Author | Callum@Web3CN.Pro
Since the beginning of 2023, the cryptocurrency market has been in a downturn, with a lack of market liquidity and continuously declining trading volume, causing many blockchain practitioners to start doubting the sustainability of the native Crypto industry. In contrast, ChatGPT has gained popularity and the AI craze has swept the globe, with generative AI and large language models becoming the focus of discussion, prompting the market to start considering the new technological revolution of Web3.0+AI and exploring the integrated innovation and large-scale application of the Web3.0 era.
The 9th Wanchain Blockchain Global Summit in 2023 focused on the core theme "Next Stop, Web3.0," and centered on the three major areas of Web3.0, AI, and DePIN, inviting dozens of outstanding developers, experts, scholars, and well-known project founders from home and abroad to discuss the new era of the Web3.0 world.
The summit has now successfully concluded. So, what information did this summit convey? Is Web3.0 currently on the eve of large-scale application? Where is the future direction of Web3.0?
AI+Blockchain Sparks a New Technological Revolution in Web3
Artificial Intelligence (AI) and blockchain are both regarded as powerful technological forces in the Web3 era. Their combination has led to a series of unprecedented innovations and will fundamentally change the underlying structure of the existing network. Blockchain technology ensures data security and privacy protection, guarantees data integrity and transparency, and reduces the risk of network attacks; AI, on the other hand, provides more precise and personalized services to users through machine learning (ML).
As the next generation of the internet, Web3 envisions a decentralized, secure, and user-centric digital ecosystem. It shares power and benefits through power decentralization. Once Web3 matures, a few large tech companies will be unable to control the core capabilities of the internet. Users will be able to control their own data, thereby gaining greater privacy. There will be no censorship system, and rewards will be distributed evenly. Although Web3 has not been defined in a standard way, it has some prominent features:
Decentralization. This is the basic principle of Web3. Web2 uses HTTP to locate information, which is done through unique URLs. With the advantage of blockchain, Web3 will allow information to be stored in multiple locations on the network. This will enable users to have better control over the vast databases currently owned by internet giants like Google and Meta. If users wish, Web3 will allow them to sell data generated from different computing resources (such as mobile phones, desktops, and devices), ensuring that users retain control over their data.
Permissionless, Trustless. Web3 is based on open-source software and is decentralized, and the Web3 applications running on the blockchain are called dApps.
Connectivity. Information and content are more tightly connected with Web3 and can be accessed by multiple applications. In addition, the number of devices connected to the internet has also increased. The Internet of Things (IoT) can also play an important role here.
Artificial Intelligence (AI) and Machine Learning. Web3 will use technologies based on the concept of the semantic web and natural language processing, enabling computers to understand information like humans. Web3 will also leverage machine learning. This branch of artificial intelligence uses data and algorithms to mimic human learning and gradually improve its accuracy.
Source: LeewayHertz
In the Web3 era, the integration of AI and blockchain can leverage each other's strengths, generating many synergistic effects and further driving the development of the next generation of the internet.
- Intelligent Blockchain: Current blockchain platforms focus on developing critical distributed computing components to achieve decentralized processing of financial transactions. These key building blocks include consensus mechanisms, memory pool structures, and oracles. The next generation of L1 and L2 blockchains will incorporate machine learning-driven functionalities, just as core components of traditional software infrastructure such as storage and networking become more intelligent. For example, blockchain runtimes can use machine learning predictions for transactions to create scalable consensus protocols. Artificial intelligence can enhance the security of blockchain; AI applications can quickly mine data, predict behavior, detect fraudulent activities, and prevent attacks.
- Smart Contracts: The Web3 stack can also integrate ML capabilities through the use of smart contracts and protocols, as evidenced by the DeFi explosion. Currently, DeFi automated market makers (AMMs) and lending protocols with intelligent logic based on machine learning models have emerged. In the future, a DeFi lending protocol could use intelligent scoring to balance loans from different types of wallets.
- Smart dApps: Decentralized applications (dApps) are expected to become one of the most popular Web3 solutions for quickly adding ML-driven functionalities. This trend is already evident in DeFi and NFTs and will continue to grow.
Today, AI and blockchain technologies are rapidly entering our lives and driving revolutionary changes in the online world. The fusion of artificial intelligence and blockchain has the potential to fundamentally change the way we interact with the internet and with each other. The vision of the new network based on blockchain (including cryptocurrencies, NFTs, DAOs, DeFi, etc.) provides a more fair and secure read/write internet for all users. AI can be used to support more personalized, efficient, and secure new applications and services. Web3 provides a more open and democratic innovation platform. This fusion paves the way for a new era of decentralized innovation, transforming industries, empowering individuals, and creating a decentralized world that combines wisdom and trust.
From Infrastructure Construction to Large-Scale Application
In 2015, Ethereum was born as the first decentralized application platform driven by blockchain technology. Over the next few years, the open-source community made contributions to improving the network, and developers began building smart contracts and experimenting with blockchain.
In 2020, with digital currencies gaining attention globally, the DeFi craze brought cryptocurrencies into the public eye. Over the next few years, many dApps gradually developed, making cryptocurrencies available globally—such as exchanges and wallets.
In 2021, NFTs became the focus of attention, introducing the verifiability, interoperability, and true ownership of digital assets for the first time.
