Author: Jerry, founder of ThePrimediaDAO This article was created at the end of 2023, with slight additions during the Spring Festival.
Introduction
From the perspective of encryption history, Web3 in 2023 is nothing surprising. Following the bear market bottoming out in 2022, the crypto world will gradually build its foundation in the bull market in 2023. But this year's tremendous progress in AI and the resulting threats have turned Web3 into an epic chapter. As early as the beginning of Bitcoin, people were longing for blockchain to establish order for intelligent networks; later, people realized that AI and blockchain/Web3 would meet in the metaverse, but it was only a longing; until ChatGPT in 2023 The AI threat theory and computing power management issues caused by the popularity of AI have forced people to start implementing the combination of AI and Web3.
We can judge from this that the construction of the metaverse in 2023 has begun to chaos, and the metaverse has occurred. In this context, we are ushering in a first year of metaverse construction and a crypto bull market cycle that will surely go down in history. In 2024, despite the changes in the physical world, opportunities for mankind to move toward a digital society are surging.
01 Fusion: Asset Market of TradeFi and DeFi
2023 is called the first year of RWA, but why is the RWA market tepid this year? Let’s start by answering this question: Because the early media of the RWA market were mainly treasury bonds, gold and the US dollar, the investment returns of these assets were relatively stable, with limited fluctuations. The US dollar even intervened in the form of stable coins, and TradeFi assets became RWA and integrated into the crypto economy. The operational space for DeFi market integration is limited.
With the success of Bitcoin ETFs on Wall Street, more TradeFi assets with asset investment returns, such as stocks and futures and other traditional financial market derivatives, will enter the crypto market through RWA. Taking BlackRock as an example, they are studying how to RWA a large number of TradeFi assets in their hands to integrate into the crypto market. Let me give you some data to help you feel what this means - according to BlackRock's 2023 Q3 financial report, BlackRock's management scale is 9.1 trillion US dollars. Previously, the management scale of Grayscale, a large Bitcoin player that we were very familiar with, was Tens of billions of US dollars, including more than 20 billion US dollars in Bitcoin trust.
Therefore, the current crypto market with Bitcoin as its core is simply not enough for BlackRock. After Bitcoin ETF enters the traditional financial market, bringing more TradeFi assets into the crypto market is worth BlackRock's play. Therefore, it can be judged that the RWA market in 2024 will be released in huge quantities.
Bitcoin ETF brings Bitcoin into the traditional financial market and brings funds to the crypto market; RWA brings assets from the traditional financial market into the crypto market and brings high-quality assets to the crypto market. Therefore, we optimistically expect that it is a high probability event that the total volume of the encryption market will exceed US$10 trillion in 2024, and that the price of Bitcoin will reach US$100,000 this year. (Friendly reminder to investors, this article does not constitute investment advice. Please make your own decision based on your own judgment).
But this is just the beginning. We skip the description of this bull market cycle, and in line with the theme of the full text, we directly look forward to the construction process of the metaverse in the next ten years. More than half of the high-quality assets in the physical world will be integrated into the crypto world through RWA; similarly, Native cryptoassets represented by Bitcoin ETFs will also be integrated with the traditional world financial system, providing more diverse wealth rights and asset management paths for early residents of the Metaverse.
It is worth mentioning that some people are worried that the encryption market will fall into the fourteen-year bear market cycle encountered during the development of the Internet after this bull market. Let’s not talk about whether these two things are comparable and referenceable. Taking a step back, even if the market cycle has its inherent regularity, we believe that this will still be resolved by the above narrative. The industrial economic power of the huge social changes brought about by the Internet cannot match the social changes and economic energy brought about by the blockchain/Web3 we are in today.
02 Return: Basic ecology such as public chain performance, cross-chain interoperability and storage
After experiencing the baptism of inscriptions at the end of 2023, people in the crypto world have realized that the current public chain and other infrastructure are still young. For example, Layer2, which has received hundreds of millions in financing, cannot withstand the baptism of Inscription, let alone its support for the application ecosystem. 2024 will undoubtedly be the year when a new round of public chain cross-chain interoperability and basic ecology such as storage return (these efforts will become the basis for the intersection of AI and Web3/blockchain in the metaverse).
For example, Layer 2 is already considering upgrades and breakthroughs - if the storage and expansion you spend huge sums of money on are not enough to attract application developers, then you should reflect on it, take a step forward, build an application ecosystem, and let good applications It can develop better here, so that users can have a better application experience here.
Such as intention, modularization and chain abstraction. In the aforementioned background, these will enter the effect of quantitative change to qualitative change in 2024 based on preliminary practice in 2023. It is worth mentioning that we have conducted case studies on intent-centric transactions. The imagination space of the intent-centric new narrative is huge and there is even no place to start. Rational developers and encryption ecosystem builders have already focused on the path of large-scale application and adoption of projects.
For example, NFT has evolved to ERC404, which has brought high-quality basic elements to the construction of crypto-economy and metaverse. Its role is first to empower financial liquidity, which is not only reflected in the avatar NFT/PFT market, but also plays a role in the RWA market; in addition, it can be combined with DID to empower DID’s identity, contribution and honor, After the relationship between assets, 404 can help decompose them, so that DID can contribute the corresponding status, honor, rights and assets and divest them.
