Crypto Trends for 2025: Stablecoins, App Stores, UX, and More

0:00So far in our four part, 2025 Big Ideas series, you've heard from teams all over A16Z, from American dynamism, to healthcare, to Fintech, and more. But one team you haven't heard from yet, A16Z Crypto. And that's because we have an entire episode dedicated to their 14 Big Ideas for 2025. Ranging from crypto wallets for AI agents, to decentralized chatbots, to proof of personhood, prediction markets, crypto app stores, and so much more. After such a banner year where among other things Bitcoin hit all -time highs above $100 ,000, it really should be no surprise that our Web 3 team thinks there's a lot to come next year.

0:42So if you'd like to stay up to date with all things Web 3 and the next generation of the Internet, check out Web 3 with A16Z. And of course, if you'd like to see all 50 big ideas, including all 14 from crypto, head on over to a16z .com slash big ideas.

1:05Welcome to Web 3 with A6 and Z. I'm Sona, and today Robert and I are excited to bring you two special end -of -year episodes, which also look ahead to 2025, because we're covering our annual Big Ideas, which includes some tech trends individual team members are excited about. It's a firm -wide list with crypto having the biggest showing every time, and this year our team had 14 trends compared to nine last year and seven the year before. You can check out the full list at asicsandzcrypto .com slash Big Ideas. This episode is part one up to, you don't have to listen to them in any particular order, covering the trends of stablecoins, app store distribution and discovery, where the next users will come from, how builders improve and choose infrastructure and simplifying user experience.

1:48Our guests for each of those are Sam Broner, Maggie Sue, Darren Matsuoka, Yokem Noi, and Chris Lions. Robert and I follow with some meta commentary at the end, so stay tuned till then. And be sure to also check out our other big ideas episode which covers all the ideas at the intersection of crypto and AI. As a reminder, none of the following is investment, business, legal, or tax advice. Please see a6synzoo .com slash disclosures for more important information, including a link to a list of our investments. With that, let's begin with the first idea. Sam, your big idea was about stablecoins. You've been writing a lot about stablecoins, and Robert co -produced the St.

2:29Adacryptor Report with Darren, and the big takeaway they had is that stablecoins have found product market fit. But what we really want to hear from you is why now... So over the last year, there's been substantial platform improvement where stablecoins went from costing $5 to less than a tenth of a cent to send for person to person. And that unlocks a huge, huge improvement in the cost structure of paying for anything. But they still haven't been adopted by the retailers, merchants, and other businesses that would most stand to benefit from that improved cost structure. I think people think that the first adopters are going to be tech -centric businesses, but those are high margin businesses that don't need that improved cost structure.

3:14So the most margin sensitive businesses, like the quarter stores, the restaurants, the mom and pop shops, are probably going to be the people who are most eager to start accepting stablecoins. We're talking about taking businesses like a coffee shop, which is running right now on a 2 % margin and doubling it, really turning businesses that are hardly profitable today to being moderately profitable, a huge difference. This was what kind of gave me in the aha moment, is when you talked about what the small businesses don't get from credit card companies. So they're not only paying these fees, but they're not even getting the benefits.

3:47Yes, what's so remarkable about credit cards is that they offered consumers fraud protection. And that was great for bootstrapping things like online sales, but fraud protection does basically nothing when the cashier is handing you a coffee as you give him the money. We're talking about 30 cents per transaction and an additional 2 % on top of that, that brings a $1 .50 coffee, almost 30 cents of that, a fifth of that is going to the payment provider. They didn't do anything of that transaction, they don't really offer very much value. So the 2 % margin that you're giving up is pure profit for the payment providers and appearly a negative for your local coffee shop.

4:25I can't wait for them to get that 30, 35 cents margin back and build their business out. It's very, very rare that you have the opportunity to add 2 % directly to your bottom line. There's a bit of a cold start problem here though, right? Because these customers have to have stablecoins in order to be able to use them to pay these businesses and circumvent the interchange fees. Do you think we're going to start seeing businesses almost help promote stablecoins and onboard people onto stablecoins in order to reap these benefits? Are we going to start seeing this kind of turn where businesses actually help the go -to -market strategy for stablecoins?

