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The top DeFi trends to watch for in 2025
January 01, 2025
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In Brief:

  • What’s next for DeFi in 2025?
  • We reveal the trends we will look closely at next year.

Happy New Year from everyone here at DL News!

Last year I made some bold predictions for 2024: That permissioned DeFi would roar into life, and that modularity-focused projects EigenLayer and Celestia would redefine the DeFi landscape.

EigenLayer, despite drawing in billions in deposits, hasn’t seen much adoption of its validation services yet. Celestia, too, has been hampered by a lack of demand for its services.

Development for hooks and Uniswap v4, which will make permissioned DeFi a reality, is still ongoing, but 2024 was certainly not a breakout year.

As 2024 draws to a close, join me as I take another stab at predicting the key DeFi trends for the coming year.

TradFi dives into DeFi

This year, several Wall Street firms continued dipping their toes into DeFi.

Asset manager BlackRock launched its BUIDL fund on Ethereum in March, then expanded it to five other blockchains in November.

Rival State Street inked a partnership with crypto custody and tokenisation platform Taurus, while interest in Franklin Templeton’s US Government Money Fund steadily grew.

Over in Europe, Deutsche Bank announced earlier in December that it’s building its own Ethereum layer 2 to address the regulatory challenges of using DeFi.

But these moves may only be the start of a larger push from institutions to utilise DeFi.

In 2025, “traditional institutions are likely to transition onchain faster than expected,” Paul Frambot, CEO and co-founder of DeFi lending protocol Morpho, told DL News.

Fatmire Bekiri, head of tokenisation at Sygnum Bank, said she expects more traditional financial players to enter DeFi in 2025, fulfilling investor demand for riskier onchain products.

Unclear crypto regulations — particularly in the US — meant many financial institutions held off on experimenting with DeFi, lest they fall foul of securities laws.

But with a pro-crypto Trump administration just around the corner, that could soon change.

“People are still trying to figure out what’s compliant,” Colin Butler, Polygon’s head of institutional capital, previously told DL News.

 

“Once certain things get accepted as collateral at big places, then I think everybody else gets to do it. And that’s when I think you see the L curve for adoption.”

Protocols move to their own blockchains

This year, we saw big DeFi protocols move towards launching their own blockchains, usually in the form of Ethereum layer 2s.

Leading decentralised exchange Uniswap announced in October its developing its own layer 2 called Unichain.

DeFi lender Aave is mulling its own Aave Network as part of its v4 upgrade, and Sky founder Rune Christensen has also suggested building a dedicated blockchain.

There are good reasons for them to do so. Layer 2s are a great source of revenue as those running them can skim off the difference in cost between what they charge users and pay the Ethereum mainnet to finalise transactions.

Having a dedicated blockchain for a DeFi protocol means projects can stop malicious forms of MEV impacting their users, and that they don’t have to share resources and bandwidth with other DeFi protocols, potentially preventing congestion.

Daniel Wang, co-founder of Taiko Labs, the firm behind layer 2 blockchain Taiko, told DL News that he sees more fragmentation within Ethereum and the projects building on it in 2025.

But, Wang said, the increased fragmentation will also place a greater focus on interoperability between the growing number of layer 2 blockchains.

DeFi and fintech unite

My final prediction is that 2025 will be the year fintech apps finally start bringing DeFi to the masses.

We’re already seeing signs some firms are preparing. Robinhood rolled out crypto transfer services to its European customers in October, and neobank Revolut expanded its crypto exchange to 30 markets in the region a month later.

Integrating DeFi could be incredibly lucrative for the first fintech company to do so. Yields far exceed those in traditional finance, but they’ve always been viewed as too risky and difficult for many established players to take advantage of.

That impression could be changing — at least towards DeFi protocols with strong security and compliance records.

“In 2025, we’ll see the long-awaited adoption of the ‘DeFi mullet’ — where fintech apps integrate DeFi protocols like Aave or Morpho directly for safer and better financial products,” Thomas Mattimore, CEO of ABC Labs, the team behind Reserve Protocol, told DL News.

