Editor’s note: a16z has released its annual list of 'Major Innovations' based on insights from its partners in AI, US dynamic developments, biotech/health, crypto, enterprise tech, fintech, gaming, infrastructure, and other industries, for tech builders to explore in the coming year. Below are some expectations from our a16z crypto industry team regarding future developments. For more on policies, regulations, and more in 2025, please refer to the relevant article in November 2024.
AI needs to have its own wallets to achieve autonomous behavior.
As AI gradually transitions from 'non-player characters' (NPCs) to 'main characters', they will begin to act in an agent-like manner. However, until recently, AI has not been able to truly act autonomously. They still cannot participate in market activities in a verifiable autonomous manner (i.e., not human-controlled), such as exchanging value, revealing preferences, or coordinating resources.
As we have seen, AI agents (like @truth_terminal) can transact using cryptocurrency, which opens up various opportunities for creative content. However, AI agents have even greater potential, not only to better meet human intentions but also to become independent network participants. When AI agents begin to manage their own crypto wallets, signing keys, and crypto assets, we will see many interesting new applications emerge. These applications include AI operating or validating nodes in decentralized physical infrastructure networks (DePIN), such as playing roles in distributed energy systems. Other possibilities include AI agents becoming truly high-value players in games, and there may even emerge the first blockchain owned and operated by AI in the future.
Enter the 'decentralized autonomous chatbot'.
In addition to AI having wallets, there is also an AI chatbot operating in a Trusted Execution Environment (TEE). A TEE provides an isolated environment in which applications can run, enabling a more secure decentralized system design. But in this case, the TEE is used to prove that the chatbot is autonomous and not controlled by human operators.
Further expanding functionality, the next major innovation will be what we call decentralized autonomous chatbots (DAC, distinguishable from decentralized autonomous companies (DAC)). Such chatbots can attract fans by publishing engaging content (whether entertaining or informative). They will build fan communities on decentralized social media; earn revenue from the audience in various ways; and manage their assets in cryptocurrency. The relevant keys will be managed in a TEE that runs the chatbot software simultaneously, meaning that no one else can access these keys besides the software.
As risks develop, a regulatory framework may be needed. But the key point here is decentralization: the chatbot operates on a set of permissionless nodes and is coordinated by a consensus protocol; it could even become the first truly autonomous billion-dollar entity.
As more people use AI, we need unique 'proof of identity'.
In a world filled with online impersonation, scams, multiple identities, deepfakes, and other real yet deceptive AI-generated content, we need 'proof of identity'—a way to help us confirm we are interacting with real people. However, the new problem here is not false content, but now we can produce this content at a lower cost. AI has significantly reduced the marginal cost of producing content that includes all the cues we use to determine whether something is 'real'.
Thus, there is now a greater need than ever for methods to privately associate content with personal digital identifiers. 'Proof of identity' is a crucial building block for establishing digital identities. However, here it becomes a mechanism to increase the marginal cost of attacking individuals or undermining network integrity: for humans, obtaining a unique ID is free, but for AI, it is costly and challenging.
This is why the 'uniqueness' property of privacy protection becomes the next major innovation in building a network we can trust. It is not just a matter of proving identity, but fundamentally changes the cost structure for malicious actors to attack. Therefore, 'uniqueness property'—also known as 'Sybil resistance'—is an uncompromising feature of any proof of identity system.
From prediction markets to better information aggregation mechanisms.
Prediction markets took the center stage in 2024 with the US elections, but as an economist studying market design, I believe the transformation in 2025 will not be about prediction markets themselves. Instead, prediction markets have paved the way for more decentralized, tech-based information aggregation mechanisms—these mechanisms can be applied across numerous industries, from community governance and sensor networks to finance.
The past year has validated this concept, but it is important to note that prediction markets themselves are not always the best way to aggregate information: even for global, 'macro-economic' events, they can be unreliable; for more 'micro' issues, the prediction pool may be too small to capture meaningful signals. However, researchers and technologists have decades of design frameworks to incentivize people to (truthfully) share what they know in different informational environments—from data pricing and buying mechanisms to 'Bayesian truth serum' used to guide subjective assessments, many of these methods have already been applied in crypto projects.