5:01That's my strong belief, but people have relationships with these in -person retailers, coffee shops, and corner stores. They go there often, so I think we're going to see the strong local brands begin to bring people on to stablecoins as part of that initial adoption curve. What I love about this is when I first started covering crypto over a fortune, my editors would always be like, when can you buy a coffee with Bitcoin? And I was like, no, no, no, no, it's not like that. That's not what it's for. But now it's like actually that is sort of what at least this is for. It's exactly what it's for and I think there'd be some of the early adopters to do it.

5:35So thank you, Sam. So you guys, thank you. So, okay. So that was interesting. Let's go on to the next one. So Maggie, your big idea was the very interesting one because it's actually focusing more on distribution, which makes perfect sense. Given your role as a go -to -market and you're like the head of the go -to -market team here, you talk about how crypto is finally getting its own app stores and discovery. Do you want to just like give us like overview of why that even matters because when you hear that headline you're like, oh, that feels so inside baseball. Like what is crypto even need its own thing?

6:04Is it already an inside or industry? Would love you to talk about the context what you're observing and why you think this is an important big idea? Absolutely. When I started at A16z about three years ago and really for the past couple of years, there have been so many companies within our portfolio that have tried to launch apps on the traditional app stores. So Apple's App Store, Google Play Store, and they've gotten blocked or denied or delayed for various reasons. And I think what's really frustrating is that if you read Apple's guidelines, they're confusing one, they are not complete, so they don't necessarily address all the questions an app developer might have.

6:40But then the policy is applied inconsistently depending on who the reviewer is. And so we've had multiple companies where depending on who they get as reviewer or another app is approved for the same thing that they were denied for, it's incredibly inconsistent and it's a black box. And much of it comes down to this concept of IAP having to run any sort of in -app purchase through the app sort of what's been great is that over the past several months we were starting to see alternatives. One great example is Salona's DApp Store. They're actually fee free. And when the Saga phone part two, the second generation comes out, I think they had something like 100 ,000 pre -orders.

7:18And so that will only increase. Another one is the world app. So, World Coin or World, they've launched several mini apps and all of these mini apps have incredible traction. And not just these, but also our blockchains that are supporting different games. They're running their marketplaces. We have infer marketplaces. You're starting to see so many of these and they're really starting to hit scale. And I think we'll become a really viable alternative for those traditional apps. So, that's fantastic. One question that comes to mind when I hear this is, and this might be the very meta question that applies to all of crypto actually, which is, what if you have too many options?

7:53One of the nice things about the world we live in with two dominant operating systems on our current mobile phones between Apple and Android is it's nice that I only have to go to one place to get something. So like, are these apps being listed across multiple app stores? Are they specific? Like both WorldCoin and Salona have their own app stores and you point out in your big idea that it's also interesting because those are both companies that also have hardware, not just software. Like in the case of world, they have the orb in the case of Salana, they have this Saga phone. And that is obviously very similar to how Apple launched the iPhone and then spawned the app ecosystem.

8:27So are these all going to become just like filtered only through the lens of what those companies think is important? Is it going to remain open? Where do you kind of see this playing out? I mean, it's still early days, but like how do they all talk to each other? Or should they even? I think at this time, the goal is to get the growth of the different app stores and you make a great point that there might be an over proliferation. We can say the same thing about the prevalence of blockchains themselves. I do think there will need to be some sort of bridging function or consolidation from these.

8:55But for now, at least to see these viable alternatives is really exciting. and the world chain example is interesting because these are verifiable humans. So I just peaked into one of their mini apps and it has something like 600 ,000 registered users. And so I think we should focus on that. And at some point you need then the curation to balance that out. This has been happening for a while with some of our NFT communities. They have lots and lots of eyeballs that are really excited to dig into other webpree applications. And so I think we'll start to see some of them also acting as these curation marketplaces for things that are built in their ecosystem.

