Written in Singapore on Dec 29, 2025

Driven by the combined forces of markets and policy in 4Q25, global traditional finance and emerging Open Finance have collided violently within an increasingly disordered environment. The resulting structural shock effectively exhausted most of the residual momentum left from the First Growth Curve (Note 1), leaving behind emotional overhangs that markets have been unable to digest in the short term.

At the same time, Traditional finance now finds itself cornered in a narrative dead end, oscillating between the AI bubble and the gold safe-haven narrative, with no credible alternatives left. Central banks around the world have been forced to rely on textbook-style monetary and fiscal tools, mechanically catering to market expectations and rigid aesthetic preferences, compelling participants to believe — at least for a while longer — that these aging economic paradigms can still hold.

In several previous essays, I have discussed in detail how conventional economic models tend to fail at the intersection of Kondratiev Cycles. Experiencing this transition firsthand, however, makes the breakdown far more tangible. Amid the overwhelming noise, one of the few relatively objective assessments came from Coinbase’s year-end report, 2026 Crypto Market Outlook, which offered a grounded summary and forward-looking view of the current market and industry landscape.

The broader trend itself is not difficult to discern; it is simply obscured by excessive emotion and entrenched narrative inertia that temporarily mask the underlying gap. From today’s vantage point, three core questions stand out as most critical to me:

i) The current global environment shows a striking resemblance — in terms of entropy accumulation — to the period between 1910 and 1935 (Note 2). How long is the corresponding window in today’s context, and how should we draw meaningful comparisons during this process, rather than mechanically copying historical precedents when assessing risk and making decisions?

ii) Between the native, exponential development speed of Crypto and Open Finance, and the friction created by their direct collision with traditional financial compliance frameworks in public markets, which force carries greater potential energy? Which will emerge as the principal contradiction, and which will be relegated to a secondary one?

iii) Taken together, these two forces form a non-linear question: will disorder itself become a turning point in 2026 — an independent growth catalyst that accelerates Crypto and Open Finance to Cross the Chasm (Note 3), pushing them rapidly into the mainstream financial system and the broader global economy?

In its 2026 Crypto Market Outlook, Coinbase highlights a number of compelling data points, among which the stablecoin figures are particularly striking. As of 4Q25, the global stablecoin supply has reached USD 305 billion, while total transaction volume has expanded to USD 47.6 trillion.

When benchmarked against the current global M0 money supply of approximately USD 15 trillion and the total annual global monetary transaction volume of roughly USD 1,500 trillion (Note 4), the implications become clear. Stablecoins now account for around 2.0% of global base money supply, yet already represent approximately 3.2% of total monetary transaction activity. This gap indicates that the average utilization and velocity of stablecoins exceeds that of traditional fiat currencies by more than 160%.

Coupled with the report’s observation of a 65% compound annual growth rate sustained over four consecutive years, and viewed in the context of the structural signals embedded throughout 2025, there is growing evidence to suggest that Open Finance is approaching the critical threshold of crossing the chasm into the Early Majority phase — with that inflection point likely to materialize within the coming year.

tl;dr

1. 10/10 as the End of Crypto’s First Growth Curve, and 2025 as the Conclusion of the Previous Kondratiev Cycle

2. The Exhaustion of TradFi’s Inertial Aesthetic, and the Systemic Failure Under Data-Driven Heavy Regulation

3. The Structural Issues Behind the Revival of RWA as a Mainstream Narrative in 2025

4. Emerging Economies and the Shifting Landscape of Global Geopolitics

5. DeFi 2.0, DAT 2.0, and Tokenomics 2.0

6. A Review of 2025 and an Outlook for 2026

1. 10/10 as the End of Crypto’s First Growth Curve, and 2025 as the Conclusion of the Previous Kondratiev Cycle

In my January article “The Second Growth Curve of Crypto”, we discussed the inherent unsustainability of the crypto market’s past reliance on speculation and narrative-driven momentum. Looking back over the full year, the outcome is now clear: of the seven giants once seated at the table, only the player in seat №1 remains, fighting alone and carving out a new path. Nearly all other participants from the old market have exited altogether or shifted course, grounding themselves and beginning the transition toward a second growth curve.

The 10/10 event triggered the largest single-day liquidation in crypto history, with $19.3 billion wiped out in one day, followed by several days of cascading liquidations totaling roughly $40 billion. On the surface, this appeared to be the concentrated unwinding of extreme leverage structures typical of the late speculative phase of the first growth curve, amplified by a low-liquidity environment. At a deeper level, however, it reflected a more fundamental failure: a zero-sum market with too few remaining players, where platforms lost the ability to manage risk, smooth volatility, or control client losses. When only two players remain at the table, all cooperative strategies collapse. Counterparty fragility becomes inevitable — and with it, the end of the first growth curve.

Much like the market extraction seen in the $TRUMP token episode, the 10/10 shock dismantled the ideological foundation of the first curve from the ground up. It extinguished the residual expectations built purely on narrative-driven momentum, marking that hollow consensus rooted in gambling-style speculation had reached its conclusion (Note 5). By contrast, the second growth curve continued to strengthen through this process. Every ecosystem player that remained began transforming or innovating toward more pragmatic, long-term development paths. A DeFi 2.0 market centred on Onchain Asset Management, RWA Finance, and Tokenization have become the inevitable direction for the next phase. This shift is not limited to DeFi alone: CEXs, blockchains, and top-tier infra providers are all adapting in parallel, rapidly repositioning toward PayFi and RWA-focused strategies.

On the other hand, by late 2025, global inflation has fully transitioned into stagflation. Fiscal and monetary policies across major economies have largely lost their effectiveness as real macro-control tools, retaining little more than their role in managing market sentiment. The extreme internal exhaustion of the traditional economic system, combined with the growing sense of impotence behind the force-fed AI growth narrative, has brought the global economy to a moment strikingly reminiscent of the Rockefeller era around 1910 — marking the definitive end of the previous Kondratiev cycle (Note 6).

On Oct 29, 2025, Nvidia’s market capitalization surpassed USD 5 trillion, becoming the first company in history to reach this scale. While many continue to debate how many more multiples remain on the upside, even without drawing direct parallels to Standard Oil in 1910, it is worth noting that the entire annual GDP of the African continent is only about half of that figure.

Entering 25H2, an increasing number of rating agencies, hedge funds, and investment banks began closely scrutinizing Nvidia’s financials. Setting aside upstream and downstream capacity constraints and profitability across the AI supply chain, and focusing solely on systemic risk concentration, the EV balance between long and short positions on Nvidia has become fundamentally distorted. In other words, even if the company were to continue delivering strong fundamental positives, sustaining this trajectory would be extremely difficult — let alone given that the underlying realities of the AI industry are far less optimistic than market narratives suggest.