Blockchain has always been the natural choice for implementing these mechanisms—not only because they are decentralized but also because they facilitate public, auditable incentive mechanisms. More importantly, blockchain can make outcomes public, allowing everyone to interpret these results in real-time.
Enterprises will increasingly accept stablecoins as a payment method.
Stablecoins have found product-market fit over the past year—this is not surprising, as they are the cheapest way to send dollars and enable rapid global payments. Stablecoins also provide entrepreneurs with a more accessible platform for building new payment products: no intermediaries, minimum balance requirements, or proprietary SDKs. However, large enterprises have yet to realize the substantial cost savings and new profit margins that can be gained by switching to these payment systems.
While we have seen some enterprises show interest in stablecoins (and early adoption in peer-to-peer payments), I anticipate that 2025 will usher in a wave of larger-scale experimentation. Small and medium-sized enterprises with strong brands, established customer bases, and high payment costs—such as restaurants, cafes, and convenience stores—will be the first to abandon credit cards. They cannot benefit from credit card fraud protection (because transactions are face-to-face) and are also most affected by transaction fees (30 cents per cup of coffee means huge profit losses!).
We should also expect that large enterprises will begin to adopt stablecoins. If stablecoins really accelerate the historical development of the banking industry, then companies will try to mediate payment providers—directly adding 2% to their profit margins. Companies will also begin to seek new solutions to address current service issues provided by credit card companies, such as fraud protection and identity verification.
Countries are exploring putting government bonds on the blockchain.
Putting government bonds on the blockchain will create a government-backed, interest-bearing digital asset—without the concerns of surveillance issues brought by central bank digital currencies (CBDCs). These products could unlock new sources of demand for collateral use in decentralized finance (DeFi) lending and derivative financial product protocols, thus adding more integrity and robustness to these ecosystems.
Therefore, as governments around the world that support innovation further explore the benefits and efficiencies brought by public, permissionless, and immutable blockchains, some countries may attempt to issue on-chain government bonds this year. For example, the UK has already explored digital securities through its financial regulatory agency, the FCA (Financial Conduct Authority) sandbox; its Treasury and the Exchequer have also expressed interest in issuing digital vouchers.
In the United States—given that the Securities and Exchange Commission (SEC) plans to require traditional, cumbersome, and costly infrastructure to clear government bonds next year—it is expected that there will be more discussion on how blockchain can enhance the transparency, efficiency, and participation in bond trading.
We will see broader adoption of 'DUNA', a new standard for blockchain network industries in the US.
In 2024, Wyoming passed a new law recognizing decentralized autonomous organizations (DAOs) as legal entities. DUNA (Decentralized Unincorporated Nonprofit Association) is specifically designed to support decentralized governance for blockchain networks and is the only viable structure for domestic projects in the US. By incorporating DUNA into the decentralized legal entity structure, crypto projects and other decentralized communities can provide legal legitimacy to their DAOs—this can not only facilitate greater economic activity but also protect token holders from liabilities and help manage tax and compliance requirements.
DAOs—communities managing the affairs of open blockchain networks—are essential tools to ensure that networks remain open, non-discriminatory, and do not unfairly extract value. DUNA can unleash the potential of DAOs, with multiple projects already implementing it. As the US looks to promote and accelerate the development of its crypto ecosystem in 2025, I expect DUNA to become the standard for projects in the US. We also anticipate that other states will adopt similar structures (Wyoming is a pioneer; they were also the first to adopt the now-common LLC structure)... especially as other decentralized applications outside of crypto (such as physical infrastructure/energy grids) emerge.
Online liquidity democracy moves into the real world.
As dissatisfaction with current governance and voting systems grows, there is now a window of opportunity to try new, tech-driven governance methods—not just online, but in the real world. I have previously written about how DAOs and other decentralized communities allow us to study political systems, behaviors, and rapidly evolving governance experiments on a large scale. But what if we could apply these learnings to real-world governance through blockchain?