The “DeFi mullet” refers to the idea that fintech apps will abstract away the complexity and poor user experience of current DeFi protocols, and open access to their users.

Mattimore’s not alone.

Morpho’s Frambot also predicts that in 2025, access to and adoption of DeFi will be propelled by partnerships with fintech companies.

Like with institutions, the more favourable regulatory environment under the Trump administration should give fintechs the confidence to integrate DeFi.

The bigger question is whether DeFi protocols are ready for a large potential influx of investors from fintech apps. Only time will tell.

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Musk Turns On Starlink to Save Iranians from Regime’s Internet Crackdown

Elon Musk, the world’s richest man and a visionary behind SpaceX, has flipped the switch on Starlink, delivering internet to Iranians amid a brutal regime crackdown.

This move comes on the heels of Israeli strikes targeting Iran’s nuclear facilities, as the Islamic Republic cuts off online access.

The former Department of Government Efficiency chief activated Starlink satellite internet service for Iranians on Saturday following the Islamic Republic's decision to impose nationwide internet restrictions.

As the Jerusalem Post reports, that the Islamic Republic’s Communications Ministry announced the move, stating, "In view of the special conditions of the country, temporary restrictions have been imposed on the country’s internet."

This action followed a series of Israeli attacks on Iranian targets.

Starlink, a SpaceX-developed satellite constellation, provides high-speed internet to regions with limited connectivity, such as remote areas or conflict zones.

Elizabeth MacDonald, a Fox News contributor, highlighted its impact, noting, "Elon Musk turning on Starlink for Iran in 2022 was a game changer. Starlink connects directly to SpaceX satellites, bypassing Iran’s ground infrastructure. That means even during government-imposed shutdowns or censorship, users can still get online, and reportedly more than 100,000 inside Iran are doing that."

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MacDonald also mentioned ongoing tests of "direct-to-cell" capabilities, which could allow smartphone connections without a dish, potentially expanding access and supporting free expression and protest coordination.

Musk confirmed the activation, noting on Saturday, "The beams are on."

This follows the regime’s internet shutdowns, which were triggered by Israeli military actions.

Adding to the tension, Israeli Prime Minister Benjamin Netanyahu addressed the Iranian people on Friday, urging resistance against the regime.

"Israel's fight is not against the Iranian people. Our fight is against the murderous Islamic regime that oppresses and impoverishes you,” he said.

Meanwhile, Reza Pahlavi, the exiled son of Iran’s last monarch, called on military and security forces to abandon the regime, accusing Supreme Leader Ayatollah Ali Khamenei in a Persian-language social media post of forcing Iranians into an unwanted war.

Starlink has been a beacon in other crises. Beyond Iran, Musk has leveraged Starlink to assist people during natural disasters and conflicts.

In the wake of hurricanes and earthquakes, Starlink has provided critical internet access to affected communities, enabling emergency communications and coordination.

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The genius entrepreneur, is throwing a lifeline to the oppressed in Iran, and the libs can’t stand it.

Conservative talk show host Mark Levin praised Musk’s action, reposting a message stating that Starlink would "reconnect the Iranian people with the internet and put the final nail in the coffin of the Iranian regime."

"God bless you, Elon. The Starlink beams are on in Iran!" Levin wrote.

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GENIUS Act lets State banks conduct some business nationwide. Regulators object

The Senate passed the GENIUS Act for stablecoins last week, but significant work remains before it becomes law. The House has a different bill, the STABLE Act, with notable differences that must be reconciled. State banking regulators have raised strong objections to a provision in the GENIUS Act that would allow state banks to operate nationwide without authorization from host states or a federal regulator.

The controversial clause permits a state bank with a regulated stablecoin subsidiary to provide money transmitter and custodial services in any other state. While host states can impose consumer protection laws, they cannot require the usual authorization and oversight typically needed for out-of-state banking operations.

The Conference of State Bank Supervisors welcomed some changes in the GENIUS Act but remains adamantly opposed to this particular provision. In a statement, CSBS said:

“Critical changes must be made during House consideration of the legislation to prevent unintended consequences and further mitigate financial stability risks. CSBS remains concerned with the dramatic and unsupported expansion of the authority of uninsured banks to conduct money transmission or custody activities nationwide without the approval or oversight of host state supervisors (Sec. 16(d)).”