Since then, mainstream applications of blockchain technology have been rare, liquidity has dried up, growth has slowed, and the market has gradually entered a bear market. Although the market has begun to doubt the sustainability of the native Crypto industry, it is undeniable that the Web3 industry is moving towards the next stage of application infrastructure construction—large-scale application.
In the past year, the blockchain industry has made several huge breakthroughs in exploring the next stage of application: blockchain scalability, user experience, and developer tools. These breakthroughs pave the way for an innovation boom, as blockchain is rapidly becoming a viable infrastructure to power the next generation of mass consumer internet applications, available to millions of people in gaming, commerce, social media, creator space, and other fields. These killer applications will succeed not only because they are built on blockchain but also because they use blockchain technology in innovative ways to achieve a global, open, and accessible digital economy.
As Mr. Xiao Feng, Chairman of Wanchain Blockchain, stated: Blockchain is transitioning from the construction phase of infrastructure to a new stage of large-scale application. The next three years are a crucial moment for blockchain applications. The past time belonged to the construction phase of blockchain infrastructure, where many technologies unrelated to the real economy and specific application scenarios were developed, and the infrastructure had no direct relationship with specific application scenarios and specific needs. However, without the construction phase of infrastructure, we cannot support large-scale applications on the blockchain framework. In the next few years, the technical framework of blockchain is becoming more mature and specific application scenarios are needed to bring about better changes.
Web3 covers various aspects of technology, including the internet, blockchain, metaverse, AGI, and more. It is not just a technology; it also involves innovative business models, organizational forms, economic mechanisms, and financial models.
According to a report from Electric Capital at the beginning of 2023, the current number of Web3 users has reached the scale of hundreds of millions, with tens of millions of active users. In addition, a total of 61,127 Web3 developers joined the crypto industry in 2022, setting a historical record. The continuous growth in the number of active developers also indicates the industry's enormous potential, providing a solid foundation for the large-scale application of Web3 in the market. After experiencing multiple cycles, the narrative theme of the cryptocurrency market has gradually shifted from infrastructure construction to large-scale applications, such as DeFi, GameFi, NFTs, social media, and Real-World Assets (RWA) that link to the real world. In addition to the public chain sector, institutions have also begun to lay out these Web3 application directions. It is expected that more Web3 projects will develop with the assistance of capital in the future.
Source: Coinbase
New Direction for Web3—DePIN (AIoT+Web3)
DePIN (Decentralized Physical Infrastructure Networks) represents a distributed physical infrastructure network, describing the network that connects physical hardware devices. In order to operate in a decentralized manner, they will receive support in the form of cryptocurrency rewards. This represents a new narrative of the combination of Web3 and AIoT.
DePIN is built on the fundamental principles of the Internet of Things (IoT) and achieves process automation by connecting multiple physical objects. For the DePIN network to operate normally, it typically requires:
- Hardware—to help connect the network to physical components in the real world.
- Hardware operators—who purchase (or lend) hardware and connect it to the network for users.
- Tokens—DePIN projects use cryptocurrency tokens to incentivize hardware service providers who use or maintain the network. Each token has different economic characteristics based on the rules set by the project.
- End users—users of the infrastructure supported by the network hardware. For example, end users may be more willing to rely on the DePIN project rather than a company to access WiFi signals and pay for the services provided by the network.
Like any other network, DePIN can be reduced to two basic components: physical infrastructure and digital networks. The former can be any physical controller connected to the network, while the latter consists of smart contracts that handle various aspects of the project, running on a public and permissionless blockchain network. The blockchain serves as the ledger of the network, recording transactions and other value exchanges among network members. The network rewards participants with tokens for specific useful activities, such as purchasing broadband access from someone renting out a router. The DePIN token serves as an incentive mechanism, encouraging providers (hardware providers, connectivity providers, sensor owners, etc.) to enhance the network's capabilities, enabling it to compete with traditional brands that dominate specific markets.
This business model effectively opens up a new path to enter the market. The traditional telecommunications service model requires operators to first raise billions of dollars to pay for the purchase and deployment of infrastructure (which needs to be assisted by a dominant centralized company in the market), invest in physical space for hosting the infrastructure, and rent or purchase expensive real estate. Finally, they must retain a small portion of employees to maintain the network and establish a strict and centralized corporate structure to meet the needs of the existing market. In contrast, by choosing the DePIN approach, they only need to allow individuals to participate and build the digital infrastructure that enables them to effectively guide their network. Enterprise and individual providers will set up their own hardware and be responsible for its deployment and maintenance. The end result here is not a corporate structure, but a community with ownership and sovereignty that operates its own services and can easily meet any demand.
As a native Web3, DePIN also allows network participants to directly access various Web3 tools and DeFi services, such as financing for new hardware, which can unlock more sources of income for them. The growing demand will motivate more participants to join, forming a self-reinforcing long-term growth cycle.
Source: Messari
Conclusion
Innovative use cases for emerging technologies do not materialize overnight. Developers need years of trial and error to create infrastructure and then build applications. Web3.0 currently faces many challenges, not only technically, but also influenced by many business factors and regulatory policies. Although we have only scratched the surface of supporting blockchain applications, with the popularization and innovative integration of blockchain technology, a new generation of technological revolution will emerge, breaking the monopoly of internet giants and driving the development of business models. It can be said that Web3.0 is on the eve of large-scale application.
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