Original author: a16z
Original compilation: 1912212.eth, Foresight News
Based on feedback from partners across American Dynamism, bio, consumer tech, crypto, enterprise, fintech, gaming, infrastructure, and more, we’ve published a comprehensive list of big ideas that technology builders may be exploring in the year ahead. Here are the trends that some crypto partners believe will be exciting in 2024.
Entering a new era of decentralization
As weve seen time and time again, when control of a powerful system or platform is in the hands of a few, let alone a single leader, it becomes all too easy to infringe on user freedoms. This is why decentralization is important: it is a tool that democratizes systems by enabling trustworthy neutral, composable Internet infrastructure; promotes competition and ecosystem diversity; and provides users with More choice and more ownership.
But in practice, decentralization has been difficult to achieve at scale, especially when compared to the efficiency and stability of centralized systems. At the same time, most Web3 governance models involve DAOs that use simplified but cumbersome governance models based on direct democracy or corporate governance that are not adapted to the sociopolitical realities of decentralized governance.
However, thanks to Web3s active labs over the past few years, decentralized best practices have begun to emerge. These practices include adapting a decentralized model for applications with richer functionality; they also include the DAO adopting Machiavellian principles to design more effective decentralized governance and hold leadership accountable for it. As these models evolve, we should soon see unprecedented levels of decentralized coordination, operational capabilities, and innovation.
—Miles Jennings, General Counsel and Head of Decentralization (@milesjennings on Farcaster - on Twitter)
Reconstructing the user experience of the future
Although user experience in the crypto space has been criticized since 2016, the fundamentals havent actually changed much. It’s still too complex: keep the keys yourself; connect the wallet with decentralized applications (dApps); send signed transactions to an ever-increasing number of network endpoints, etc. This is something we cannot expect users to learn within the first few minutes of using an encrypted application.
But now, developers are actively testing and deploying new tools that could reset the crypto front-end user experience in the coming year. One such tool includes pass-through passwords that simplify logging into apps and websites; unlike passwords that require users to work manually, pass-through passwords are automatically generated, encrypted passwords. Other innovations include smart accounts, which make the accounts themselves programmable and therefore easier to manage; embedded wallets, which are built into the app so they can make onboarding frictionless; and multi-party computation, which makes it easier for third parties to create accounts without custody of user keys. Case support for signatures; advanced RPC (remote procedure call) endpoints that can identify user needs and fill gaps, and more. All of this not only helps Web3 become more widely adopted, but also makes the user experience better and more secure than in Web2.
—Eddy Lazzarin, Chief Technology Officer (@eddy on Farcaster - @eddylazzarin on Twitter)
The rise of modular technology stacks
In the online world, one force always dominates the others: the network effect. Network effects are often so powerful that there are really only two ways to modularize: modularity that extends and strengthens the network effect; modularity that destroys and weakens the network effect. In all but rare cases, only the former makes sense, especially when it comes to open source.
Monolithic architecture has the advantage of allowing for deep integration and optimization at what would otherwise be modular boundaries, thereby improving performance...at least initially. But the biggest advantage of an open source, modular technology stack is that it unlocks permissionless innovation; allows players to specialize in specific areas; and incentivizes more competition. We need more of this in the world.
—Ali Yahya, Partner (@alive.eth on Farcaster - @alive_eth on Twitter)
Combining AI and blockchain
Decentralized blockchain is a counterweight to centralized AI. Currently, AI models such as ChatGPT can currently only be trained and operated by a handful of tech giants, as the required computing and training data are prohibitive for smaller players. But with encryption, multi-sided, global, permissionless markets can be created where anyone can contribute computations or new data sets to someone in need of the network and be compensated. Leveraging the long tail of these resources will enable these markets to lower the cost of AI and make it more accessible.
But as AI changes the way we produce information, transforming society, culture, politics, and economics, it also creates a rich world of AI-generated content, including deepfakes. Cryptozoology also has a role to play here, to open black boxes; track the origins of things we see online; and so on. We also need to find ways to distribute generative AI and govern it democratically so that no one actor ultimately determines everyone else; Web3 is the laboratory for solving this problem. Decentralized, open-source cryptographic networks will democratize (rather than centralize) AI innovation, ultimately making it safer for consumers.
—Andy Hall, professor, Stanford University (@ahall_research); Daren Matsuoka, data scientist (@darenmatsuoka on Farcaster - on Twitter); Ali Yahya, partner (@alive.eth on Farcaster - @alive_eth on Twitter)
Playing to make money becomes playing and making money
In play-to-earn games, players can often earn money in the real world (not just virtually) based on the time and effort they spend in the game. This trend ties into broader changes that are transforming gaming and the fields surrounding it, from the rise of the creator economy to the changing relationship between people and platforms. Web3 allows us to break from the current norm where all the revenue from playing games and transacting goes only to the gaming companies. Users spend a lot of time on these platforms and create a lot of value for these platforms, so they should also be paid.
