Original: arndxt
Translation: Yuliya, PANews
In the current context of generally low and unclear market sentiment, the author presents a bold and critical assertion about the altcoin market: 'We may be in the last quiet period before the next round of “altcoin season” erupts.' Unlike a full rally, the future market will be driven by core narratives such as ETFs, real yields, and institutional adoption. Below is the original text of the article, which PANews has translated.
We may be at a critical turning point—the most grueling phase of the market cycle. In this stage, 99% of market participants choose to watch due to exhaustion or indecision, while only that 1% quietly completes trades that can impact a lifetime.
Signals of Altcoin Season Have Emerged
Just last week, Bitcoin set a record monthly closing price, but its market dominance began to decline. At the same time, whales quietly absorbed over one million ETH in a single day, approximately $3 billion, while Bitcoin's balance on exchanges has dropped to a multi-year low.
Retail investors remain cautious and skeptical. Sentiment indicators are at a low—this is exactly the ideal market state for early entrants.
Everything is beginning to brew at this moment.
Currently, the speculation index for altcoins remains below 20%, and the ETH/BTC pair has finally recorded its first weekly bullish candle in weeks. The approval of the Solana ETF is a foregone conclusion. The rotation of on-chain capital has quietly begun, with funds subtly flowing into DeFi, Real World Assets (RWA), and re-staking areas that align with market narratives.
But this is not 2021; that kind of 'everyone take off' market will not reappear.
The upcoming market will be more selective, deeply driven by narratives. Capital is flowing into real yields, cross-chain abstract infrastructure, and ETF-structured assets with staking yield mechanisms.
If you have been quietly accumulating, this is your signal.
Profound Changes in the DeFi Field
We are witnessing DeFi transition into a phase of 'more institutionalized and more invisible'. On one hand, financial primitives designed for institutions, such as re-staking bonds, fixed-rate automatic renewal credit, and stablecoin circular treasuries, are thriving. On the other hand, composability layers like Enso and Dynamic are simplifying operational complexity for ordinary users.
But ultimately, only those protocols that go beyond 'points games' and integrate real economic value or use cases can sustain capital inflows. Behind this, the real winners will be those protocols that can seamlessly combine cross-chain user experience (UX), secure infrastructure, and predictable, real-world-like investment returns.
Here are six major trends occurring in the DeFi space:
1. Stablecoin Yield Optimization and Fixed Income DeFi
DeFi is increasingly mimicking traditional finance by converting stablecoins into high-yield, bond-like assets to attract capital. Against the backdrop of increasing volatility in the spot market, various protocols are shifting focus to capital efficiency and fixed-rate structures to meet the dual demands of institutions and retail investors.
Euler Finance: This super lending application deployed on Arbitrum provides lending markets for blue-chip assets like ARB, WETH, USDC, and WBTC, attracting liquidity through its rEUL reward mechanism.
Yield Nest: Centered around stablecoins, launching a new asset $ynUSDx, leveraging the Superform platform and strategies based on SuperUSDC to maximize stablecoin yields.
Size Credit: Innovatively allows users to cyclically reuse fixed-income principal tokens in exchange for cheaper USDC, attempting to earn double-digit annualized returns through idle capital.
Renzo Protocol: Meanwhile, in re-staking, Renzo has launched fixed-term 'zero-interest re-staking bonds', providing predictable cash flow for Active Validation Services (AVS) while offering liquidity providers bond-like fixed income exposure. This structure could become a cornerstone of fixed income in EigenLayer's security market.
But be aware that the high yields (15%+) advertised often require leverage, re-staking locks, or circular strategies. After deducting fees, slippage, and risk drag, the actual net return may be closer to 6-9%. Furthermore, while the composability supporting these circular structures offers convenience, it also increases systemic risks of chain liquidations and stablecoin decoupling.
2. Integration of Cross-chain Liquidity and User Experience
The way users interact with multi-chain liquidity is undergoing a fundamental transformation. Cross-chain user experience is evolving from cumbersome bridging processes to seamless, intent-based deposit systems, effectively abstracting the boundaries between chains.
GHO: Its deployment on Avalanche (the first deployment outside Ethereum) demonstrates the development trend of native cross-chain stablecoin utility.
Enso: The newly launched embeddable cross-chain DeFi deposit component represents an intergenerational leap in user experience. Built on LayerZero and Stargate, it lets users bridge, swap, and deploy strategies with a single click. Projects like Pume Network and Yield have integrated this component, driving capital into their treasuries.
