2025数字资产展望报告

TABLEOFCONTENTS

03AreYou“TooLate?”

ByChrisKuiper,CFA®

04ParallelPathways:

TheEvolutionofthe

InternetandDigitalAssets

ByChapmannChen

06Bitcoinand

MacroDrivers:

WhyIsNoOneTalking

AboutStagflation?

ByChrisKuiper,CFA®

09EthereumOutlook

ByMaxWadington

13TheChanging

LandscapeofBitcoin

ByZackWainwright

18BuildingonBitcoin

ByDanielGray

21Stablecoins:

AsAdoptionandUseCases

Expand,ExpectEvolution

ByMarthaReyes

25DeFiandBlockchain

TrendstoWatchfor

in2025

ByChapmannChen

27ThePossibleDrivers

ofMainstreamAdoption

andDiffusionin2025

ByMattHogan

32Conclusion:

NotTooLate,andHopefully

EarlytoaNewEra

FidelityDigitalAssets®2025LookAhead|2

AreYou“TooLate?”

IntroductionbyChrisKuiper,CFA®

Inour

2024LookAhead

,theFidelityDigitalAssets®Researchteamopinedthatinvestorsshould“prepareforacceleration”with“increasedadoption,development,interestin,anddemandfordigitalassets.”However,noonecouldfullypredictwhat2024wouldbring.

Thedigitalassetsmarketexperiencedtwosignificantwavesofaccelerationinthefirsthalfoftheyearwiththeapprovaloftheexchangetradedproducts(ETPs)followedbyapost-electionsurgeattheendof2024.

Thequestiononmanypeople’smindsisnow,“AmItoolate?”

Toanswerthis,weareremindedofabooktheteamreadanddiscussedatlength,TechnologicalRevolutionsandFinancialCapital,byeconomistCarlotaPerez.

OneofPerez’scorethesesisthattruetechnologicalrevolutionsdonotjustaffectoneindustry.Instead,theyaresolargetheydisruptmultiplefieldsandoverhaulentire

economiclandscapes.Perezusesrailroadsandoilasexamples—breakthroughsthat

reshapenotonlyentireindustriesbutthestructureofproductionandcommunicationtoo.

Bitcoinanddigitalassetscouldfitthistheory.WearepotentiallypastwhatPerezdescribesasanearlyspeculativeperiodaccompaniedbyfinancialboomandbustsandarenow

possiblyenteringthephaseoffurtheradoption.ResearcherJeffreyDingalsoechoesthisideaashesaysitisnotthediscoveryofanewtechnologythathasthegreatesteffectonsocietyandnations.Instead,itisthediffusionthathappensinthedecadesthatfollow

.1

Webelievewearebeginningtoseeearlysignsofmassdiffusionandadoption,manyofwhicharedetailedinthisreport.Althoughthisprocesswilllikelytakedecades,2025hasthepotentialtobetheyearthatislookedbackonasthepivotaltimewherethe“chasmwascrossed”asdigitalassetsbegintotakerootandembedthemselvesintomultiple

fieldsandindustries.Forexample,inthepastyearwehavealreadyseendiscussionsaroundnation-stateadoptionandincreased

corporatebalancesheetadoption

.

Therefore,itmaybetoolateforthespeculatorsthatwantanotherfrenzy.However,

webelievewearestillincrediblyearlyintermsofthisneweraofsustainableadoption,diffusion,andintegration.

ThefollowingisacollectionofinsightsfromtheFidelityDigitalAssetsResearchteamonwhatweanticipatefor2025,beginningwithamoredetailedlookintoadoption

trends.Additionaltopicsincludemacroeconomics,Bitcoin,Ethereum,stablecoins,payments,andmore.

FidelityDigitalAssets®2025LookAhead|3

ParallelPathways:

TheEvolutionoftheInternetandDigitalAssets

ByChapmannChen

ParallelsBetweenInternetandDigitalAssets

Innovativetechnologyoftenstartsatthefringesofsociety—suchasundergroundcommunities—andgraduallygainsmainstreamadoption.Throughouttheprocess,incrementalinnovations

enhanceuser-friendlinessandregulatorycompliance.

