KuCoin Ventures <> Animoca Research: Crypto Outlook 2026 Report Q&A

 

2026 is a year that holds both significant uncertainty and traceable opportunities. We believe it will mark a structural shift in the asset pricing logic of Crypto. The influence of the traditional "four-year bull/bear cycle driven by Bitcoin halving" will significantly diminish. Market pricing power will no longer be dominated by the supply side (miners) but will instead be collectively driven by Global Macro Liquidity (monetary policies of the Fed/BOJ), Technological Narratives (AI computing demand), and Geopolitics (monetary sovereignty and capital controls). Crypto is no longer an isolated island on the edge of the internet; it has officially become a crucial subset of the global "Big Finance + Big Tech" sector.

 

Against this backdrop, the forces driving the bull market and industry growth will undergo a qualitative change. Mere TVL stacking or user subsidies can no longer propel the main narrative. The return to intrinsic value will become the main theme:

 

• Real Revenue is King: TVL growth driven solely by subsidies and inflation is unsustainable. Whether it is a DeFi protocol or a public chain, it must prove its ability to generate external cash flow. As observed in our previous On-Chain Trading Shakeout report (Link), protocols capable of capturing real transaction fees will command a premium.

• Implementation of AI x Crypto: A series of past projects seem to have proven that pure Web3 solutions do not possess an advantage in the competition of Large Language Models (LLMs). However, with the rise of the AI Agent Economy, Crypto will become indispensable infrastructure for various AI applications. It provides AI Agents with a borderless, permissionless, highly efficient, and extremely low-cost machine-to-machine payment network and property rights confirmation—capabilities that the traditional identity-dependent SWIFT system cannot match.

• Playground for Innovative Developers: Web3 remains the best testing ground for entrepreneurs' "crazy ideas." Unlike the traditional internet, which has become a labor-intensive industry (e.g., tech giants with tens of thousands of employees), the origins of Uniswap, Curve, Polymarket, and PumpFun were all small, agile teams or individuals. We believe "Super Individual" developers will use unique perspectives to validate business models on-chain quickly and at low cost. Great revolutions are often born in Web3 applications that initially appear rough around the edges.

 

 

As the proportion of unmined BTC decreases with each halving, we believe 2026 marks the gradual transition of Crypto from an "Endogenous Miner Cycle" to an "Exogenous Macro Cycle." The crypto asset cycle will no longer be a simple four-year loop but is now deeply embedded in the global "Big Finance + Big Tech" narrative. We must bid farewell to the dogma of the "four-year halving cycle" and embrace structural growth and changes driven by macroeconomics.

 

Our investment strategy focus is divided into three layers:

• The Monetary Layer: Infrastructure such as smart contracts, stablecoins, and high-speed public chains will reshape the global value settlement network and liquidity carriers. We aim to capture liquidity premiums in a high-interest macro environment and drive the evolution of money from "static value storage" to "dynamic interest-bearing payments." We are focusing on Stablecoins 2.0 (compatibility of yield and payments, dedicated stablecoin chains, settlement tools/aggregators), RWA (financial/non-financial physical assets and related infra), and PayFi (capital efficiency demands in strong currency regions vs. anti-inflation savings, low-cost cross-border remittance, and merchant settlement systems in developing countries/regional alliances).

• The Trading Layer: Catering to institutional-grade risk management and gaming demands to build a new paradigm for information discovery and risk hedging. The scope of on-chain trading objects we monitor will expand significantly. utilizing perpetual contract mechanisms, synthetic assets, and oracles, on-chain perpetuals will become the best venue for trading global assets (e.g., US stocks, commodities, forex, and even carbon credits). This solves the inefficiency of T+1/T+2 settlement and the time/regional restrictions of traditional finance, achieving 24/7 global liquidity access. We view Prediction Markets not just as gambling, but as "accountable" financial derivatives. They allow institutions to hedge against non-standard real-world risks—a new hedging paradigm based on "events" rather than "assets." Meanwhile, on-chain technology can standardize complex OTC derivatives, structured notes, and even private debt via smart contracts, making them tradable and liquid.

