Trends for 2025 (part 1): Stablecoins, App Stores, UX, and More
Dec 20, 2024
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Discover the transformative power of stablecoins in reducing transaction costs for small businesses. Explore the emerging crypto app ecosystem and the challenges developers face in traditional markets. Delve into decision-making between adopting existing technologies or creating new ones, framed through relatable analogies. Unpack the importance of simplifying crypto for mainstream audiences and the potential of AI to enhance user experience. Plus, learn about groundbreaking legal frameworks supporting decentralized communities.
Stablecoins offer significant cost reductions in transactions, presenting opportunities for small businesses to enhance profit margins through adoption.
The emergence of dedicated app stores for crypto applications could disrupt traditional platforms, necessitating effective curation and user experience improvement.
Deep dives
The Rise of Stablecoins
Stablecoins have achieved a significant product market fit due to recent cost improvements in transactions, decreasing from $5 to less than a tenth of a cent. This cost efficiency presents a substantial opportunity for small, margin-sensitive businesses like coffee shops and restaurants, which often pay high fees to credit card companies. These businesses stand to benefit from adopting stablecoin payments, potentially doubling their profit margins by avoiding traditional payment processing fees. However, there is a barrier to adoption as customers must first acquire stablecoins, which could lead to local businesses playing a pivotal role in onboarding customers.
Emergence of Crypto-Specific App Stores
The development of dedicated app stores for cryptocurrency applications is becoming increasingly relevant, particularly as traditional platforms have inconsistently approved crypto apps. Alternatives like Solana's Dapp Store provide a fee-free environment, encouraging new applications to flourish without the hurdles faced on mainstream app stores. As these specialized app stores gain traction, they could offer viable distribution channels that challenge the traditional app ecosystem dominated by Apple and Google. The need for clear guidelines and effective curation within this new landscape will be critical to prevent overwhelming users with choices.
Transforming Dormant Users into Active Participants
A significant gap exists in the crypto space, with only about 5-10% of crypto owners actively using their assets, leading to a large opportunity for growth. Many users first engaged with crypto during price surges or specific events, such as major NFT auctions, but have since remained passive. Addressing this challenge involves improving user experience and creating compelling use cases that drive active participation. As infrastructure and user experience improve, the industry might see a wave of new users transitioning from holders to active participants.
Leveraging Existing Infrastructure for New Innovations
The trend among crypto builders is shifting towards reusing established infrastructure instead of reinventing it, leading to greater efficiency and focus on product differentiation. This method allows developers to concentrate their efforts on unique value propositions while relying on well-defined layers of technology that have matured over time. As industry standards stabilize, builders can create innovative applications that fulfill specific market needs without starting from scratch. This approach not only fosters collaboration but also democratizes access to high-quality tools and components in the crypto ecosystem.
with @sambroner @meigga @darenmatsuoka @jneu_net @chrislyons and @rhhackett @smc90
Welcome to our special end-of-year episodes -- which also look ahead to 2025 -- covering our annual Big Ideas lists, where various a16z crypto team members share what they are personally excited about. (You can see the firmwide list, also including all the trends of the crypto team, here.)
This episode is part 1 of 2 -- but you don't have to listen to them in any particular order -- covering the trends and themes of:
stablecoins, payments, and where the early adopters will come from;
app store distribution, curation, and discovery;
where the next crypto users will come from, turning passive holders into active users;
how builders improve, and better choose, infrastructure; and
simplifying user experience.
Covering each of these -- and coming from the investing, go-to-market, data science, research, and media teams are: Sam Broner, Maggie Hsu, Daren Matsuoka, Joachim Neu, and Chris Lyons; in conversation with hosts Sonal Chokshi and Robert Hackett. (Stay tuned until the end for some of our meta-commentary.)
These are just 5 of the 14 trends we shared; you can check out the full list at a16zcrypto.com/bigideas.
Also be sure to check out part 2, which covers all the trends at the intersection of crypto and AI.
As a reminder, none of the content is investment, business, legal, or tax advice; please see a16z.com/disclosures for more important information -- including a link to a list of our investments.
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