a16z Forecasts the Top 9 Cryptocurrency Trends for 2024

With 2023 drawing to a close, a16z forecasts nine key trends to watch in the crypto space in 2024. Let’s take a look.

Decentralization Optimization

The concept of Decentralized Autonomous Organizations (DAOs) has come a long way in its mission to eliminate the need for centralized leadership, which can lead to risks of disruption or abuse of power.

a16z targets the year ahead as a new era of decentralization. With the emergence of best practices and innovative governance models in the Web3 space, decentralized models will be upgraded to address challenges associated with the Web3 community participation model and create a more streamlined and effective decentralized governance structure.

UX Reset

User experience (UX) remains a major pain point in crypto. The lack of user-friendly experience blocks newcomers’ entry to the space.

a16z suggests a number of tools which can help tackle this challenge. Tools such as passkeys, smart accounts, embedded wallets, multi-party computation (MPC), and advanced remote procedure call (RPC) endpoints are introduced to streamline the user journey. UX reset promises a more accessible, secure, and seamless interaction with crypto applications.

Strong Growth of Modular Technology

Modularity has been the talk of the crypto town with Celestia (TIA) leading the way. A16z believes that this approach will continue to take center stage in 2024 and beyond.

According to the firm, a modular tech stack is necessary to enhance and strengthen network effects. Modularity not only promotes permissionless innovation but also encourages specialization and healthy competition. The embrace of modular architectures will foster a more flexible and resilient crypto ecosystem.

Learn more about modularity and how Celestia uses it to address blockchain dilemma in our Celestia Review.

AI and Blockchain Combined

The convergence of artificial intelligence (AI) and blockchain unlocks a new era of possibilities. a16z envisions decentralized blockchains as a counterbalance to the current centralization of AI. This synergy not only mitigates the risk of single entity control but also optimizes performance and security, saves costs, and opens the door to ‘multi-sided, global, permissionless markets.’

Transition from Play-to-Earn to Play-and-Earn

The initial focus on “play-to-earn” has proven to have an ephemeral effect. Most GameFi projects have failed to build a rewarding experience, resulting in major failure in the last 5 years.

However, GameFi isn’t at its endgame. a16z anticipates a shift from Play-to-Earn (P2E) to Play and Earn. This transition will likely incentivize players and generate value, as users with significant contributions are now rewarded for their time and contributions. Alongside this shift, GameFi must prioritize engaging gameplay experiences to truly thrive..

AI as Gamemaker

Like other industries, AI has been increasingly important in shaping the Web3 gaming landscape. Its influence is reflected on game design, game development, and user experience. a16z highlights the critical need for guarantees in web3 games and the potential of AI to ensure integrity and fairness in both markets and content creation.

The fund believes that AI can be used to create better games, ensure fair markets, and bring greater transparency to the crypto ecosystem.

Smart Contract Verification: Less, Well, Formal

The world of formal verification is undergoing a paradigm shift, particularly in smart contract development. a16z recognizes this trend and highlights the growing demand for accessible tools. This surge in user-friendly options empowers developers to enhance the robustness of smart contract protocols, leading to a more secure and reliable foundation for decentralized applications.

Security is always a priority. Investment in tools that optimize the smart contract verification process, according to a16z, is a strategic approach to bolster security measures, effectively reducing the risk of hacking and solidifying the reliability of smart contract protocols.

NFTs as Ubiquitous Brand Assets

2023 has seen a surge in brands venturing into non-fungible tokens (NFTs). Major players like Starbucks, Nike, and Reddit have jumped on board. The fund believes this trend demonstrates the growing potential of NFTs as ubiquitous brand assets.

Beyond loyalty programs and marketing campaigns, established brands can unlock even more value by leveraging NFTs to create personalized digital identities for customers, link physical products to unique digital experiences, and empower brands to collaborate with their dedicated communities.

SNARKs Going Mainstream

The emergence of Succinct Non-interactive ARguments of Knowledge (SNARKs) marks a major technological breakthrough. With minimal computational overhead, SNARKs unlock a wide range of possibilities, from streamlining IoT networks to ensuring content authenticity in media editing. Their immense potential will foster widespread adoption, according to a16z.