It is worth recalling that when Standard Oil was dismantled into 34 companies under antitrust action in 1911, global consensus had already clearly formed around the future demand for petroleum in automobiles, aviation, and next-generation industrial automation. Yet this recognition failed to prevent nearly three decades of chaos, depression, and systemic restructuring that followed. The reason is simple: disorder and instability are not caused by a lack of technological direction, but by the breakdown of production relations from the previous phase — manifesting in extreme monopolization, widespread poverty, structural imbalance, and persistent social conflict. This is an irreversible process of societal entropy increase.

At major cycle inflection points, both economic policy tools and short-term conventional wisdom lose their effectiveness. The true obstacle to economic progress is not the absence of viable growth paths, but the inertia of monopolistic production relations from the prior cycle, which obstruct — or outright fail to support — the fair and efficient integration of new productive forces and labour structures. Applied to the present moment, the advancement of AI is inevitable; what is unsustainable is a global governance framework still rooted in semi-feudal, semi-monopolistic capitalism, which is no longer capable of adapting to or supporting the next phase of development (Note 7).

2. The Exhaustion of TradFi’s Inertial Aesthetic, and the Systemic Failure Under Data-Driven Heavy Regulation

Even so, one outcome that has genuinely exceeded my expectations is that still many economists and industry experts remain fixated on interest-rate cuts as the core variable of analysis. From Feb 2020, prior to the pandemic, to Apr 2022, at the peak of monetary expansion, U.S. M2 increased by more than 40% cumulatively. Against such an enormous monetary base, subsequent rounds of QT or QE are, in my view, largely symbolic — a form of emotional reassurance rather than a meaningful economic adjustment. Whether 25bp or 100bp, interest rates have long since lost their original value and marginal power (Note 8).

In the current environment, rate cuts have become the perfect convergence of sentiment-driven expectations from market participants and coerced policy decisions by authorities. Put plainly, this is a two-sided form of psychological inertia — a mutual hostage-taking between markets and policymakers — where emotional value substitutes for structural solutions. To be fair, governments around the world have made their utmost efforts to delay a full descent into systemic disorder and global confrontation by exhausting every remaining tool rooted in legacy financial aesthetics.

Yet the process of entropy cannot be slowed by such measures. Revisiting a Greenspan warning I quoted in an earlier piece — “We must accept that monetary and fiscal policy cannot permanently boost economic growth in the presence of deeply rooted structural constraints.” — it becomes increasingly evident that a large portion of traditional policy instruments have already lost their effectiveness within the existing system.

By mid-Dec 2025, Nasdaq publicly stated its intention to submit a proposal to the SEC to extend equity trading hours to a 24/7 model. In substance, this move reflects a defensive response by traditional finance under mounting structural pressure — both a counter-push toward crypto and onchain markets, and a simultaneous attempt to test regulatory boundaries. In fact, since the introduction of the Genius Act, many traditional financial institutions across North America and East Asia have been continuously recalibrating their posture. They have oscillated between two competing imperatives: confronting the disruptive challenge posed by Crypto Finance head-on, with all the risks that entails, or preserving existing regulatory moats and legacy advantages for as long as possible.

What is particularly interesting is how this tension evolved over the year:

In Q2, institutional reactions were intense. The Genius Act appeared to abruptly shatter the prior equilibrium(Note 9) — undermining cartel-like defensive alliances and long-standing moats. A widespread sense of urgency emerged, as many recognized that the transformation of traditional finance was no longer avoidable.

By Q3, however, sentiment shifted again. Market participants began to realize that the pace of transformation would not be as immediate or as violent as initially feared. Traditional financial institutions and policymakers, almost paradoxically, arrived at a short-term counter-equilibrium. The prevailing logic became: change is inevitable, but regulatory compliance can serve as the stabilizing anchor — so long as licensed institutions and regulators upgrade in tandem, the transition can be managed without catastrophic disruption. This Q3 phase was especially subtle. In effect, the entire system entered a large-scale prisoner’s dilemma, where participants collectively and temporarily reversed their individual strategies to withstand external pressure. Yet this equilibrium was ultimately psychological rather than structural — a temporary illusion preceding the genuine dissolution of the cartel framework.

By Q4, the most forward-looking players had already recognized that, through divergent paths taken by actors such as Hyperliquid and Robinhood, the disintegration of traditional financial cartels was inevitable and approaching rapidly. This is precisely why both Nasdaq and Coinbase began to speak more candidly — choosing to confront tangible, execution-level reforms such as extended trading hours and the construction of native RWA tokenization infrastructures, in order to secure authentic strategic advantages for themselves in the next phase.

Viewed in retrospect, this entire progression follows a classic pattern. Ahead of a major transformation, all participants collectively construct a Gartner Curve–like psychological sandbox and play out their strategic interactions within it.

The exhaustion of traditional finance’s inertia-driven aesthetic does not imply a failure of economic principles themselves. On the contrary, the Crypto Economy and Open Finance represent a further evolution grounded precisely in economics. The real blockage lies in the systemic failure of the production-relationship mechanisms used to manage markets and economies. After fully entering the digital era, legacy governance systems have proven fundamentally incapable of balancing regulation and freedom.

Globally, policymakers have fallen into a major misconception: the misuse of digital over-regulation, which has significantly accelerated entropy over the past decade.

Over the last ten years, nearly every region has — sooner or later — slid into the same trap: “if data exists, it must be used; if methods exist, they must be regulated.” Under outdated systems, rule-compliance costs and access thresholds now far exceed opportunity and risk costs. Rigid data governance has turned path dependence into dogma — one that not only cannot be broken, but must be paid for at increasing economic and social cost. This has created a disturbing phenomenon that can be described as a “Digital Middle Ages Effect”.

This condition has permeated every layer of society and nearly all industries worldwide. Excessive digital misuse and financial constraints have become structural obstacles to growth across sectors. To give a simple example from my more than 15 years in venture capital: if one were to judge a person’s eligibility for financing purely through rigid bank KYC criteria, 99% of enterprises and innovations in this world would never exist.

As entropy continues to undermine the global financial system and broader social governance frameworks, 2026 is almost certain to usher in a deeper phase of disorder and restructuring. A large number of rules and entire industries will be rewritten, and it is equally unavoidable that the world will enter a prolonged transitional period of chaos — likely lasting at least a decade.

3. The Structural Issues Behind the Revival of RWA as a Mainstream Narrative in 2025

The RWA narrative staged a strong comeback in 2025, for a very simple reason: the collapse of credibility in the first growth curve, combined with the absence of a new, widely accepted concept for the second growth curve. As a result, RWA stepped in as a temporary substitute and effectively became this year’s MVP.

Two months ago, during a conversation with a long-time industry OG friend in Silicon Valley, he suggested that — upon hearing that Cicada Finance was preparing to announce its go-to-public plan — I should position the project squarely within RWA Finance. I took his advice, while deliberately retaining Onchain Asset Management as the core foundation. This led to the current framing: Onchain Asset Management for RWA Finance. There is no doubt that both Onchain Asset Management and RWA Finance will remain structurally strong, mainstream tracks throughout 2026.