But games arent necessarily meant to be a workplace (at least for most players). What we really need are games that are fun and allow players to capture more of the value they create. As a result, play and earn is increasingly evolving into fun and easy to earn, making an important distinction between gaming and the workplace. As Play to Earn Games moves beyond its initial growth stages, the dynamics leading to how the games economy is managed will continue to change. Ultimately, however, this wont be a separate trend but just part of the game.
—Arianna Simpson，@AriannaSimpson
When AI becomes the game maker, cryptocurrencies provide security
As someone who spends a lot of time thinking about Web3 games and the future of gaming, its clear to me that AI agents in games must provide guarantees that they are based on specific models, and that those models have not been tampered with during execution. Otherwise, the game will lose its integrity.
When lore, terrain, narrative, and logic are all procedurally generated, in other words, when AI becomes the game maker, we will want to know that the game maker is trustworthy and neutral. We will want to know that the world is built on assurance. The most important thing cryptography provides are these guarantees—including the ability to understand, diagnose, and punish AI when things go wrong. In this sense, AI alignment is really an incentive design problem, just like dealing with any human agent is an incentive design problem...and thats exactly what cryptocurrencies are about.
—Carra Wu, Partner (@carra on Farcaster, @carrawu on Twitter)
Formal verification becomes less formal
Although formal methods are popular for validating hardware systems, they are less common in software development. For most developers not involved in hard or safety-critical systems, these approaches are too complex and can add significant cost and latency. However, smart contract developers have different needs: the systems they develop handle billions of dollars; bugs can have devastating consequences and are often not immediately fixable. Therefore, there is a need for more accessible formal verification methods in software development, especially smart contract development.
Over the past year, weve seen a number of new tools emerge (including our own) that provide a much better development experience than traditional formal systems. These tools take advantage of the fact that smart contracts are architecturally simpler than regular software—with atomic and deterministic execution; no concurrency or exceptions; a small memory footprint and fewer loops. The performance of these tools is also improving rapidly, by taking advantage of recent breakthroughs in SMT solver performance (SMT solvers use complex algorithms to identify or confirm the presence of errors in software and hardware logic). As developers and security experts gain widespread adoption of tools inspired by formal methods, we can expect the next wave of smart contract protocols to be more robust and less susceptible to expensive hacks.
—Karma (Daniel Reynaud), Research Engineering Partner (@karma on Farcaster, @0x karmacoma on Twitter)
NFTs become ubiquitous brand assets
More and more well-known brands have begun to launch digital assets in the form of NFTs to mainstream consumers. For example, Starbucks introduced a gamified loyalty program in which participants collect digital assets while exploring the companys coffee products (not to mention an AR pumpkin spice maze!). Meanwhile, Nike and Reddit have developed digital collectible NFTs explicitly marketed to a wide audience. But brands can do much more than that: they can use NFTs to represent and strengthen customers identities and community relationships; connect physical goods and their digital representations; and even co-create new products and experiences with their most loyal fans.
Last year, we saw a trend towards large-scale collections of low-cost NFTs as consumer goods - these NFTs are often managed via custodial wallets and/or Layer 2 blockchains, with correspondingly low transaction costs. As we enter 2024, the conditions are in place for NFTs to become ubiquitous digital brand assets, as Steve Kaczynski and I explain in a forthcoming book, for a variety of companies and communities.
—Scott Duke Kominers, Research Partner (@skominers on Farcaster - on Twitter)
SNARKs go mainstream
Historically, technology experts have had several strategies for validating computing workloads:
1) Re-execute the calculation on a trustworthy machine;
2) Perform the computation on a machine dedicated to the task, i.e. (TEE Trusted Execution Environment); or
3) Perform computations on reliable and neutral infrastructure, such as blockchain. Each strategy has limitations in terms of cost or network scalability, but now, SNARKs (Succinct Non-interactive ARguments of Knowledge) are becoming more available. SNARKs allow a cryptographic receipt of some computational workload to be computed in an unforgeable manner by an untrusted prover: in the past, the cost of computing such a receipt was 10^9 higher than the original computation; recent advances Working on reducing this number to around 10^6.
Therefore, SNARKs become feasible in situations where the initial computation provider can afford the 10^6 overhead without the client being able to re-execute or store the initial data. The resulting use cases are numerous: Edge devices in the IoT can verify upgrades. Media editing software can embed authenticity and conversion data into the content; while mash-ups of memes can pay homage to the original source. LLM inference can include truth information. We could have self-verifying tax forms, bank audits that cannot be faked, and many more beneficial uses for consumers.
—Sam Ragsdale, investment engineer (@samrags on Farcaster, @samrags_ on Twitter)
