The explosion of DeFi 2.0 under the disorderly restructuring in 2026

Title: Gary Yang: The Explosion of DeFi 2.0 Under Disordered Reorganization in 2026

Author: Gary Yang

Source:

Reprinted from: Mars Finance

In Q4 of 2025, driven by the overlay of market and policy factors, traditional global finance and emerging open finance are colliding intensely in an increasingly disordered environment. These dramatic changes have largely exhausted the residual heat from the first curve ( Note 1), leaving emotional wreckage that is difficult to digest in a short period. Meanwhile, traditional finance has become isolated amid the bubble narrative of AI and the chaos of the golden age, reaching the end of its strength. Central banks worldwide are forced to rigidly satisfy market audiences with textbook-like monetary and fiscal policies, making everyone believe that these outdated economic inertia can still sustain for a little longer.

In several previous articles, I have detailed the failure of conventional economic models at the junction of Kondratiev cycles, but the real experience of being within these cycles feels even more tangible. Among the many noises, only Coinbase’s year-end market outlook report <2026 Crypto Market Outlook> objectively summarizes and forecasts the current market and industry. The overall trend is not hard to see; it’s just that too many emotions and inertial aesthetics cover the brief gap. From today’s perspective, I mainly focus on three questions:

i) The current global situation is highly similar to the entropy-increasing trend during the 1910-1935( period, and the window of opportunity corresponding to this period—how long is it today, and how will the process compare rather than mechanically referencing historical experience to assess risks and make decisions?

ii) The native development speed of Crypto and Open Finance versus their conflicts with traditional financial compliance in positive markets—which one will have greater potential and become the main contradiction, restraining the other as a secondary issue?

iii) The combination of the first two creates a nonlinear problem: will chaos form a turning point in 2026, becoming an independent growth factor that promotes Crypto and Open Finance to cross the gap ) Note 3( and rapidly enter the mainstream world and financial markets?

Coinbase’s <2026 Crypto Market Outlook> report mentions many impressive data points, among which one about stablecoins is particularly striking: as of Q4 2025, the total global stablecoin supply has reached $305 billion, with a total transaction volume of $47.6 trillion. Comparing this roughly with the current global M0 supply ) and the total global currency transaction volume of $1500 trillion $15T Note 4(, we see that the stablecoin supply accounts for 2.0%, and its application ratio has reached 3.2%. ) Note that this indicates the average activity level of stablecoins exceeds that of traditional Fiat by 160%. Coupled with the report’s note of a 65% annualized compound growth rate over four consecutive years, and considering various foreshadowings laid in 2025, we have reason to believe that the crossing point for Open Finance to enter the early majority stage is within this upcoming year.

tl;dr

1. 1011 ends the first crypto curve; 2025 concludes the last Kondratiev cycle

2. The waning strength of traditional financial inertia and the societal failure under data-driven strict regulation

3. The RWA revival in 2025 as a core narrative issue

4. Emerging developing economies and the new global geopolitical landscape

5. DeFi 2.0, DAT 2.0, Tokenomics 2.0

6. Review of 2025 and outlook for 2026

7. 1011 ends the first crypto curve; 2025 concludes the last Kondratiev cycle

In January 2025, we discussed the unsustainability of the past crypto markets driven by speculation and narrative logic. Looking back over the year, only the number 1 position on the table remains fighting alone, forging a new path, while various market players have almost completely exited or transitioned to a more pragmatic development of the second curve.

The event on 1011 triggered the largest single-day liquidation in crypto history, with $193 million wiped out, and several days of liquidations totaling about $40 billion. On the surface, this was the extreme leverage structure at the end of the first curve market speculation being liquidated in a low-liquidity environment. Essentially, it was caused by too few players in the zero-sum game market, leading to the failure of platform risk mitigation and customer loss control. When only two players remain at the table, all cooperative strategies fail, and the opponent’s dilemma becomes the inevitable end of the first curve.