Beyond the label itself, RWA is not experiencing a revival, but it is being built from the ground up. The challenge lies in the fact that interpretations of “RWA” vary widely among those who use the term. As of 2H25, in most regions around the world, RWA is still commonly understood as no more than a form of asset tokenization used for crowdfunding fundraising activities.

Most participants entering the RWA space are not driven by industry building, but by their own immediate needs — which is understandable. However, as seen previously with P2P finance and crowdfunding during the e-commerce era, demand-driven markets tend to push platforms, distribution channels, and even the market itself into one-sided outcomes, ultimately steering the entire industry in the wrong direction.

What is the difference between RWA without fair value and equity crowdfunding of the past? Do RWA assets without liquidity truly need tokenization at all? Conversely, do all RWA assets genuinely require liquidity? For the market as a whole, these questions clearly had not been fully thought through or reached consensus in 2025. Some deeper, commercially sensitive issues also remain difficult to discuss openly at this stage.

Current RWA asset distribution data is analysed in detail in the Coinbase report. U.S. Treasuries, commodities, liquid funds, and credit loans remain the four dominant categories, underscoring the importance of quantifiable financial assets within the RWA landscape. In our view, the RWA structure will shift meaningfully in 2026. While these asset classes will continue to exist, real economic activity from emerging and developing markets — driven by DeFi and Crypto Finance — will be consolidated into the RWA market as new sources of asset supply. Among them, stablecoin payments and SupplyChainFi are likely to become the fastest-growing directions.

4. Emerging Economies and the Shifting Landscape of Global Geopolitics

In 2025, while economically and financially developed countries and regions were preoccupied with how to formulate regulatory frameworks for stablecoins and crypto finance, the pace of development across emerging and developing economies proved both striking and far beyond expectations.

“What they really want is stablecoins — platform tokens would work too.” This has been the consistent feedback from cross-border trade and payment companies throughout the year. Beyond Nigeria, India, Brazil, Indonesia, and Bangladesh, many other countries and regions across Africa, South America, South Asia, Southeast Asia, Eastern Europe, and the Middle East have all recorded exponential growth in the adoption of stablecoins and crypto finance for three consecutive years. In many of these markets, actual usage penetration has already surpassed — or caught up with — that of fiat currencies (Note 10).

These emerging economic systems across developing regions are expanding rapidly through what can best be described as “off-balance-sheet assets,” standing in sharp contrast to the governance and structural constraints faced by the mainstream global system discussed earlier. Although historical factors mean that significant gaps in economic strength and consumption power still exist across regions, it is increasingly evident that mainstream global economic data has become fundamentally distorted. Faced with stagnation under excessive regulation on one side, and explosive growth in new environments on the other, the global economic landscape is likely to be reshaped within less than five years, with profound shifts in geopolitical dynamics to follow.

Returning to Question ii) raised at the outset, my conclusion is clear. The true reformation of a Nash Equilibrium will not come from dismantling and rebuilding within the existing global economic system itself. Instead, it will emerge through a far more complex restructuring, driven by external forces under a new global configuration. The native growth velocity of Crypto and Open Finance will vastly outpace the ability of traditional economies and markets to absorb and adapt to them. Against this backdrop, 2026 is highly likely to become a critical inflection point in the broader process of disorder, restructuring, and transition.

5. DeFi2.0, DAT2.0, Tokenomics2.0

In its latest report, Coinbase has begun to place emphasis on several new terms, including DAT 2.0 and Tokenomics 2.0, which are, in essence, evolutionary branches of what the industry already recognizes as DeFi 2.0. The definitions of these concepts are generally sound, and it is worth unpacking them individually here.

In 2025, the concept of DAT was successfully introduced to global mainstream financial markets by MSTR. Its underlying logic is straightforward:

DAT premium multiple = equity market capitalization ÷ NAV (net asset value) of the BTC (or other major crypto assets) held.

However, this premium multiple declined rapidly from Q3 to Q4, in some cases even inverting, bringing the global DAT 1.0 enthusiasm to a swift end.

The fundamental reason for the decline in DAT 1.0 value and its diminishing financial impact lies in the insufficient friction of the capital multiplier. The narrative was overly simple, pricing was transparent, and upside expectations were limited. The dynamics of Davis Double Play and Davis Double Contraction were overly direct, causing confidence to evaporate quickly once market sentiment shifted between bull and bear cycles.

The real industry significance of DAT in 2025 was not its sustainability, but rather its role as a transitional mechanism: traditional equity market narratives had become exhausted, bubbles had grown too large for EVs to remain defensible, while Crypto’s first growth curve suffered from both speculative excess and a collapse of credibility. As a result, capital in both markets gravitated toward each other in a collective flight toward perceived strength.

Why, then, can DAT 2.0 sustain the value of crypto–equity linkage? Simply put, DAT 1.0 represented a value transfer from Crypto’s first growth curve into traditional finance, whereas DAT 2.0 represents a value integration between Crypto’s second growth curve and traditional finance. Unlike the former, the latter possesses genuine long-term sustainability. In 2025, companies such as Ondo, Ethena, Maple, Robinhood, and Figure have already provided strong early templates for DAT 2.0 in practice. Looking ahead to 2026, a broader wave of emerging players is expected to scale rapidly within this framework.

Tokenomics 2.0 is a broader and more inclusive concept. This year, we introduced a range of Tokenomics-related derivatives such as Liquid Engineering and Yield Engineering, which are, in essence, further evolutions of Financial Engineering. Across real-world financial scenarios, Tokenomics functions much like a Financial Circuit (Note 11), continuously adjusting and optimizing each specific financial setup on a case-by-case basis. While implementations differ across contexts, industry-wide evolution tends to converge toward general-purpose innovations with systemic impact — such as Pendle’s PT-YT framework.

In the report, Coinbase only briefly touched on several elements under the Tokenomics 2.0 umbrella — Value Capture, Token Buybacks, Financial Engineering, Regulatory Clarity as a Catalyst, and Protocol P&L — without establishing a clear logical structure or offering a detailed analysis. Here is a simplified breakdown:

Value Capture is not inherently part of Tokenomics 2.0. It is merely a necessary condition for asset utilization and distribution along the second growth curve. Tokenomics exists independently of Value Capture. Put differently, Tokenomics without sustainable value capture has already proven — during the first growth curve — to be nothing more than Ponzinomics, and will no longer constitute a mainstream model in the post-2025 Crypto and Open Finance markets.

Token Buybacks are a critical — and in my view, necessary — condition for Asset Tokenization within both RWA and DAT 2.0 frameworks. More precisely, Asset Clearing Capability is a fundamental necessary condition for any asset investment. The healthy development of RWA Finance in the coming year will largely depend on whether the market can reach consensus on this point.

Regarding Regulatory Clarity, as discussed earlier in Chapter 2 and 4, it should be evaluated objectively in terms of both pros and cons. Coinbase’s framing reflects its own contextual positioning. However, as previously noted, the faster and more flexible evolution of Open Finance is in fact occurring within emerging economies and new market structures.