Thisprocessisnotlinearandcanvarysignificantlydependingonthetechnology,itspotential

impact,andtheregulatoryandsocietalresponse.Sometechnologiesmayremainonthefringes

duetopersistentethicalorlegalconcerns,whileothersmayrapidlytransitionintomainstreamuse.

Thejourneyfromthefringestomainstreamadoptionisshapedbyacomplexinterplay

oftechnologicaladvancement,societalacceptance,regulation,andculturaladaptation.Thefollowingtablegivesanoverviewofhowtheadoptionofdigitalassetsmightprogressandwhereitmaybetodaybydrawingparallelstotheinternet’sadoptionjourney:

Stage

Definition

Internet

DigitalAssets

Emergence

Thetechnologyfirstbecomesknownandbeginstodevelop.

Academicresearchers

beganusingtheinternetinthelate1980stoshareinformation.

Bitcoinwasreleasedin

2009asapurelypeer-to-peerversionofelectroniccash.

Fringe

Thetechnology

existsoutsidethe

mainstreamandisoftenusedinunregulated

environments.

Earlyusersexplored

anonymous

communication,

whistleblowing,andevadingcensorship.

Earlybitcoinusers

experimentedwithdigitalmoneyinanunregulatedmanner.

Innovation&Legitimization

Theprocessofrecognizingthetechnology'svalueandpotentialforlegitimate

usesbeyonditsoriginalfringeapplications.

Inthe2000s,the

emergenceofecommercedemonstratedthe

internet'spotentialforlegitimatebusiness

applications.

Inthe2010s,blockchainwasacknowledgedforitsapplicationsbeyondpeer-to-peerpayments,suchasfinancialsystemsandsupplychain

management.

Source:FidelityDigitalAssetsResearch.CHARTCONTINUESONNEXTPAGE

FidelityDigitalAssets®2025LookAhead|4

The

DigitalAssetsSpaceIsHere

CHARTCONTINUEDFROMPREVIOUSPAGE

Stage

Definition

Internet

DigitalAssets

RegulatoryAttention

Governmentsbegin

addressingthetechnologythroughthedevelopmentoflegalframeworks.

Astheinternetgrewin2010s,regulators

frameworksissuessuch

developedaddressing

asprivacy,intellectual

property,andecommercetaxation.

Thelate2010sinitialcoinofferingboompromptedgovernmentsacross

theworldtodevelop

regulatoryframeworkstoaddressconcerns

relatedtofraud,moneylaundering,andtaxation.

MainstreamAdoption

Thepointatwhichthetechnologygainsbroadacceptancebysociety.

Theinternetsaw

explosivegrowth,

becominganintegral

partofmodernlife,

affectingcommunication,commerce,work,and

accesstoinformation.

Intheearly2020s,

digitalassetsaregainingacceptanceasan

investableassetclassby

institutionswithadditionalusecasesbeyondfinance.

Cultural

&SocietalImpact

Theinfluenceofthe

technologypermeates

societalnorms,behaviors,andstructures.

Theinternetledtoa

fundamentalshiftinhowsocietyfunctionsandhasreshapedculturaland

societalnorms.

Althoughwehaveyet

toreachthisstage,

blockchaintechnologyhasthepotentialtoreshape

finance,digitalidentity,

informationprivacy,andAIusage.

Source:FidelityDigitalAssetsResearch.

OutlookforMassAdoptionofDigitalAssets

Innovationandevolutionarestochasticprocesseswheretheoutcomesateachmomentaresubjecttorandomnessanduncertainty.However,thereisaprobabilitydistributionthatgovernsthepossibleoutcomes.Whilewecannotpredicttheprecisepathtoadestination,wecanexplorethepotential

finalstates.

Thereisgrowingrecognitionofthevalueofdecentralization,whichenhancessecurityandsystemic

resilience.Blockchainplatformsareevolvingtoaccommodatemodularization,allowingorganizationsto

customizesolutionstotheirspecificneeds.Simultaneously,publicdemandfordataprivacyandownershipisontherise,promptingthedevelopmentofprivacyenablingtools.

