The 2026 DeFi 2.0 Boom and the Reconstruction of the Residual Profit Model

In the overlapping landscape of market and policy in Q4 2025, the collision between traditional finance and open finance intensifies, with the speculative residual profits of the first curve facing a large-scale liquidation. Simultaneously, emerging trends such as DeFi 2.0, RWA revival, and Tokenomics 2.0 rapidly rise to prominence, marking 2026 as a pivotal year where cryptocurrencies and open finance transition into a true value-capturing phase. According to Coinbase’s “2026 Crypto Market Outlook” report, the reorganization of new financial structures based on residual profit models suggests an inevitable direction for industry development.

Disorder in 2025 and the End of the First Curve: Reallocation of Residual Value

In the analysis of the “Second Growth Curve” published in January 2025, we discussed the unsustainability of speculation and narratives in the crypto market. A year of validation revealed significant structural changes among the multiple players once present at the table. Many original market participants have either exited almost entirely or shifted toward the development of a second curve grounded in fundamentals.

The single largest on-chain liquidation event in crypto history on October 11, involving $1.93 billion, superficially appears as the extreme leverage liquidation at the end of speculation in the first curve market under low liquidity. However, fundamentally, it reflects a market where residual profits have become overly concentrated, leading to a shortage of market players and the failure of platform loss control mechanisms. In a duopoly environment, all cooperation strategies become ineffective, and the plight of one side becomes an inevitable trigger for the end of the first curve.

While $TRUMP coins sweep the market, the October 11 event fundamentally destroys the belief foundation of the first curve and shatters expectations of residual profits based on simple narratives. This signifies the end of hollow, speculative consensus, with the second curve continuing to grow amid this process.

All existing ecosystem companies are undergoing transformation or innovation, pursuing more practical and long-term development paths. On-chain asset management, RWA finance, and tokenization-based DeFi 2.0 markets are the inevitable next steps, with CEXs, public blockchains, and top infrastructure all transforming along the new trajectory of residual profit creation. The shift toward PayFi and RWA-oriented layouts accelerates industry-wide.

Clash Between Traditional Finance and Open Finance: Regulatory Rigidity and Value Capture

By the end of 2025, global inflation has fully transitioned into stagflation, with many central banks losing effectiveness of traditional fiscal and monetary policies, leaving only emotional value adjustments. The extreme inward pull of traditional economies and the limits of AI expectations are akin to the Rockefeller era of 1910, signaling the complete end of the previous K-wave cycle.

On October 29, 2025, Nvidia’s market cap surpassed $5 trillion, becoming the first company in history to reach this scale. Industry optimism persists about how much further this valuation can multiply, yet the stark reality remains that Africa’s annual GDP is less than half of this figure.

The rigidity of traditional finance does not imply invalidation of economic principles; rather, crypto economy and open finance are further deepening based on these principles. The core issue is systemic failure in management economics and market production relations mechanisms. After the full digital transition, existing regulatory systems struggle to balance regulation and freedom.

The world is heading toward a misguided direction due to excessive digital regulation, with entropy increasing rapidly. Over the past decade, a massive misconception has taken hold: “Data can be utilized if available, and regulation can be imposed if methods exist.” The rule costs and entry barriers of legacy systems now far exceed opportunity and risk costs. This “Medieval Data Effect” does not free us from path dependence but imposes significant costs.

In mid-December 2025, Nasdaq announced plans to apply to the SEC to change stock trading hours to 24/7. This move symbolizes traditional finance’s attempt to push back against open finance while attempting to defend within regulatory frameworks. In reality, many North American and East Asian traditional financial institutions have continued adjusting positions since the mid-year Genius Act. They face ongoing conflicts—balancing response to crypto finance challenges while maintaining traditional advantages—repeating a cycle of tension.

Interestingly, responses from institutions in Q2 were highly intense. The Genius Act seemingly shattered the original equilibrium and cartel defenses, making everyone recognize the inevitability of this trend. However, by Q3, market reactions proved overblown, and the iteration process was not as rapid as imagined. Traditional finance participants and policymakers again reached a short-term new equilibrium, with the logic that “change is inevitable, but policy compliance enables smooth transition for all.”

By Q4, leading firms like Hyperliquid and Robinhood, employing multi-faceted approaches, are aware that the cartel alliances of traditional finance are collapsing. Nasdaq and Coinbase are proactively facing more tangible reforms—such as trading hour extensions and RWA tokenization systems—to gain a true advantage in the next phase.

The Essence of RWA Revival: Liquidity, Tokenization, and Residual Profit Generation

In 2025, the RWA narrative experienced a remarkable revival. The reason is straightforward: due to the collapse of trust in the first curve, the second curve has yet to establish new terminological consensus, allowing RWA to temporarily emerge and earn this year’s MVP award.

Coinbase’s report provides a detailed analysis of the current asset distribution within RWA. Treasury Bills, commodities, liquid funds, and credit loans remain the four main categories, highlighting the importance of quantifiable financial assets in RWA.

However, understanding of RWA varies widely. By H2 2025, most regions worldwide equate RWA with asset tokenization via crowdfunding. Many companies participating in RWA are driven by their own needs rather than industry-building, which is understandable. Yet, similar to issues faced by P2P and e-commerce crowdfunding, demand-driven markets impose unilateral problems on platforms, channels, and the market itself, potentially steering the industry in a wrong direction.

What is the difference between non-valuable RWAs and the stock crowdfunding of that era? Do illiquid RWA assets truly need tokenization? Conversely, do all RWA assets require liquidity? These questions remain unclarified across the market in 2025, indicating a lack of consensus.