The protocolization of finance is likewise not determined by regulatory clarity alone. While regulatory alignment is highly correlated in certain developed financial regions such as North America and East Asia, the P&L of protocol-based finance is fundamentally a market-driven outcome within an upgraded Open Finance ecosystem, shaped by real transactional dynamics rather than policy design.

Ultimately, DAT 2.0 and Tokenomics 2.0 are temporary labels, much like the terms Second Growth Curve and DeFi 2.0. What they collectively describe is a structural shift — an inevitable re-gearing of the Crypto Market and Open Finance following the systemic reset of 2025.

6. A Review of 2025 and an Outlook for 2026

As 2025 comes to a close, we look back and review the analyses and forecasts made throughout the year.

February — The Second Growth Curve of Crypto

“Zero-Sum Game and the 7 Giants at the Table”, “The Trend of RYA/RWA and the Rise of PayFi”, “Crossing the Chasm: The Second Growth Curve of Crypto”, “The Crypto Development Landscape and National Scenarios Under Compliance Challenges”;

April — Trump’s Tariffs — Kondratiev’s Transition, Bitcoin’s Transformation

“The Triple-Kill of Bonds, Equities, and Currencies, and the Breakdown of the Merrill Clock”, “The Thucydides Trap and the Final Phases of Five Kondratiev Cycles in History”, “Greenspan’s Prophecy and the Role of Crypto at the Crossover Point of Kondratiev Cycles”, “The Reversal of Bitcoin’s Correlation with Global Chaos and the Shift in Cognitive Inertia”;

May — The GENIUS Act and On-chain Shadow Money
“The fundamental reasons behind the weakening control of the U.S. dollar”, “The nominal versus substantive objectives of the GENIUS Act”, “Insights from DeFi restaking for the fiat world and the monetary multiplier effect of shadow money”, “Gold, the U.S. dollar, and crypto stablecoins”;

September — The Asset Tokenization Trend Based on Stablecoin Pricing Models
“The essence of the Genius Act is to delegate the power of currency issuance and settlement, thereby strengthening the pricing power of the currency”, “Stablecoins, by changing the form of monetary pricing, have triggered global reforms in financial tokenization and asset tokenization”, “The reform is rapidly dismantling the long-standing Cartel Alliances in traditional finance, creating opportunities for interest realignment amid chaos”, “The Two Directions of Crypto–Equity Linkage: Securitization and Tokenization, and Their Market Characteristics”, “The market characteristics and problems of stablecoins, DAT, stock tokenization, RWA, and on-chain asset management”.

Looking ahead to 2026, this article has already addressed many aspects of the outlook. With the exception of Question i), the other issues have been analysed with sufficient clarity. The further disorder and restructuring of the macro environment — and the resulting acceleration of DeFi 2.0 — are both clear trends and, in many respects, inevitable.

Question i), however, remains genuinely challenging. Whether in socio-economic systems or financial markets, direction and trajectory are always easier to identify than precise timing and magnitude. Unlike the transition period two Kondratiev Cycles earlier, the similarities in paradigm mask three major differences today:

a) The speed from information transmission to structural evolution is dramatically faster, with differences of roughly 2.5–5x across multiple dimensions (Note 12);

b) The spillover potential of global geopolitical conflicts is fundamentally different, making the likelihood of escalation materially higher;

c) The nonlinear effects introduced by AI and Crypto far exceed those seen during the era of industrial electrification and automation.

At the same time, many elements remain largely unchanged relative to a century ago. The fundamental “hardware” of social governance has not evolved significantly; human lifespans, the capacity of a generation to absorb long- and short-cycle emotional swings, and the political-economic management cycles across different social systems all remain broadly similar.

Against this backdrop, in recent years of managing companies, I have frequently discussed — and gradually come to accept — a core reality with my co-founder: nonlinear dynamics must be taken seriously. The ability to anticipate, respond to, and internalize nonlinear triggers is no longer optional. Non-linear shocks must be treated not as anomalies, but as an integral component of strategic planning itself.

Author: Gary Yang

Date: December 29, 2025

X: https://x.com/gary_yangge

E: gary_yangge@hotmail.com

BX: https://x.com/CicadaFinance

BW: https://cicada.finance

Notes

Note 1: The “the First Growth Curve” refers to the past 16 years of crypto development, during which speculative environments were created through consensus-driven expectations, continuously amplifying expectations and generating wealth effects.

Note 2: The year 1935 is chosen instead of the end of World War II in 1945 because gold prices experienced a cliff-like surge in 1934 after decades of relative stability.

Note 3: Crossing the Chasm is a classic paradigm describing the adoption path of innovative technologies. Here, it is used to indicate that crypto and Open Finance in recent years have largely remained in the Early Adopter stage.

Note 4: The estimate of USD 1,500 trillion is derived using the annualized transaction volumes of the FX market and global securities and commodities markets as a rough proxy for overall financial scale.

Note 5: Prediction markets are effectively an extension of the First Growth Curve. When consensus-based, expectation-driven narratives can no longer sustain collective credit, short-term, event-driven wagering becomes a new form of consensus credit for such risk preferences.

Note 6: The late stage and transition points of Kondratiev cycles have been discussed multiple times in prior articles, including “Trump’s Tariffs — Kondratiev’s Transition, Bitcoin’s Transformation”, Chapter 2: “The Thucydides Trap and the Final Phases of Five Kondratiev Cycles in History”. From 2020 to 2025, the world has been in the transitional phase between the end of the previous Kondratiev cycle and the beginning of the next. The key distinction here is that the end of 2025, together with its accompanying socio-economic phenomena, marks the definitive conclusion of the prior cycle.

Note 7: In “The Dramatic Shift Following Trump’s Election Victory” (Nov 2024), it was first stated that “as of the end of 2024, under the current global landscape, most nations and interest groups still operate within a semi-feudal, semi-centralized state-capitalist environment.” This description is now refined to “semi-feudal, semi-monopolistic capitalism”.

Note 8: Objectively speaking, emotional value itself has become a major factor in today’s global secondary financial markets. Economic policy and market confidence are mutually causal through the channel of emotional value.

Note 9: The breakdown of cartel-like structures in traditional finance was discussed in detail in Chapter 3 of “The GENIUS Act and On-chain Shadow Money” (May 2025).

Note 10: For emerging and economically underdeveloped countries, there is no publicly available, clearly citable data. The information referenced here is based on non-public, commercially sensitive enterprise data.

Note 11: Financial Circuit and Web3 Tokenomics Theory, written in Oct 2022, provides a detailed explanation of the underlying structural mechanisms for building financial systems within Web3 tokenomics.

Note 12: This multiplier has only limited reference value. On a macro level, 2.5× reflects a comparison between a 10-year Merrill Lynch Clock cycle and a 4-year Bitcoin cycle. On a micro level, 5× reflects 7×24-hour trading versus 5×6.5-hour trading. These figures do not accurately represent the true differences in real production or social iteration speeds.

