Author: Ken Alabi, CoinTelegraph; Translated by: Tao Zhu, Jinse Finance
Every four years, a few months after the Bitcoin halving, the blockchain ecosystem attracts close public attention. This period typically lasts for over a year and is driven by basic economic principles: when the supply of an asset decreases while demand remains stable or increases, its value generally rises. Historically, this supply shock has triggered appreciation in the Bitcoin-dominated market, leading to increased interest and engagement from users, developers, investors, and policymakers.
In these post-halving periods, the blockchain industry has demonstrated its projects, technological innovations, and potential utility. No previous cycle has resulted in a blockchain application that clearly outperforms existing technology in any particular area. However, the core strengths of blockchain – immutability enabled by private key cryptography, data transparency, and sovereignty of user assets – continue to attract innovators. These features have been creatively applied in numerous areas, including borderless payment systems, DeFi, NFTs, gaming systems with recorded in-game assets, fan and loyalty tokens, transparent grant and charitable spending systems, agricultural subsidies, and loan tracking.
Although past cycles have highlighted the potential of blockchain, the next period is expected to trial new use cases, as described below.
Lessons from Past Halving Cycles
A period following the 2012 halving highlighted the potential of a borderless, intermediary-free payment system. Before the advent of Bitcoin, intermediary payments and slow cross-border transactions were the norm—international transfers could take days, and check clearances were similarly sluggish. Bitcoin hinted at a future of seamless payments, with early adopters tracking the number of businesses accepting Bitcoin. However, scalability issues and rising transaction costs limited its utility. Ironically, many blockchain networks hindered their success with fee structures that obstructed growth. This cycle ended with security breaches, notably the Mt. Gox hack that occurred 20 months after the halving.
**The 2016 cycle sparked an explosion of ICOs (ICO), democratizing access to venture capital. Ordinary individuals can now invest in early-stage projects – an opportunity that was once reserved only for large financial institutions. However, the market is flooded with tokens that are only backed by whitepapers. The lack of investor protection and accountability has led to the rapid collapse of many ICOs. Most of the projects of that era are outdated, and even the biggest ICOs are no longer among the top 100 blockchain projects.
In 2020, three major trends dominated: DeFi projects, NFTs, and play-to-earn (P2E) games. DeFi projects promise unsustainable returns—sometimes exceeding 100%—by minting more tokens to provide rewards without any underlying economic activity. Similarly, the valuations of NFTs are also very high, with some being merely pixel art that cannot retain value. As the anticipated mass virtual adoption failed to materialize, the hype around the metaverse gradually faded. P2E games rely on inflationary token economics, which collapse when growth stagnates, exposing the fragility of these models.
The 2024 halving cycle is based on the approval of a U.S. Bitcoin ETF, officially integrating cryptocurrency into traditional financial markets. This move, along with the increasing influence of the blockchain community on democratic processes, marks a significant shift.
This is the first time that crypto assets are inside the financial system rather than outside, which has the potential to lead to balanced regulation rather than an outright hostility to the technology. People saw its usefulness in essence and discussed it. The U.S. is ready to play a leading role in the adoption of blockchain technology, which bodes well, especially given the role the U.S. has played in other previous technological innovations and advancements. The next question is: how far will this integration go? Will we see more countries adding crypto assets to their national reserves, rather than just one or two countries that already have crypto assets? In addition to regulatory developments, there are several blockchain applications ready for review during this cycle.
Tokenizing real-world assets and decentralizing their financing has gained attention. RWA enables asset owners to directly benefit from blockchain-based financing. Key areas include real estate and housing finance, stocks, bonds, treasury bills, agricultural financing, DePIN, and DePUT.
Blockchain-AI synergy
The combination of AI and blockchain is becoming a powerful force. The decentralized management of AI models and secure data processing provide new solutions, especially in terms of privacy. AI can surpass solutions like ZK-SNARK by managing encrypted data and disclosing data or data proofs only to its owners (according to their instructions) or to authorized law enforcement agencies under specific conditions (depending on the composition of the blockchain).
Micro Transaction
Due to high operational costs, the traditional financial system is unable to support microtransactions. With a low-cost transaction model, blockchain is a natural fit for micropayments, especially for content consumption. This could potentially eliminate outdated bundling practices in the media and usher in a new era of seamless payments.