Similar to the market’s “harvesting” of ( coins, the event on 1011 fundamentally shattered the belief in the first curve, destroying the residual heat expectations based solely on narrative. It indicates that empty talk based on gambling-style speculation is coming to an end ) Note 5$TRUMP ; conversely, the second curve further grows during this process, with all remaining ecological enterprises transitioning or innovating toward more pragmatic, long-term development paths. The DeFi 2.0 market based on Onchain Asset Management, RWA Finance, and Tokenization becomes the inevitable direction for the next stage, including changes in CEXs, public chains, and top infrastructure, which are also shifting towards PayFi and RWA.

Meanwhile, by the end of 2025, the global economy has fully transitioned into stagflation. The failure of central banks’ fiscal and monetary policies to regulate has only left emotional value as a tool. The ultimate internal competition of traditional economics and the powerlessness of AI expectations are now entirely comparable to the Rockefeller era of 1910, marking the end of the previous Kondratiev cycle ( Note 6).

On October 29, 2025, Nvidia’s market cap surpassed ( dollars, becoming the first company in history to reach that level. While many still bullishly speculate about how many times higher the price could go, without comparing to Rockefeller’s Standard Oil of 1910, I just want to say: you can rationally look at Africa’s entire GDP for the year, which is only about half of this figure.

Entering H2 2025, more rating agencies, hedge funds, and investment banks are closely monitoring Nvidia’s financials. Aside from its upstream and downstream production capacity and profitability, the comparison of EV for long and short positions has become completely unbalanced; in other words, even if fundamentals improve, this trend will be hard to sustain. Moreover, industry facts about AI are clearly not so optimistic.

It’s worth noting that when Standard Oil was broken up into 34 companies in 1911, the global understanding of oil’s application in automobiles, aircraft, and next-generation automation industries was already quite clear. Yet this did not prevent 30 years of chaos, depression, and systemic restructuring after 1911. The core reason is that chaos and disorder are the result of the failure of the previous stage’s production relations—manifested in severe monopolies, widespread poverty, imbalanced development, and persistent contradictions—an irreversible increase in societal entropy.

At major cycle junctions, economic policies and short-term cycle common sense fail. The factors hindering healthy social and economic development are not a lack of growth potential but the inertia of monopolistic production relations from the previous cycle, which obstruct or cannot support the fair and effective integration of productivity and labor in the next stage. Today, AI development is inevitable; however, the semi-feudal, semi-monopolistic global management mechanism cannot continue to support or adapt to this ) Note 7$5T .

2. The waning strength of traditional financial inertia and societal failure under data-driven strict regulation

Even so, one of the surprises beyond my expectations is that many economists and industry experts still obsess over interest rate cuts. Comparing the period from February 2020 before the pandemic to April 2022 at the pandemic’s peak, US M2 increased by over 40%. With such a huge monetary volume, each subsequent QT and QE, in my understanding, is merely a formalistic emotional massage. Whether it’s 25 basis points or 100 basis points, they have long lost their original economic value ( Note 8).

Interest rate cuts have become an emotional aesthetic expectation for recipients and a coerced decision for policymakers—a dual inertial psychological trap, a tool to influence markets through emotional value. It’s worth respecting that, in delaying global entry into chaos and disorder, countries have made their utmost efforts using inertial aesthetic financial and policy tools.

However, the entropy-increasing process cannot be slowed down because of this. Half a year later, revisiting Greenspan’s prophecy in my previous articles: “We must accept that monetary and fiscal policy cannot permanently boost economic growth in the presence of deeply rooted structural constraints.” We see that many policies under the traditional system have already rapidly failed.

By mid-December 2025, Nasdaq publicly announced plans to submit to the SEC for a change to 24/7 trading hours, which essentially represents traditional finance’s defensive move to pressure Crypto and Onchain Markets and test regulators amid a major transformation. In fact, many traditional financial institutions in North America and East Asia have been adjusting their stance since the Genius Act in mid-2025, struggling between embracing the challenge of Crypto Finance and maintaining their previous barriers and advantages.