Written in Singapore on Dec 29, 2025

Driven by the combined forces of markets and policy in 4Q25, global traditional finance and emerging Open Finance have collided violently within an increasingly disordered environment. The resulting structural shock effectively exhausted most of the residual momentum left from the First Growth Curve (Note 1), leaving behind emotional overhangs that markets have been unable to digest in the short term.

At the same time, Traditional finance now finds itself cornered in a narrative dead end, oscillating between the AI bubble and the gold safe-haven narrative, with no credible alternatives left. Central banks around the world have been forced to rely on textbook-style monetary and fiscal tools, mechanically catering to market expectations and rigid aesthetic preferences, compelling participants to believe — at least for a while longer — that these aging economic paradigms can still hold.

In several previous essays, I have discussed in detail how conventional economic models tend to fail at the intersection of Kondratiev Cycles. Experiencing this transition firsthand, however, makes the breakdown far more tangible. Amid the overwhelming noise, one of the few relatively objective assessments came from Coinbase’s year-end report, 2026 Crypto Market Outlook, which offered a grounded summary and forward-looking view of the current market and industry landscape.

The broader trend itself is not difficult to discern; it is simply obscured by excessive emotion and entrenched narrative inertia that temporarily mask the underlying gap. From today’s vantage point, three core questions stand out as most critical to me:

i) The current global environment shows a striking resemblance — in terms of entropy accumulation — to the period between 1910 and 1935 (Note 2). How long is the corresponding window in today’s context, and how should we draw meaningful comparisons during this process, rather than mechanically copying historical precedents when assessing risk and making decisions?

ii) Between the native, exponential development speed of Crypto and Open Finance, and the friction created by their direct collision with traditional financial compliance frameworks in public markets, which force carries greater potential energy? Which will emerge as the principal contradiction, and which will be relegated to a secondary one?

iii) Taken together, these two forces form a non-linear question: will disorder itself become a turning point in 2026 — an independent growth catalyst that accelerates Crypto and Open Finance to Cross the Chasm (Note 3), pushing them rapidly into the mainstream financial system and the broader global economy?

In its 2026 Crypto Market Outlook, Coinbase highlights a number of compelling data points, among which the stablecoin figures are particularly striking. As of 4Q25, the global stablecoin supply has reached USD 305 billion, while total transaction volume has expanded to USD 47.6 trillion.

When benchmarked against the current global M0 money supply of approximately USD 15 trillion and the total annual global monetary transaction volume of roughly USD 1,500 trillion (Note 4), the implications become clear. Stablecoins now account for around 2.0% of global base money supply, yet already represent approximately 3.2% of total monetary transaction activity. This gap indicates that the average utilization and velocity of stablecoins exceeds that of traditional fiat currencies by more than 160%.

Coupled with the report’s observation of a 65% compound annual growth rate sustained over four consecutive years, and viewed in the context of the structural signals embedded throughout 2025, there is growing evidence to suggest that Open Finance is approaching the critical threshold of crossing the chasm into the Early Majority phase — with that inflection point likely to materialize within the coming year.

tl;dr

1. 10/10 as the End of Crypto’s First Growth Curve, and 2025 as the Conclusion of the Previous Kondratiev Cycle

2. The Exhaustion of TradFi’s Inertial Aesthetic, and the Systemic Failure Under Data-Driven Heavy Regulation

3. The Structural Issues Behind the Revival of RWA as a Mainstream Narrative in 2025

4. Emerging Economies and the Shifting Landscape of Global Geopolitics

5. DeFi 2.0, DAT 2.0, and Tokenomics 2.0

6. A Review of 2025 and an Outlook for 2026

1. 10/10 as the End of Crypto’s First Growth Curve, and 2025 as the Conclusion of the Previous Kondratiev Cycle

In my January article “The Second Growth Curve of Crypto”, we discussed the inherent unsustainability of the crypto market’s past reliance on speculation and narrative-driven momentum. Looking back over the full year, the outcome is now clear: of the seven giants once seated at the table, only the player in seat №1 remains, fighting alone and carving out a new path. Nearly all other participants from the old market have exited altogether or shifted course, grounding themselves and beginning the transition toward a second growth curve.

The 10/10 event triggered the largest single-day liquidation in crypto history, with $19.3 billion wiped out in one day, followed by several days of cascading liquidations totaling roughly $40 billion. On the surface, this appeared to be the concentrated unwinding of extreme leverage structures typical of the late speculative phase of the first growth curve, amplified by a low-liquidity environment. At a deeper level, however, it reflected a more fundamental failure: a zero-sum market with too few remaining players, where platforms lost the ability to manage risk, smooth volatility, or control client losses. When only two players remain at the table, all cooperative strategies collapse. Counterparty fragility becomes inevitable — and with it, the end of the first growth curve.

Much like the market extraction seen in the $TRUMP token episode, the 10/10 shock dismantled the ideological foundation of the first curve from the ground up. It extinguished the residual expectations built purely on narrative-driven momentum, marking that hollow consensus rooted in gambling-style speculation had reached its conclusion (Note 5). By contrast, the second growth curve continued to strengthen through this process. Every ecosystem player that remained began transforming or innovating toward more pragmatic, long-term development paths. A DeFi 2.0 market centred on Onchain Asset Management, RWA Finance, and Tokenization have become the inevitable direction for the next phase. This shift is not limited to DeFi alone: CEXs, blockchains, and top-tier infra providers are all adapting in parallel, rapidly repositioning toward PayFi and RWA-focused strategies.

On the other hand, by late 2025, global inflation has fully transitioned into stagflation. Fiscal and monetary policies across major economies have largely lost their effectiveness as real macro-control tools, retaining little more than their role in managing market sentiment. The extreme internal exhaustion of the traditional economic system, combined with the growing sense of impotence behind the force-fed AI growth narrative, has brought the global economy to a moment strikingly reminiscent of the Rockefeller era around 1910 — marking the definitive end of the previous Kondratiev cycle (Note 6).

On Oct 29, 2025, Nvidia’s market capitalization surpassed USD 5 trillion, becoming the first company in history to reach this scale. While many continue to debate how many more multiples remain on the upside, even without drawing direct parallels to Standard Oil in 1910, it is worth noting that the entire annual GDP of the African continent is only about half of that figure.

Entering 25H2, an increasing number of rating agencies, hedge funds, and investment banks began closely scrutinizing Nvidia’s financials. Setting aside upstream and downstream capacity constraints and profitability across the AI supply chain, and focusing solely on systemic risk concentration, the EV balance between long and short positions on Nvidia has become fundamentally distorted. In other words, even if the company were to continue delivering strong fundamental positives, sustaining this trajectory would be extremely difficult — let alone given that the underlying realities of the AI industry are far less optimistic than market narratives suggest.

