Written by: a16z
Translated by: 1912212.eth, Foresight News
Based on feedback from partners in the fields of American Dynamism, biology, consumer technology, crypto, enterprise, fintech, gaming, infrastructure, and more, we have released a comprehensive list of big creative explorations that tech builders might explore in the coming year. Here are some exciting trends for 2024 as suggested by some of our crypto partners.
Table of Contents
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Entering a new era of decentralization
Reconstructing the future of user experience
The rise of modular tech stacks
The combination of AI and blockchain
From play-to-earn to earn-while-playing
When AI becomes a game creator, cryptocurrencies provide security
Formal verification becomes less formal
NFTs becoming ubiquitous brand assets
SNARKs going mainstream
As we have seen time and time again, it becomes too easy to infringe on user freedoms when control of a powerful system or platform is in the hands of a few individuals (let alone a single leader). This is why decentralization is important: it is a tool that can democratize systems by achieving trusted neutrality, composable internet infrastructure, fostering competition and ecosystem diversity, and providing users with more choices and ownership.
However, decentralization has been challenging to achieve at a large scale in practice, especially when compared to the efficiency and stability of centralized systems. At the same time, most Web3 governance models involve DAOs, which use simplified but cumbersome governance models based on direct democracy or corporate governance, which do not apply to the social and political reality of decentralized governance.
Nevertheless, thanks to the active experimentation in Web3 labs over the past few years, best practices for decentralization have begun to emerge. These practices include adapting decentralized models for applications with richer functionality and DAOs adopting Machiavellian principles to design more effective decentralized governance, holding leadership accountable. With the development of these models, we should soon see unprecedented levels of decentralized coordination, operational functionality, and innovation.
—Miles Jennings, General Counsel and Head of Decentralization (@milesjennings on Farcaster | on Twitter)
While user experience in the crypto space has been criticized since 2016, the underlying principles have not changed significantly. It remains too complex: self-custody of keys, connecting wallets to decentralized applications (dApps), sending signed transactions to an increasing number of network endpoints, and so on. This is something we cannot expect users to learn in the first few minutes of using crypto apps.
However, developers are actively testing and deploying new tools that could reset the front-end user experience of crypto in the coming year. One such tool includes simplified password delivery for logging into applications and websites; unlike passwords that require manual work from users, delivered passwords are automatically generated encrypted passwords. Other innovations include smart accounts, making accounts programmable and easier to manage; embedded wallets within applications, making onboarding frictionless; multi-party computation, making it easier for third parties to support signatures without storing user keys; advanced RPC endpoints that can identify user needs and fill gaps, and more. All of these not only help with wider applications of Web3 but also provide a better and more secure user experience than in Web2.
—Eddy Lazzarin, Chief Technology Officer (@eddy on Farcaster | @eddylazzarin on Twitter)
In the online world, one force always dominates others: network effects. Network effects are usually so powerful that there are only two modular ways: one that expands and enhances network effects, and one that disrupts and weakens network effects. Except in extremely rare cases, only the former makes sense, especially when it comes to open-source.
Monolithic architectures have the advantage of allowing deep integration and optimization at modular boundaries that would otherwise be modular; this improves performance… at least initially. However, the biggest advantage of open-source modular tech stacks is that they unlock permissionless innovation; allow participants to focus on specific areas; and incentivize more competition. In this world, we need more of these.
—Ali Yahya, Partner (@alive.eth on Farcaster | @alive_eth on Twitter)
Decentralized blockchains act as a counterbalance to centralized AI. Currently, AI models (such as ChatGPT) can only be trained and operated by a few tech giants due to the computational and training data requirements that are hard to afford for smaller players. But through crypto, a multilateral, global, permissionless market can be created where anyone can contribute computing power or new datasets for a need on the network and be compensated. The long tail of utilizing these resources will lower the cost of AI, making it more accessible.
But as AI changes the way we produce information and changes society, culture, politics, and economics, it also creates a world of rich AI-generated content, including deep fakes. Crypto can also play a role in this by opening the black box; tracking the origin of things we see online; and more. We still need to find ways to democratize distributed generative AI and govern it democratically so that no single participant ultimately decides for everyone else; Web3 is the laboratory to solve this problem. A decentralized, open-source crypto network will democratize AI innovation (rather than centralize it), ultimately making it more secure for consumers.
—Andy Hall, Stanford University Professor (@ahall_research); Daren Matsuoka, Data Scientist (@darenmatsuoka on Farcaster | on Twitter); Ali Yahya, Partner (@alive.eth on Farcaster | @alive_eth on Twitter)
In play-to-earn games, players can often earn money in the real world (not just virtual) based on the time and effort they spend in the game. This trend is related to a broader transformation that is changing games and their surrounding areas, from the rise of the creator economy to changes in relationships between people and platforms. Web3 allows us to break the conventional practice where all profits from playing games and transactions flow only to game companies. Users spend a lot of time on these platforms and create a lot of value for them, so they should also be rewarded.
