Author: Samuel | OKG Research
Two days after Donald Trump was sworn in as the 60th President of the United States, he signed the 'STRENGTHENING AMERICAN LEADERSHIP IN DIGITAL FINANCIAL TECHNOLOGY' executive order on January 23, 2025. This policy is seen as strong support from the US for innovation in crypto assets and economic freedom, marking an adjustment in the policy landscape of digital financial technology. Notably, the document explicitly emphasizes the importance of maintaining the right to self-custody digital assets, demonstrating the US's determination to lead in the Web3 and crypto economy.
At the same time, the memecoin launched by the Trump family on the eve of his inauguration has become a market sensation. Among them, $TRUMP was first issued on the Solana chain, which is not just a regular cryptocurrency issuance, but an "experiment" around converting personal influence into capital, defining a new on-chain gameplay. This token has quickly sparked a phenomenal craze by combining identity, community, and market demand.
Interestingly, on-chain data shows that nearly half of the wallet addresses that purchased the Trump family memecoin were newly created wallets. Additionally, this sale not only supports cryptocurrency trading pairs, but also allows users to purchase directly via bank cards, significantly lowering the participation threshold. For many new users who had not previously engaged in on-chain transactions, this provides a lower-cost opportunity to enter the crypto realm.
Pic Source: https://x.com/JasonYanowitz/status/1882238816507089220
However, whether this craze has truly injected new liquidity into the crypto market remains debatable. Looking at market performance, almost all other on-chain projects have experienced varying degrees of decline in the short term. In contrast, Solana has bucked the trend due to strong trading demand, with its price breaking new historical highs. Meanwhile, the number of active wallets on the chain reached a peak in nearly a month on January 19. This polarization phenomenon reveals the fragility of market liquidity when faced with a single hot spot, and also exposes some deep-seated issues in the on-chain ecosystem.
Pic Source: https://solscan.io/analytics
This memecoin craze is both an opportunity for the Web3 ecosystem and a "stress test", revealing three core contradictions in the current on-chain ecosystem: liquidity barriers, ecosystem fragmentation, and conflicts between user behavior and market structure.
Against this backdrop, whether Web3 can move from "bubble frenzy" to "sustainable value creation" depends not only on the evolution of technology and protocols, but also on how to restructure the rules of user participation and the inherent logic of the ecosystem. The answer to this transformation will determine the future direction of Web3.
On-chain Liquidity: From Boom to Crisis
The Trump token event not only ignited the market, but also revealed the fragility of the on-chain ecosystem's liquidity system. In the short term, a large influx of funds drove a surge in on-chain wallet activity and transaction volume, but the resulting "local overheating" phenomenon exposed structural issues in the on-chain system.
- Liquidity Concentration and Market Fragility
The lack of decentralized liquidity mechanisms on-chain means that when phenomena like $TRUMP appear, funds quickly concentrate on the hot assets, causing other projects to plummet due to capital outflows, rendering the short-term market pricing mechanism almost ineffective.
- The "Control Effect" of CEXs
Although DEXs are gradually becoming more prevalent, CEXs still control the majority of liquidity. Once CEXs restrict withdrawals (such as the Solana withdrawal restrictions during the Trump token issuance), the efficiency of on-chain asset allocation plummets, exposing the decentralized ecosystem's dependence on centralized liquidity.
- Isolated Liquidity Islands Across Ecosystems
The divide between EVM and non-EVM ecosystems like Solana further amplifies the concentration effect of hot spots. Although some cross-chain protocols are improving this issue, the current cross-chain experience remains fragmented, with high user operating costs.
Future Outlook
The on-chain ecosystem needs richer asset-bearing forms and more diversified channels. Self-custody wallets and their derivative functions will become an important part of the liquidity system, providing support for applications such as trading, cross-chain, and finance, upgrading on-chain wallets from security tools to the core hubs of the Web3 ecosystem.
From "Custody Fear" to "Self-Custody Revolution"
The trust crisis in centralized custody is reshaping user behavior. Events like the FTX collapse have prompted profound industry reflections on the CEX model. Self-custody wallets are no longer just the choice of seasoned players, but have become an "essential tool" for more users. However, there are still challenges behind this trend. Users still fear the complexity of private key management, and wallet operation interfaces remain cumbersome.
