Reviewing the main narrative logic of 2024: Written at the moment of the metaverse singularity

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2024-02-18 10:46:14
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People's imagination of the metaverse is beginning to take shape, with the two main lines of construction, AI and Web3, unfolding sequentially and ultimately converging in the metaverse.

Author: Jerry, Founder of ThePrimediaDAO

Introduction

From the perspective of crypto history, the Web3 wave of 2023 is unremarkable. Following the bottoming out of the bear market in 2022, the crypto world has methodically navigated the foundation of a bull market in 2023. However, the significant advancements in AI this year, along with the ensuing threat narratives, have thrust Web3 into an epic narrative. As early as the inception of Bitcoin, people envisioned that blockchain could establish order for intelligent networks; later, it became apparent that AI and blockchain/Web3 would converge in the metaverse, but this was merely a vision. It wasn't until the explosive popularity of ChatGPT in 2023, which sparked discussions about AI threats and computational governance issues, that people were compelled to engage in the practical integration of AI and Web3.

We can conclude that the construction of the metaverse in 2023 has begun to take shape, and the metaverse singularity has occurred. In this context, we are entering a year that will undoubtedly be recorded in history as the inaugural year of metaverse construction and the crypto bull market cycle. In 2024, despite the ever-changing physical world, opportunities for humanity's progress towards a digital society are surging.

01 Integration: The Asset Market of TradeFi and DeFi

2023 is dubbed the year of RWA (Real World Assets), but why is the RWA market lukewarm this year? Let's start by answering this question: because the early mediums of the RWA market primarily consist of government bonds, gold, and US dollars. These assets offer relatively stable investment returns with limited fluctuations, and even the dollar is involved in the form of stablecoins, limiting the operational space for the RWA of TradeFi assets to merge with the crypto economy's DeFi market.

However, with the successful launch of Bitcoin ETFs on Wall Street, more TradeFi assets with investment returns, such as stocks and futures derivatives from traditional financial markets, will enter the crypto market through RWA. Take BlackRock as an example; they are exploring how to RWA their substantial TradeFi assets to integrate into the crypto market. To provide some data to help illustrate what this means—according to BlackRock's Q3 2023 financial report, their assets under management stand at $9.1 trillion, while the well-known Bitcoin fund Grayscale manages several billion dollars, with over $20 billion in Bitcoin trust.

Thus, the current crypto market centered around Bitcoin is simply not enough for BlackRock. After Bitcoin ETFs enter the traditional financial market, bringing more TradeFi assets into the crypto market will be worth BlackRock's attention. Therefore, it can be predicted that the RWA market in 2024 will see a massive release.

Bitcoin ETFs bring Bitcoin into the traditional financial market, providing funds for the crypto market; RWA brings traditional financial market assets into the crypto market, providing quality assets for the crypto market. Therefore, we optimistically anticipate that the total volume of the crypto market will exceed $10 trillion in 2024, and Bitcoin's price reaching $100,000 is also likely to occur this year (a friendly reminder to investor friends, this article does not constitute investment advice; please make decisions based on your own judgment).

But all of this is just the beginning. Skipping the narrative of this bull market cycle and aligning with the overall theme of this article, we directly look forward to the next decade, during which more than half of the quality assets from the physical world will integrate into the crypto world through RWA; similarly, native crypto assets represented by Bitcoin ETFs will also merge with the traditional financial system, providing early residents of the metaverse with more diverse wealth rights and asset management paths.

It is worth mentioning that some are concerned that the crypto market may fall into a fourteen-year bear market cycle after this bull market, similar to what the internet experienced. Without discussing whether these two matters are comparable or relevant, even if market cycles have their inherent regularities, we believe that this will still be mitigated by the aforementioned narrative. The immense social changes brought about by the internet's industrial economic capabilities cannot be matched by the social changes and economic energy brought by the blockchain/Web3 we are currently in.

02 Return: Basic Ecosystems of Public Chain Performance, Cross-Chain Interoperability, and Storage

After the baptism of inscriptions at the end of 2023, people in the crypto world have realized that the current public chains and other infrastructures are still in their infancy. For instance, even Layer 2 solutions that have secured hundreds of millions in funding cannot withstand the scrutiny of inscriptions, let alone their support for application ecosystems. Undoubtedly, 2024 will be a year of returning to the basics of public chain cross-chain interoperability and storage ecosystems (these efforts will become the foundation for the convergence of AI and Web3/blockchain in the metaverse).

For example, Layer 2 is already considering upgrades and breakthroughs—if the storage and scalability you invest heavily in are insufficient to attract application developers, perhaps it's time to reflect and take a step forward to create an application ecosystem where good applications can thrive and users can have a better application experience.

Concepts like intent, modularization, and chain abstraction will build upon the preliminary practices of early 2023 and enter a phase of qualitative change in 2024. It is worth mentioning that we previously analyzed intent transactions, and the new narrative around intent-centric applications has immense imaginative space, even if it seems daunting. Rational developers and crypto ecosystem builders have already focused their thoughts on the paths to large-scale application and adoption of projects.

For instance, NFTs evolving to ERC404 bring quality foundational elements to the crypto economy and metaverse construction. Its primary function is to empower financial liquidity, which will not only manifest in avatar-type NFT/PFT markets but also play a role in the RWA market; additionally, it can integrate with DID (Decentralized Identity), allowing ERC404 to decompose the relationships between NFTs and the identities, contributions, honors, and assets empowered by DID, enabling DID to confer corresponding status, honors, rights, and assets.

