Carbono Insights #95 | Getting ready for crypto catch-up: AI, DePin, RWA, and other use cases beyond speculation

The beast has awoken. Since the ETF news brought back euphoria, crypto has been, once again, moving at breakneck speed. It is hard to keep up with all the hyperbolic launches, mind-blowing airdrops, and the deafening noise of prophets of the financial revolution.

Marketing has supplanted traditional valuation rules. Users move from one chain to another, from one DeFi protocol to another, searching for the latest incentive scheme. It is hard to judge the value proposition of many of these projects when they’re hyped according to their giveaways (real or imagined by the community).

Excuse this futile “old man yells at cloud” moment, though. This is crypto. It is populated by fast-moving bounty hunters, so we shouldn’t be surprised. But the emphasis on building for the new generation of financial services or bringing the crypto revolution to the doorsteps of normies is now clouded by all this frenzy.

Who’s thinking about moms and dads? They will come back with questions any time soon, and this time, unlike in the last family gatherings, they will be listening. Why? Because BTC is doing these things again.

But remember that things are a little bit different this time. When your parents ask again what the hell crypto is about, you don’t have to stop at DeFi and speculative use cases (avoid memecoins at all costs).

There is more proof than ever that crypto can disrupt other industries. It’s still early, but they are great new use cases to help you explain what you do on your computer all day. Let’s take a look at some of them.

Decentralized Social Media can return power to users

Social media companies, led by Meta and Twitter, have turned from a source of societal transformation to an extension of the powers that be in just a couple of decades. They are now more akin to the establishment than to people since they own the narrative, the algorithm, and your data.

Decentralized social has always had a great appeal. It embodies the core values of crypto: platforms like Lens or Farcaster promise full ownership of your data and your network and full independence from the platforms. Imagine seamlessly migrating your content, activity, and network from Twitter to TikTok.

But now, beyond having a narrative of positive impact (like walking to work, saving or eating more fruit), decentralized social has developed a potentially killer app that could finally make the experience of socializing on the blockchain more attractive than socializing in your traditional place.

Farcaster, a “sufficiently decentralized” social media protocol, just integrated Frames. Basically, frames allow users to embed any type of content inside a post and wrap it in blockchain functionality. Imagine being able to post virtually anything in your Instagram feed instead of only what Instagram lets you post. This includes even websites and video games. And now imagine that besides the like and comment buttons, you could add buttons that led to crypto-transactions such as vote… or buy.

Turning the digital social square into a mall has been a long-lasting dream of anyone in Silicon Valley. Farcaster is delivering on this promise.

Crypto can onboard AI, police AI, and support AI. And this is just the beginning

Last year, crypto moved to the passenger’s seat in the metaphoric car of disruptive technologies. But there is enough space for synergy to feel optimistic about the combination of crypto and AI.

Crypto has long been exploring AI as a content generation tool (ask us about Botto!). However, crypto can also accompany AI in the content generation process as a potential tool for defending authenticity. Blockchain technology could be used to verify and track content and become a trusted source of truth, warning about deepfakes or other AI-generated or modified content.

But tell your parents that these days the current focal point in the intersection of crypto and AI lies in how blockchain technology can offer a decentralized infrastructure to AI. Ask them how they like the idea of a few vast corporations managing how you design and train the artificial intelligence that will help people make and execute decisions daily.

Blockchain is in the way to becoming an alternative infrastructure for the development of decentralized AI tech. Decentralized storage and computation stand out as some of the most promising use cases in this approach, captivating developers…and speculators. Tokens like Bittensor’s $TAO (decentralized AI modeling, learning, and training), Render’s $RNDR (decentralized computing), and Akash’s $AKT (decentralized storage) have recently emerged as top performers in this space.

This is where we stand, but the potential of AI and crypto together is vast, and exploring where it can take us is an exciting prospect. Thanks to crypto, AI models could eventually engage in economic relations autonomously. Think of them doing the shopping for you. But let’s not scare the elders with this yet.

DePin: other telecommunication infrastructures can be decentralized too

If Mom and Pop understood the idea of decentralizing AI infrastructure, they will get this too: DePin is the name given to Decentralized Physical Infrastructure, and it refers mainly to telecommunications infrastructure that can be offered by a decentralized network of participants coordinated through crypto. Akash, the provider of decentralized storage mentioned above, is a representative of this trend too.

But let us exemplify this trend better with Helium, because Helium is breaking it lately, too. Helium is a decentralized network leveraging blockchain technology to provide affordable internet connectivity through a global network of hotspots. These hotspots are connectivity home devices.

Tell Mom and Dad it’s like a modem that you and your neighbors place on your windows so that passersby connect to them. Your parents would thus become small internet service providers, and Helium would reward them for that. Helium aims to democratize internet access and revolutionize how we connect to the digital world by incentivizing users to host hotspots and participate in the network.

Real-world assets, aka traditional assets on steroids

Real-world assets (RWAs) are the trend that is more vigorously exploring the connection between conventional financial products and crypto. Somehow, RWAs have been around in the form of stablecoins for a long time. Most stabelcoins are basically blockchain-native IOUs connected to bank accounts where good-old greenbacks are stored.

The railways that can connect crypto with TradFi are currently being built. Moguls like BlackRock’s Larry Fink have hailed the potential for tokenizing assets (the idea of creating blockchain-based representations of traditional assets like stocks or bonds). In layman’s terms, onboarding real-world assets into crypto would mean giving them steroids regarding market access and speed.

Lately, Ondo Finance has been leading in word of mouth as the best representative of RWAs, with news of geographical expansion (new offices in Asia Pacific) and blockchain expansion (the launch of their stablecoins in the SUI ecosystem). Ondo’s products include OUSG (which tokenizes a short-term treasuries ETF managed by Blackrock) and USDY (which receives yield from treasuries as well). Ondo does everything according to TradFi’s books: they take care of KYC, AML, and whitelisting investors according to legislation so that the tokenized versions of RWAs do not misbehave in crypto.

Games on blockchains can also be fun

You can probably tell your parents that crypto allows players actually to own your in-game stuff. Explain to them that all that in-game stuff is also cross-game stuff because your ownership can be potentially exercised across different platforms. The jersey your avatar is wearing in Fortnite could go on Mario on Mario Kart. Of course, Fortnite and Mario Kart do not care about blockchain at the moment, but they’ll get it.

The promise of decentralized ownership of digital assets makes intuitive sense in gaming. There are two reasons why the industry has not flourished yet.

One is the fact that the infrastructure is not there yet. Transactions are expensive and slow, but without getting into detail, you can tell your parents that crypto these days is mainly obsessed with infrastructure and that anyone seeing beyond trading is only speaking about scalability (you can drop words like parallelization or modularity).

Two, that developers hadn’t given enough love to the fun part of crypto games. When the hype peaked before 2023, everyone used to speak about “play to earn”, and how to obtain tokens with monetary value in gaming. Now, things are a bit more focused on “play for fun,” which is actually the whole point of video games. Earnings will come later. Ask them if this looks like a game developed by a bunch of crypto-nerds trying to shill you their token.