Theevolutionofblockchainanddigitalassetsfromtheirideologicalrootstomassadoptionreflectsthe

dynamicinterplaybetweeninnovation,societalacceptance,andregulatoryclarity.Whiletheoriginalvisionofafullydecentralizedfinancialsystemfacesgrowingchallengesfromcorporateinfluenceandregulators,thecoreprinciplesofdecentralization,modularization,anddataprivacyremaincentraltoitsongoing

development.Asdigitalassetscontinuetomature,theassetclasscouldpotentiallystrikeabalancebetweenpreservingitsfoundationalidealsandadaptingtotherealitiesofmainstreamacceptanceandcommercialization.

FidelityDigitalAssets®2025LookAhead|5

BitcoinandMacroDrivers:

WhyIsNoOneTalkingAboutStagflation?

ByChrisKuiper,CFA®

Inour2024LookAhead,theteamspeculatedwhetherthenarrativeofbitcoinasa“growthstockonsteroids”wouldshiftto“goldonsteroids”in2024.Itappearsthisdidhappenasbothgoldandbitcoinmovedtogetherinthefirstpartoftheyear,thengoldcontinueditsclimbwhilebitcoinremainedflatinthemiddleoftheyear.Bitcoinhassinceregaineditsascension,outpacinggoldagain:

BitcoinandGoldPriceYTD

GoldPrice(Left)

$3,000

$100,000

$2,800

$90,000

$2,600

$80,000

$70,000

$60,000

$2,200

$50,000

$2,000

$40,000

$30,000Dec-24

Source:FidelityDigitalAssetsResearchviaGlassnode,12/12/24.

BitcoinPrice(Right)

Apr-24May-24

$110,000

Aug-24

Sep-24

$2,400

$1,800

Nov-24

Feb-24

Oct-24

Mar-24

Jun-24

Jan-24

Jul-24

However,itistruethattechstocksalsoralliedduring2024andcorrelationsbetweenbitcoinandtech

stocksremainedhigh,sotherewasnotashiftorrotationfromonetoanother.Itappearsthatthesustained“riskon”appetiteforinvestorscontinues.

Now,anewquestionarises:Wherecouldwegofromhere?Inarecentblog,wenotedthatthebiggestmacrodriversofbitcoincontinuetobe

liquidityandinflationexpectations

.

TheFederalReserveisnowembarkingonaratecuttingcourse,whichgenerallyhasledtomoreliquidity.MonetaryaggregateslikeU.S.M2andglobalM2areonceagainonanupwardpath,andwethinkthat

anyfinancialmarketdisruptionsinthenextyearwillbemetwithevenmoreliquidityasithasbecomethecentralbanker’stoolofchoicetoquellvolatilityanddislocations.This,inturn,ishistoricallybeneficialfordigitalassetprices.

FidelityDigitalAssets®2025LookAhead|6

Whenlookingatinflation,weoftenreflectonthe1970sand1980s,whichiswidelyregardedasonelarge,continuousdecadeofhighinflation.Acloserexaminationrevealstherewereatleasttwo(andarguably

three)distinctwavesofinflationthattookplace.Whilepastperformanceisnotindicativeoffuture

performance,wedofindsomestrikingsimilarities—mostnotably,thenotionthatcentralbanksbelievetheyhavetamedinflation,onlytoseeitreturnstronger.

Year-over-YearChangeinCPI:1966-1983vs.2014-2024CPIY/YChange-1966StartCPIY/YChange-2014Start

17%15%13%11%9%7%5%3% 1%-1%

Source:FidelityDigitalAssetsResearchviatheU.S.BureauofLaborStatistics,12/12/24.

Currentinflationmeasures,suchasCPIandPPI,aresignificantlylowerthanprevious40-yearhighs.

However,theyremain“stubborn”or“sticky,”resistingareturntothecentralbank’spreferred2%target.Combinethiswithcontinuedlargeandstructuralfiscaldeficits—alongwithaFedthathasnowembarkedonaratecuttingcycle—anditisnotdifficulttoimagineinflationcomingbackinasecondwave.

