Hey Edge readers, welcome back!

Big things are happening in crypto this week! Bitcoin is holding steady above $100K, solidifying its status as the ultimate store of value. ETH is consolidating around $4K as spot ETF inflows continue. Meanwhile, DeFi is buzzing with innovation—from AI agents reshaping on-chain strategy to Ethena’s USDe overtaking DAI as the third-largest stablecoin. Are we on the cusp of DeFi’s next big moment?

Here’s what we got for you this week:

• Why should you care about DeFi now? 💡

  Explore the catalysts fueling DeFi’s renaissance and why this is the perfect time to dive in.

• AI agents and the new DeFi frontier 🤖

  VanEck’s 10 crypto predictions for 2025, Trump is buying DeFi tokens, and more.

Stay sharp. 🫡

-The Exponential team

Why should you care about DeFi now?

The bear market is over, and DeFi is making its comeback. But why now, and why should you care?

Decentralized Finance (DeFi) is making a comeback—and this time, it’s here to stay. After years of building quietly through the bear market, DeFi is re-emerging as one of the most promising sectors in crypto. The numbers don’t lie: Total Value Locked (TVL) in DeFi protocols is soaring, stablecoins market cap reached a new all-time high, DEX trading volumes are climbing, and foundational DeFi projects like Aave are breaking past their previous highs.

What’s fueling this DeFi renaissance?

A few key shifts are driving the revival:

• The timing is right: After a few rocky years, DeFi is finally back on an upward trajectory. Key metrics like TVL are soaring—up 240% year-over-year to $130 billion—and the total stablecoin market cap has surpassed $200 billion for the first time. With interest rates falling and liquidity returning, DeFi is primed for its next wave of growth.

• Macro tailwinds: As global interest rates begin to decline, the opportunity cost of capital decreases, making DeFi’s competitive APYs harder to ignore for yield-seekers. Lower borrowing costs are also fueling speculation and loan activity, injecting fresh liquidity into the ecosystem. Major protocols like Aave are benefiting from these tailwinds, surpassing their previous TVL highs and signaling renewed confidence in the space.

• New regulatory regime: The recent election of pro-crypto President Trump has set the stage for a more favorable regulatory environment. This shift in leadership brings the potential for clearer frameworks and fewer barriers for DeFi innovation. With regulatory uncertainty easing, institutional players and retail users alike are gaining the confidence to explore and invest in DeFi opportunities.

• Proven product-market fit: While sectors like NFTs, metaverse, and gaming continue to search for traction, DeFi has firmly established its utility. From liquid staking to overcollateralized lending and new stablecoin innovations, DeFi protocols are delivering real value and scaling fast.

• Improved infrastructure: DeFi’s early days were marred by clunky interfaces and security issues, but those are becoming a thing of the past. Smart wallets, better UX, and enhanced contract audits are making DeFi safer and more accessible for mainstream and institutional adoption.

DeFi’s potential goes far beyond traditional finance. Its ability to offer 24/7, cross-border, low-cost services without intermediaries is fundamentally reshaping how value flows. And while adoption is still in its early stages—DeFi currently represents just 3.7% of the total crypto market cap—analysts predict this could grow to 10% in the next two years.

Now is the time to pay attention. Whether it’s earning yield, investing in altcoins, or exploring new protocols, DeFi is cementing itself as the backbone of onchain finance.

In the news 🗞️

• AI agents are the new DeFi craze. AI-powered crypto agents are rapidly gaining traction in the current bull market, driving innovation in areas like on-chain governance, trading, and automated strategy execution. This new wave of AI adoption is emerging as a defining trend for DeFi’s next phase.

• USDe flips DAI. Ethena’s USDe has surged past Maker’s DAI to become the third-largest stablecoin by market cap, thanks to its high-yield savings model. USDe’s rise highlights a growing shift in stablecoin demand and positions it as a key contender in DeFi’s expanding ecosystem.

• Avalanche raises $250M for Avalanche9000. Avalanche secured a $250 million funding round ahead of its highly anticipated Avalanche9000 upgrade. This next-gen scaling solution is expected to significantly improve transaction speed and cost, further solidifying Avalanche’s role in the competitive Layer 1 race.

• Ripple’s stablecoin gets green light from NY regulators. Ripple’s RLUSD stablecoin has received regulatory approval in New York, signaling a major milestone for Ripple and boosting its ambition to dominate the cross-border payments and DeFi space with a compliant stablecoin offering.

Trending 📈