Moreover, the concept of DePin is on the rise; for example, the AI+DePin project Peaq, which primarily targets the European and American markets, has launched its mainnet and is onboarding a new Fortune 500 partner every week. It has also been mapped as a key layer 1 in the Messari DePin report. DePin will be an important breakthrough and infrastructure for the integration of AI and Web3, and we will witness whether more fundamental aspects like network bandwidth can also be combined with blockchain in this cycle.

Regarding the public chain track itself, we anticipate that a new public chain ecosystem will gradually flourish in this cycle. However, from the narrative perspective of 2024, the most mainstream ecosystems remain Ethereum and Bitcoin:

Ethereum Ecosystem: Beyond the orderly development of Layer 2 and applications, our greater expectation lies in the incremental market brought by TradeFi (traditional finance). It is highly likely that the path for TradeFi RWA to enter the crypto market, discussed in the first part, will choose Ethereum. For instance, BlackRock, which aims to put assets on-chain, will likely choose Ethereum for their Layer 2 development.

Bitcoin Ecosystem: As early as the DeFi era of the Ethereum ecosystem, people were imagining the vast market space of "BTC+DeFi." All of this will become a reality in 2024. Our expectations for the Bitcoin ecosystem should not be about replicating what has been done on Ethereum, but rather about the pioneering market space created by the largest asset in the crypto market, BTC, combining with DeFi. Currently, there are practices in the market attempting to facilitate better circulation, issuance, and leverage of assets on Layer 2.

The leap in the foundational ecosystem of the crypto world will provide possibilities for the convergence of AI and Web3.

03 Iteration: The Application Market Led by AI and Web3

As mentioned earlier, Web3 has not yet entered the application era, largely due to the barriers to public chain development. Some promising Web3 iterations of Web2 application scenarios have stalled due to public chain performance and protocol thresholds. However, it is the practice of "AI+Web3" that is opening the floodgates to the Web3 application market.

Of course, "AI+Web3" is still constrained by the foundational infrastructure ecosystem, and AI on-chain is a cutting-edge proposition. The progress of this event depends on the development team's understanding of AI on-chain. Compared to development teams in Web3 social, blockchain gaming, and other tracks, we have reason to believe that AI development teams will have a deeper and more pioneering understanding and practice of AI on-chain.

Furthermore, we can further imagine that the practices of AI ecosystems based on large models and Web3 ecosystems based on public chains in this era will likely serve as the foundation for their convergence in the metaverse in the future. Therefore, we optimistically expect that several "AI+Web3" projects with valuations exceeding $1 billion will emerge in 2024, thereby driving the crypto world into the Web3 application era. The application markets of Web3 social, blockchain gaming, and the Web3 media we are currently in will also become active in this cycle, potentially even giving rise to specialized services for "AI+Web3," such as MugglePay, which is dedicated to helping businesses accept cryptocurrency payments and has shifted its 2024 development focus from e-commerce to AI and gaming, introducing a unique subscription payment feature for AI service providers; and StreamAi, which aims to become the largest cloud service provider for "Web3 networks and interstellar networks," providing data storage and precise push services for AI, as well as ChatGPT for "programs and robots."

However, we need to clarify the difference between the active "AI+Web3" in this cycle and the "AI+Web3/blockchain=civilization at rest" we previously proposed. The current "AI+Web3" is merely a collection of application scenarios that can be understood within the inertia of the "Internet +" iterative logic. However, in the coming decades, the continuous enhancement of productivity through AI and the transformative social relationships brought by Turing-complete Web3 will converge in the metaverse, ushering humanity into a new era of digital advancement.

Of course, all of this relies on the practices of these active "AI+Web3" projects in 2024.

Conclusion

This may be the last round of bull-bear iterations centered around Bitcoin, and it may also be a bull market cycle that will be recorded in history. From this point on, Web3/blockchain will begin to establish order for AI/intelligent networks, rapidly expanding the native asset market of the crypto world; at the same time, the digitization of physical world assets (RWA) will enter a fast track, and the assets in the crypto market will gradually surpass those in the traditional physical market's financial asset market.

On this basis, people's imaginations of the metaverse will begin to materialize, and the two main lines of metaverse construction (AI and Web3) will unfold sequentially and ultimately converge in the metaverse. The latest news is that Sora's generative capabilities are astonishing, and OPENAI has propelled the construction of the metaverse significantly forward. However, the crypto world of Web3 has not lagged behind; the current constraints are more fundamental hardware devices and network facilities, especially network facilities. A critical issue is whether users in the Chinese-speaking world can trust China Mobile. While human elites are laying out the technological high ground concerning the future, China Mobile is still busy consuming user traffic to exchange for more user fees. We hope that such issues will be resolved using methods from the Web3 world.

There is much to look forward to in 2024. Let's encourage each other!

ChainCatcher reminds readers to view blockchain rationally, enhance risk awareness, and be cautious of various virtual token issuances and speculations. All content on this site is solely market information or related party opinions, and does not constitute any form of investment advice. If you find sensitive information in the content, please click "Report", and we will handle it promptly.
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