a16z: 7 predictions and 13 expectations for the encryption industry in 2025

Article Original Title | A few of the things we’re excited about in crypto (2025)

Translate | IRIS

Summary|This article explores the integration of blockchain technology, artificial intelligence (AI), and the Depth of the Decentralization system, and predicts key trends for 2025. Here are the main contents:

1. AI’s autonomous agency ability

• AIWallet: AI agents need to have their own Wallet and signing Secret Key to participate independently in market activities and manage encryption assets. In the future, this will give rise to new use cases, such as AI running Decentralization physical infrastructure network (DePIN) or managing its own blockchain.
• Decentralization Autonomous Chatbots (DACs): DACs are independent chatbots that run on trusted execution environments (TEEs), can generate content autonomously, manage assets, and prove their independence through encryption technology. These types of chatbots may become the first truly autonomous and high-value network entities.

2. The Importance of Identity Verification

• With the proliferation of AI-generated content, the ‘identity verification’ system for privacy protection has become particularly important to ensure the authenticity of digital interactions. This not only increases the cost of attacks, but also enhances the integrity and trustworthiness of the network.

3. A New Form of Decentralized Governance

• Liquid Democracy: Liquid democracy implemented through blockchain technology will change the online and offline governance models, allowing people to vote directly or delegate their votes. This model is expected to achieve low-cost trials in local governance.

4. New Applications of Blockchain Technology

• Enterprises adopt stablecoins: Stablecoins are becoming the mainstream choice for enterprise payments due to their low cost and fast payment capabilities, especially for small and medium-sized enterprises and the retail industry. In the future, large enterprises may also adopt this payment method, directly boosting profit margins.
• on-chain government bonds: The government will explore the issuance of government bonds on-chain, which not only provides a digital asset based on interest, but also provides more collateral for the Decentralized Finance (DeFi) ecosystem.
• Asset tokenization: As the cost of Blockchain infrastructure decreases, the tokenization of non-traditional assets (such as biological data, medical data, etc.) will become a new source of income, further driving the Decentralization economy.

5. Legal Framework of Decentralization组织

• DUNA (Decentralization Non-Profit Association) provides legal status for DAO (Decentralized Autonomous Organization), especially in the United States, which helps strengthen the project’s economic activities, compliance management, and protects the rights of Tokenholder.

6. User Experience and Infrastructure Optimization

• Simplifying blockchain technology is key to attracting mainstream users. By designing more intuitive interfaces and dedicated encryption app stores, the industry is working to transform passive encryption asset holders into active users.
• Developers will increasingly adopt ready-made blockchain infrastructure instead of building from scratch to accelerate product development and focus on user experience.

7. Extension of Blockchain Applications

• The prediction market showed its potential in 2024 and may evolve into a more advanced information aggregation tool in the future, used in areas such as governance, finance, and community decision-making.
• Web3’s ‘killer app’ may achieve seamless interaction with users by hiding technical complexity, similar to how Spotify simplifies the music streaming experience.

This article provides a rich perspective on the intersection of future AI and blockchain technology, emphasizing the importance of balancing regulation and responsibility while driving technological innovation. This trend will pave the way for the integration of technology and society’s depth. The following is the complete content of the a16z article:

2025, a few things we look forward to most in the encryption industry

Editor’s note: a16z has released its comprehensive ‘big ideas’ list, which may be the issues that technology builders need to address in the coming year, covering insights from partners in AI, US dynamics, bio/health, encryption, enterprise, fintech, gaming, infrastructure, and other fields. Below is a brief list showcasing the excitement of a16z’s encryption partners about what’s to come.

Artificial intelligence needs to have its own Wallet to achieve subjective behavior

As artificial intelligence transitions from non-player characters (NPCs) to protagonists, they will begin to act as agent. However, until recently, AI has not been able to truly act as a subject. They still cannot participate in the market in a verifiable autonomous manner (i.e. non-human control) - exchanging value, expressing preferences, coordinating resources.