9:32Yeah, I was just going to ask, one thing that a company like Apple would argue is that because of the curation that they provide, they are owed some fee on both the purchases or the activity that goes on in their app store. How does that swear with the permissionlessness that you see in the crypto arena? I would say at this point, there isn't a lot of thoughtful curation, so I would disagree with the first part of that potentially. The second part of that, the great thing about crypto is that you can then move to another platform. Similar thing, games need quite a bit of capital to launch. And for the past several years, blockchains have acted not just as a platform to build upon, but the publisher as well as a distribution and discovery mechanism.

10:16and what I've been seeing is many of these game chains now have their own marketplaces and they're able to feature key games that are built on those blockchains. And that is a key benefit because they are able to take users and move them from game to game. And that is the thesis of a lot of our investments. I don't think that they'll be stuck in any one of these decentralized app stores, for example. I love watching all these experiments, like the Solana phone. it breaks every rule. Don't compete with Apple on the iPhone. Then they're just like, screw it, we're going to do that. Yeah, totally did a wonderful job on our podcast explaining some of the impetus behind it and the innovation bet that they were making with it, which I think was fantastic.

10:57So I just want to call out that episode in case listeners haven't heard it. Yeah, that's a great one. And then one other point, Maggie, you brought up, it's actually not all fun in games. There are some challenges as well, which is, for example, if a product has existing distribution like on messaging apps, it's hard to port that distribution on chain. And that's one of the things that's going to be difficult for some of these companies that are way be web 2 coming to web 3. One example you cited was Telegram and the ton network. I want to be very clear. We're not talking about the token just the network.

11:26I think Telegram has been one of the exceptions. What I've heard from speaking firsthand to many, many organizations that have large incumbent distributions. So they might have a platform in web 2. They might actually have something like, but three is that it's they still find it hard to bring those users on chain. One example that you can look at the public data coinbase has something like 100 million verified users that have ever transacted the coinbase. If you look at both the active users, so the daily active monthly, that's something like eight or 10 million transacting. And the number of those users on base, I think those numbers have just went up recently.

12:00They went up from something like 10 million to 18 million, but that's still about 10 % of their total base. So there's this large number of dormant users. And we actually talk about this in our state of crypto report, which I think is fascinating because it's absolutely true. You talk to any large could be a messaging app. It could be a centralized exchange anything like this. And they're all trying to figure out, you know, we got them in somehow they created an account, but they haven't done anything more. And how can we keep them coming back and transacting on chain. Yeah, I agree. Maggie, thank you so much for joining.

12:31Thank you. It's really fascinating to think that there are so many people out there who have crypto. They hold it. They've interacted with it, but they're just not doing anything yet. They're sort of like lying and waiting to get activated. They've got the broadband going to their house. They've got the phones in their pockets. They're just like, what do I do with this new tech I have? It's just a matter of switching that on and people becoming really actively transacting with it. Let's hear what's next. When we were doing the state of crypto report, we really wanted to do our best to size up the crypto industry.

13:07There's a lot of noise out there, you know, measuring users is very tricky in the crypto world for a number of reasons. But when we did this market sizing exercise, we actually found that only 5 to 10 % of people who own crypto are actively using crypto. So, then to me, that stood out as a big gap, but also a really big opportunity for the industry, given where we're at on the technology timeline with blockchain and the infrastructure getting better. The UX continues to get better, and I think we're finally ready for prime time, and given where we're at on that curve, I think this next year is the perfect time to bring people on chain, convert those passive crypto holders into active crypto users.

13:53For me, that was a very eye -opening idea because so many people talk about mainstreaming these new users and it feels not like insurmountable, but it feels like it's skipping a phase, stage -wise, and the technology readiness and development. And your idea was like a wonderful bridge to like, here's a way to bring in the existing people, convert them into users. Do you guys have any theories about what brought them? I mean, we don't know the exact answer, obviously, because we don't have that data. But like, what do you think they did in the first place and then why they stalled out before they did something else.

