a16z: What to expect in the cryptocurrency space in 2025

a16z released its comprehensive outlook for the technology sector in 2025, which includes partners' outlooks on artificial intelligence, American innovation, biomedicine, cryptocurrency, enterprise, fintech, gaming, and infrastructure. Here are some of the expectations of a16z cryptocurrency partners for future development.

Original text: 7 Big Ideas for 2025 (a16zcrypto)

Compiled by: Punkcan

Typesetting: Cikey

a16z released its comprehensive outlook for the technology sector in 2025, which includes partners' outlooks on artificial intelligence, American innovation, biomedicine, cryptocurrency, enterprise, fintech, gaming, and infrastructure. Here are some of the expectations of a16z cryptocurrency partners for future development.

For an outlook on policy, regulation, and more in 2025, see this November 2024 article.

Original link: https://a16zcrypto.com/posts/article/what-the-election-means-crypto/

AI needs its own wallet to implement proxy behavior

—Carra Wu

@carrawu (Twitter) | @carra (Farcaster)

As AIs move from supporting roles (NPCs) to protagonists, they will begin to play the role of active agents. However, until recently, AIs have not been able to truly achieve agent behavior. They are still unable to participate in market activities such as value exchange, preference expression, and resource coordination in a verifiable independent way (without human control) (that is, AIs are currently still only assisting in executing human ideas).

As we’ve seen, AI agents (like @truth_terminal) can indeed transact using cryptocurrency, which opens up all kinds of opportunities for creative content. But there’s even more potential for AI agents to achieve more utility — both in fulfilling human intent and in becoming independent network participants. As AI agent networks begin hosting their own cryptocurrency wallets, signing keys, and crypto assets, we’ll see interesting new use cases emerge. These use cases include AI operating or validating nodes in DePIN (Decentralized Physical Infrastructure Network) — for example, helping distributed energy resources. Other use cases include AI agents becoming real, high-value game players. We may even eventually see the first AI-owned and operated blockchain.

Meet the "decentralized autonomous chatbot"

—Dan Boneh, Karma, Daejun Park, and Daren Matsuoka

@danboneh (Twitter) @0xkarmacoma (Twitter) | @karma (Farcaster) @daejunpark (Twitter) @darenmatsuoka (Twitter) | @darenmatsuoka (Farcaster)

In addition to the AI owning the wallet, there is also an AI chatbot running in the TEE (Trusted Execution Environment). TEE provides an isolated secure environment for applications to run in, enabling a more secure distributed system design.

But in this case, the TEE is used to prove that the robot is autonomous and not controlled by a human operator.

Taking this concept a step further, the next big idea here is what we call a "decentralized autonomous chatbot" or DAC (not to be confused with a decentralized autonomous corporation).

Such a chatbot can build a following by posting engaging content, whether entertaining or informative. It will build a following on decentralized social media; generate income from its audience through various means; and manage its assets in cryptocurrency. The keys will be managed by the TEE running the chatbot software, ensuring that only the software can access them.

As risks emerge, regulatory guardrails may be needed. But the key point here is decentralization: running on a permissionless set of nodes and coordinated by a consensus protocol, chatbots may even become the first truly autonomous billion-dollar entities.

As more people use AI, we need unique personal identities

—Eddy Lazzarin

@eddylazzarin (Twitter) | @eddy (Farcaster)

In a world filled with online impersonations, scams, multiple identities, deep fakes, and other realistic yet deceptive AI-generated content, we need "personal identification" - to help us know we are interacting with real people. The new problem here is not fake content, but that it can now be produced at a much lower cost. AI has greatly reduced the cost of producing content that contains all the characteristics we use to judge authenticity.

Therefore, methods to digitally link content to people in a private way are needed now more than ever. "Proof of personal identification" is an essential component of establishing a digital identity. But here, it becomes a mechanism to increase the marginal cost of attacking an individual or compromising the integrity of the network: it is free for humans to obtain a unique ID, but expensive and difficult for AI.

That’s why I think our industry will adopt the idea of “making technology simple and easy to use” in 2025: “hide the complexity”. Ensuring that each user is unique while protecting privacy - this is the next big idea in building a trusted network. It’s not just about proving “you are you”, but more about radically increasing the cost for those who want to disrupt it.