The T1 Protocol's Proof of Read system is also promoting real-time cross-chain validation mechanisms, relying on TEE (Trusted Execution Environment) infrastructure to provide high-speed cross-chain validation without multi-signatures between Arbitrum and Base, effectively enhancing bridging efficiency and trust assumptions.
The new collaboration between Wormhole and Ripple enables cross-chain information transmission on the XRP Ledger, further indicating that the war between chains will not disappear, but user experience is gradually integrating.
The trend is clear: value capture is gradually shifting from L1 public chains themselves to composable infrastructure and messaging layers.
3. Re-staking and On-chain Security Market
Re-staking continues to evolve into a standalone on-chain security market, essentially injecting re-staked ETH into structured products to create yield mechanisms similar to corporate bonds or government bonds.
Renzo Protocol's new Flow Treasury and re-staking bonds empower AVS (Active Validation Service) to conduct budget planning based on known yields while allowing liquidity providers to lock ETH in fixed-income style products.
Succinct has now entered stage 2.5 of its testnet, adding a decentralized validation layer, competitive validation auctions, staking mechanisms, and hardware optimization features, laying the foundation for a high-performance re-staking ecosystem.
In the Solana ecosystem, jito is also providing re-staking support for rollups through the Magicnet project, promoting the expansion of the on-chain security layer for Solana.
As capital gradually flows into EigenLayer's ecological primitives, we are seeing the emergence of a new form of 're-staking yield curve': the prices of short-term and long-term debts will be priced differently based on risk perception, exit liquidity, and slash risk, resulting in discounts or premiums.
But composability also brings fragility. For example, zero-interest bond structures require the principal to be locked until maturity; any forfeiture event or validator downtime could severely impair the principal—even without smart contract vulnerabilities.
4. Monetization and Programmability of Data Infrastructure
Block space is no longer a bottleneck; data latency and composability are. Projects like Shelby and Dynamic aim to provide monetizable real-time read/write infrastructure for Web3 developers.
Shelby: Developed by Aptos and Jump, enabling sub-second reads, dynamic content, and monetizable data access, aiming to replace static cold storage with real-time streaming computation.
ZKsync's Airbender module can generate zkVM proofs in 35 seconds at a cost of only $0.0001, a sixfold improvement in speed and cost over previous solutions.
Dynamic enters from the wallet interaction layer, focusing on solving friction points in wallet switching and user onboarding. Its infrastructure supports over 20 million users and 500+ wallets, achieving composability in various application scenarios.
This trend is giving rise to a new middleware business model: providing developers with low-latency, chain-agnostic data access services and charging on demand, which may introduce AWS-style pricing models and developer tier systems based on latency in the future.
5. Institutional Credit Infrastructure and RWA Integration
On-chain lending is moving towards institutionalization, with automatic renewal credit lines, standby floating rates, and leveraged RWA strategies becoming the focal point.
The integration of Tenor Finance and Morpho V2 showcases the maturity of on-chain credit. Their new fixed-rate loan products come with automatic renewal and standby logic, providing institutional users with tools commonly used in TradFi.
Morpho has also previewed a leveraged RWA strategy based on Apollo Global's ACRED fund, indicating that the future trend is to build high-yield, compliant, and institutionally liquid on-chain treasuries.
Euler Prime is driving stablecoin liquidity enhancement through targeted incentives, optimizing yield efficiency for market makers and treasury managers seeking predictable returns.
We are gradually approaching on-chain wholesale brokerage, with compliant, structured fixed-income products leading a new wave of growth. However, RWA strategies require high-fidelity oracles and robust redemption logic. Any off-chain mismatch could trigger massive decoupling or margin call risks.
6. Airdrop Economy and Incentive Mining
Airdrops remain the primary user acquisition strategy, although user retention data continues to decline.
Spark's SNAPS events, Aethir's Cloud Drop 2.0, and KiiChain's ORO testnet events continue the familiar formula: points, task systems, and gamified interactions to attract attention.
However, data shows that two weeks after an airdrop, only about 15% of the total value remains. Therefore, projects are forced to offer higher point multiples (up to 30x for LP) or bind additional benefits (governance rights, increased yield) to attract users.
Platforms like Cookie.fun are attempting to reduce witch attacks through social or behavioral verification, but mining whales still evade restrictions through wallet splitting, multi-signature structures, and other means.
Projects seeking long-term liquidity must shift to retention-oriented incentive mechanisms, such as veNFT locking, time-weighted reward mechanisms, or re-staking access, rather than relying solely on speculative points to attract new users.
Macroeconomic Narratives and Investment Frameworks
Although geopolitical turmoil may still severely impact the market, structural buyers are continually absorbing every dip. Altcoins will not see a 'full rally' like in 2021; rather, narratives with concrete catalysts (like ETFs, real income, exchange distribution channels) will draw attention away from pure Meme speculation.
