Article Highlights
- Prediction Markets: A viable alternative to crypto options, offering user-friendly interfaces and broad appeal.
- AI & Prediction Markets: A perfect testing ground for machine learning teams to refine their models.
- Neobank Wars: Major Web2 players and crypto-native projects are racing to provide seamless financial services.
- Evolving Crypto Applications: Growth in trading, DeFi, and asset tokenization, increasing accessibility.
- Crypto AI: Finding real-world utility through automated payment solutions and verifiable models.
- Dynamic DeFi: Integrating AI to create more adaptive and intelligent protocols.
Introduction
2025 appears to be a challenging year for the crypto industry. Despite promises of making the U.S. a global hub for crypto and AI, the market faced significant headwinds. After President Trump officially took office in January, the market experienced a series of stress moments, culminating in a flash crash in October that nearly paralyzed the entire industry. While the aftershocks of this crash haven't fully resolved, macroeconomic factors and industry tailwinds are pointing towards a more positive quarter, as well as a brighter outlook for 2026. Let's delve into six trends working behind the scenes to reshape the crypto industry, providing you with an early preview of what the landscape might look like in 2026.
1. Prediction Markets: Crypto Option Alternative
Prediction Markets (PMs) are experiencing a significant surge, with weekly nominal trading volume surpassing $3 billion. The market is expanding to include politics, sports, esports, pop culture, macroeconomics, crypto, and finance. Projects like @Polymarket and @Kalshi cover a wide range of topics, while projects like @trylimitless and @opinionlabsxyz focus on specific areas, such as currency markets and interest rates. Prediction markets address the shortcomings of crypto options with user-friendly interfaces, allowing anyone to participate and bet on events. Users simply buy Yes or No shares instead of understanding complex terminology. Additionally, prediction markets can be used to hedge against risk, making them a valuable tool for investors.
2. Prediction Markets: ML Team Playground
Machine learning teams are investing in prediction markets to refine their models. For example, Sportstensor provides incentives for submitting the best signals, which are used to improve their prediction models. Synth uses market data to predict crypto asset prices, while Sire is building an Alpha Vault for sports predictions. Billy provides tools for automated betting analysis. These environments foster AI-driven competition, allowing teams to prove their strategies in real-world market conditions. These projects also have the opportunity to benefit from token incentives, making it similar to the early days of Hyperliquid.
3. Neobank Wars
Major Web2 companies are launching L1/L2 projects and integrating stablecoin payment links to serve users directly. At the same time, crypto-native projects are advancing towards real-world financial services. Teams like @ether_fi, @useTria, @AviciMoney, and @UR_global offer non-custodial crypto debit cards that allow users to spend in the real world using on-chain assets. However, most products still rely on partner banks licensed by Visa/Mastercard, making them just "user acquisition gateways." Projects that control compliance and regulation will be able to provide real bank accounts and seamless multi-currency channels, providing seamless integration between crypto and traditional finance. UR, from the Mantle ecosystem, is advanced in this regard, already operating under FINMA regulation and having Swiss banking authority.
4. Breakthrough Crypto Applications
The crypto landscape has evolved significantly, from CEXs to spot DEXs, perpetual DEXs, and the era of Hyperliquid. The wave of hyper-speculative launchpads led by Pumpdotfun has led to a surge in narrative-driven on-chain launch platforms. Prediction markets are experiencing rapid growth, now truly reaching a broad audience, similar to the NFT craze. DeFi is advancing in areas like structured yields, interest products, stablecoins, RWA/DePIN, and asset tokenization. All key crypto applications are being amplified, with CEXs launching wallet super-apps and other wallets rapidly expanding their capabilities. ICOs are seeing a return, with Coinbase launching its first Monad ICO, and other platforms like Legion and Kaito growing.
5. Crypto AI Finding PMF
Initially, Crypto AI was dominated by meme coins and GPT wrapper projects. Now, blockchain-based payments and stablecoins are being used to support automated transactions between agents. Technologies like TEE and ZK, along with token-based incentives and penalties, are making AI systems verifiable, controllable, and predictable. Supporting layers are paving the way for seamless collaboration between AI and humans. "Darwinian AI" competitions are a powerful mechanism for developing agents, improving signals, and increasing performance. The most successful use cases remain trading and prediction signals. More ecosystems are adopting this Darwinian model, incentivizing developers, compensating contributors, and supporting R&D for high-quality AI products. Although still in its early stages, some subnets of Bittensor are already showing promising results.
6. Dynamic DeFi
DeFi has long been a cornerstone of the crypto industry, with over $130 billion in TVL covering DEXs, lending, yield products, and stablecoins. DeFi's strengths lie in its programmability, verifiability, and composability. However, the fundamental mechanisms of DeFi have remained largely static over the past five years. Now, imagine what would happen if new DeFi protocols could automatically increase/decrease leverage, rebalance LP positions, and enter and exit markets based on predicted prices of underlying assets. This is the beginning of the "Dynamic DeFi era," driven by AI and machine learning. Allora Network is a key player, integrating machine learning intelligence into traditional DeFi. These strategies include dynamic leverage management and yield optimization based on forward-looking risk signals. Giza and Almanak are also developing new products that allow AI agents to deploy tokenized strategy vaults in minutes, making them both capital allocators and platforms for strategy creation.
What's Next?
By 2026, we may see a convergence of several narratives—Crypto, AI, DeFi, RWA, DePIN, and robotics—converging into an interconnected digital economy run by humans and agents together. DeFi will become dynamic, AI will drive DeFi to more users, crypto payment links, stablecoins, and key applications will gain widespread adoption, and neobanks will merge Web2 and Web3. Prediction markets will continue to grow, and machine learning teams will become an essential part. Natural selection will be faster, with only a few assets truly appreciating. Crypto projects are more likely to choose IPOs over ICOs, in order to obtain liquidity, compliance, and scale from traditional capital markets. The next cycle will be a cycle of deep integration between TradFi and DeFi.
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