Hello!
This is the year web3 goes mainstream. Off the strength of the first Bitcoin (BTC) ETFs, the price of BTC began to inch toward all-time highs by mid-2024, attracting renewed attention to the web3 space. When President Trump began to vocally support BTC and cryptocurrency on the campaign trail, the web3 market ascended even higher on the prospect of his victory.
We have always known, however, that web3 would never reach mainstream if it remained merely a highly volatile asset class. Investors poured billions into blockchain technology off the promise of its ability to revolutionize our digital lives.
Web3 operates in two-to-three-year cycles, and I predict that the growth cycle of 2024-2026 will finally usher in the mass adoption use cases that previous cycles have come close to achieving before falling into bear markets again. As the top year for this particular expansion cycle, what do we have to look forward to from web3 in 2025?
AI agents are autonomous entities that rely on AI to execute specific tasks. They can be as simple as an AI-triggered smart contract on a blockchain to make a payment or as complicated as a human-like actor that serves as a game’s non-performing character or even plays on the gamer’s behalf.
Because AI agents are autonomous, it is incredibly important that their actions be verifiable and transparent. Once an AI agent has been enabled with a task, it does not require further human intervention to perform its role, so the usual checks human actors put in place will not apply.
It's a small wonder, then, that blockchains are already beginning to shine as the rails by which AI agents are tasked and managed. By using blockchain, anyone can see the actions performed by an AI agent and quickly detect any adjustments needed to the models that drive them. More importantly, AI agents can act without the control of a centralized organization. In order for these agents to truly take on the capabilities of a human actor, they need to hop networks and organizations in the same manner, which can only be done on an immutable ledger like blockchain.
Finally, as we’ve observed in our work at Saga, these AI agents are increasingly used in the world of gaming and entertainment to create content through generative AI among parties who do not directly interface. In order for these agents to transact and ensure proper attribution and payment for their work, blockchain rails are needed to record, organize and execute their actions.
Web3 remains primarily built for finance. However, as a financial instrument, cryptocurrencies often do not have staying power because they lack utility. The recent phenomenon of memecoins is a perfect example of this principle: Other than a few memecoins that are about signifying membership and personal iconography, most disappear in a few weeks.
The truly potent combination is a web3 asset that has social utility. These assets tend to originate in gaming and entertainment. For example, games have in-game assets that cannot be traded on a secondary market without the risk of a crackdown from the original game creator, who sees no value from sales on these markets. Using a decentralized marketplace, games are able to realize value after the primary sales of their assets, and their players have the freedom to transfer the assets as they like. Particularly among Gen-Z and Gen-Alpha, this sort of combined economic and social activity is not just normal but an incredibly popular form of entertainment.
The attribution of value to an asset purely because of community consensus was the origin of web3, and the same force of SocialFi (social finance) will drive the industry into mass adoption.
The gaming industry has been in deep recession for a little over a year, with mass layoffs still affecting larger studios and many profitable indie studios due to shut down by the end of the year. While part of this dip is due to the glut in content during the pandemic, similar to what’s happening in the streaming industry, the true culprit is the cost of user acquisition. For mobile games, the average cost per install (CPI) in 2023 was around $4.30 on iOS and $1.15 on Android. For AAA franchises, many of which have a strong built-in, historical fan base, marketing budgets can reach around $300 million.
Even though web3 has had its detractors in traditional gaming, almost all industry leaders admit that web3 has figured out something about community engagement that is crucial to cost-effective and sustainable user acquisition. At Saga, we have found that using both web3 and traditional rails for building a player base is the best way to optimize for both the acquisition and retention of users.
During the last growth cycle of crypto (2020-2022), traditional industries, from insurance to supply chain to banking and beyond, undertook large experiments in adopting blockchain technology. However, very few of the experiments were deemed successful and continued.
Disruptive technology does not just change the rails by which tasks are done; they introduce completely new models for doing business and interacting with the world. Therefore, a method of adoption that simply mimics current processes and places them on new infrastructure will seem far less convenient and more expensive than the options that currently exist.
New, robust social and business models will emerge from web3 in this cycle, and those will form the basis of mass adoption by traditional businesses. After these technologies are first proven at the grassroots level, they will then be taken up by the fast followers and late adopters.
NFTs and distributed finance (DeFi) were the two main sectors that emerged from 2020 to 2022. Neither achieved mass adoption. This time around, the industry has the chance to build on what they began and truly merge culture, technology and finance to birth the web3 breakthrough product.
Written by Rebecca Liao for forbes.com