a16z: 5 crypto metrics to watch in 2025

2024 may well go down as the most exciting year in the history of the crypto industry. Crypto activity and usage are at all-time highs. Blockchain infrastructure has improved significantly, and transaction fees have decreased. Stablecoins have found product-market fit. The inevitable intersection of crypto and AI has become clearer. Bitcoin and Ethereum ETPs have been approved. The legislative and regulatory environment now provides a positive path forward for the industry. All of this sets the stage for another exciting year.

As we consider what’s next for cryptocurrencies, we’ll be keeping an eye on the following five indicators to track the industry’s continued development. (For additional indicators, you can also check out our State of Crypto Index, which will be released in 2023 to track broader industry innovation and adoption.)

1. Number of mobile wallet users per month

To attract the next wave of cryptocurrency users, we need to bring the user experience (UX) closer to that of web2 applications. Mobile wallets will play a key role here: hundreds of millions of "passive" cryptocurrency owners (people who own cryptocurrency but do not regularly transact on-chain) can be transformed into active cryptocurrency users. To do this, developers need to continue to build new consumer applications, and consumers need wallets to participate.

Last month, the number of mobile wallet users hit an all-time high, surpassing 35 million for the first time. This was driven by growth from established brands like Coinbase Wallet, MetaMask, and Trust Wallet, but also by some new players like Phantom and World App.

Consumer wallets present developers with one of the toughest challenges in the industry — finding the right balance between security, privacy, and usability is no easy task. But with blockchain infrastructure today able to handle hundreds of millions or even billions of on-chain users, now is the perfect time to build the next generation of mobile wallets. We’ll be watching these developments closely in 2025.

Track monthly mobile wallet users here.

2. Adjusted stablecoin trading volume

Stablecoin activity picks up in 2024 as infrastructure builds to drastically reduce transaction fees. Notably, stablecoins are used not only for cryptocurrency transactions, but also for cross-border payments and remittances; to purchase goods and services; and as a store of value, especially in countries with rampant inflation. Stablecoins are already the cheapest way to send remittances, and we expect businesses to increasingly accept stablecoin payments.

Driven by these favorable factors, on-chain value settlement should continue to grow in 2025. While we can easily measure transaction volume using on-chain data, isolating true organic stablecoin usage can be difficult. Transactions can be initiated manually by end users or programmatically by bots, and some of these on-chain transactions do not resemble traditional settlements.

Fortunately, Visa has created a clear and simple way to demonstrate how stablecoins are used while adjusting for inorganic activity from bots and other artificial inflationary behavior.

If stablecoin adoption (one of the most obvious use cases for cryptocurrency) starts to take off in 2025, this metric will be worth watching.

Track stablecoin trading volume here.

3. (Bitcoin and Ethereum) ETP Net Flow

The U.S. SEC approved exchange-traded products (ETPs) for Bitcoin and Ethereum last year. This is an important milestone that makes cryptocurrencies more accessible to individual and institutional investors. However, it will take time to activate distributors such as Goldman Sachs, JPMorgan Chase and Merrill Lynch, who can include these products in retail investors' portfolios.

One way to measure ETP activity is through “net flows,” which represent the amount of BTC or ETH that flows into or out of an ETP. (Excluding existing products like the Grayscale Bitcoin and Ethereum Trust, which eventually convert into ETPs.) So far, there have been 515,000 net flows of BTC (corresponding to $110 billion in on-chain holdings) and 611,000 net flows of ETH (corresponding to $13 billion in on-chain holdings).

As more institutional investors seek exposure to crypto assets, this should translate into increased net flows of ETPs. Tracking on-chain deposits and withdrawals to addresses identified as ETP custodians allows us to monitor this data in real time.

Track ETP net flows here and here.

4. The proportion of DEX to CEX in spot trading volume

As more people join blockchain, we expect decentralized exchanges (DEX) to become more used than centralized exchanges (CEX) for cryptocurrency trading. After all, the core premise of cryptocurrency is decentralized finance, or DeFi. As the DeFi ecosystem grows, the share of spot trading on DEXs has steadily grown to around 11% over the past few years, and we expect this trend to continue through 2025.

Recently, transaction volumes on high-throughput chains such as Coinbase’s Base and Solana have surged as new users enter the space, driving DEX volumes to all-time highs.

As more and more new consumer applications come online, the importance of decentralized exchanges will likely continue to grow, further boosting the growth of DEXs.

This will be an important metric to watch as we monitor the changing balance between decentralized, crypto-native activity and centralized crypto exchanges.

Track the spot trading volume of DEXs relative to CEXs here.

5. Total transaction fees (block space requirements)

The total amount of transaction fees denominated in USD reflects the total demand for block space on a particular chain, which is the actual economic value.

However, since most projects are explicitly trying to keep user fees low, there is a lot of nuance to this metric. That’s why it’s also important to consider unit transaction costs (i.e., the cost of a given amount of blockchain resources). Ideally, overall demand (total transaction fees) grows, while gas fees (cost per unit of resource usage) stay low.

In November 2024, Solana charged more fees than Ethereum for the first time (see chart below). Notably, this milestone was achieved while Solana’s unit transaction cost was significantly lower; sending USDC on Ethereum costs about $5, while sending USDC on Solana costs less than 1 cent. This is an important milestone that we will continue to monitor.

Many ecosystems and their associated fee markets are maturing, and now is a good time to start measuring the economic value that various blockchains bring. In the long run, demand for block space (measured by the total dollar value of fees paid) may be the most important metric for tracking the progress of the crypto industry. Why? Because it reflects participation in valuable economic activities, and users' willingness to pay for those activities.

Block space requirements are tracked here via transaction fees.

We track several metrics for the industry, including our annual State of Crypto report — but this year we’ll be keeping a close eye on these five. As investor pipeline expands, the industry will be well-positioned to attract more users and builders; as infrastructure matures, paving the way for compelling new applications; and as more hot products, like stablecoins, emerge. Let’s see what else gets built this year and moves these metrics forward.