As we can see, AI agents like @truth_terminal can use Cryptocurrency for trading, opening the door to various creative content opportunities. However, the potential for AI agents to become more useful goes far beyond this—whether in fulfilling human intent or becoming independent network participants. As AI agent networks begin to manage their own encryptionWallet, sign Secret Key, and encryption assets, we will see interesting new use cases emerge. These use cases include AI operating or verifying Nodes in the Decentralization physical infrastructure network (DePIN)—for example, helping distributed energy. Other use cases range from AI agents becoming true, high-value gamers. We may even eventually see the first blockchain owned and operated by AI.

—Carra Wu

@carrawu on Twitter | @carra on Farcaster

Enter ‘Decentralization Autonomous Chatbot’

In addition to the AI ​​wallet, there is also an AI chatbot running in a TEE (trusted execution environment). TEE provides an isolated environment where applications can run, allowing for more secure design of distributed systems. However, in this case, TEE is used to prove that the chatbot is autonomous and not controlled by human operators.

To further expand on this concept, the next big idea will be what we call a Decentralized Autonomous Chatbot (DAC, not to be confused with a Decentralized Autonomous Company). Such chatbots can establish their own follower base by publishing engaging content, be it entertaining or informative, on Decentralized social media. It will build followers on Decentralized social media; generate revenue from its audience in various ways; and manage its assets with Cryptocurrency. The relevant Secret Keys will be managed in a TEE that also runs the chatbot software, which means that no one can access these Secret Keys apart from the software itself.

With the development of risks, regulatory barriers may be needed. But the key point here is Decentralization: running on a permissionless Node set and coordinated by Consensus protocol, this chatbot may even become the first truly autonomous billion-dollar entity.

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

@danboneh on Twitter

@0xkarmacoma on Twitter | @karma on Farcaster

@daejunpark on Twitter

@darenmatsuoka on Twitter | @darenmatsuoka on Farcaster

As more and more people use artificial intelligence, we need unique personality proof

In a world filled with online impersonation, fraud, multiple identities, Depth falsification, and other lifelike but deceptive AI-generated content, we need ‘personality verification’ - a way to help us confirm that we are interacting with a real human being. However, the new problem is not fake content; the new thing is that now these contents can be produced at a lower cost. Artificial intelligence has greatly dropped the marginal cost of producing content containing all the cues we use to judge the ‘authenticity’ of things.

Therefore, it is now more important than ever to have a way to digitally link content with individuals while ensuring privacy. ‘Digital identity’ is an important component in establishing a digital identity. However, here it becomes a mechanism that increases the marginal cost of attacking individuals or compromising network integrity: obtaining a unique ID for humans is free, but it is expensive and difficult for AI.

This is why the ‘uniqueness’ of privacy protection is the next big idea in building a network we can trust. It’s not just about proving identity; it fundamentally changes the cost structure of malicious attackers’ attacks. Therefore, ‘uniqueness attribute’ - or anti-Sybil attack - is a non-negotiable attribute of any identity proof system.

—Eddy Lazzarin

@eddylazzarin on Twitter | @eddy on Farcaster

From prediction market to a better information aggregation mechanism

Prediction markets made their debut on the main stage of the 2024 US elections, but as an economist studying market design, I believe that it is not prediction markets themselves that will bring about change in 2025. Instead, prediction markets lay the foundation for more information aggregation mechanisms based on distributed technologies - mechanisms that can be applied to multiple fields, including community governance, sensor networks, and finance.

Last year proved this concept, but please note that prediction markets themselves are not always a good way of aggregating information: even for global ‘macro’ events, they can be unreliable; for more ‘micro’ issues, prediction pools may be too small to obtain meaningful signals. However, researchers and technologists have decades of design frameworks to incentivize people to (truthfully) share what they know in different information environments - from data pricing and purchasing mechanisms to ‘Bayesian truth serum’ used to induce subjective assessments - many of which have been applied in encryption projects.

