A Tale of Two Markets - The Cryptoeconomy in 2025
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way.” – Charles Dickens
Critics often cite pervasive financial nihilism within the cryptoeconomy as evidence of its futility. Despite 16 years since Bitcoin’s launch and 9 since Ethereum’s, there are still few mainstream use cases to point to with undeniable utility.
For every story of an emerging market user protecting their savings from local inflation through stablecoins, there are seemingly countless more stories of developed market users gambling their savings away trading memecoins they also accessed through stablecoins.
Stablecoins as liberation. Stablecoins as destruction. Blockchains as the great equalizer. Blockchains as the great destabilizer. The cryptoeconomy as the future of the global financial system. The cryptoeconomy as the greatest collective delusion in human history.
These dualities reflect the high stakes: a technology that could either change the world or implode under the weight of its excesses. For many, this tension leads to skepticism, prompting the question, “what is the point of it all?” and casting doubt on whether a long-term fundamental view on any asset in the cryptoeconomy, beyond Bitcoin, has merit.
This tension, however, between futility and utility is not a bug – it's a feature that illustrates the growing pains of blockchain’s revolutionary potential.
Democratizing Wealth in the Digital Age
In a world where inequality between countries is extreme and widening, blockchains have the potential to democratize wealth for billions of people. To understand this, you must first understand that blockchains are novel institutions that enable users to transact and enforce contractual relationships without intermediaries. They achieve this through a supranational system of property rights that is secured by cryptography and verifiable by anyone – a subtle but powerful tool in leveling the economic playing field.
Provisioned entirely in the cloud, their only physical presence is the thousands of computers distributed worldwide that collectively uphold the network’s integrity. Together, these computers create an internet-native foundation for markets – society’s best mechanism to date for approaching the "perfect information" necessary to allocate resources efficiently.
The significance of this unlock is best explained through Ronald Coase’s seminal 1937 paper, The Nature of the Firm. Coase argued that firms exist because the costs of finding information, negotiating agreements, and enforcing contracts in the market outweighed the efficiencies of outsourcing.
Blockchains fundamentally alter this dynamic. By automating enforcement through cryptography, making information universally accessible, and reducing reliance on intermediaries, blockchains dramatically lower transaction costs – especially when paired with complimentary internet age technologies like search engines and gig economy platforms. As these transaction costs diminish, the need for large hierarchical firms weakens, paving the way for global market-based structures built on blockchains that maximize economic production, increase market efficiency, and provide the foundation for entirely new markets.
The cryptoeconomy is already showcasing these benefits. Stablecoins promote economic growth and financial inclusion by providing users worldwide with cheap, reliable money. Global exchanges and lending platforms create more efficient markets and democratize access to capital markets. DePINs create new markets entirely, allowing users to coordinate and monetize disparate physical and digital resources. Many of these businesses operate with extreme efficiency, featuring software-like margins, with blockchains automating much of the backend infrastructure and settling all this activity. Large financial institutions and enterprises are slowly recognizing this potential, with many either directly launching products on blockchains or integrating blockchain-based projects as backend infrastructure to existing products.
So why all the skepticism?
A Superposition of Utility and Futility
The creation of decentralized infrastructure for transacting and enforcing contracts inevitably leads to unconstrained experimentation. With the potential user base of blockchains encompassing billions of internet users worldwide, the incentives to do so are immense. So much so that even world leaders are launching their own currencies – a tale as old as time. The seductiveness of the opportunity has led to a rapid proliferation of new assets and financial protocols, ranging from transformative products to outright scams.
While much of this experimentation may seem frivolous, it isn’t too dissimilar from the dot-com bubble when companies often went public with little more than a domain name in their possession. The cryptoeconomy, however, amplifies this dynamic to the extreme, offering internet-scale capital markets accessible to anyone. This creates an unparalleled playground for both innovation and speculation, ultimately accelerating the pace of discovery and adoption. Afterall, speculation attracts new users and provides much needed stress tests, before trillions of dollars worth of activity comes onto blockchains over the coming years.