The National Conference of State Legislatures expressed similar concerns in early June, stating:

“We urge you to oppose Section 16(d) and support state authority to regulate financial services in a manner that reflects local conditions, priorities and risk tolerances. Preserving the dual banking system and respecting state autonomy is essential to the safety, soundness and diversity of our nation’s financial sector.”

Evolution of nationwide authorization

Section 16 addresses several issues beyond stablecoins, including preventing a recurrence of the SEC’s SAB 121, which forced crypto assets held in custody onto balance sheets. However, the nationwide authorization subsection was added after the legislation cleared the Senate Banking Committee, with two significant modifications since then.

Originally, the provision applied only to special bank charters like Wyoming’s Special Purpose Depository Institutions or Connecticut’s Innovation Banks. Examples include crypto-focused Custodia Bank and crypto exchange Kraken in Wyoming, plus traditional finance player Fnality US in Connecticut. Recently the scope was expanded to cover most state chartered banks with stablecoin subsidiaries, possibly due to concerns about competitive advantages.

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Is it that bad?

As originally drafted, the clause seemed overly permissive.

The amended clause makes sense for stablecoin issuers. They want to have a single regulator and be able to provide the stablecoin services throughout the United States. But it also leans into the perception outside of crypto that this is just another form of regulatory arbitrage.

The controversy over Section 16(d) reflects concerns about creating a regulatory gap that allows banks to operate interstate without the oversight typically required from either federal or state authorities. As the two Congressional chambers work toward reconciliation, lawmakers must decide whether stablecoin legislation should include provisions that effectively reduce traditional banking oversight requirements.

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If you find value in my content, consider showing your support via:

💳 PayPal: 
1) Simply scan the QR code below 📲
2) or visit https://www.paypal.me/thedinarian

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Dubai regulator VARA classifies RWA issuance as licensed activity
Virtual Asset Regulatory Authority (VARA) leads global regulatory framework - makes RWA issuance licensed activity in Dubai.

Real-world assets (RWAs) issuance is now licensed activity in Dubai.

~ Actual law.
~ Not a legal gray zone.
~ Not a whitepaper fantasy.

RWA issuance and listing on secondary markets is defined under binding crypto regulation.

It’s execution by Dubai.

Irina Heaver explained:

“RWA issuance is no longer theoretical. It’s now a regulatory reality.”

VARA defined:

- RWAs are classified as Asset-Referenced Virtual Assets (ARVAs)

- Secondary market trading is permitted under VARA license

- Issuers need capital, audits, and legal disclosures

- Regulated broker-dealers and exchanges can now onboard and trade them

This closes the gap that killed STOs in 2018.

No more tokenization without venues.
No more assets without liquidity.

UAE is doing what Switzerland, Singapore, and Europe still haven’t:

Creating enforceable frameworks for RWA tokenization that actually work.

Matthew White, CEO of VARA, said it perfectly:

“Tokenization will redefine global finance in 2025.”

He’s not exaggerating.

$500B+ market predicted next year.

And the UAE just gave it legal rails.

~Real estate.
~Private credit.
~Shariah-compliant products.

Everything is in play.

This is how you turn hype into infrastructure.

What Dubai is doing now is 3 years ahead of everyone else.

Founders, investors, ecosystem builders:

You want to build real-world assets onchain.

Don’t waste another year waiting for clarity.

Come to Dubai.

It’s already here.

 

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🙏 Donations Accepted 🙏

If you find value in my content, consider showing your support via:

💳 PayPal: 
1) Simply scan the QR code below 📲
2) or visit https://www.paypal.me/thedinarian

🔗 Crypto – Support via Coinbase Wallet to: [email protected]

Or Buy me a coffee: https://buymeacoffee.com/thedinarian

Your generosity keeps this mission alive, for all! Namasté 🙏 Crypto Michael ⚡  The Dinarian

 

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