Therefore, "ensuring that each user is authentic and unique" - that is, preventing someone from attacking the system with a fake identity - is a necessary feature of any identity authentication system.

From prediction markets... to better information aggregation

—Scott Duke Kominers

@skominers (Farcaster) | (Twitter)

Prediction markets took center stage in the 2024 US election, but as an economist who studies market design, I believe that what will be truly transformative in 2025 is not the prediction markets themselves.

Instead, prediction markets lay the foundation for more information aggregation mechanisms based on distributed technologies—mechanisms that can be applied in a variety of fields, from community governance and sensor networks to finance.

The past year has proven this concept, but note that prediction markets themselves are not always a good way to aggregate information: they can be unreliable even for global, “macro” events; for more “micro” problems, the prediction pool may be too small to pick up a meaningful signal, and so on.

But researchers and technologists have had decades of design frameworks for incentivizing people to honestly share what they know in different information environments — from data pricing (that is, designing a reasonable price system to buy data) and purchasing mechanisms (how to design rules to make transactions that satisfy both data buyers and sellers), to "Bayesian truth serum" for obtaining subjective assessments (a method of verifying honesty by predicting other people's answers) — many of which have been applied in crypto projects.

Blockchains have always been a natural choice for implementing such mechanisms—not only because they are decentralized, but also because they facilitate open, auditable incentive schemes. Importantly, blockchains also make outputs public, so everyone can interpret the results in real time.

Businesses will increasingly accept stablecoin payments

—Sam Broner

@sambroner

Stablecoins have found product-market fit over the past year — not surprising, as they are the cheapest way to send dollars and enable fast global payments. Stablecoins also provide a more accessible platform for entrepreneurs building new payment products: no gatekeepers, minimum balances, or proprietary SDKs. But large enterprises have yet to realize the huge cost savings and new profit margins that can be gained by switching to these payment rails.

While we’re seeing some enterprise interest in stablecoins (and early adoption in peer-to-peer payments), I expect to see a larger wave of experimentation in 2025. Small and medium-sized businesses with strong brands, built-in audiences, and painful payment costs — like restaurants, coffee shops, convenience stores — will be the first to switch away from credit cards. They don’t benefit from credit card fraud protection (given in-person transactions), and they’re also the group most affected by transaction fees (30 cents per cup of coffee is a big profit loss!).

We should also expect greater corporate adoption of stablecoins. If stablecoins do take off in the history of banking, then businesses will seek to disintermediate payment providers — adding a direct 2% to their bottom line. Businesses will also begin seeking new solutions to problems currently solved by credit card companies, such as fraud protection and identity verification.

Countries explore putting government bonds on blockchain

—Brian Quintenz

@brianquintenz (Twitter) | @brianq (Farcaster)

Putting government bonds on-chain would create a government-backed, interest-bearing digital asset — without the surveillance concerns that CBDCs (central bank digital currencies) raise. These products could unlock new sources of demand for collateral use in DeFi (decentralized finance) lending and derivatives protocols, further enhancing the integrity and robustness of these ecosystems.

Therefore, as innovative governments around the world further explore the benefits of public, permissionless and irrevocable blockchains this year, some countries may pilot issuing government bonds on the chain. For example, the UK has explored digital securities through its financial regulator FCA (Financial Conduct Authority) sandbox; its Treasury/Chancellor has also expressed interest in issuing digital gifts.

In the United States — with the SEC set to require the clearing of Treasury bonds via traditional, cumbersome and expensive infrastructure next year — expect to see more discussion about how blockchain can increase transparency, efficiency and participation in bond trading.

We will see wider adoption of 'DUNA', the new industry standard for US blockchain networks

—Miles Jennings

@milesjennings (Twitter) | @milesjennings (Farcaster)

In 2024, Wyoming passed a new law recognizing DAOs (decentralized autonomous organizations) as legal entities. DUNAs, or "decentralized unincorporated nonprofit associations," are specifically designed to enable decentralized governance of blockchain networks and are the only viable structure for projects in the United States. By incorporating DUNAs into a decentralized legal entity structure, crypto projects and other decentralized communities can give their DAOs legal legitimacy — not only enabling greater economic activity, but also protecting token holders from liability and managing tax and compliance needs.