It is worth recalling that when Standard Oil was dismantled into 34 companies under antitrust action in 1911, global consensus had already clearly formed around the future demand for petroleum in automobiles, aviation, and next-generation industrial automation. Yet this recognition failed to prevent nearly three decades of chaos, depression, and systemic restructuring that followed. The reason is simple: disorder and instability are not caused by a lack of technological direction, but by the breakdown of production relations from the previous phase — manifesting in extreme monopolization, widespread poverty, structural imbalance, and persistent social conflict. This is an irreversible process of societal entropy increase.

At major cycle inflection points, both economic policy tools and short-term conventional wisdom lose their effectiveness. The true obstacle to economic progress is not the absence of viable growth paths, but the inertia of monopolistic production relations from the prior cycle, which obstruct — or outright fail to support — the fair and efficient integration of new productive forces and labour structures. Applied to the present moment, the advancement of AI is inevitable; what is unsustainable is a global governance framework still rooted in semi-feudal, semi-monopolistic capitalism, which is no longer capable of adapting to or supporting the next phase of development (Note 7).

2. The Exhaustion of TradFi’s Inertial Aesthetic, and the Systemic Failure Under Data-Driven Heavy Regulation

Even so, one outcome that has genuinely exceeded my expectations is that still many economists and industry experts remain fixated on interest-rate cuts as the core variable of analysis. From Feb 2020, prior to the pandemic, to Apr 2022, at the peak of monetary expansion, U.S. M2 increased by more than 40% cumulatively. Against such an enormous monetary base, subsequent rounds of QT or QE are, in my view, largely symbolic — a form of emotional reassurance rather than a meaningful economic adjustment. Whether 25bp or 100bp, interest rates have long since lost their original value and marginal power (Note 8).

In the current environment, rate cuts have become the perfect convergence of sentiment-driven expectations from market participants and coerced policy decisions by authorities. Put plainly, this is a two-sided form of psychological inertia — a mutual hostage-taking between markets and policymakers — where emotional value substitutes for structural solutions. To be fair, governments around the world have made their utmost efforts to delay a full descent into systemic disorder and global confrontation by exhausting every remaining tool rooted in legacy financial aesthetics.

Yet the process of entropy cannot be slowed by such measures. Revisiting a Greenspan warning I quoted in an earlier piece — “We must accept that monetary and fiscal policy cannot permanently boost economic growth in the presence of deeply rooted structural constraints.” — it becomes increasingly evident that a large portion of traditional policy instruments have already lost their effectiveness within the existing system.

By mid-Dec 2025, Nasdaq publicly stated its intention to submit a proposal to the SEC to extend equity trading hours to a 24/7 model. In substance, this move reflects a defensive response by traditional finance under mounting structural pressure — both a counter-push toward crypto and onchain markets, and a simultaneous attempt to test regulatory boundaries. In fact, since the introduction of the Genius Act, many traditional financial institutions across North America and East Asia have been continuously recalibrating their posture. They have oscillated between two competing imperatives: confronting the disruptive challenge posed by Crypto Finance head-on, with all the risks that entails, or preserving existing regulatory moats and legacy advantages for as long as possible.

What is particularly interesting is how this tension evolved over the year:

In Q2, institutional reactions were intense. The Genius Act appeared to abruptly shatter the prior equilibrium(Note 9) — undermining cartel-like defensive alliances and long-standing moats. A widespread sense of urgency emerged, as many recognized that the transformation of traditional finance was no longer avoidable.

By Q3, however, sentiment shifted again. Market participants began to realize that the pace of transformation would not be as immediate or as violent as initially feared. Traditional financial institutions and policymakers, almost paradoxically, arrived at a short-term counter-equilibrium. The prevailing logic became: change is inevitable, but regulatory compliance can serve as the stabilizing anchor — so long as licensed institutions and regulators upgrade in tandem, the transition can be managed without catastrophic disruption. This Q3 phase was especially subtle. In effect, the entire system entered a large-scale prisoner’s dilemma, where participants collectively and temporarily reversed their individual strategies to withstand external pressure. Yet this equilibrium was ultimately psychological rather than structural — a temporary illusion preceding the genuine dissolution of the cartel framework.

By Q4, the most forward-looking players had already recognized that, through divergent paths taken by actors such as Hyperliquid and Robinhood, the disintegration of traditional financial cartels was inevitable and approaching rapidly. This is precisely why both Nasdaq and Coinbase began to speak more candidly — choosing to confront tangible, execution-level reforms such as extended trading hours and the construction of native RWA tokenization infrastructures, in order to secure authentic strategic advantages for themselves in the next phase.

Viewed in retrospect, this entire progression follows a classic pattern. Ahead of a major transformation, all participants collectively construct a Gartner Curve–like psychological sandbox and play out their strategic interactions within it.

The exhaustion of traditional finance’s inertia-driven aesthetic does not imply a failure of economic principles themselves. On the contrary, the Crypto Economy and Open Finance represent a further evolution grounded precisely in economics. The real blockage lies in the systemic failure of the production-relationship mechanisms used to manage markets and economies. After fully entering the digital era, legacy governance systems have proven fundamentally incapable of balancing regulation and freedom.

Globally, policymakers have fallen into a major misconception: the misuse of digital over-regulation, which has significantly accelerated entropy over the past decade.

Over the last ten years, nearly every region has — sooner or later — slid into the same trap: “if data exists, it must be used; if methods exist, they must be regulated.” Under outdated systems, rule-compliance costs and access thresholds now far exceed opportunity and risk costs. Rigid data governance has turned path dependence into dogma — one that not only cannot be broken, but must be paid for at increasing economic and social cost. This has created a disturbing phenomenon that can be described as a “Digital Middle Ages Effect”.

This condition has permeated every layer of society and nearly all industries worldwide. Excessive digital misuse and financial constraints have become structural obstacles to growth across sectors. To give a simple example from my more than 15 years in venture capital: if one were to judge a person’s eligibility for financing purely through rigid bank KYC criteria, 99% of enterprises and innovations in this world would never exist.

As entropy continues to undermine the global financial system and broader social governance frameworks, 2026 is almost certain to usher in a deeper phase of disorder and restructuring. A large number of rules and entire industries will be rewritten, and it is equally unavoidable that the world will enter a prolonged transitional period of chaos — likely lasting at least a decade.

3. The Structural Issues Behind the Revival of RWA as a Mainstream Narrative in 2025

The RWA narrative staged a strong comeback in 2025, for a very simple reason: the collapse of credibility in the first growth curve, combined with the absence of a new, widely accepted concept for the second growth curve. As a result, RWA stepped in as a temporary substitute and effectively became this year’s MVP.

Two months ago, during a conversation with a long-time industry OG friend in Silicon Valley, he suggested that — upon hearing that Cicada Finance was preparing to announce its go-to-public plan — I should position the project squarely within RWA Finance. I took his advice, while deliberately retaining Onchain Asset Management as the core foundation. This led to the current framing: Onchain Asset Management for RWA Finance. There is no doubt that both Onchain Asset Management and RWA Finance will remain structurally strong, mainstream tracks throughout 2026.