An interesting phenomenon is: in Q2 of this year, reactions from various institutions were very intense. It seemed that the Genius Act suddenly broke the original game balance and cartel’s moat ( Note 9). Everyone was aware that this trend was inevitable, and traditional finance systems were about to be completely changed; but by Q3, the market’s overreaction was apparent, and the iteration process was not as fast as imagined. Traditional finance practitioners and policymakers surprisingly reached a short-term reverse equilibrium, with the main logic being: change is inevitable, but policy compliance will serve as a reassurance to smoothly transition to the new equilibrium and moat. As long as licensed entities and policymakers upgrade together, the transition can be completed smoothly. This Q3 phase is very delicate—like everyone participating in a prisoner’s dilemma, agreeing temporarily to reverse their decisions to cope with external pressures. This is merely a psychological illusion before the cartel’s true disintegration. By Q4, the most forward players realize that with methods like Hyperliquid and Robinhood, the eventual complete disintegration of the traditional financial cartel alliance will come soon. Therefore, whether Nasdaq or Coinbase, they will step forward to tell the truth, facing more tangible reforms such as changing trading hours and building their own RWA Tokenization systems to gain real advantages in the next stage.

This process is actually very classic—a psychological sandbox of the Gartner Curve formed by all players facing a major transformation, participating in a game.

The waning strength of traditional financial inertia does not mean the failure of economic principles. On the contrary, Crypto Economy and Open Finance are entirely based on further development of economic principles. The bottleneck lies in the systemic issues of management economics and market production relations, especially after entering the digital age, where the existing management system cannot adapt to find a balance between regulation and freedom. The global overuse of digital strict regulation has led to a serious misconception, accelerating entropy increase within just ten years.

Over the past decade, countries around the world have gradually fallen into the huge misconception of “use data whenever available, regulate whenever possible.” The rules and barriers of outdated systems have far exceeded opportunity and risk costs. Rigid data management has led to doctrinal dependence on historical paths, which not only fails to break but also incurs higher costs—creating a terrifying “Data Medieval” effect.

This phenomenon penetrates all industries and corners worldwide. Excessive digital abuse and financial restrictions hinder development in every sector. For example, based on my over 15 years of VC experience, if you judge whether someone can get financing solely by their bank KYC, 99% of enterprises and innovations would be wiped out.

Faced with the entropy failure of the global financial system and social management environment, 2026 will inevitably enter further disorder and restructuring. Many rules and industries will be rewritten, and a chaotic transition period of at least 10 years or more is unavoidable.

3. The RWA revival in 2025 as a core narrative issue

The RWA narrative made a remarkable comeback in 2025, for a simple reason: the credit collapse of the first curve, and the lack of a new consensus term for the second curve, temporarily allowed RWA to step in and win MVP this year.

Two months ago, I discussed with a veteran OG in Silicon Valley. After learning that Cicada Finance was about to announce its listing plan, he advised me to focus on RWA Finance. I followed his advice and also retained Onchain Asset Management as the main entity, leading to today’s Onchain Asset Management for RWA Finance. Undoubtedly, both Onchain Asset Management and RWA Finance will remain the main mainstream tracks in the 2026 market.

Beyond the name, RWA is not a revival but a rebuild from scratch. The problem is that people using the term “RWA” have very different understandings. As of H2 2025, most of the global understanding still equates RWA with a crowdfunding act of asset tokenization.

Most participants in RWA are driven by personal needs rather than industry development, which is understandable. But as with P2P and E-commerce crowdfunding in the past, demand-driven markets will force platforms, channels, and markets to develop in a one-sided manner, leading the industry to develop in the wrong direction rapidly.

What’s the difference between RWA without fair value and equity crowdfunding back then? Do illiquid RWA assets need tokenization? Conversely, do all RWA assets truly require liquidity? These questions have not been fully thought through or reached consensus in the overall market by 2025, and some deeper commercial confidentiality issues cannot be discussed here.

Coinbase’s report provides detailed analysis of current RWA asset distribution. T-Bills, commodities, liquid funds, and credit loans remain the four main categories, indicating the importance of quantifiable financial assets in RWA. In our view, the RWA landscape in 2026 will undergo some proportional changes. The aforementioned assets will still exist, but the actual business brought by emerging developing economies—DeFi and Crypto Finance—will be integrated into the RWA market as asset suppliers, with Stablecoin Payments and SupplyChainFi becoming rapid growth directions.

