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Pendle was arguably the most successful protocol in Ethereum over the past year. Up until now, the team has only targeted spot yield markets on Ethereum. In 2025, they’re targeting funding rate yields, and also making big moves to Solana, Ton and Hyperliquid. 

AO’s fair-launch volatility:

The AO token became transferrable Saturday alongside the AO Core and HyperBEAM rollout, introducing verifiable compute via HTTP message signing — a much ballyhooed standard for secure web communication built on Arweave.

Instead of requiring developers to learn new protocols, deploy custom smart contracts or integrate with blockchain-specific tooling, AO enables verifiable computation using familiar HTTP requests.

Price action on launch day reflected typical fair-launch volatility. AO has been gradually allocated in exchange for various actions — like locking stETH in a smart contract to forego staking rewards — over several months. With no CEX listings, price discovery is so far limited to one or two DEXs on AO itself.

To trade the token, you first have to transfer your AR or USDC/USDT to the AO network through the AOX cross-chain bridge, turning them into wrapped versions (wAR, wUSDT, wUSDC). Then, you can use them to exchange AO tokens — for instance on Permaswap.

After debuting with an initial surge to $56, AO quickly retraced, finding support around $14 before stabilizing in the $24–$30 range. (Like Bitcoin, there are 21 million AO, giving the new token an FDV of around $510 million.) Liquidity remains relatively low at $58k, as does the 24-hour volume at $118k.

The network itself has been hard to use, with frequent errors and few applications.

An X thread positions AO as the trust layer for decentralized compute and explains how the focus now shifts to adoption. But as @cryptolopers noted, “Why wasn't all that done during testnet?”

 — Macauley Peterson

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SKALE, the gas-free invisible blockchain, is “Built Different” for mass adoption: high-throughput, scalable, and fair. As a network of interoperable EVM-compatible L1s, SKALE’s user experience focus has accelerated a strong ecosystem across gaming, AI, and more. Due to SKALE’s gas-free nature, blockchain can be integrated invisibly, creating accessible Web2-like experiences for users and developers.

SKALE has:

• Over 50M UAWs

• 9 Games on the Epic Games Store

• Saved Users over $9.5B on Gas Fees

Dive in to learn more.

Pendle has big plans for 2025

Decentralized finance today is still largely an ouroboros, as Vitalik once pointed out.

Protocol revenues and fees are real, and they prove the tech works. That is important! But these revenue flows are still largely the downstream result of speculative capital passing between traders in a circular, self-consuming cycle.

Protocols like Pendle observed these state of affairs, declined to pass judgment, then simply built the best possible product to capitalize on this ouroboros-like economy.

Want a fixed yield? Buy Pendle Principal Tokens (PT). Prefer to farm points with expectation of big airdrops? Buy Yield Tokens (YT). It’s as simple as that.

What Pendle has created is not new. It’s the TradFi-equivalent of zero-coupon bonds, interest rate swaps or forward rate agreements.

But Pendle has emulated these traditionally structured products extremely well in DeFi. In 2024, Pendle grew its TVL levels to $4.4 billion and daily average trading volumes to $96 million — a 20x and 100x increase, respectively.

Pendle is so successful that it has in effect become a de facto token launchpad akin to an ICO, but better. 

For instance, in the weeks leading up to Berachain’s genesis airdrop, Berachain Pendle markets accumulated more than a billion in TVL from users wanting to yield trade on Berachain assets and game airdrops.

Pendle’s 2025 outlook

Pendle co-founder TN Lee announced last week the protocol’s big plans for 2025. 

There are a host of minor piecemeal upgrades coming, like dynamic fees for yield trading and improvements to the vePENDLE token bribe system.

But the most notable upgrade looks to Pendle’s plans to target the most lucrative yield source in crypto: perps funding rates. 

As part of this “Boros” (a play on ouroboros?) initiative, Pendle will allow traders to swap to yield trade perpetual funding rates.

This would enable protocols like Ethena to lock in predictable funding yields, which would entail fixed APYs for sUSDe holders. 

In hyper-volatile perps markets like memecoins, long traders will also be able to hedge against their perps positions by locking into a predictable, fixed funding rate.

Pendle is also planning an expansion to non-EVM chains Solana, Hyperliquid and Ton. Solana already has a burgeoning yield-trading market, though it’s still small relative to Pendle.

Finally, Pendle is coming for TradFi. The pitch is straightforward: “Why stick with 8% yields on a 5-year corporate bond when you can enjoy a 17% WBTC PT yield?”

This is part of the team’s plans to launch a KYC’d product for regulated entities as well as Islamic funds to access crypto yields.

Pendle’s pendulum is swinging, and looks to swing even harder in the coming year. With its planned expansions to target non-EVM chains and TradFi liquidity, these moves radically expand Pendle’s target addressable market beyond spot yield markets on Ethereum and the broader crypto sector itself.

— Donovan Choy

Bitcoin and Ethereum updates

Bitcoin saw strong institutional inflows and price resilience in January, rising 9% to close at $104k. BTC ETFs attracted $5.26b in net inflows, the fourth-highest on record. Political factors played a role, with the Trump administration evaluating BTC as a potential US reserve asset. Multiple US states are also exploring BTC adoption.

Market behavior diverged, with BTC decoupling from tech stocks and showing lower correlation to Nasdaq. Despite a tariff-driven drawdown, BTC rebounded as geopolitical uncertainty fueled demand.

Network fundamentals showed mixed signals. Transaction activity declined, with real economic value (REV) dropping 50% to $20m. However, demand for Ordinals increased, reaching 10.9% of total fees. Miners remained profitable, with BTC mining costs at ~$84.5k and monthly revenue holding above $1.4b.

The market structure is maturing, with ETFs potentially altering price flows. BTC dominance rose to 58%, and leverage retraced post-tariff announcements. Institutional demand, macroeconomic tailwinds and political momentum suggest continued strength for BTC in early 2025.

Ethereum ended January at $2.7k after a sharp selloff driven by geopolitical tensions. Network fundamentals weakened, with REV falling 29% to $167m, its lowest since October 2024. Ethereum’s share of transaction fees declined as Solana outperformed in REV generation. However, institutional demand remained robust, with ETH ETF AUM surpassing $10b and stablecoin market cap on Ethereum reaching a record $117.5b.

A major development was the validator-backed gas limit increase to 36m, the first since Ethereum's transition to proof-of-stake. This aims to boost network capacity, reduce congestion and lower transaction costs. Meanwhile, DEX volumes fell to $81b, ETH burn dropped to $117m, and onchain activity showed slight declines.

Market positioning remained cautious, with ETH funding rates declining and options skew suggesting long-term optimism despite short-term uncertainty. Institutional engagement, technical upgrades and increasing network capacity position ETH for potential upside, particularly as the Pectra upgrade and growing stablecoin liquidity take effect.

For full details, see the Blockworks Research report by Marc-Thomas Arjoon.