14:21Well, this is like the perfect time to talk about the price of the innovation cycle. Sure. We have this concept, which is this idea that when crypto prices go up, people get interested. And then people that get interested, ultimately decide to build something, the developers come in, they build the products, and those products then kickstart the next wave. And we've seen this happen now many times over the history of crypto. And it speaks to the fact that prices are often a leading indicator for the types of activity that we want to see. And I think we're at the beginning of potentially the next wave.

14:57So sorry, just to be more concrete about it though, because I totally agree that's a great framework for it. Like if I were to speculate a lot of these people that came on that got wallets might have done it to buy an NFT, because they saw like Constitution down. Remember when all those people were trying to buy the US Constitution, I think one of the most exciting things about that is that even though they failed their bid to win the constitution, they brought a lot of new people into crypto. But that's probably the only thing they did, and then they didn't do anything more with it. I mean, again, we don't know exactly, but that's what I would sort of speculate, and then now they're just holding these wallets, but they're not active users.

15:29I guess the question I have, what do you think would take to get them to that next thing? Like, what is that gap? Yeah, crypto as a technology has a number of different use cases, but it's also kind of has these different movements underpinning the technology. Yeah. In 2024, for example, we saw a lot of progress with crypto as a political movement. We saw key politicians and policymakers speaking very positively about the technology. We also saw it make incredible developments as a financial movement, right? So Bitcoin and Ethereum, ETPs were approved, which broadened investor access. And so these are the types of things that ultimately bring a lot of people into the space, make them aware that this is something that they can participate in.

16:13But where we believe crypto has the most promise is as a computing movement. And Chris Dixon talks a lot about this in his book Read Right Own. The real power of this technology is to create a better version of the internet that is more fair and open and transparent. And I think we are, like I said, at the inflection point here, where we may, in 2025, see more developments of crypto as a computing movement because we have the people that are in there, right? And with the infrastructure developments, We've seen with fees coming down with the UX improvements with new application categories starting to emerge.

16:51We potentially could see a killer app like ChatGPT kind of showed us on the AI side that really takes starts the entire industry and kind of delivers on the promise of crypto as a computing movement, a new internet. And that's what I think I am a lot of the team here is really excited to watch. Yeah, this is something that we've talked a lot about, but the fact that stablecoins are they've found product market fit. And all it really is going to take is one big company to realize that they, you know, not paying merchant fees on credit card transactions with your customers could be tremendously profitable for them, like transformative for their bottom line for these thin margin businesses.

17:31It's going to take one big company to do that before this thing takes off. At least that's one pathway where you could see this thing really kind of hit the big time. Yeah, I'll add just that what I again find very interesting about your idea is that notion of bringing adjacent users and then then when we're ready We bring in more of the mainstream users and we were not ready for that on the UX side anyway because when you really think about the mainstream users I don't know if they're gonna come through these paths like they're gonna be there's interfaces gonna be very abstracted away from them They might not even know they're using crypto and so it's actually really interesting when you think about all these different waves That are gonna come in through all these different paths.

18:04It's very exciting awesome Darren. Thank you so much. Awesome. Thank you Okay, so now onto the next one. So you'll can quickly summarize, your idea was builders will reuse not just reinvent infrastructure, and your main point you talk about is how it seems like we always see a bespoke validator set, consensus protocol, da da da. And what you say in the post is the outcomes where sometimes only slightly better in specialized functionality, but they often lacked in broader or baseline functionality. That this year you expect to see crypto builders there's leverage more of the contributions of each other, like using off the shelf infrastructure and that it'll save them time and effort, but really allow them to really focus on differentiating the value of their product, which I think is a fantastic big idea, much needed call to action even.

18:51So the quick question I have for you is sounds like it's great in theory, will it actually happen? And like what do you see as maybe obstacles of making this happen? I think the crucial ingredient for this idea is whether or not the tech stack keeps changing going forward. If the hypothesis is correct that the tech stack has stabilized or is stabilizing and we see certain layers of the tech stack getting well defined in terms of their interface and how they interpret with other layers of the tech stack, then you would expect that those layers, there's specialized teams, specialized products, specialized services, is working and improving these layers, and that leads to the professionalization of those layers.