Blockchains are inherently suitable for implementing such mechanisms - not only because they are decentralized, but also because they promote open, auditable incentive mechanisms. Importantly, blockchains also make output results public, so the results can be interpreted in real-time by everyone.

—Scott Duke Kominers

@skominers on Farcaster | on Twitter

Enterprises are increasingly accepting Stable Coin as a payment method

In the past year, Stable Coin has found a product-market fit - this is not surprising, as they are the cheapest way to send dollars, making global payments fast. Stable Coin also provides entrepreneurs with a more accessible platform to build new payment products: no thresholds, minimum balance requirements, or proprietary software development kits. But large enterprises have not yet realized the significant cost savings and new profit space that can be gained by switching to these payment rails.

While we have seen some companies interested in stablecoin (and early adoption in peer-to-peer payments), I expect to see a bigger wave of experiments in 2025. Small and medium-sized enterprises with strong brands, fixed audiences, and painful payment costs—such as restaurants, cafes, and corner stores—will be the first to transition from credit cards. They do not benefit from credit card fraud protection (considering face-to-face transactions), and Money Laundering (30 cents per cup of coffee) is also where they are most hurt (which is a significant portion of profit loss).

We should also expect large enterprises to adopt Stable Coin. If Stable Coin really develops rapidly in the history of banking, then businesses will try to disintermediate payment providers - adding 2% directly to their bottom line. Enterprises will also start looking for new solutions to the problems currently addressed by credit card companies, such as fraud protection and identity authentication.

—Sam Broner

@sambroner | @sambroner

Countries Explore Putting Government Bonds on the Blockchain

The securitization of government bonds will create a digital asset supported by the government that can generate interest, without the monitoring concerns of central bank digital money (CBDC). These products may unlock new sources of demand for borrowing and collateral use in decentralized finance (DeFi) lending and derivatives protocols, thereby adding further integrity and soundness to these ecosystems.

Therefore, as governments around the world that support innovation further explore the benefits and efficiency of public, permissionless, and irrevocable blockchain, some countries may attempt on-chain issuance of government bonds. For example, the UK has explored digital securities through its financial regulator FCA (Financial Conduct Authority) and through a sandbox environment; its Treasury has also expressed interest in the issuance of digital gifts.

In the United States, given the Securities and Exchange Commission (SEC) plans to require the use of traditional, burdensome, and costly infrastructure to clear treasury bonds, it is expected that there will be more discussions in the future about how blockchain can improve the transparency, efficiency, and participation of bond trading.

—Brian Quintenz

@brianquintenz on Twitter | @brianq on Farcaster

We will see a broader adoption of the US Blockchain network for the new industry standard ‘DUNA’

In 2024, Wyoming passed a new law recognizing DAOs (Decentralized Autonomous Organizations) as legal entities. DUNA, or ‘Decentralized Unincorporated Non-profit Associations,’ is specifically designed to achieve Decentralized governance of Blockchain networks and is the only viable structure for U.S. projects. By incorporating DUNA into the legal entity structure of Decentralization, encryption projects and other Decentralization communities can provide legal legitimacy for their DAOs—promoting greater economic activity, while also providing liability protection for Token holders and managing tax and Compliance requirements.

DAOs — communities that manage open blockchain network transactions — are essential tools for ensuring that networks remain open, non-discriminatory, and fair in value distribution. DUNA has the potential to unlock the power of DAOs, and several projects are currently being implemented. With the United States preparing to nurture and accelerate its encryption ecosystem by 2025, I expect DUNA to become a standard for American projects. We also anticipate other states adopting similar structures (led by Wyoming, which was also the first state to adopt the now widely used LLC)… especially with the emergence of other Decentralization applications (such as for physical infrastructure/energy grids).