We can finally leverage blockchain for secure and private election voting, starting with low-risk pilot projects to reduce cybersecurity and audit concerns. But more importantly, blockchain will enable us to experiment with 'liquid democracy' at the local level—a way for people to directly vote on issues or delegate their votes to others. This idea was initially proposed by Lewis Carroll (the author of Alice in Wonderland, and a prolific researcher on voting systems); however, it was not feasible at scale... until now. The latest advancements in computation and connectivity, along with blockchain technology, make new forms of representative democracy possible. Crypto projects have already applied this concept, generating a wealth of data on how these systems work—please check out our recent research findings—that can serve as a reference for local governments and communities.
Builders will reuse infrastructure rather than just reinvent it.
Over the past year, teams have continued to 'reinvent the wheel' in the blockchain tech stack—another custom series of validators, consensus protocol implementations, execution engines, programming languages, RPC APIs. While these results have improved certain specific functionalities, they often lack broader or foundational capabilities. For example, a programming language tailored for SNARKs (Succinct Non-interactive Arguments of Knowledge): while an ideal implementation may allow ideal developers to create more efficient SNARKs, in practice, it may fall short compared to general-purpose languages (at least for now) in compiler optimization, developer tools, online learning materials, AI programming support, etc., and may even lead to poorer performance in the generated SNARKs.
Therefore, I anticipate that more teams will leverage others' contributions in 2025, reusing existing blockchain infrastructure components—from consensus protocols and existing staked capital to proof systems. This approach will not only help builders save significant time and effort but also allow them to focus on continuously enhancing the differentiated value of their products/services.
Today, the infrastructure is finally in place to build mainstream Web3 products and services. Like other industries, these products and services will be built by teams that can successfully navigate complex supply chains, rather than by those who underestimate 'what has not been invented here.'
Crypto companies will start with the end-user experience rather than letting the infrastructure dictate the user experience.
While the blockchain technology infrastructure is interesting and diverse, many crypto companies are not just selecting their infrastructure—in some respects, the infrastructure is making decisions for them, thereby influencing the end-user experience (UX). This is because specific technological choices at the infrastructure layer are directly associated with the user experience (UX) of blockchain products/services.
But I believe the industry will overcome this potential ideological barrier: that technology should dictate the end-user experience rather than the other way around. By 2025, more crypto product designers will start with the end-user experience they want and then choose appropriate infrastructure from there. Crypto startups will 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 will no longer be bogged down by specific EIPs (Ethereum Improvement Proposals), wallet providers, intent architectures, etc., but can abstract these choices into a cohesive, full-stack, plug-and-play manner. This industry is already prepared for this: rich programmable blockspace, mature development tools, and chain abstractions are beginning to enable more people to design crypto products. Most technology end-users do not care what language a product is written in; they only care about how to use the product daily. This situation will also begin to happen in the crypto industry.
'Hidden Lines' help lead the killer applications of Web3.
The technical superpowers of blockchain set it apart, but these capabilities have also somewhat hindered mainstream adoption. For creators and fans, blockchain unlocks possibilities for connectivity, ownership, and monetization... but industry jargon (like 'NFTs', 'zkRollups', etc.) and complex designs have set barriers for those who stand to benefit the most from these technologies. I have deeply felt this when discussing Web3 with many senior executives in media, music, and fashion industries.
Many widespread consumer technologies have followed a similar path: starting with technology; certain iconic companies/designers abstracting away complexity; this process helps unlock certain breakthrough applications. Think about how email began—SMTP protocols were hidden behind the 'send' button; or credit cards, which most users today don't care about the payment gateways. Similarly, Spotify revolutionized the music industry by bringing song playlists to our fingertips instead of showcasing file formats. As Nassim Taleb observed, 'Over-engineering leads to fragility. Simplicity can be scalable.'
Thus, I believe that by 2025, our industry will adopt the idea of 'hidden lines'. The best decentralized applications have already begun to focus on more intuitive interfaces, designed to make use as simple as touching a screen or swiping a card. In 2025, we will see more companies design simple, clear communication; successful products do not explain, they solve problems.