However, games are not necessarily meant to be workplaces (at least for most players). What we really need are games that are both fun and allow players to capture more of the value they create. Therefore, play-to-earn is evolving into play well and earn well, making an important distinction between games and workplaces. As play-to-earn games move beyond their initial growth phase, the dynamics of how game economies are managed will continue to evolve. However, in the end, this will not be a divisive trend, but just a part of the game.
—Arianna Simpson, @AriannaSimpson
As someone who spends a lot of time thinking about Web3 games and the future of gaming, it is clear to me that AI agents in games must provide assurances: they are based on specific models, and these models are not tampered with during execution. Otherwise, the game will lose integrity.
When legends, terrains, narratives, and logics are all generated through programs, in other words, when AI becomes a game creator, we would want to know that the game creator is a trusted neutral party. We would want to know that this world is built on assurances. The most important thing that crypto provides is these assurances—including the ability to understand, diagnose, and penalize when AI goes wrong. In this sense, AI alignment is actually an incentive design problem, just like dealing with any human agent is an incentive design problem… and that is what cryptocurrencies are concerned with.
—Carra Wu, Partner (@carra on Farcaster, @carrawu on Twitter)
While formal methods have been popular for verifying hardware systems, they are not as common in software development. For most developers not involved in hardcore or safety-critical systems, these methods are too complex and may add significant costs and delays. However, smart contract developers have different needs: the systems they develop handle billions of dollars; bugs could have catastrophic consequences and are often not immediately fixable. Therefore, in software development, especially in smart contract development, more accessible formal verification methods are needed.
Over the past year, we have seen a wave of new tools (including our own) emerge that offer a much better development experience than traditional formal systems. These tools leverage the fact that smart contracts are structurally simpler than conventional software—having atomic and deterministic execution, no concurrency or exceptions, low memory usage, and fewer loops. The performance of these tools is also rapidly improving, leveraging the latest breakthroughs in SMT solver performance (SMT solvers use complex algorithms to identify or confirm the existence of errors in software and hardware logic). With the widespread adoption of tools inspired by formal methods by developers and security experts, we can expect the next wave of smart contract protocols to be more robust and less susceptible to costly hacks.
—Karma (Daniel Reynaud), Research Engineering Partner (@karma on Farcaster, @0xkarmacoma on Twitter)
More and more well-known brands have begun introducing digital assets to mainstream consumers in the form of NFTs. For example, Starbucks introduced a gamified loyalty program where participants collect digital assets while exploring the company’s coffee products (not to mention the AR pumpkin spice maze!). Meanwhile, Nike and Reddit have developed digital collectible NFTs specifically marketed to a broad audience. But brands can do much more than this: they can use NFTs to represent and reinforce customer identities and community relationships; link physical goods with their digital representations; and even co-create new products and experiences with their most loyal fans.
Last year, we saw a trend of mass-scale collectibles for consumers using low-cost NFTs—these NFTs are typically managed through custodial wallets and/or “Layer 2” blockchains with correspondingly low transaction costs. By 2024, the conditions for NFTs to become ubiquitous digital brand assets are already in place, as explained in an upcoming book by Steve Kaczynski and me, applicable to various companies and communities.
—Scott Duke Kominers, Research Partner (@skominers on Farcaster | on Twitter)
Throughout history, technical experts have had the following strategies for verifying computational workloads:
1) Rerunning the calculation on a trusted machine;
2) Running the calculation on a machine dedicated to the task, i.e., a Trusted Execution Environment (TEE); or
3) Running the calculation on a reliable neutral infrastructure, such as a 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 the “prover” to compute a “cryptographic proof” of some computational workload in an unforgeable way by an untrusted party: in the past, the cost of computing such proofs was 10^9 times higher than the original computation, but recent advances are reducing this number to around 10^6.
Therefore, SNARKs become feasible when the initial computation provider can bear the expense of 10^6 and the customer cannot rerun or store the initial data, making it possible. There are many use cases that arise from this: edge devices in the Internet of Things can verify upgrades; media editing software can embed the authenticity of content and transform data; and mixed graphics can pay homage to the original source. LLM reasoning can include authenticity information. We can have self-verifying tax forms, unforgeable bank audits, and many more consumer-friendly applications.
—Sam Ragsdale, Investment Engineer (@samrags on Farcaster, @samrags_ on Twitter)
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