—Miles Jennings

@milesjennings on Twitter | @milesjennings on Farcaster

Online Liquid Democracy Goes Offline

As people become increasingly dissatisfied with the current governance and voting systems, there is now an opportunity to experiment with a new, technologically supported governance window - not only online, but also in the physical world. I have written before about how DAOs and other Decentralization communities allow us to study political institutions, behavior, and rapidly evolving governance experiments on a large scale. But what if we could apply these learnings to governance in the physical world through blockchain?

We can eventually use the Block chain for secure, private voting, starting with low-risk pilot projects to address network security and audit issues. But importantly, the Block chain 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. This idea was originally proposed by Lewis Carroll (author of ‘Alice’s Adventures in Wonderland’ and a prolific researcher on voting systems); however, it was impractical on a large scale… until now. The latest developments in computation and connectivity, along with the Block chain, make a new form of representative democracy possible. The encryption project has been applying this concept and generating a wealth of data on how these systems work—please see our recent research findings—local governments and communities can draw on this data.

—Andrew Hall

@ahall_research on Twitter | on Farcaster

Builders will reuse infrastructure instead of reinventing it

Last year, teams continued to reinvent the wheel in the Blockchain technology stack - a new set of validators, Consensus protocol implementation, execution engine, programming languages, and RPC APIs. These achievements sometimes have slight improvements in specialized functionality, but often lack performance in broader or foundational functionality. For example, a dedicated programming language for SNARKs: while an ideal implementation may allow ideal developers to produce more efficient SNARKs, it may not achieve the performance of a general-purpose language (at least for now) in terms of compiler optimization, development tools, online learning materials, AI programming support, etc., and may even lead to a decrease in SNARKs performance.

Therefore, I expect more teams to leverage the contributions of others and reuse existing Blockchain infrastructure components by 2025 - from Consensus protocol to existing capital inputs to proof systems. This approach will not only save builders a lot of time and effort, but also enable them to ruthlessly focus on the differentiated value of their products/services.

The infrastructure is finally in place to build ready-made web3 products and services. Like any other industry, these will be built by teams capable of successfully navigating complex Supply Chain, rather than teams that dismiss ‘non-self-invented’ products.

—Joachim Neu

@jneu_net on Twitter

encryption company will prioritize user experience based on end users, not letting the infrastructure decide the user experience

Although the Block chain technology infrastructure is fascinating and diverse, many encryption companies not only choose their infrastructure - in some ways, the infrastructure also chooses the user experience (UX) for them and their users. This is because specific technical choices at the infrastructure level are directly related to the end user experience of Block chain products/services.

But I believe that the industry will overcome the ideological barriers here: technology should determine the ultimate user experience, rather than the other way around. By 2025, more encryption product designers will start from the user experience they want and then choose the appropriate infrastructure from there. Encryption startups no longer need to overly focus on specific infrastructure decisions before finding product-market fit - they can focus on truly finding product-market fit.

We can abstract these choices and adopt a comprehensive, full-stack, plug-and-play approach instead of getting stuck in specific EIPs, Wallet providers, intent architectures, etc. The industry is ready for this: Programmability’s Block space is abundant, developer tools are becoming more mature, and the abstraction of the chain is beginning to democratize the crowd designing encryption products. Most technical end-users don’t care about the language used by the product on a daily basis. The same situation will also occur in the encryption field.

—Mason Hall

@0xMasonH on Twitter | @mason on Farcaster

‘Hidden Lines’ Empower the Birth of Killer Applications in Web3

The superpower of Block chain technology is a manifestation of its uniqueness, but so far, it has also hindered its mainstream adoption. For creators and fans, Block chain unlocks the possibilities of connectivity, ownership, and monetization… but industry jargon (such as ‘NFTs’ and ‘zkRollups’) and complex designs have created barriers for those who can benefit the most from these technologies. I have seen this firsthand in numerous conversations with executives in the media, music, and fashion industries.