DAOs — communities that govern the affairs of open blockchain networks — are necessary tools to ensure that networks remain open, non-discriminatory, and value is not extracted unfairly. DUNA can unlock the potential of DAOs, and several projects are already implementing it. As the US prepares to foster and accelerate the development of its crypto ecosystem in 2025, I expect DUNA to become the standard for US projects. We also look forward to other states adopting similar structures (Wyoming is ahead of the curve, just as they were the first state to introduce the LLC, a corporate form that is now ubiquitous across the US)... especially as other decentralized applications beyond cryptocurrencies develop (such as physical infrastructure/energy grids).

Online Liquid Democracy Goes to the Real World

—Andrew Hall

@ahall_research (Twitter) | (Farcaster)

As dissatisfaction with current governance and voting systems grows, an opportunity has emerged to experiment with new, technology-enabled governance — not just online, but in the real world.

I’ve written before about how DAOs and other decentralized communities allow us to study political institutions, behaviors, and rapidly evolving governance experiments. But what if we could apply these lessons to real-world governance through blockchains?

We can finally use blockchain for secure, private voting in elections, starting with low-risk pilots to limit cybersecurity and auditing concerns. But importantly, blockchain will also allow us to experiment with “liquid democracy” at the local level — a way for people to vote directly on issues or delegate their votes. The idea first came from Lewis Carroll, author of Alice in Wonderland (and an expert on voting systems). While the idea was difficult to implement at scale at the time, the technology is now ready. Recent advances in computing and connectivity, as well as blockchain, make new forms of representative democracy possible. Crypto projects are already applying the concept, generating a wealth of data on how these systems work — see our recent research here — and local governments and communities can learn from these experiences.

Builders will reuse rather than reinvent infrastructure

—Joachim Neu

@jneu_net (Twitter)

Over the past year, many teams have also been iterating on the development of the foundational components of blockchains—from validator sets and consensus protocols to execution engines, programming languages, and RPC APIs. The results are sometimes slight improvements in specialized features, but often lack in broader or baseline features. Take SNARK-specific programming languages as an example: while an ideal implementation might allow an ideal developer to produce higher-performance SNARKs, in practice it may lag behind general-purpose languages in compiler optimizations, developer tools, online learning materials, AI programming support, etc. ... and may even result in lower-performance SNARKs.

That’s why I expect to see more teams leveraging the contributions of others and reusing more off-the-shelf blockchain infrastructure components — from consensus protocols and existing staked capital to proof systems — in 2025. This approach will not only help builders save a lot of time and effort, but also allow them to focus on differentiating the value of their product/service.

The web3 infrastructure is mature enough to support building mainstream products and services. And as with other industries, these will be built by teams that can successfully navigate complex supply chains, not by teams that turn their noses up at “non-self-development”.

Crypto companies will start with the end (user experience) rather than letting infrastructure dictate the user experience

—Mason Hall

@0xMasonH (Twitter) | @mason (Farcaster)

While blockchain technology infrastructure is interesting and diverse, many crypto companies are not just choosing their infrastructure — in some ways, the infrastructure makes the choice for them in terms of user experience (UX). This is because specific technology choices at the infrastructure level directly relate to the end-user experience of the blockchain product/service.

But I believe the industry will change this mindset: instead of letting technology limit the user experience, it should start with user needs. In 2025, more crypto product designers will start with the end-user experience they want, and then choose the appropriate infrastructure from there. Crypto startups no longer need to be overly concerned with specific infrastructure decisions before finding product-market fit - they can focus on actually finding product-market fit.

Rather than getting locked into specific EIPs, wallet providers, intent architectures, etc., we can abstract these choices into a holistic, full-stack, plug-and-play approach. The industry is ready for this: rich programmable blockspaces, mature developer tools, and chain abstractions are beginning to democratize crypto design. Most technology end users don't care what language a product is written in to use it every day. The same will start to happen in crypto.

‘Hidden Cables’ Help Introduce Web3’s Killer Apps

—Chris Lyons

@chrislyons (Twitter) | (Farcaster)

The industry’s technological superpowers make blockchain so special, but have also so far hindered mainstream adoption. For creators and fans, blockchain opens up possibilities for connection, ownership, and monetization… But industry jargon (“NFTs,” “zkRollups,” etc.) — and complex designs — create barriers for those who can most benefit from these technologies. I’ve experienced this firsthand in countless conversations with executives in the media, music, and fashion industries.