ThisiswhythelongendofthebondcurvemaystillbehighwithratesactuallyincreasingdespiteinitialratecutsbytheFederalReserve.Wethinkthisiswhatgoldhadbeen“sniffingout”throughout2024andnowthelong-termbondmarketisaswell—thepotentialforstickyorevenreacceleratinginflation.

Ifthistrendcontinuesandtheoutcomeisanythingworsethana“softlanding”andahistoricallytypical

recession,itcouldquicklyescalateintostagflation.Whilethisisnotaprediction,wedofinditunusualthatitisnotdiscussedmoreasapossiblescenario.

HowCouldBitcoinFareUnderaStagflationScenario?

Sofarinitsrelativelyyounglife,bitcoinhasneverencounteredastagflationaryenvironment.Althoughit

experiencedatechnicalrecessionduringtheCOVID-19pandemicandunderwentasignificantdrawdown,theperiodwasbrief.Bitcoinrecoveredquicklyalongsideotherassetslikeequities.Duringthistime,GDPcontracted,butthehighinflationdidnottakeholduntilafterward,avoidingthestagflationscenarioofhighinflationcoupledwithlowordecliningGDP.

FidelityDigitalAssets®2025LookAhead|7

Basedonourresearch,wethinkiftheU.S.weretoencounterastagflationscenario,theperformance

ofbitcoinwoulddependonthefiscalandmonetarypolicyresponse.Iffiscalandmonetaryinstitutions

chosetofightthe“stag”partoftheproblemthroughincreasedspendingormonetarytools,bitcoincouldpotentiallyperformwell,albeitlikelywithanotherlag.

However,ifcontrollingthe“flation”partbecomesthehigherpriorityandisaddressedwithsignificantreductionsinthemoneysupply,liquidity,andfiscalspending,thenbitcoincouldpotentiallyface

headwindsonarelativebasis.

Anotherwaytoconsiderbitcoin’spotentialinastagflationscenarioistoanalyzehowgoldperformedduringthestagflationeraofthe1970sandearly1980s:

Goldvs.CPIYear-over-YearChanges

Gold-Y/YChange(Left)CPI-Y/YChange(Right)

16%

14%

12%

10%

8%

6%

4%

2%

0%

Source:FidelityDigitalAssetsResearchviatheU.S.BureauofLaborStatistics,12/12/24.

200%

100%

150%

-50%

50%

0%

Noticehowgoldralliedthehardestinthe“secondwave”ofinflation.

Whilewemaynotknowwhatthefutureholdsforthemacroeconomicenvironmentfor2025,wedothinkbitcoinmaycontinuetoprovidebenefitsinaportfolioformultipleeconomicscenarios.Ifarecessiondoesoccur,itwilllikelyberespondedtowithadditionalmonetaryandfiscalstimulus,whichhistoricallyhas

beengoodforbitcoin.

Ifriskassetscontinuetoappreciateandinflationcontinuestorunabovethe2%target,bitcoinwillalsolikelydowell.Bitcoinwillonlyfaceobstaclesonarelativebasisifthereisadrasticcutinfiscalspendingandslowingorreversingofmoneycreation.However,inouropinion,thisistheleastlikelyscenariogiventhefiscalsituationofhighstructuraldeficitsandahighlyindebtedmonetarysystem.

FidelityDigitalAssets®2025LookAhead|8

EthereumOutlook

ByMaxWadington

WastheRollup-CentricRoadmaptheRightChoice?

Therollup-centricroadmapwasdesignedtoscaleEthereumwhilekeepingtheLayer1blockchaineasytorun.However,sincetheDeneb-Cancunupgrade,therehasbeendebateaboutthisdecisionasLayer1feeshaveplummeted.However,ourviewpointpresentedlastyearremainsfirm.Wecontinuetobelievethat

revenuefromtheblobmarketisunlikelytooffsetthedramaticdecreaseinrevenuecreatedbythepreviousupgradeintheshortterm,yetitstillcarrieslong-termpositivebenefitsthroughimprovednetworkeffects.