1. Macroeconomic Background: Volatility Linked to Headlines
During the Iran-Israel conflict, Bitcoin's price fell from $105,000 to just below $99,000, further proving that the 2025 market is driven by headlines. Within 36 hours, the US confirmed strikes on Iranian nuclear facilities, the Iranian parliament threatened to block the Strait of Hormuz, and Tehran symbolically launched missiles at US military bases, while Trump quickly mediated a ceasefire. The entire process condensed into a single weekend, with BTC's price rapidly declining and then fully recovering.
Market Interpretation: With short-selling leverage building up after three months of consolidation, geopolitical panic has only spurred liquidity grabs, pushing chips from uncertain holders to long-term accounts. ETFs continue to absorb circulating chips, and each macro disturbance accelerates this transfer. BTC is currently fluctuating around $107,000, about 25% lower than this round's peak, but still above the 'buy' zone in the rainbow valuation model (i.e., below $94,000).
2. A Summer of Silence, or Building Momentum Before the Jump?
Although seasonal statistics suggest that the Q3 market may be relatively flat, two structural forces are breaking this trend:
Stable ETF Buying: Experience in 2024 shows that stable ETF capital inflows create a structural bottom. Once miners' selling pressure weakens further and capital continues to flow into corporate treasuries, BTC could quickly surge to $130,000 once it breaks out.
Leadership of the US Stock Market: The S&P 500 index reached a new high on June 27, while Bitcoin lagged behind. Historically, such gaps are often closed by BTC within 4 to 8 weeks. If overall risk appetite remains optimistic, the crypto market may just be 'lagging' rather than 'failing'.
3. The only altcoin narrative currently worth paying attention to: Solana ETF
In a market extremely lacking in 'next big event' narratives, the Solana spot ETF has become the only topic of institutional weight. The SEC's review window for four ETF applications (VanEck, 21Shares, Canary, Bitwise) officially opened in January this year, with a final ruling expected by September at the latest.
If the future Solana ETF structure includes staking rewards, its role will change from 'high Beta L1 trading target' to 'quasi-yield digital equity'. This will lead to staking-related targets (like JTO, MNDE) being included in the ETF narrative. The current SOL price below $150 is no longer pure speculation but an advance layout for 'ETF packaged trading'.
4. DeFi's Fundamental Support
Although Meme coins and rotation narratives dominate the topic heat on platform X, truly cash-flow-generating on-chain protocols are quietly gaining strength.
5. Meme Coins
Recent perpetual contracts launched by Binance, such as $BANANAS31, $TUT, $SIREN, exhibit a 'pump and dump' trading pattern: these low liquidity assets are pumped through perpetual contracts, and funding rates quickly turn negative, while marketers package them as 'sector rotation'. In reality, most of these trades are extractive—non-value-creating. It's recommended to either accept it as a 'Ponzi game' and set clear stop-loss and take-profit points, or simply ignore it completely.
The same warning applies to Meme coins on the Base chain (such as $USELESS, $AURA), which can surge 10x in a day or plummet 70%.
6. New Issuance Projects and Structural Benefits
Robinhood Enters L2: Robinhood has chosen Arbitrum Orbit as its L2 solution, promoting the development of tokenized stocks. This reinforces the 'exchange chain' theory pioneered by Coinbase's Base. Robinhood may leverage its millions of users to boost user activity on Ethereum L2, sparking a wave during the typical summer trading lull.
$H (Humanity Protocol) and $SAHARA (Sahara AI) recent token prices indicate that even after significant early sell-offs, as long as the team has credible planning and a verifiable roadmap, their tokens can still attract positive market buying in secondary trading.
7. Investment Framework for Q3 2025
Core Position: Continuously allocate a large amount of BTC until ETF outflows significantly exceed inflows (this has not yet been observed).
Rotating Beta: Continue building positions in SOL below $160, using it as an alternative to ETFs, along with $JTO and $MNDE for enhanced potential returns.
Fundamental DeFi Portfolio: Equal-weight allocation to $SYRUP, $LQTY, $EUL, $FLUID; rotate profits into underperforming projects when any of them shows outstanding performance.
Speculative Position: Limit the risk exposure of Meme coins to no more than 5% of total net assets; treat every Meme coin on Binance's perpetual contracts as weekly options trading—using small costs for high returns, while setting strict stop-loss points.
Event-driven: Track milestone events for Robinhood L2; in the Arbitrum ecosystem tokens, pre-positioning related catalysts for user growth.