Beyond the label itself, RWA is not experiencing a revival, but it is being built from the ground up. The challenge lies in the fact that interpretations of “RWA” vary widely among those who use the term. As of 2H25, in most regions around the world, RWA is still commonly understood as no more than a form of asset tokenization used for crowdfunding fundraising activities.

Most participants entering the RWA space are not driven by industry building, but by their own immediate needs — which is understandable. However, as seen previously with P2P finance and crowdfunding during the e-commerce era, demand-driven markets tend to push platforms, distribution channels, and even the market itself into one-sided outcomes, ultimately steering the entire industry in the wrong direction.

What is the difference between RWA without fair value and equity crowdfunding of the past? Do RWA assets without liquidity truly need tokenization at all? Conversely, do all RWA assets genuinely require liquidity? For the market as a whole, these questions clearly had not been fully thought through or reached consensus in 2025. Some deeper, commercially sensitive issues also remain difficult to discuss openly at this stage.

Current RWA asset distribution data is analysed in detail in the Coinbase report. U.S. Treasuries, commodities, liquid funds, and credit loans remain the four dominant categories, underscoring the importance of quantifiable financial assets within the RWA landscape. In our view, the RWA structure will shift meaningfully in 2026. While these asset classes will continue to exist, real economic activity from emerging and developing markets — driven by DeFi and Crypto Finance — will be consolidated into the RWA market as new sources of asset supply. Among them, stablecoin payments and SupplyChainFi are likely to become the fastest-growing directions.

4. Emerging Economies and the Shifting Landscape of Global Geopolitics

In 2025, while economically and financially developed countries and regions were preoccupied with how to formulate regulatory frameworks for stablecoins and crypto finance, the pace of development across emerging and developing economies proved both striking and far beyond expectations.

“What they really want is stablecoins — platform tokens would work too.” This has been the consistent feedback from cross-border trade and payment companies throughout the year. Beyond Nigeria, India, Brazil, Indonesia, and Bangladesh, many other countries and regions across Africa, South America, South Asia, Southeast Asia, Eastern Europe, and the Middle East have all recorded exponential growth in the adoption of stablecoins and crypto finance for three consecutive years. In many of these markets, actual usage penetration has already surpassed — or caught up with — that of fiat currencies (Note 10).

These emerging economic systems across developing regions are expanding rapidly through what can best be described as “off-balance-sheet assets,” standing in sharp contrast to the governance and structural constraints faced by the mainstream global system discussed earlier. Although historical factors mean that significant gaps in economic strength and consumption power still exist across regions, it is increasingly evident that mainstream global economic data has become fundamentally distorted. Faced with stagnation under excessive regulation on one side, and explosive growth in new environments on the other, the global economic landscape is likely to be reshaped within less than five years, with profound shifts in geopolitical dynamics to follow.

Returning to Question ii) raised at the outset, my conclusion is clear. The true reformation of a Nash Equilibrium will not come from dismantling and rebuilding within the existing global economic system itself. Instead, it will emerge through a far more complex restructuring, driven by external forces under a new global configuration. The native growth velocity of Crypto and Open Finance will vastly outpace the ability of traditional economies and markets to absorb and adapt to them. Against this backdrop, 2026 is highly likely to become a critical inflection point in the broader process of disorder, restructuring, and transition.

5. DeFi2.0, DAT2.0, Tokenomics2.0

In its latest report, Coinbase has begun to place emphasis on several new terms, including DAT 2.0 and Tokenomics 2.0, which are, in essence, evolutionary branches of what the industry already recognizes as DeFi 2.0. The definitions of these concepts are generally sound, and it is worth unpacking them individually here.

In 2025, the concept of DAT was successfully introduced to global mainstream financial markets by MSTR. Its underlying logic is straightforward:

DAT premium multiple = equity market capitalization ÷ NAV (net asset value) of the BTC (or other major crypto assets) held.

However, this premium multiple declined rapidly from Q3 to Q4, in some cases even inverting, bringing the global DAT 1.0 enthusiasm to a swift end.

The fundamental reason for the decline in DAT 1.0 value and its diminishing financial impact lies in the insufficient friction of the capital multiplier. The narrative was overly simple, pricing was transparent, and upside expectations were limited. The dynamics of Davis Double Play and Davis Double Contraction were overly direct, causing confidence to evaporate quickly once market sentiment shifted between bull and bear cycles.

The real industry significance of DAT in 2025 was not its sustainability, but rather its role as a transitional mechanism: traditional equity market narratives had become exhausted, bubbles had grown too large for EVs to remain defensible, while Crypto’s first growth curve suffered from both speculative excess and a collapse of credibility. As a result, capital in both markets gravitated toward each other in a collective flight toward perceived strength.

Why, then, can DAT 2.0 sustain the value of crypto–equity linkage? Simply put, DAT 1.0 represented a value transfer from Crypto’s first growth curve into traditional finance, whereas DAT 2.0 represents a value integration between Crypto’s second growth curve and traditional finance. Unlike the former, the latter possesses genuine long-term sustainability. In 2025, companies such as Ondo, Ethena, Maple, Robinhood, and Figure have already provided strong early templates for DAT 2.0 in practice. Looking ahead to 2026, a broader wave of emerging players is expected to scale rapidly within this framework.

Tokenomics 2.0 is a broader and more inclusive concept. This year, we introduced a range of Tokenomics-related derivatives such as Liquid Engineering and Yield Engineering, which are, in essence, further evolutions of Financial Engineering. Across real-world financial scenarios, Tokenomics functions much like a Financial Circuit (Note 11), continuously adjusting and optimizing each specific financial setup on a case-by-case basis. While implementations differ across contexts, industry-wide evolution tends to converge toward general-purpose innovations with systemic impact — such as Pendle’s PT-YT framework.

In the report, Coinbase only briefly touched on several elements under the Tokenomics 2.0 umbrella — Value Capture, Token Buybacks, Financial Engineering, Regulatory Clarity as a Catalyst, and Protocol P&L — without establishing a clear logical structure or offering a detailed analysis. Here is a simplified breakdown:

Value Capture is not inherently part of Tokenomics 2.0. It is merely a necessary condition for asset utilization and distribution along the second growth curve. Tokenomics exists independently of Value Capture. Put differently, Tokenomics without sustainable value capture has already proven — during the first growth curve — to be nothing more than Ponzinomics, and will no longer constitute a mainstream model in the post-2025 Crypto and Open Finance markets.

Token Buybacks are a critical — and in my view, necessary — condition for Asset Tokenization within both RWA and DAT 2.0 frameworks. More precisely, Asset Clearing Capability is a fundamental necessary condition for any asset investment. The healthy development of RWA Finance in the coming year will largely depend on whether the market can reach consensus on this point.

Regarding Regulatory Clarity, as discussed earlier in Chapter 2 and 4, it should be evaluated objectively in terms of both pros and cons. Coinbase’s framing reflects its own contextual positioning. However, as previously noted, the faster and more flexible evolution of Open Finance is in fact occurring within emerging economies and new market structures.