19:36And, you know, instead of being spread across the stack, like working on each of these layers simultaneously, it becomes prudent to basically focus on, you know, the pieces of the stack that you can make the most impact on. And so, a critical question here is, has the tax stack materialized enough and stabilized enough? If there's like a surprising turn around the corner that turns us techs that upside down, then this may not happen. Yo, so your point about people gravitating toward certain products or services or components that are existing out there, it makes me wonder, when do you know that the tech is actually good enough to say, okay, we are going to use this tech, we're not going to try to build something new and better than what already exists off the shelf.

20:23That's a great question. and you're basically asking, how do you know as a builder? Yeah, yeah, because it's nice to say, just use something that's already out there. But what if you're like, but I think I can make something better than that. You know? Yeah, I think advice that I would give that for a son is to always be aware of the larger ecosystem and the larger ramifications and the larger use case or application. There's a wider context that the product or service is going to be used in than you may perhaps initially think. Yes. So one can make an analogy with a car. So maybe you're very, very good at building engines.

20:59And your idea is I'm going to build a new car. I'm really good at building engines. And that's really the one key distinguishing factor. But your customer will not only want to have a fantastic engine. The car also has to have a reasonable stereo. It has to have reasonable seats. It has to maybe have air conditioning. right? Are you going to like reinvent all those parts as well? Or is there a way for you to focus on the one thing that you're very, very good at while leveraging best -of -class products that are provided by others that provide other parts to the stack? That's fantastic. It's a great analogy.

21:36That's a perfect analogy actually. But it's also it's also very apt coming from New York and because you're German and in Germany they have all these very, very specialized auto parts makers that like completely make like the best possible tiny component in the BMW car that like nobody else can top. So it's it's also extra. I'm just laughing. I can't believe you went there, but that's a great point. It's easy to say when you have the best car components around. Right. Totally. Yo, you know, I was joking with you about this big idea that one of my personal observations is that I think people in crypto have this thing, which I call constraints porn, that there's a lot of people in this early phase of crypto that are just really into it because of the constraints.

22:19And I think your big idea is going to be very annoying for that crowd because they actually really like that part of the problem. And in a way, your big idea actually welcomes more new builders to the space, which is quite democratizing in my opinion. I mean, it's really an amazing time to build in the space, right? Because so many code bases that people can tap into when they build their products or their services. And you know, But there's really so little you have to genuinely do yourself, right? Like you can really focus on what you're good at. And for everything else, there's highly specialized parts already out there.

22:51So probably a good idea to reuse them whenever you can and tap into the expertise of other teams of people who built on other parts of the stack. Thank you. Wonderful. Thank you, Yokem. And now we have the last one. So Chris, you've had a lot of different roles at A6 and Z over the last decade. but in your job, you come across a lot and you work with and you've onboarded a lot of fashion, music, media executives into Web 3. And so I think your vantage point is not just speaking for yourself, but like thousands of the people that you've met with. So can you tell us like your big point for 2025?

23:27Of course, of course. So my big idea for 2025, which has been my big idea for 2024 and 2023 and 2022 but I think now we finally are at a state where you know we can really make this happen and I call it hiding the wires. And so what that means is that obviously everybody knows the benefits of crypto and how it's going to be the future of so many different industries whether it's music whether it's fashion film the power of ownership the power of decentralization, but there's a little bit of a lack of knowledge from people that aren't in the crypto industry when we're using technical terms like ZK rollups or L2s or gas or gas fees.

24:14And I just have a PSA to the crypto industry that we don't need to start with the phrase of, hey, this is an NFT project, or hey, this is a token, or hey, you know, if you connect your wallet into the like, those are great things are people in the crypto industry, but if you're going to really take something and have it go mainstream, we can't lead with the technical terms because unfortunately most people do not know, nor do they care. And what I mean by hiding the wires is not necessarily leading with the technical infrastructure with the technical terms, the technical products, that obviously are the benefits behind the application, but don't necessarily need to be the overarching sell.