4. Emerging developing economies and the new global geopolitical landscape

In 2025, while developed countries and regions are struggling to formulate management policies for Stablecoins and Crypto Finance, the development speed of emerging developing countries and regions is astonishing and beyond imagination.

“They all want stablecoins, or platform coins too,” is the consistent feedback from cross-border trade and payment companies this year. Besides Nigeria, India, Brazil, Indonesia, and Bangladesh, many other countries and regions in Africa, South America, South Asia, Southeast Asia, Eastern Europe, and the Middle East have shown exponential growth in Stablecoin and Crypto Finance applications for three consecutive years, with actual usage far exceeding that of developed economies, many surpassing or catching up with local mainstream fiat currency usage ( Note 10).

These emerging economies are rapidly expanding in an “off-balance-sheet” manner, forming a stark contrast with the management dilemmas faced by the current mainstream global environment. Despite long-standing historical reasons causing significant differences in economic strength and consumption capacity across regions, it’s clear that the global mainstream economic data has long been distorted. Facing over-regulation-induced stagflation and a rapidly growing new environment, the global economic landscape will be reshaped within five years, and geopolitical relations will undergo dramatic changes.

Regarding question ii( from the opening, I have a clear answer. The true reshaping of Nash equilibrium is not about breaking and rebuilding within the existing global economic system but about being broken by external forces under a new global pattern, forming a complex new restructuring. The native development speed of Crypto and Open Finance will far surpass the understanding and acceptance speed of traditional economies and markets, and 2026 is very likely to be a crucial turning point in this disorderly restructuring.

5. DeFi 2.0, DAT 2.0, Tokenomics 2.0

In this report, Coinbase begins to emphasize some new terms, including DAT 2.0 and Tokenomics 2.0, both of which are essentially branches of the familiar DeFi 2.0 development. Their definitions are quite good; here I will elaborate separately.

In 2025, the DAT concept successfully spread from MicroStrategy (MSTR) to the global mainstream financial markets. Its core logic is simple: DAT premium multiple = stock market cap ÷ NAV of its held BTC) or other mainstream Crypto) assets. However, this premium rapidly declined and even inverted from Q3 to Q4, ending the global hype for DAT 1.0 this year.

The decline in DAT 1.0 value and the end of its financial effect are mainly due to the very small capital multiplier resistance coefficient. The story is straightforward: limited price transparency expectations, overly direct Davis double-doubles and double-kills, and once bullish or bearish confidence shifts, the trend dissipates quickly.

The core value of the DAT concept in 2025 lies in the fact that traditional financial stock markets are exhausted and bubble-prone, with the first crypto curve bubble and credit collapse, leading to a mutual shift of attention and collective warming in both markets.

Why can DAT 2.0 continue to link crypto and stocks? Simply put, DAT 1.0 is the transfer of value from the first crypto curve to traditional finance, while DAT 2.0 is the integration of value from the second crypto curve into traditional finance. Unlike the former, the latter’s value is sustainable for long-term development. In 2025, Ondo, Ethena, Maple, Robinhood, and Figure have already demonstrated good prototypes for DAT 2.0, and more emerging enterprises will develop rapidly in 2026.

Tokenomics 2.0 is a broader concept. This year, we proposed derivatives related to Tokenomics, such as Liquid Engineering and Yield Engineering, which are further evolutions of Financial Engineering. In various real financial cases, Tokenomics acts like an electrical circuit ( Note 11), constantly adjusting and optimizing each financial scenario case by case. Although each case is different, the overall industry evolution will gradually form innovative, universally applicable protocols like Pendle’s PT-YT with significant systemic impact.

Coinbase’s report only briefly touches on some issues when mentioning Tokenomics 2.0, such as Value Capture, Token Buybacks, Financial Engineering, Regulatory Clarification as Catalyst, and Protocol P&L, without detailed logical connections.