WhilemanyinvestorsfocusedoncashflowsmayviewLayer2sasvalue-extractive,wethinkofthe

relationshipbetweenLayer2sandEthereumasmutualistic.ThebaselayerbenefitsfromLayer2s

providingcheaptransactionexecutionandfurtheringthedistributionoftheethertokenwhilebeingabletokeepthecoreethosofdecentralizationintact.

Layer2sbenefitfromEthereumbyinheritingsomelevelofitssecurity,leveragingitsliquidity,and

enhancingthefocusontheirownvaluepropositions.Themutualisticrelationshipholdsaslongas

EthereumofferscheapdataavailabilityandlargeliquiditytoLayer2s.Thesewillbeimportantmetricstowatchtodeterminethelonger-termsuccessoftherollup-centricapproachforEthereum.

BlobCountandFees

BlobCount(Left)EstimatedTargetBlobSupply(Left)TotalBlobFees(Right)

$1,000$900

25,000

20,000

15,000

10,000

5,000

0

Thousands

$800$700$600$500$400$300$200$100$0

Mar-24Apr-24May-24Jun-24Jul-24Aug-24Sep-24Oct-24Nov-24

Source:FidelityDigitalAssetsResearchviaCoinMetrics,11/14/24.

Thecharttitled“BlobCountandFees”showsblobfeescanbeseenasalong-termpositiveforEthereum’snetworkeffects,specificallyenablingLayer2stoonboardmoreuserswhointeractwithether.ThisisnottosaythatEthereumhasgivenuponfuturecashflowsentirely.Themostlikelyfutureendgoal,asstatedbydevelopers,isthatcashflowswillcomenaturallyafternetworkeffectshavegrownsignificantlyduetothepositivedifferenceinadoptionovertimerelativetothegrowthinissuance.

FidelityDigitalAssets®2025LookAhead|9

EthereumcoredevelopersandmembersoftheEthereumfoundationhaverecentlystressedthe

importanceoflowfeesforLayer2stogrowtheiruserbase

.2

Highfeescouldpushrollupstoother

options,emphasizingtheneedfornear-zerofeestokeepLayer2swithintheEthereumecosystem.Duetodevelopers’clearlystatedpriorities,weexpectmoreLayer2announcementsin2025,andspecificallythosethatareforspecializedusecasessinceapplicationsliketheEthereumNameService(ENS)seethebenefitofcustomizingtheentiretechstackfortheirspecificusecase

.3

Solanavs.Etherin2025

Wethinkfundamentalsaremostimportantforlong-terminvestors.Withthatsaid,Ethereumhasstrong

developeractivity,totalvaluelocked(TVL),andstablecoinsupply.Comparatively,Solana’srevenueand

TVLareimprovingatafasterratethanEthereum’sandseemtohavecapturedsignificantcommunity

mindsharethispastyear.AnimportantcaveathereisthatalargeportionofSolana’srevenuecomesfrommemecointrading,whichweviewasacyclicaltrendthatremainsstrongduringbullmarketsbutpullsbacksignificantlyduringbearmarkets.However,asimilarargumentcouldbemadeforEthereum’smainuse

casebeingUniswap.Whiletheseusecasesaresimilar,webelieveEthereumfundamentalsareslightlylessdependentonspeculationandmaybelessvolatileoverthelongterm.

Itisimportanttonotethatthesefundamentalstypicallyinformlong-terminvestorsandmaynotnecessarilyindicatewhichwilloutperformoverasingleyear.

Short-termpricetrendsoftenrevolvearoundnarratives,andSolanamaybethemorenotablecontenderinthisregardthroughout2025giventheplannedupgradesforbothnetworks.Solana’sFiredancer

upgrade—whichhasbeenhighlyanticipatedwithinthecommunity—promisesasubstantialincreaseintransactionspersecond(TPS),whichmaydirectlyenhanceSolana’svalueproposition.

Conversely,Ethereum’sPrague/Electraupgradeisexpectedtogeneratelesscommunityhypeasitdoesnotsignificantlyimpactether’svalueproposition.WhiletheupgradeenhancescorefeaturesthatmakeEthereumunique,suchasitsunrivaledsecuritydesign,itisrelativelylessimpactfulfromaninvestmentstandpoint.

