Trends we’re watching in 2024
Consumer Crypto
NFTs and smart contracts will propel a shift in consumer content, social media, and gaming. Content NFTs will transform how new businesses approach content monetization, moving away from conventional models (e.g., advertising, subs) to direct-to-consumer sales of digital objects made scarce, valuable, and ownable via NFTs. Content NFTs will promise exclusive access and privileges to holders.
Consumer crypto — and its incentives and points systems — will drive mainstream crypto adoption. It will start to be normal to see web apps and plugins incorporate on-chain actions and NFT-enabled privileges.
New Privacy Frontiers
FHE-crypto projects capture more mindshare as projects start coming out of stealth, enabling new use cases powered by end-to-end encrypted privacy. It’ll be like when ZKPs entered the limelight in 2019 (i.e., zkSync and StarkWare).
It’ll be a pivotal development for web3 privacy tech, with FHE enabling computation directly over encrypted data, applications like dark pool AMMs and private lending pools, where users can access both shared and individual private states.
Current public blockchain architecture won’t cut it for massive enterprise adoption. The rise of FHE projects like Zama, Fhenix, Inco Network, and Nillion will eventually be as obvious in hindsight as rollups are today.
Modular Maximalism
Emerging modular blockchain architectures and alternative L1s are set to further challenge Ethereum’s dominance. For instance, more L2s will follow suit and use cost-effective DA solutions (e.g., Celestia, Eigenlayer, NEAR) following Manta Network. Competition at the DA layer will ramp up quickly, driving DA prices down further.
In 2024, we will see the network effects of modularity start to take hold and manifest in flourishing innovation. Tailor-made smart contract platforms built from open-source, modular tech stacks will start to showcase high performance and low fees comparable to the best integrated/monolithic chains.
Demand for Digital Integrity
Generative AI will keep making leaps and bounds of progress. Deepfakes and other malicious AI-generated content are going to be an issue looming larger and larger. Blockchains and smart contracts will be discussed as potential countermeasures, offering immutable records of digital proof and automated verification. This will pave the way for a new digital integrity ecosystem in web3, underpinned by cryptoeconomic systems.
Disclaimer: This post is for general information purposes only. It does not constitute investment advice or a recommendation or solicitation to buy or sell any investment and should not be used in the evaluation of the merits of making any investment decision. It should not be relied upon for accounting, legal or tax advice, or investment recommendations. This post reflects the current opinions of the authors and is not made on behalf of Inception Capital or its affiliates and does not necessarily reflect the opinions of Inception Capital, its affiliates, or individuals associated with Inception Capital. The opinions reflected herein are subject to change without being updated.