Nevertheless, winners are beginning to emerge amidst all the speculation. Many of these are powering the speculative capital markets activity that grabs headlines and are compounding growth behind the scenes. These winners are the rare “compounders” that are consolidating market share, extending their capabilities, and increasingly servicing non-speculative use cases over time. These projects will ultimately provide the backbone for the cryptoeconomy to mature and scale globally.
Do Parallel Roads Intersect?
For the foreseeable future, Syncracy believes the best way to express fundamental theses in the cryptoeconomy is to own assets that balance sound fundamentals with the ability to capture the speculative momentum inherent in internet capital markets. This isn’t a profound statement as in practice it just means owning fast-growing projects that people actually use. Today this means being long volumes, such as through asset issuers or marketplaces (e.g. exchanges) that directly monetize speculative activity onchain, or through their underlying infrastructure — the L1s. These L1s not only also monetize speculative activity but also offer forgiving valuation frameworks, as they are often priced as money-like assets.
In fact, being long speculation through infrastructure (fast-growing projects that people actually use) has been the common denominator of many of the largest winners of the cycle. Solana offered best-in-class performance that made onchain trading feel similar to traditional trading rails for retail (e.g. Robinhood). Phantom created an Apple-like experience that's friendly to users with specific attention given to its mobile app which allows users to speculate on-the-go like never before. Pumpdotfun collapsed the costs, effort, and resources necessary to launch new tokens. Hyperliquid made onchain perps feel like using a centralized exchange, but with cheaper costs and fewer onboarding constraints. Virtuals and ai16z (Eliza) enabled anyone to launch an AI agent with an associated token and wallet. Telegram bots and token discovery tools like Photon and DexScreener, respectively brought light to the onchain economy and made it easy to access from familiar applications. The list goes on.
Eventually we will move beyond this paradigm of speculative projects capturing outsized attention and flows. Especially as more institutional buyers enter the asset class. Moreover, there are plenty of less speculative, but promising projects in DeFi and DePIN climbing up the “slope of enlightenment” with early signs of product-market fit and strengthening fundamentals. These assets may need time to grow into their valuations and a clear regulatory framework to accelerate their progress towards mainstream adoption. Although some sectors like stablecoins are already showing the path forward for the industry, having confidently entered the deployment phase of their lifecycle. There‘s so much activity in the cryptoeconomy these days that onlookers can find ample examples of whatever their biases lead them to seek.
Nevertheless, for now, the goal from an investment perspective is to own long-term winners that capitalize on both sides of the cryptoeconomy – harnessing the speculative energy that drives transformative financial outcomes while increasingly servicing practical, non-speculative use cases. These are the assets that can compound gains over time, as opposed to the game of musical chairs that describes most of the other more narrative-driven assets in the cryptoeconomy. These are also the assets that will ultimately spearhead the world’s transition onchain, as the speculative activity they power attracts new users and provides much needed stress tests, before trillions of dollars worth of activity comes onto blockchains over the coming years.
In truth, futility and utility are two sides of the same coin.
Special thanks to Chris Burniske, Jesse Walden, and Jonathan Moore for their feedback and discussions
Important Legal Notices
While this article is intended to express the views held by Syncracy Operational Management LLC (“Syncracy”), nothing in this article is intended to constitute or form part of, and should not be construed as, an issue for sale or subscription of, or solicitation of any offer or invitation to subscribe for, underwrite, or otherwise acquire or dispose of any security, including any interest in any private investment fund managed by Syncracy. Any such offer may only be made pursuant to a formal confidential private placement memorandum of any such fund, which may be furnished to potential investors upon request and which will contain important information to be considered in connection with any such investment, including risk factors associated with making any investment in any such fund. Further, nothing in this correspondence is, or is intended to be treated as, investment or tax advice. Each recipient should consult their own legal, tax and other professional advisors in connection with investment decisions. Any investment involves the risk of a loss, including the risk of a complete loss.
