralized seems acceptable. Rather than letting DeFi be decentralized, it could be redefined as on-chain finance, and the problem would be solved.
• Ethereum's inability to scale on Layer 1 and the lack of innovation in tokenomics seem acceptable.
• In the current market, the low market cap of $LQTY compared to $ENA indicates that there is no longer a real need for decentralized stablecoins; high yields are better.

Perhaps the passage of each cycle gradually wears down the ambition to push boundaries, leading to a more mundane cryptocurrency industry. In summary, if token prices continue to rise, why take risks?

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