Currently,aclearadvantagethatetherhasoverSolanaisitsaccessibilityviaETPs.Whileitispossiblethatthisadvantagemaydisappearatsomepoint,itisuncertainiforwhenthismightoccur.Itiscleartosee

thatadecisionfromregulatorsineitherdirectioncouldeithersolidifyether’sadvantageinthisareaorcompletelyremoveit,makingitanimportantdevelopmenttotrackin2025.

AlthoughSolanaappearstohavemoreshort-termtailwindsthanether,itsrelativeperformancecould

providesignificantupsideforether,similartohowSolana’spriorunderperformanceprovidedasubstantial

runwayleadinginto2024.Aspricesgetextendedthroughoutthisbullmarket,investorswilllikelyincreasinglyfocusonfundamentals,whichmayswaythembackintoether.

FidelityDigitalAssets®2025LookAhead|10

Ether’sMonetaryOutlook

SincetheDeneb-Cancunupgrade,ether’smonetaryoutlookremainsstable,withtheannualizedinflationrateofetherin2024at0.22%.ThisindicatesthatevenwithhistoricallylowLayer1activity,supplyremainsrelativelystable.AftercorrectlypredictingthatLayer1transactiondemandwouldnotsurpasstheloss

toLayer2sinlastyear’sLookAhead,wecontinuetobelievethatethersupplyislikelytobeslightlymoreinflationarythandeflationaryoverthenextfewyears.Althoughthebaselayerhasexperiencedperiodsofhigherfees,especiallyduringtherecentrun-upinpriceandevenintimesofmarketturmoil,these

occurrenceshavenotbeenfrequentenoughtooffsetissuance.

EthereumL1FeesandTransactions

L1TransactionCount(Left)L1Fees(Right)

2.5

2

1.5

Millions

1

0.5

0

$40

$35

$30

$25

Millions

$20

$15

$10

$5

$0

Jan-24Feb-24Mar-24Apr-24May-24Jun-24Jul-24Aug-24Sep-24Oct-24Nov-24

Source:FidelityDigitalAssetsResearchviaCoinMetrics,11/14/24.

Thecharttitled“EthereumL1FeesandTransactions”highlightsanimportantpoint.Althoughmore

transactionsareoccurringonLayer2s,transactionsonthebaselayerhavenotfallencomparedtobeforetheupgradeeventhoughthefeespaidfromthosetransactionshavedecreasedsubstantially.ThiscouldimplythateventhoughEthereumhasprioritizedLayer2improvements,usersstillseeutilityintransactingonthebaselayer.

Lastly,forthosestillholdingoutforEthereumtoprovidefreecashtoinvestors,thereisapossibilitythatreductionstoissuancecouldbeimplementedinthenextfewyears,potentiallyacceleratingthepointatwhichtotalfeesburnedexceedissuance.

FidelityDigitalAssets®2025LookAhead|11

Ethereum’sscalingroadmapcanbesummarizedbyanattempttoincreasethenumberofblobsover

time.MoreblobscombinedwithmoredemandfromusersonLayer2smeansmoreabsolutepayments

toEthereum.Ifdemandcontinuestoincreaseoverthelongterm,wethinkitispossiblethatthetotalfeespaidfromLayer2scombinedwiththefeesfromtheLayer1couldeclipsetheamountofetherissuedeachyear,thereforepossiblyprovidingfreecashtotokenholdersintheformofanetdeflationarysupply.Thepathtogetherewilltakesignificantimprovementsinthesupplyofblobs,whichwethinkisdoableina

relativelyshorttimeframe.TheleverforinvestorstowatchwillbetherateofadoptionofLayer2sthatis

requiredtosaturatetheblobsupply.Lastly,developersarecomingaroundtotheideaofscalingLayer1inadditiontosupportingrollupswhichisasignificantlypositivedevelopmentforthosewhovaluecashflows.