And the DePin concept is rising. For example, the AI+DePin project Peaq, which mainly promotes the European and American markets, has been on the mainnet. Now it onboards a new Fortune 500 as a partner every week. It is also mapped as a key layer 1 in the Messari Depin report. . DePin will be an important breakthrough and infrastructure for the combination of AI and Web3. In addition, whether the more basic network bandwidth related to this can be combined with the blockchain will also be witnessed in this cycle.
Regarding the public chain track itself, we expect that the new public chain ecology will gradually prosper in this cycle, but from the narrative perspective of 2024, the most mainstream ones are the Ethereum ecology and the Bitcoin ecology:
Ethereum Ecology: In addition to the possibility of step-by-step Layer 2 and application development, our greater expectation lies in the incremental market brought by TradeFi (traditional finance). There is a high probability that the TradeFi (traditional finance) RWA we discussed in the first part will choose Ethereum as the path to enter the crypto market. For example, BlackRock, which wants to put assets on the chain, has to develop its own Layer 2, and there is a high probability that it will. Choose Ethereum.
Bitcoin Ecology: As early as the DeFi period of the Ethereum ecosystem, people were imagining the huge market space of "BTC+DeFi". All this will become a reality in 2024. Our expectations for the Bitcoin ecosystem should not be to do it again in Ethereum, but to pioneer the market space brought about by the combination of BTC and DeFi, which is the largest in the crypto market. At present, there are already practices in the market that try to make assets circulate better on the second layer, be better issued, and obtain more leverage.
Only the advancement of the basic ecology of the encryption world will provide the possibility for AI and Web3 to meet.
03 Iteration: Application market led by AI and Web3
As mentioned before, Web3 has not yet entered the application era. To a large extent, Web3 application development is subject to the threshold of the public chain. Some good Web3 iterations of Web2 application scenarios have been stranded due to public chain performance and protocol thresholds. But it is the practice of "AI + Web3" that opens the regulatory gap in the Web3 application market.
Of course, "AI+Web3" is still subject to the infrastructure ecosystem, and AI on-chain is a cutting-edge proposition, but the progress of this event depends on the development team's understanding of AI on-chain. Compared with the development teams in Web3 social networking, chain games and other tracks, we have reason to believe that the AI development team will have a deeper understanding and practice of AI on-chain and will be cutting-edge.
We can even further imagine that the practice of the AI ecosystem based on large models and the Web3 ecosystem based on public chains in this era is likely to be the foundation for their intersection in the metaverse in the future. Therefore, it is optimistically expected that there will be several "AI+Web3" projects with more than 1 billion units in 2024, which will lead the encryption world to enter the era of Web3 applications, applications of Web3 social networking, chain games, and the Web3 media we are in. The market will also be active in this cycle, and there will even be functions dedicated to serving "AI + Web3". For example, MugglePay, which is dedicated to helping companies accept cryptocurrency payments, has shifted its development focus in 2024 from e-commerce to AI and gaming. , and has launched an original subscription payment (Web3 subscription) function for AI service providers; StreamAi, which provides data storage and accurate push for AI, is committed to becoming the largest cloud service provider in "Web3 network and space interstellar network". and ChatGPT for “programs and robots”.
However, we need to clarify the difference between this active cycle of "AI+Web3" and the "AI+Web3/Blockchain = End of Civilization" we once proposed. This cycle of "AI+Web3" is just a collection of application scenarios, which can be understood within the inertial iteration logic of "Internet+". However, in the next ten years or even decades, AI, which continues to improve productivity, and Web3, which is Turing-complete production relations and even social relations, will meet in the metaverse, and mankind will enter a new era of digital advancement.
Of course, all this depends on the practice of these active "AI+Web3" projects in 2024.
Conclusion:
This will probably be the last bull-bear iteration with Bitcoin as the cycle, and this will probably be a bull market cycle that will go down in history. Since then, Web3/blockchain has begun to establish order for AI/intelligent networks, and the native asset market in the crypto world driven by this will also rapidly expand; at the same time, the digitalization of physical world assets (RWA) has also entered the fast track, and the crypto market Assets will gradually surpass the financial asset market of traditional physical markets.
On this basis, people's imagination of the Metaverse has begun to come to fruition, and the two main lines of the metaverse construction (AI and Web3) have unfolded one after another and will eventually converge in the Metaverse. The latest news is that Sora’s generation ability is amazing, and OPENAI has taken a big step forward in the construction of the metaverse. But Web3 in the encrypted world has not fallen behind. The current constraints are more basic hardware equipment and network facilities, especially network facilities. A fatal question is, can users in the Chinese-speaking world dare to trust China Mobile? While human elites are laying out technological highlands related to the future, China Mobile is still busy consuming user traffic in exchange for more user phone bills. I hope that this type of problem will be solved using methods from the Web3 world.
There is a lot to look forward to in 2024. mutual encouragement!
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