However, the landscape of RWA in 2026 will change. While traditional assets will still exist, emerging economies’ real DeFi and crypto finance businesses will enter the RWA market as asset suppliers in parallel. Among these, stablecoin payments and supply chain finance are expected to grow rapidly.

From the residual profit perspective, the true value of RWA lies not in tokenization itself but in building continuous value-capturing mechanisms enabled by tokenization. Even illiquid RWA assets can be recognized as valuable if they generate ongoing cash flows and profit distributions. The success of Ondo, Ethena, Maple, and others stems from not merely tokenizing assets but establishing mechanisms to continuously generate residual profits.

Adoption of Stablecoins in Emerging Economies and Geopolitical Reconfiguration

In 2025, while advanced economies grapple with managing stablecoins and crypto finance, the development speed of emerging economies surpasses expectations.

The consistent feedback from international trade and payment companies is that they seek stable currencies or platform currencies. Countries like Nigeria, India, Brazil, Indonesia, and Bangladesh, along with many in Africa, South America, South Asia, Southeast Asia, Eastern Europe, and the Middle East, have experienced exponential growth in stablecoin and crypto finance usage for three consecutive years, often exceeding local mainstream fiat currency usage and surpassing the total annual GDP of many regions.

Coinbase’s data indicates that by Q4 2025, global stablecoin supply reached $305 billion, with total transaction volume hitting $4.76 trillion. Comparing this roughly to the current global M0 supply of $15 trillion and total currency transaction volume of $1,500 trillion, the stablecoin supply accounts for about 2.0%, with a utilization rate of 3.2%. Notably, the average activity level of stablecoins exceeds that of traditional fiat by 160%, and with a four-year CAGR of 65%, open finance is well on its way to crossing the “chasm” into the early majority.

Emerging economies are rapidly expanding their “off-balance-sheet” assets, creating a stark contrast with the management challenges faced by developed economies. While economic and consumption disparities remain large across regions, the analysis data of major economies is already significantly distorted. Between excessive regulation-induced stagflation and the rapidly growing new environment, within less than five years, the global economic structure will be reconstructed, and geopolitical relations will undergo dramatic shifts.

DeFi 2.0, DAT 2.0, Tokenomics 2.0: Evolution of Protocol Finance

Coinbase’s latest report introduces several new terms, including DAT 2.0 and Tokenomics 2.0, representing industry understanding of the branching development of DeFi 2.0.

In 2025, the concept of DAT successfully spread from MicroStrategy to mainstream financial markets worldwide. Its core logic is simple: DAT Premium Multiple = Market Cap / NAV of held BTC (or other major cryptocurrencies). However, this premium rapidly declined from Q3 to Q4, even reversing, ending the global DAT 1.0 craze within the year.

The fundamental reasons for the decline in DAT 1.0 value and the end of its financial effect are: the friction coefficient of capital multiplier is too small; the story is too simple, limiting price transparency expectations; and the Davis double effect is too direct, causing rapid disappearance once bullish-bearish sentiment reverses.

Why can DAT 2.0 sustain currency and stock linkage? Simply put, DAT 1.0 represents value transfer from crypto assets to traditional finance, while DAT 2.0 embodies the integration of value from the second crypto curve into traditional finance. The latter has long-term sustainability. In 2025, Ondo, Ethena, Maple, Robinhood, and Figure have demonstrated promising examples of DAT 2.0, with many more emerging firms expected to grow rapidly in 2026.

Tokenomics 2.0 is a broader concept. Our proposals of Liquid Engineering, Yield Engineering, and related derivatives this year are essentially further deepening of financial engineering. In various real financial cases, Tokenomics acts like a circuit, continuously modifying and optimizing each financial scene. While each case differs, industry evolution will gradually see the emergence of comprehensive, impact-providing protocols like Pendle’s PT-YT.

The core of Tokenomics 2.0 is Value Capture. Without sustainable value capture, Tokenomics resembles Ponzinomics of the first curve, proven ineffective by 2026 open finance. Token Buybacks are a key condition for asset tokenization; more precisely, Asset Clearing Capability is a necessary condition for all asset investments. The healthy development of RWA finance heavily depends on market consensus on this point next year.

Outlook for 2026 and the Rebuilding of Residual Profit Models

As 2025 concludes and we survey the current market and industry landscape, the main challenge for 2026 is clear.

Amid further large-scale disorderly restructuring, the explosion of DeFi 2.0 is inevitable and trending. The pace of information interaction and phase evolution is extremely rapid, with differences exceeding 2.5 to 5 times across various aspects. Geopolitical contradictions will manifest more fully, increasing the likelihood of conflicts. The nonlinear effects of AI and crypto will far surpass industrial automation.

Yet many fundamental aspects remain unchanged from a century ago. Human social management hardware conditions have hardly evolved; human lifespan, emotional digestion capacity per generation, and political-economic cycles across social forms remain similar.

The core of DeFi 2.0 development in 2026 is establishing residual profit models and optimizing value capture mechanisms. On-chain and tokenized assets, including ORN, represent not just technological progress but a fundamental reorganization of the financial system. Only protocols capable of continuously generating residual profits will truly attain market value.

The adoption of stablecoins by emerging economies and the growth of PayFi are the most tangible evidence of this reconstruction. The true integration of open finance with vested interests will be driven not by regulators’ approval but by market demand and real economic effects. 2026 will be the decisive year when cryptocurrencies and open finance shift from mere speculation to actual financial infrastructure.