Memecoins and Celebrity Tokens
Memecoins have surged, with nearly 10 tokens in the top 100 by market capitalization, but they have little to no actual utility. Low-cost blockchains and user-friendly token creation tools have fueled this trend. Meme tokens launched by or around well-known public figures are also becoming increasingly popular, but most similarly lack practicality.
stablecoin
Stablecoins continue to bridge traditional finance and blockchain. As faster and cheaper blockchains dominate this cycle, stablecoins are being widely used for payments, challenging traditional systems such as slow check settlements and expensive cross-border transfers. Regulatory clarity may drive stablecoins toward mainstream adoption.
What did early data reveal ###
Toronet Research tracked the performance of various categories of tokens from January to May 2024 and predicted the trends for December. Research findings:
Data is sorted by the price growth rate as of January 2025. Source: Toronet Research, January 2025.
Data shows that memecoins, AI-related tokens, and RWA tokens are the frontrunners of early growth. Other observations include that all categories have seen an increase in trading volume, which is common during periods when interest and participation in blockchain projects seem to increase every four years. DePIN projects may not have experienced much growth at the beginning of the cycle, although one or more innovative projects might achieve some breakthroughs. The growth of Layer 2 projects has surpassed that of Layer 1 projects, or absorbed most of the growth that the latter would experience. Results from January 2025 are presented in the chart below.
Price growth trend bar chart for January 2025. Source: Toronet Research.
CoinGecko's Q3 2024 Crypto Industry Report reviews popular categories by network traffic, with similar findings in the top three. Another observation from the Toronet Research report is that, as we've seen in past cycles, application areas that sparked a frenzy in the previous cycle, such as ICOs in 2017 and NFTs in 2021, tend to be negated in the next cycle. Developers and industry leaders should strive to steer new adopters toward sustainable, utility-driven projects that reduce market volatility and minimize investor disillusionment. This will reduce the intensity of the quadrennial boom-bust cycle and the magnitude and number of disillusionments, with many already lining up to chase memecoin and ultimately turning worthless airdrops into futility.
Will we break this cycle?
The current cycle presents blockchain with the most significant opportunity to make a lasting impact to date. With increasing institutional consolidation, more thoughtful regulatory commitments, and a shift to real-world utility, the industry is poised for meaningful growth. The increasing acceptance and integration of blockchain solutions in the wider economy, as well as the potential for thoughtful regulations to be introduced, could lead to better outcomes than ever before in this cycle.
The content is for reference only, not a solicitation or offer. No investment, tax, or legal advice provided. See Disclaimer for more risks disclosure.
The next major breakthrough in Blockchain: What should we follow?
Author: Ken Alabi, CoinTelegraph; Translated by: Tao Zhu, Jinse Finance
Every four years, a few months after the Bitcoin halving, the blockchain ecosystem attracts close public attention. This period typically lasts for over a year and is driven by basic economic principles: when the supply of an asset decreases while demand remains stable or increases, its value generally rises. Historically, this supply shock has triggered appreciation in the Bitcoin-dominated market, leading to increased interest and engagement from users, developers, investors, and policymakers.
In these post-halving periods, the blockchain industry has demonstrated its projects, technological innovations, and potential utility. No previous cycle has resulted in a blockchain application that clearly outperforms existing technology in any particular area. However, the core strengths of blockchain – immutability enabled by private key cryptography, data transparency, and sovereignty of user assets – continue to attract innovators. These features have been creatively applied in numerous areas, including borderless payment systems, DeFi, NFTs, gaming systems with recorded in-game assets, fan and loyalty tokens, transparent grant and charitable spending systems, agricultural subsidies, and loan tracking.
Although past cycles have highlighted the potential of blockchain, the next period is expected to trial new use cases, as described below.
Lessons from Past Halving Cycles
A period following the 2012 halving highlighted the potential of a borderless, intermediary-free payment system. Before the advent of Bitcoin, intermediary payments and slow cross-border transactions were the norm—international transfers could take days, and check clearances were similarly sluggish. Bitcoin hinted at a future of seamless payments, with early adopters tracking the number of businesses accepting Bitcoin. However, scalability issues and rising transaction costs limited its utility. Ironically, many blockchain networks hindered their success with fee structures that obstructed growth. This cycle ended with security breaches, notably the Mt. Gox hack that occurred 20 months after the halving.
**The 2016 cycle sparked an explosion of ICOs (ICO), democratizing access to venture capital. Ordinary individuals can now invest in early-stage projects – an opportunity that was once reserved only for large financial institutions. However, the market is flooded with tokens that are only backed by whitepapers. The lack of investor protection and accountability has led to the rapid collapse of many ICOs. Most of the projects of that era are outdated, and even the biggest ICOs are no longer among the top 100 blockchain projects.