The crypto industry finally has its own app store and discovery channels.
When crypto applications are blocked by centralized platforms like the Apple App Store or Google Play, it limits their top users’ access. However, we now see some new app stores and marketplaces providing these distribution and discovery channels without setting barriers. For example, Worldcoin's World App marketplace—not only storing authentication information but also allowing access to 'mini-apps'—has attracted thousands of users to multiple applications within just a few days. Another example is Solana's fee-free dApp store for mobile users. These two examples also demonstrate that hardware devices, not just software—like phones, spherical devices—may be a key advantage for crypto app stores... just as Apple devices were an advantage for the early application ecosystem.
Meanwhile, there are other stores offering thousands of decentralized applications and Web3 development tools, covering popular blockchain ecosystems (e.g., Alchemy); as well as the blockchain itself acting as publishers and distributors of games (like Ronin). However, this is not always fun: if a product is already distributed on existing platforms—like messaging apps—migrating it to the chain is very difficult (with exceptions like Telegram/TON network). Similarly, this is true for applications with significant Web2 distribution channels. But we may see more such migrations happening by 2025.
Cryptocurrency holders are transforming into cryptocurrency users.
In 2024, cryptocurrency made significant progress as a political movement, with key legislatures and politicians expressing positive views on it. We also saw its development as a financial movement (e.g., Bitcoin and Ethereum ETPs expanded investment channels for investors). By 2025, cryptocurrency should further evolve into a computational movement. But where will these new users come from?
I believe it is now time to re-engage current 'passive' cryptocurrency holders and turn them into more active users, as only 5%–10% of cryptocurrency holders are actively using cryptocurrency.
We can bring the 617 million people who already have cryptocurrency into the blockchain, especially as blockchain infrastructure improves, transaction costs decrease, and user experiences enhance. This means new applications will begin to emerge, attracting both existing and new users. Meanwhile, some of the early applications we have already seen—covering stablecoins, decentralized finance (DeFi), NFTs, gaming, social, decentralized physical infrastructure networks (DePIN), decentralized autonomous organizations (DAOs), and prediction markets—are also starting to become more easily accepted by mainstream users, as communities push for broader adoption while focusing on user experience and other improvements.
Industries may begin tokenizing 'unconventional' assets.
With the maturation of the crypto industry infrastructure and the push from other emerging technologies, the practice of tokenized assets will spread widely across various industries. This will make previously considered untouchable assets—whether due to high costs or lack of recognized value—capable not only of achieving liquidity but more importantly of participating in the global economy. AI engines can also use this information as unique datasets.
Just as the shale gas revolution unlocked previously considered untouchable oil reserves, tokenizing unconventional assets may redefine income generation in the digital age. Seemingly sci-fi scenarios are becoming more likely: for example, individuals could tokenize their biometric data; then lease this information to companies through smart contracts. We have already seen some early examples, such as through decentralized science (DeSci) companies that leverage blockchain technology to enhance ownership, transparency, and consent in medical data collection. These types of developments enable people to utilize previously undeveloped assets in a decentralized manner—rather than relying on government and centralized intermediaries to provide these resources.
Disclaimer: This article does not constitute investment advice, and users should consider whether any opinions, viewpoints, or conclusions contained herein are suitable for their specific circumstances and comply with relevant laws and regulations in their country or region.
This article is republished with permission from: (MarsBit)
Original authors: Dan Boneh, Sam Broner, Andrew Hall, Mason Hall, Maggie Hsu, Miles Jennings, Scott Duke Kominers, Eddy Lazzarin, Chris Lyons, Daren Matsuoka, Joachim Neu, Daejun Park, Brian Quintenz, karma (Daniel Reynaud), Aaron Schnider, Carra Wu, a16z
'2025 Crypto Trend Forecast! A16z: 3 Tracks Will Trigger Industry Transformation, Popularization is Hopeful?' This article was first published on 'Crypto City'.