5 DeFi predictions for 2025: Rise of AI, Omnichain and BTC derivatives

It’s the fourth quarter of the year, which can only mean one thing: prediction season is here. It’s that time when industry figures gaze into the crystal ball to glean the trends that will define the following year. 

But this isn’t just guesses: those who work on the frontlines of web3 have a good idea what shape the next game-changing innovations will take, because they’re the ones currently building them.

While there are no guarantees for what 2025 will hold, just probabilities, I’m confident there’s an outsize chance of the following trends coming to pass.

Omnichain DeFi becomes the norm 

Omnichain DeFi, in which liquidity is sourced from multiple chains, as well as from centralized sources, will see significant adoption in 2025. Its ability to deliver better pricing and deeper liquidity solves one of the greatest challenges networks currently face: liquidity fragmentation.

The ability to access concentrated liquidity on demand will support greater capital efficiency and create opportunities for arbitrage and yield farming across the multi-chain landscape. In the process, it will enable users to tap into virtually unlimited liquidity from CEXs that’s delivered onchain, resulting in a superior trading experience without custodial risk.

Institutional adoption of DeFi accelerates 

We’ve already seen the first institutions begin trading and participating in DeFi activities this year, but so far it’s been a trickle rather than a flood – and for the most part their crypto exposure remains limited to ETFs. But that’s going to change next year and we know that because the infra to support a surge of adoption has been getting rolled out all through 2024.

Better onchain tools for supporting things like compliance, wallet management, sub-accounts, and reporting mean that institutions can now interact with onchain protocols with confidence, both in terms of the integrity of the underlying technology and of their legal and financial obligations. Tokenized Real World Assets (RWAs) are already a multi-billion dollar industry and it’s here we’re likely to see the greatest inflows of institutional capital, aided by the deeper liquidity that’s now available through omnichain innovations.

Rise of DeFi derivatives, including on Bitcoin L2s 

DeFi derivatives have been ticking over nicely this year with the likes of Hyperliquid, Jupiter, and GMX dominating. Next year, we’ll see the DeFi sector evolve, moving to new blockchain ecosystems and incorporating support for a much broader range of assets, including things like leveraged prediction markets.

In 2025, we’ll also see the first derivatives exchanges coming onstream for Bitcoin DeFi, bringing this capability to the Bitcoin L2 ecosystem for the first time. With BTC serving as the underlying asset for minting stablecoins – that can then be used on derivatives DEXs – there’s the potential for billions of dollars in dormant capital to be unlocked while providing a framework to hedge against other trades without needing to rely on centralized exchanges. 

Increasing focus on user experience and accessibility

It’s no secret that the DeFi industry has been doubling down on UI/UX in recent years, with VCs flinging money at projects intent on solving the challenges associated with user onboarding and retention. Wallet design has already improved significantly, but there’s still a lot of work to be done in enhancing DeFi user experience, particularly given the massive expansion in use cases, networks, and protocols, all of which adds underlying complexity.

The DeFi projects that gain market share and TVL next year won’t just offer attractive products and great features: they’ll be bundled inside a seamless interface design that makes them intuitive to use. Coupled with improved educational resources and growing knowledge of DeFi among crypto natives, it will make onchain markets easier to access than ever before.

AI-powered DeFi solutions

Expect a surge in AI-powered DeFi tools, particularly in terms of automated trading bots, risk assessment tools, and predictive analytics. AI agents in particular – autonomous bots that can execute trades or trigger smart contracts based on predefined conditions being met – are going to see explosive growth.

Blockchain intersects with AI on a number of levels, starting with DePIN which uses blockchain rails to support markets for things like GPU compute and for AGI training data. Web3 has already shown that it’s ideally suited to hosting this type of activity. Using AI to directly enhance DeFi experiences, however, is how retail users will begin to tangible experience the power this technology has to offer.

From identifying optimal investment strategies to finding the best yield farming opportunities and retroactive airdrops, AI assistants will be everywhere next year and smart traders will be harnessing them to extract more value and mitigate risk through providing early threat detection. Just as it’s now hard to imagine a time when we didn’t turn to ChatGTP for help with everyday queries, we’ll soon wonder how we ever did DeFi without a trusty AI assistant by our side.

Ran Yi is the co-founder of Orderly Network. Founded in 2022, Orderly Network is a cloud liquidity infrastructure designed to revolutionize trading with its permissionless, omnichain liquidity layer. Also a co-founder of WOO Network, Ran is a tireless advocate for DeFi’s potential for democratization. With 15 years in global asset management and 5 years in crypto, he has a background in traditional finance, having worked at institutions such as China Merchants Bank and Freddie Mac. Ran holds a Bachelor of Science from Carnegie Mellon University and an MBA from CEIBS.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.