In 2020, three major trends dominated: DeFi projects, NFTs, and play-to-earn (P2E) games. DeFi projects promise unsustainable returns—sometimes exceeding 100%—by minting more tokens to provide rewards without any underlying economic activity. Similarly, the valuations of NFTs are also very high, with some being merely pixel art that cannot retain value. As the anticipated mass virtual adoption failed to materialize, the hype around the metaverse gradually faded. P2E games rely on inflationary token economics, which collapse when growth stagnates, exposing the fragility of these models.
The 2024 halving cycle is based on the approval of a U.S. Bitcoin ETF, officially integrating cryptocurrency into traditional financial markets. This move, along with the increasing influence of the blockchain community on democratic processes, marks a significant shift.
This is the first time that crypto assets are inside the financial system rather than outside, which has the potential to lead to balanced regulation rather than an outright hostility to the technology. People saw its usefulness in essence and discussed it. The U.S. is ready to play a leading role in the adoption of blockchain technology, which bodes well, especially given the role the U.S. has played in other previous technological innovations and advancements. The next question is: how far will this integration go? Will we see more countries adding crypto assets to their national reserves, rather than just one or two countries that already have crypto assets? In addition to regulatory developments, there are several blockchain applications ready for review during this cycle.
Tokenizing real-world assets and decentralizing their financing has gained attention. RWA enables asset owners to directly benefit from blockchain-based financing. Key areas include real estate and housing finance, stocks, bonds, treasury bills, agricultural financing, DePIN, and DePUT.
Blockchain-AI synergy
The combination of AI and blockchain is becoming a powerful force. The decentralized management of AI models and secure data processing provide new solutions, especially in terms of privacy. AI can surpass solutions like ZK-SNARK by managing encrypted data and disclosing data or data proofs only to its owners (according to their instructions) or to authorized law enforcement agencies under specific conditions (depending on the composition of the blockchain).
Micro Transaction
Due to high operational costs, the traditional financial system is unable to support microtransactions. With a low-cost transaction model, blockchain is a natural fit for micropayments, especially for content consumption. This could potentially eliminate outdated bundling practices in the media and usher in a new era of seamless payments.
Memecoins and Celebrity Tokens
Memecoins have surged, with nearly 10 tokens in the top 100 by market capitalization, but they have little to no actual utility. Low-cost blockchains and user-friendly token creation tools have fueled this trend. Meme tokens launched by or around well-known public figures are also becoming increasingly popular, but most similarly lack practicality.
stablecoin
Stablecoins continue to bridge traditional finance and blockchain. As faster and cheaper blockchains dominate this cycle, stablecoins are being widely used for payments, challenging traditional systems such as slow check settlements and expensive cross-border transfers. Regulatory clarity may drive stablecoins toward mainstream adoption.
What did early data reveal ###
Toronet Research tracked the performance of various categories of tokens from January to May 2024 and predicted the trends for December. Research findings:
Data is sorted by the price growth rate as of January 2025. Source: Toronet Research, January 2025.
Data shows that memecoins, AI-related tokens, and RWA tokens are the frontrunners of early growth. Other observations include that all categories have seen an increase in trading volume, which is common during periods when interest and participation in blockchain projects seem to increase every four years. DePIN projects may not have experienced much growth at the beginning of the cycle, although one or more innovative projects might achieve some breakthroughs. The growth of Layer 2 projects has surpassed that of Layer 1 projects, or absorbed most of the growth that the latter would experience. Results from January 2025 are presented in the chart below.
Price growth trend bar chart for January 2025. Source: Toronet Research.
CoinGecko's Q3 2024 Crypto Industry Report reviews popular categories by network traffic, with similar findings in the top three. Another observation from the Toronet Research report is that, as we've seen in past cycles, application areas that sparked a frenzy in the previous cycle, such as ICOs in 2017 and NFTs in 2021, tend to be negated in the next cycle. Developers and industry leaders should strive to steer new adopters toward sustainable, utility-driven projects that reduce market volatility and minimize investor disillusionment. This will reduce the intensity of the quadrennial boom-bust cycle and the magnitude and number of disillusionments, with many already lining up to chase memecoin and ultimately turning worthless airdrops into futility.
Will we break this cycle?
The current cycle presents blockchain with the most significant opportunity to make a lasting impact to date. With increasing institutional consolidation, more thoughtful regulatory commitments, and a shift to real-world utility, the industry is poised for meaningful growth. The increasing acceptance and integration of blockchain solutions in the wider economy, as well as the potential for thoughtful regulations to be introduced, could lead to better outcomes than ever before in this cycle.