The protocolization of finance is likewise not determined by regulatory clarity alone. While regulatory alignment is highly correlated in certain developed financial regions such as North America and East Asia, the P&L of protocol-based finance is fundamentally a market-driven outcome within an upgraded Open Finance ecosystem, shaped by real transactional dynamics rather than policy design.

Ultimately, DAT 2.0 and Tokenomics 2.0 are temporary labels, much like the terms Second Growth Curve and DeFi 2.0. What they collectively describe is a structural shift — an inevitable re-gearing of the Crypto Market and Open Finance following the systemic reset of 2025.

6. A Review of 2025 and an Outlook for 2026

As 2025 comes to a close, we look back and review the analyses and forecasts made throughout the year.

February — The Second Growth Curve of Crypto

“Zero-Sum Game and the 7 Giants at the Table”, “The Trend of RYA/RWA and the Rise of PayFi”, “Crossing the Chasm: The Second Growth Curve of Crypto”, “The Crypto Development Landscape and National Scenarios Under Compliance Challenges”;

April — Trump’s Tariffs — Kondratiev’s Transition, Bitcoin’s Transformation

“The Triple-Kill of Bonds, Equities, and Currencies, and the Breakdown of the Merrill Clock”, “The Thucydides Trap and the Final Phases of Five Kondratiev Cycles in History”, “Greenspan’s Prophecy and the Role of Crypto at the Crossover Point of Kondratiev Cycles”, “The Reversal of Bitcoin’s Correlation with Global Chaos and the Shift in Cognitive Inertia”;

May — The GENIUS Act and On-chain Shadow Money
“The fundamental reasons behind the weakening control of the U.S. dollar”, “The nominal versus substantive objectives of the GENIUS Act”, “Insights from DeFi restaking for the fiat world and the monetary multiplier effect of shadow money”, “Gold, the U.S. dollar, and crypto stablecoins”;

September — The Asset Tokenization Trend Based on Stablecoin Pricing Models
“The essence of the Genius Act is to delegate the power of currency issuance and settlement, thereby strengthening the pricing power of the currency”, “Stablecoins, by changing the form of monetary pricing, have triggered global reforms in financial tokenization and asset tokenization”, “The reform is rapidly dismantling the long-standing Cartel Alliances in traditional finance, creating opportunities for interest realignment amid chaos”, “The Two Directions of Crypto–Equity Linkage: Securitization and Tokenization, and Their Market Characteristics”, “The market characteristics and problems of stablecoins, DAT, stock tokenization, RWA, and on-chain asset management”.

Looking ahead to 2026, this article has already addressed many aspects of the outlook. With the exception of Question i), the other issues have been analysed with sufficient clarity. The further disorder and restructuring of the macro environment — and the resulting acceleration of DeFi 2.0 — are both clear trends and, in many respects, inevitable.

Question i), however, remains genuinely challenging. Whether in socio-economic systems or financial markets, direction and trajectory are always easier to identify than precise timing and magnitude. Unlike the transition period two Kondratiev Cycles earlier, the similarities in paradigm mask three major differences today:

a) The speed from information transmission to structural evolution is dramatically faster, with differences of roughly 2.5–5x across multiple dimensions (Note 12);

b) The spillover potential of global geopolitical conflicts is fundamentally different, making the likelihood of escalation materially higher;

c) The nonlinear effects introduced by AI and Crypto far exceed those seen during the era of industrial electrification and automation.

At the same time, many elements remain largely unchanged relative to a century ago. The fundamental “hardware” of social governance has not evolved significantly; human lifespans, the capacity of a generation to absorb long- and short-cycle emotional swings, and the political-economic management cycles across different social systems all remain broadly similar.

Against this backdrop, in recent years of managing companies, I have frequently discussed — and gradually come to accept — a core reality with my co-founder: nonlinear dynamics must be taken seriously. The ability to anticipate, respond to, and internalize nonlinear triggers is no longer optional. Non-linear shocks must be treated not as anomalies, but as an integral component of strategic planning itself.

Author: Gary Yang

Date: December 29, 2025

X: https://x.com/gary_yangge

E: gary_yangge@hotmail.com

BX: https://x.com/CicadaFinance

BW: https://cicada.finance

Notes

Note 1: The “the First Growth Curve” refers to the past 16 years of crypto development, during which speculative environments were created through consensus-driven expectations, continuously amplifying expectations and generating wealth effects.

Note 2: The year 1935 is chosen instead of the end of World War II in 1945 because gold prices experienced a cliff-like surge in 1934 after decades of relative stability.

Note 3: Crossing the Chasm is a classic paradigm describing the adoption path of innovative technologies. Here, it is used to indicate that crypto and Open Finance in recent years have largely remained in the Early Adopter stage.

Note 4: The estimate of USD 1,500 trillion is derived using the annualized transaction volumes of the FX market and global securities and commodities markets as a rough proxy for overall financial scale.

Note 5: Prediction markets are effectively an extension of the First Growth Curve. When consensus-based, expectation-driven narratives can no longer sustain collective credit, short-term, event-driven wagering becomes a new form of consensus credit for such risk preferences.

Note 6: The late stage and transition points of Kondratiev cycles have been discussed multiple times in prior articles, including “Trump’s Tariffs — Kondratiev’s Transition, Bitcoin’s Transformation”, Chapter 2: “The Thucydides Trap and the Final Phases of Five Kondratiev Cycles in History”. From 2020 to 2025, the world has been in the transitional phase between the end of the previous Kondratiev cycle and the beginning of the next. The key distinction here is that the end of 2025, together with its accompanying socio-economic phenomena, marks the definitive conclusion of the prior cycle.

Note 7: In “The Dramatic Shift Following Trump’s Election Victory” (Nov 2024), it was first stated that “as of the end of 2024, under the current global landscape, most nations and interest groups still operate within a semi-feudal, semi-centralized state-capitalist environment.” This description is now refined to “semi-feudal, semi-monopolistic capitalism”.

Note 8: Objectively speaking, emotional value itself has become a major factor in today’s global secondary financial markets. Economic policy and market confidence are mutually causal through the channel of emotional value.

Note 9: The breakdown of cartel-like structures in traditional finance was discussed in detail in Chapter 3 of “The GENIUS Act and On-chain Shadow Money” (May 2025).

Note 10: For emerging and economically underdeveloped countries, there is no publicly available, clearly citable data. The information referenced here is based on non-public, commercially sensitive enterprise data.

Note 11: Financial Circuit and Web3 Tokenomics Theory, written in Oct 2022, provides a detailed explanation of the underlying structural mechanisms for building financial systems within Web3 tokenomics.

Note 12: This multiplier has only limited reference value. On a macro level, 2.5× reflects a comparison between a 10-year Merrill Lynch Clock cycle and a 4-year Bitcoin cycle. On a micro level, 5× reflects 7×24-hour trading versus 5×6.5-hour trading. These figures do not accurately represent the true differences in real production or social iteration speeds.