The widespread adoption of many consumer technologies has followed this path: starting from the technology; some iconic companies/designers abstract away complexity; this helps unlock some breakthrough applications. Think of the starting point of email - the SMTP protocol hidden behind the ‘send’ button; or credit cards, which most users no longer consider payment rails. Similarly, Spotify revolutionized the music industry not by flaunting file formats, but by putting song playlists at our fingertips. As Nassim Taleb observed, ‘Overengineering leads to fragility. Simplicity allows for scalability.’

This is why I believe our industry will adopt the spirit of ‘hidden lines’ by 2025: the best Decentralization applications have already begun to follow more intuitive interfaces, making it as simple as touching a screen or swiping a card. By 2025, we will see more companies with simple designs and clear communication; successful products don’t need explanations; they solve problems.

—Chris Lyons

@chrislyons on Twitter | on Farcaster

The encryption industry finally has its own app store and discovery platform

When encryption is blocked on centralized platforms like the Apple App Store or Google Play, it limits their users’ access channels. However, we now see new app stores and markets that offer this distribution and discovery service without restrictions. For example, Worldcoin’s World App Market - not only stores identity proofs but also allows access to ‘mini-apps’ - enabled thousands of users for several apps in just a few days. Another example is the fee-free dApp store for Solana mobile users. These examples also demonstrate that hardware (not just software - phones, globes) could be a key advantage for encryption app stores… just as Apple devices were essential to the early app ecosystem.

Meanwhile, there are other stores with thousands of Decentralization applications and web3 development tools, covering popular blockchain ecosystems (such as Alchemy); as well as blockchains that serve as game publishers and distributors (see Ronin). However, it’s not all fun and games: if a product already has existing distribution channels - such as on messaging apps - it’s difficult to migrate it to on-chain (with the exception of Telegram/TON Network). The same goes for apps with significant distribution on web2. But we may see more of this migration activity in 2025.

—Maggie Hsu

@meigga on Twitter | @maggiehsu on Farcaster

Cryptocurrency owners become cryptocurrency users

In 2024, Crypto Assets witnessed significant development as a political movement, with key policymakers and politicians taking a positive stance. We also saw its development as a financial movement (such as BTC and ETP of ETH expanding access for investors). By 2025, Crypto Assets should further develop as a computing movement. But where will these new users come from?

I believe it is time to re-engage the current ‘passive’ Cryptocurrency holders and transform them into more active users, as only 5-10% of Cryptocurrency holders are actively using Cryptocurrency. We can onboard the existing 617 million Cryptocurrency holders on-chain - especially as Money Laundering drops with the continuous improvement of Blockchain infrastructure. This means new applications will start to emerge for existing and new users. Meanwhile, we have also seen early applications - such as stablecoins, Decentralized Finance, Non-fungible Tokens, gaming, social, DePIN, DAO, and prediction markets - becoming more accessible to mainstream users as the community focuses more on user experience and other improvements.

—Daren Matsuoka

@darenmatsuoka on Twitter | on Farcaster

Various industries may start tokenizing “non-traditional” assets

As the encryption industry and other emerging technology infrastructure mature, the practice of tokenizing assets will be widely disseminated in various industries. This will allow previously expensive or unrecognized assets to not only achieve liquidity, but more importantly, participate in the global economy. Artificial intelligence engines can also consume this information as unique datasets.

Just as hydraulic fracturing technology has tapped into previously untouchable oil reserves, tokenization of non-traditional assets could redefine income generation in the digital age. What seemed like a science fiction scenario becomes more possible: for example, individuals can tokenize their own biometric data and then rent out this information to companies through smart contracts. We have already seen early examples of this, such as DeSci using blockchain technology to bring more ownership, transparency, and consent to medical data collection. We have yet to see how this future will unfold, but such developments will allow people to leverage previously untapped assets in a decentralized manner, rather than relying on governments and centralized intermediaries to provide them with these assets.

—Aaron Schnider

@aaronschnider on Twitter