Whilewedonotexpectrevenuefromblobstobemeaningfulnextyear,webelievethatEthereumcouldreachapointofproducingfeesaboveissuancewhilealsoprovidinglowfeetransactionoptionstoitsusersoverthelongterm.

Althoughthiscanbedifficulttomodelout,therationaleforthisstanceisbasedonthepositivedifferenceinthesupplyoftransactionsonEthereumversustheincreaseinissuanceovertime.Whilethisisunlikelytooccurin2025,whatweshouldbelookingforislowfeesforLayer2swhiletheycontinuetoincrease

theirthroughputoverthenextyear.KeepingLayer2feeslowoverthenextyearwillbeeasiergiventheincreaseinblobsupplyinthePrague/Electraupgrade.However,thedemandforblobspacefromLayer2shasgrownsteadilysincetheupgrade,reflectingthecontinuousriseinuseractivityacrosstheLayer2landscape.

EthereumUpgradestoLookOutFor

TheupcomingEthereumupgradesincludeseveralkeyfeaturesandimprovements:MaxEB,BlobSupplyIncreases,PeerDAS,EOF,andVerkleTrees.TheseenhancementsarecrucialfortheEthereumroadmapastheyaddressscalability,efficiency,andnetworkperformance.

ThePrague/Electraupgrade,slatedforfirsthalfof2025,featuresseveraloptimizationsrelatedtotheproof-of-stakemechanismandotherLayer1changes.Initially,itwassettobethelargestupgradeinEthereum’shistory,aimingtoimprovealmosteverycoreaspectofEthereum.However,thescopehasbeenlimitedtofocusonacleanupofTheMergeandshort-termsolutionsforscalingLayer2s.

Themostpositiveimprovementforinvestorstoconsideristheincreaseinblobcounttoatargetofsixandamaximumofnine.ThisshouldprovideLayer2swithenoughrunwaytoremainalignedwithEthereum

untilPeerDASisreadytobeimplemented.ThisalignswithourprojectionofsignificantlymoreLayer2scomingonlinealongwiththeirfurtherspecialization.

WeexpectPeerDAStobeoneofthemostbullishupgradestoEthereum.Itcouldbethefirststepin

solidifyingEthereum'sprobabilityofprovidinguserswithlowtransactioncostsandfreecashflowtoalletherholdersduetoitsabilitytoallowEthereumnodestohandleasignificantlyhigherthroughputof

blobs.CurrenttimelineestimatessuggestthatthePrague/ElectraupgradewillbeimplementedinQ2of2025andPeerDASsometimein2026.

FidelityDigitalAssets®2025LookAhead|12

TheChanging

LandscapeofBitcoin

ByZackWainwright

TheMiningFeeSqueeze

Asbitcoinjoinsthetraditionalfinancialsystem,itsinvestorbasehasshifted.Lessfocusonself-custodycoupledwithagreaterabilitytotrustinstitutionalthirdpartieshasledtolessactivityonBitcoin’sbaselayer.Minershavefacedadualchallengein2024,asaveragefeesperdayhavedeclinedthroughouttheyearalongsidetheblocksubsidybeinghalvedinApril.

AverageFeesperDay(BTC)AverageFees

250

200

150

100

50

0

Jan-24Feb-24Mar-24Apr-24May-24Jun-24Jul-24Aug-24Sep-24Oct-24Nov-24

Source:FidelityDigitalAssetsResearchviaGlassnode,11/11/24.

ThemaindriverbehindthisdropinfeeshasandcontinuestobespotbitcoinETPs,whichlaunched

inJanuary2024.Thisalternativehasgiveninvestorsthesamelevelofexposuretobitcoinwiththe

conveniencesthatcomewithtraditionalfinance—anditappearsdemandforsuchaproductishistoricallyhigh.BitcoinETPsintheU.S.nowholdoveronemillionbitcoin,or5%ofthetotalsupply

.4

FidelityDigitalAssets®2025LookAhead|13

BitcoinHeldinETPs

0Jan-24Feb-24Mar-24Apr-24May-24Jun-24Jul-24Aug-24Sep-24Oct-24Nov-24

Source:FidelityDigitalAssetsResearchviaGlassnode