At the same time, we can see that more and more institutions are seeking the middle ground between CEX and self-custody wallets, with the combination of CEX liquidity and integrated self-custody wallets to simultaneously manage personal Web3 assets becoming an irresistible industry trend. Recently, OKX President Hong Fang stated in an interview with Coindesk that the total assets held in OKX's self-custody wallets currently exceed $50 billion, surpassing the $30.8 billion in its centralized exchange. This transformation is not only a change in user behavior, but also an industry innovation driven by market demand.
In the $TRUMP craze, the advantages of on-chain wallets were particularly prominent. Data shows that many X platform users shared their experiences of quickly participating in this memecoin "PVP" battle through the OKX Web3 Wallet. By enabling the exchange of exchange assets to on-chain, as well as on-chain asset management, trading, and exchange across ecosystems, not only is the operation experience smoother, but the technical threshold is also significantly reduced. Tools like the OKX Web3 Wallet are becoming an important entry point for user on-chain activities.
In addition to the demand for asset autonomy, market hot spots are also driving changes in user behavior. The meme craze that started on Solana in 2024 provided users with a simpler participation path and high return opportunities. This "yield-oriented" trend is attracting more "Risk Taker" type investors to actively join the on-chain ecosystem. Unlike traditional Web3 users who are more focused on long-term value, these new users are more concerned with the immediacy and return rate of on-chain transactions. The meme craze has made on-chain projects no longer seem high-threshold, but accessible, further accelerating the popularization of the on-chain economy.
This transformation is not just a short-term phenomenon, but a key driving force for the on-chain ecosystem to move towards the mainstream. Users' transition from "custody fear" to "self-custody revolution" reflects the awakening of asset sovereignty awareness, and also reflects the market's search for more efficient and convenient asset management models. Driven by both CEXs and on-chain self-custody tools, the future of Web3 is building a more decentralized and vibrant economic system.
AI Interaction: From Tool to Participant
Another core driver for large-scale adoption on-chain is the introduction of AI. Compared to its past role as a simple "auxiliary tool", AI is now becoming an active participant in the on-chain ecosystem, redefining user experience and protocol functions. It not only helps users complete complex transaction operations, but may also dominate decentralized governance in the future.
- Lowering User Thresholds
AI is bringing unprecedented operational convenience to ordinary users through large language models and natural language interaction. For example, users only need to issue a simple instruction, and AI can automatically complete complex cross-chain asset transfers or LP parameter settings. This simplification not only reduces the technical threshold, but also opens the door to the on-chain world for more users.
- Dynamic Optimization and Autonomy
AI's capabilities go beyond just the auxiliary level, as it also exhibits a high degree of autonomy. For example, in liquidity pool management, AI can dynamically adjust capital deployment based on market fluctuations to maximize returns. Furthermore, AI's real-time yield forecasting and risk warning functions also allow users to respond to market changes more calmly.
- Updates to the Protocol Layer
The introduction of AI has not only changed the way users operate, but has also injected more flexibility into the protocols themselves. For example, AI can dynamically adjust the parameters of DeFi protocols through in-depth analysis of on-chain data, thereby improving the adaptability and stability of the protocols. In the future, we may see fully AI-driven decentralized protocols that will become the new driving force of the on-chain economy.
From Fragmentation to Integration
Although the current on-chain adoption still faces challenges such as liquidity fragmentation and insufficient self-custody education, the trend is irreversible. The continuous maturity of cross-chain technology, the increasing prevalence of AI tools, and the growing emphasis on asset sovereignty are all driving the on-chain economy towards comprehensive integration.
Education and Tools: Making Self-Custody Accessible to All
In the future, users will need not only tools, but also knowledge. The key to achieving mass adoption is to combine education and tooling, allowing every user to easily manage their on-chain assets.
Cross-Chain Technology: Breaking Down Ecosystem Barriers
By integrating aggregated on-chain functionalities within wallets, users will be able to seamlessly transfer assets between different ecosystems, making the overall on-chain liquidity more fluid.
AI: Unlocking the Potential of the On-Chain
AI will no longer be just a tool, but a core component of the on-chain ecosystem. From user interaction to protocol design, AI will deeply participate in every aspect of the on-chain economy.
In this era of network transformation, the on-chain is no longer just a concept, but the main battlefield for the further expansion of application types and scenarios. In the Web3 era, it will not be a return to centralization, but the rise of on-chain applications.
