The past few weeks have been dramatic, and maintaining a calm mindset has become the biggest challenge. But regardless of the ups and downs, speculation does not die, and narratives endure.
In the next 1-2 quarters, I believe the most worth studying and laying out application side narrative is chain abstraction and AI Agent.
1. Chain Abstraction
Chain abstraction is the fastest-growing narrative in mental share in 2024, without exception. This is the result of internal and external forces.
1) From a macro environment perspective
As the multi-chain pattern gradually confirms, the fragmentation of Web3 has become a proposition that cannot be ignored or bypassed. The cost of fragmentation not only hinders the growth of individual applications or chains but also affects the entry of new users into the entire industry and on-chain activity, exacerbating redundant development and misaligned incentives.
The cross-chain bridge approach that we once viewed as a solution has, to some extent, limited the resolution of the issue. The trend is becoming increasingly clear—what users need is not a more user-friendly cross-chain bridge, but a bridge that is completely seamless. Chain abstraction has emerged, enabling one account without the need for bridging, which is the on-chain experience Web3 users are calling for. Deeper than user experience is the liquidity integration and transformation on the developer side brought by chain abstraction. Chain abstraction has the potential to reshuffle the landscape of supply and demand sides in Web3.
2) From a technical evolution perspective
The technology stack covered by chain abstraction, including AA, intent, interoperability protocols, TEE, etc., has also reached a mature stage where it can be integrated into a more comprehensive solution. Quantitative changes lead to qualitative changes, and chain abstraction gives users the opportunity to engage directly with technologies they have previously heard of but only partially understood, which cannot be separated from the continuous efforts of long-term players in the field.
3) From a timing perspective
The upcoming Pectra upgrade will be a more significant milestone event than the Cancun upgrade, with its core content (7702, 3074, 7623) directly benefiting chain abstraction, AA, and the modular track.
2. AI Agent
After the frenzy over GPUs and algorithms, it's time for AI Agents to become the vehicle for satisfying Crypto users' speculative AI needs. Compared with the related speculation anchored by the Nvidia conference and Apple’s keynote at the beginning of the year, this wave of AI Agents at the end of the year seems more 'down-to-earth', no longer relying on external news but starting to create value through self-promotion and community building. Although the technology is external, the gameplay is native to Crypto.
Of course, there is a hype element in this, but it has also made the market and developers realize one thing—AI Agents must connect with users (which is why the hot trend is the AI Agent launch platforms rather than the AI Agent infrastructure).
Currently, the intelligence level of Agents remains relatively one-dimensional in forms such as tweeting and live streaming, but at least they have achieved 'visibility', similar to Web2 digital humans, having their own image.
In the next phase, AI Agents will transition from 'visible' to 'usable'. Taking the digital humans of Web2 as an analogy, the first phase of digital humans centers around IP, pursuing extreme realism. They usually appear as idols, hosts, etc., but cost a lot and have unclear commercial value.
Therefore, in the second phase, digital humans started to replace roles like customer service and hosts, capturing the market of real humans with ultra-long standby times and low prices, thus finding product-market fit (PMF).
Therefore, I do not believe that Crypto will see a general AI Agent comparable to Web2, as opportunities must be hidden in the scenarios most exposed to Crypto users. Wallets are obviously the first step, which is also the direction currently being pursued by Base and Coinbase.