Here’s a brief breakdown:

Value Capture is actually unrelated to Tokenomics 2.0; it’s a necessary condition for the application and promotion of assets in the second curve. Tokenomics exists independently of value capture. In other words, Tokenomics without sustainable value capture has already been proven in the first curve to be Ponzinomics, and it will no longer be mainstream in the Crypto Market and Open Finance after this year.

Token Buybacks are an important condition for Asset Tokenization in RWA and DAT 2.0, and in my view, even a necessary condition. More precisely, Asset Clearing Capability ( is a necessary condition for all asset investments. The healthy development of RWA Finance next year largely depends on whether the market can reach consensus on this point.

Regulatory Clarification, discussed earlier in this article, should objectively be expressed as Pros and Cons. Coinbase’s perspective is somewhat unique, but as discussed, the larger and faster development of flexibility is actually in emerging developing economies and new economies.

Additionally, the process of Protocol Finance is not determined by Regulatory Clarification alone. It is highly relevant only in some developed regions like North America and East Asia. The P&L of Protocol Finance is essentially an upgraded trading phenomenon of the Open Finance Market, determined by the market itself.

Both DAT 2.0 and Tokenomics 2.0 are just temporary terms. The second curve and DeFi 2.0 similarly describe the fundamental shift and inevitable trend of the Crypto Market and Open Finance after 2025.

6. Review of 2025 and outlook for 2026

As 2025 concludes, I review and summarize the predictions and analyses of this year:

February

“Zero-sum game and the 7 giants at the table,” “The trend of RWA / RYA and the rise of PayFi,” “Crossing the gap: the second growth curve of Crypto,” “Crypto development pattern and national situations under compliance issues”;

April

“The debt-equity tri-kill problem and the failure of the Merrill Clock,” “Thucydides Trap and the comparison of the five Kondratiev cycle endings,” “Greenspan’s prophecy and the significance of Crypto at Kondratiev cycle intersections,” “The shift in correlation between Bitcoin and chaos: change in inertia cognition and similarities with Merrill Clock issues”;

May

“The fundamental reasons for the decline of US dollar control,” “Nominal and substantive purposes of the GENIUS Act,” “DeFi Restaking’s insights for fiat world and the monetary multiplier of shadow currencies,” “Gold, USD, and Crypto stablecoins”;

September

“The essence of the Genius Act is to delegate the issuance and settlement rights of currency, thereby gaining enhanced monetary pricing power,” “The change in stablecoin monetary pricing has triggered reforms in global financial on-chain and asset on-chain processes,” “The reforms are rapidly dismantling traditional financial long-standing cartel alliances, bringing opportunities for chaos-driven利益重组,” “Two directions of coin-stock linkage: securitization )Securitization( and tokenization )Tokenization(, and market characteristics,” “Industry features and issues of stablecoins, DAT, stock tokenization, RWA, and on-chain asset management.”

The outlook for 2026 has been extensively discussed in this article. Besides question i), which I believe has been sufficiently analyzed, the further disorderly restructuring of the macro environment and the consequent explosion of DeFi 2.0 are clear trends and inevitable.

Question i( is indeed a headache. Trends and directions are always easier to judge than timing and extent, compared to the two Kondratiev cycles a century ago. The main differences under similar paradigms are:

a) The speed of information interaction and evolution from the situation is much faster—more than 2.5 to 5 times in various aspects ( Note 12);

b) The spillover space of global geopolitical contradictions is entirely different, increasing the inevitability of conflicts;

c) Nonlinear effects brought by AI and Crypto are far higher than industrial automation.

From another perspective, many aspects remain largely unchanged compared to a hundred years ago—for example, the hardware conditions of human social management, human lifespan, the emotional digestion capacity of a generation, and the political-economic management cycles under different social forms are still broadly similar.

Against this background, in my recent two years of corporate management, I have often discussed and gradually accepted a fact: it’s crucial to pay attention to nonlinear problems, learn to respond to and master nonlinear trigger situations, and incorporate unexpected changes into plans.