Many mass adoptions of consumer technology have followed this path: Start with the technology; some iconic company/designer abstracts away the complexity; this move helps unlock some breakthrough application. Think of the beginnings of email — the SMTP protocol hidden behind a “Send” button; or credit cards, where most users now don’t think about payment rails. Similarly, Spotify revolutionized music not by showing off the file format — but by delivering playlists to our fingertips. As Nassim Taleb observes, “Over-engineering breeds brittleness. Simplicity scales.”

That’s why I think our industry will adopt this idea in 2025: “Hide the Cable.” The best decentralized applications are already focusing on more intuitive interfaces, becoming as easy as tapping a screen or swiping a card. In 2025, we’ll see more companies designing simply and communicating clearly; successful products don’t explain; they solve problems.

The crypto industry finally has its own app store and discovery mechanism

—Maggie Hsu

@meigga (Twitter) | @maggiehsu (Farcaster)

When crypto apps were banned from centralized platforms like Apple’s App Store or Google Play, this limited their top-of-funnel user acquisition. But we’re now seeing newer app stores and marketplaces offering this distribution and discovery functionality without the barrier of entry. For example, Worldcoin’s World App Marketplace — which not only stores personal identification but also allows access to “mini-apps” — brought in hundreds of thousands of users to a few apps in just a few days. Another example is Solana’s free dApp Store for mobile users. Both of these examples also show that hardware, not just software — phones, spheres — may be the key advantage of crypto app stores… just as Apple devices did for the early app ecosystem.

Meanwhile, there are other stores with thousands of dapps and web3 developer tools across popular blockchain ecosystems (e.g., Alchemy); and blockchains acting as both publishers and distributors of games (see Ronin). However, it’s not all fun and games: if a product has existing distribution on a messaging app — it’s hard to port it to chain (exception: Telegram/TON network). The same is true for apps with significant distribution on Web2. But we’ll probably see more of these ports happening in 2025.

Cryptocurrency holders become crypto users

—Daren Matsuoka

@darenmatsuoka (Twitter) | (Farcaster)

In 2024, cryptocurrencies have made a major breakthrough in the political sphere, with major policymakers and politicians expressing active support. We continue to see its growth in the financial sector as well (for example, look at how Bitcoin and Ethereum ETPs have expanded investor access). In 2025, cryptocurrencies should make even greater inroads in computing technology. But where will the next wave of users come from?

I believe now is the time to re-engage currently “passive” cryptocurrency holders and turn them into more active users, as only 5-10% of people who own cryptocurrency are actively using it. We can bring the 617 million people who already own cryptocurrency on-chain — especially as blockchain infrastructure continues to improve, leading to lower transaction fees for users. This means new applications will begin to emerge for existing and new users. At the same time, the early applications we’ve already seen — spanning categories such as stablecoins, DeFi, NFTs, games, social, DePIN, DAOs, and prediction markets — are also starting to become more accessible to mainstream users as the community focuses more on user experience and other improvements.

Various sectors may begin to tokenize "unconventional" assets

—Aaron Schnider

@aaronschnider (Twitter)

As the infrastructure of the crypto industry and other emerging technologies matures and costs decrease, the practice of asset tokenization will spread across all sectors. This will make it possible for assets that were previously considered unattainable due to high costs or lack of value recognition to not only achieve liquidity, but more importantly, participate in the global economy. AI engines can also consume this information as a unique data set.

Just as shale gas extraction technology unlocked oil reserves once thought untouchable, the tokenization of unconventional assets could redefine revenue generation in the digital age. Just as shale gas extraction technology gave us access to previously untouchable oil resources, the tokenization of unconventional assets will create entirely new revenue streams for the digital age. Seemingly sci-fi scenarios become more possible as a result: individuals could tokenize their own biometric data, for example; then lease the information to companies via smart contracts. We’re already seeing early examples through companies like DeSci, which use blockchain technology to bring more ownership, transparency, and consent to medical data collection, for example. We don’t know how such a future will play out yet, but these types of developments will allow people to tap into previously untapped assets in a decentralized way — rather than relying on governments and centralized intermediaries to provide them with it.

Original editor: Sonal Chokshi

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