• The Intelligence Layer: Providing payment and property rights infrastructure for the AI Agent Economy—specifically, the application of AI x IoT x Robotics x Crypto, or network convergence. Web3 can empower more grounded AI application scenarios; for example, AI + Hardware in office or entertainment settings. We focus on payment infrastructure supporting high-frequency, micro-amount, instant settlements, and even Agent-exclusive exchanges that allow AI Agents to autonomously purchase computing power, API interfaces, storage space, or electricity. In an era flooded with AI-generated content, we also focus on ownership, identity confirmation, and decentralized verification of AI deepfakes.

 

Investment Discipline: We insist on finding projects with real yield, verifiable demand, and compliance resilience. We do not wish to invest in fleeting bubbles but prefer projects that, based on clear boundaries of compliance and risk, can demonstrate a clear revenue curve within the next 12-24 months and possess a clear path for liquidity/exit.

 

 

In 2025, the activation of the UNI fee switch, allowing UNI to directly capture protocol value, was a landmark event. We believe adoption growth in 2026 will no longer be driven by purely symbolic governance tokens but will concentrate on two areas capable of generating external cash flow or solving actual pain points: Institutional-grade High-Yield Non-Standard Assets and Consumer-grade Payment Finance & Physical Assets.

 

Institutional Scenario: The core breakthrough lies in revitalizing specific non-standard assets.

• Core Logic: In the past, RWA was mainly about putting US Treasury bills on-chain to solve the issue of risk-free returns for crypto users or low-risk exposure for non-crypto users. Now, we are also looking at the on-chain demand for non-standard assets. Crucially, the assets worth revitalizing are not "junk assets" with no demand, but high-quality assets that perform strongly in regional markets and have potential global demand, yet suffer from fragmented liquidity due to infrastructure limitations. The core value of blockchain lies not in creating demand, but in eliminating the friction costs of cross-border investment and lowering entry barriers.

 

• Major Use Cases:

  • Interest-bearing Stablecoins/Institutional Crypto Wealth Management: Institutions require capital efficiency. Idle institutional funds on-chain need more diverse, risk-controllable sources of return. Yields from RWA, Delta Neutral strategies, and on-chain structured products are rigid demands for future capital.

  • Infrastructure Financing & Revenue Distribution: Against the backdrop of the AI explosion, demand for computing power and energy has skyrocketed. We will see heavy assets with actual cash flows—such as data centers, charging networks, and photovoltaic energy storage—financing via blockchain and transparently distributing generated revenues. Backed by assets, the related tokens are no longer "air," but represent real future cash flows like rent or compute fees.

  • Liquidity Release for Private Equity: Using stablecoins and tokenization technology to fragment private equity shares (which typically have 7-10 year lockups) and provide a liquidity window for early exit via secondary markets. This solves the biggest pain point of traditional finance: the liquidity discount. By moving on-chain, these massive, dormant assets become tradable, collateralizable "active money." Of course, issues regarding pricing valuations and liquidity require further refinement by entrepreneurs.

 

Consumer Scenario: PayFi & "Tradable Everything"

 

• Core Logic: The consumer side will bifurcate: Financial applications will pursue extreme capital efficiency, while non-financial applications will pursue the minimization of transaction friction in the physical world.

• Major Use Cases:

  • The Rise of PayFi: Traditional payment is just "consumption," whereas PayFi allows funds to earn interest via various strategies right up until the second before consumption, achieving extremely high capital efficiency.

    • Scenario: Crypto payment cards supporting stablecoin lending/wealth management. Users don't need to manually sell coins to top up; funds remain in the card enjoying on-chain DeFi yields. Only at the instant of swiping does the smart contract automatically flash-swap for payment, or pay via DeFi borrowing without selling the crypto position. This is a "dimensional strike" against the traditional bank demand deposit model. Furthermore, instant settlement within IoT networks or between various AI Agents is also a key scenario for PayFi.

 

• Physical Assets On-Chain: The boundary for physical assets is wide. Beyond common financial products and real estate, the previously popular "On-Chain Pokemon Cards" RWA trend shows that physical goods with scarcity, high regional turnover, and authentication difficulties (trading cards, luxury watches, designer toys, points) have a demand to be moved onto the blockchain to access global liquidity.

  • Scenario: Blockchain solves the "rights confirmation" and "traceability" issues. This isn't just about NFTs for images/videos, but the ownership of the physical object behind the trade. It turns niche hobbies popular in specific regions into a massive alternative asset trading market.

 

 

Core Challenges: The Compliance Cost Paradox & The Fairness Crisis in Growth Markets

 

• The "Double-Edged Sword" of Compliance: Startups face a dilemma—non-compliance brings survival risks (delisting/sanctions), while compliance brings extremely high commercial costs (licenses/audits/system transformation).

  • 2026 Development: We look forward to the maturity of the "Compliance Stack." For example, on-chain identity verification implemented via ZK technology allows projects to meet regulatory KYC/AML requirements without touching user private data. We also hope for the launch of lower-cost solutions.

• Failure of Asset Issuance Mechanisms: Retail investors felt exhausted in this cycle because the issue of high-valuation institutional projects not only overdrew the secondary market's potential but also destroyed fairness.

  • 2026 Outlook: The solution lies in the reconstruction of the "Asset Issuance Paradigm." The market has an urgent need to return to "Fair Launches" similar to the early DeFi or Inscription eras. Many projects are currently seeking solutions, such as utilizing on-chain reputation systems and Proof of Contribution (liquidity/compute/content) to distribute rewards to true early participants rather than just capital whales.

• Further Return to Fair Issuance Paradigms: Drawing on the fairness of early DeFi or Memes, combined with the "accountable for results" mechanism of prediction markets, may help establish token distribution models based on real contribution (liquidity, prediction accuracy, computing power).

• Invisibility of Infrastructure: Fragmented liquidity and complex interactions (cross-chain/signing) remain high walls blocking Mass Adoption.

  • We hope technologies like Chain Abstraction can be further implemented to thoroughly solve liquidity fragmentation. Users shouldn't need to know which L2 they are trading on, just as users don't need to know which specific routing network the issuing bank and acquirer used when swiping a Visa card.

 

 

The biggest turning point in 2025-2026 lies in the reversal of the US attitude— from a regulatory gray area to fertile ground for crypto. This not only brings clear legislation (Stablecoins/DAO/DeFi) but also triggers global regulatory competition. Meanwhile, 2025 also saw steady regulatory progress across major jurisdictions, with more markets moving toward clearer licensing and compliance frameworks for crypto.  With SEC Chair Paul Atkins announcing that new "Innovation Waiver Rules" will take effect in January 2026, the US will transform from a "regulatory blur" to an "institutional sandbox," further attracting crypto entrepreneurs.

 

Our Expected Impacts:

• Elimination of Uncertainty Discount: Although compliance costs may rise, the biggest obstacle to institutional entry—policy uncertainty—will be eliminated. This will pave the way for large traditional institutions to enter the RWA and Stablecoin sectors.

• Trading "Time" for "Space": The new rules allow projects (including DeFi, Stablecoins, DAOs) to operate with simplified information disclosures during a 12-24 month waiver period, without needing complex S-1 registration. This approach trades "time" for "space," directly lowering the compliance startup costs for teams and allowing for rapid PMF verification.

• Global Regulatory Competition: Due to the rapid shift in US regulatory attitude, we expect to see non-US regions (such as Hong Kong S.A.R, the UAE, Singapore, etc.) move from passive policy following to differentiated competition.

• Specific Expectations: We highly anticipate regulation moving from a "one-size-fits-all" approach to risk-based refined regulation or tiered regulation. High systemic risk businesses (like high-leverage lending) should be strictly regulated, while innovative tracks like prediction markets, decentralized social, and Web3 payments should see relaxed KYC/AML thresholds to avoid stifling innovation in the cradle.