Innovation in the crypto industry is slowing down. What other ambitious projects are there besides AI Agent?

Original text: Ignas

Compiled by: Yuliya, PANews

On the surface, cryptocurrencies appear to be booming: After years of ostracism, spot ETFs are finally coming online, with the Bitcoin (BTC) and Ethereum (ETH) ETFs setting new records for inflows. Trump’s victory brings cryptocurrencies closer to mainstream power in the United States, while the crypto lobby successfully pushed for the ouster of Gary Gensler and skeptics. Today, cryptocurrency has become a recognized industry, and Bitcoin may even be considered a national reserve asset by some countries.

While the price outlook for cryptocurrencies is bullish, most of the gains have been driven by external macro factors. However, the cryptocurrency industry’s internal innovation engine is gradually slowing down. Innovation naturally slows as an industry matures, but even if innovation slows, prices can still rise.

However, the slowdown in innovation is not the root problem but a symptom. The real problem is waning ambition and growing risk aversion. There was a time when cryptocurrencies were driven by radical ideas and aimed to change the world. Today, the industry appears content with pursuing regulatory approval and institutional adoption.

This is also supported by Vitalik Buterin in his 2023 blog post "Regaining the Cyberpunk Spirit of Ethereum" : "We are not just trying to create isolated tools and games, but to comprehensively build a more free and An open society and economy in which different parts of technology, society and the economy can integrate with each other.”

Think about it: What is the innovation of the current cycle? AI x Crypto is one of them. But AI is an external innovation, and without it, this cycle may be different and may continue to focus on Meme coin trading.

The only real goal of meme coins is to get rich quick, not to change the world . After becoming wealthy, the problems of the outside world no longer seem to bother those involved. It’s worth noting that these days, “[Project Name] is the most egalitarian thing we’ve ever seen. It’s ambitious and, if successful, could truly reshape the fabric of society.” This type of declaration is no longer common. In comparison, the last cycle did witness several radical innovations:

• Decentralized Finance (DeFi)

• Non-Fungible Tokens (NFTs)

• Decentralized financial yield farms (DeFi yield farms)

• P2E games (such as Axie Infinity)

• Metaverse

The 2020-2021 cycle was also the pinnacle of token economics innovation, with the emergence of innovative concepts such as Ampleforth’s Rebasing Tokens, veTokenomics, (3,3) model, liquidity mining, and SNX as sUSD collateral. At the same time, Multiple algorithmic stablecoins.

However, current crypto projects and the venture capital institutions behind them prefer to adopt simple and proven economic models to reduce risk, since they usually only have one opportunity for a token generation event (TGE). $EIGEN’s Intersubjective Token is a rare innovative exception.

In contrast, the ICO boom of 2017 is considered the peak of ambition in the crypto industry, when many projects tried to decentralize everything, but most of them failed because they were too aggressive, and only a few projects survived and had to adjust. lower their vision .

These crazy ideas have difficulty finding funding in today’s more risk-averse cryptocurrency industry. Yet these radical concepts once attracted a group of people who dreamed of changing the world.

B. Hobart and T. Huber pointed out in their book "Prosperity: The End of Bubbles and Stagnation" that transformative progress often comes from small groups with a unified vision. These groups usually have sufficient financial support but lack rigorous questioning. accountability mechanism. They believe that although financial bubbles are often viewed as a negative phenomenon, history shows that many important breakthroughs are driven by bubbles.

While the days of low accountability are not over yet, as regulation brings more risk aversion, this cycle may be the last big bubble opportunity to produce substantive innovation. The AI ​​x Crypto bubble could produce at least one or two killer applications.

The most ambitious cryptocurrency project currently

Despite this, there are many ambitious cryptocurrency projects underway today, including:

• Ethena : Integrating DeFi, CeFi and traditional finance (TradFi)

• Chainlink: bridging blockchain and real-world data for immutable smart contracts

• Pudgy Penguins: Leading Web3 IP brand, expanding to Web2

• WorldCoin: Bringing everyone on-chain, potentially enabling AI-funded UBI

• Liquity/RAI: The Last Decentralized Stablecoin

• Arweave/Filecoin: Permanent storage and censorship resistance

• Farcaster/Lens: Reimagining Social Media

• Polymarket: Your source of truth in a world of fake news

• Bio protocol (DeSci): Revolutionizing science by changing incentives

• Bitcoin: Revolutionary Currency, Digital Gold

Among them, stablecoins like WorldCoin’s eye-scanning Orb and Liquidity v2 and $BOLD, while appearing radical, are exactly the risks ambitious protocols are willing to take. These projects demonstrate the most egalitarian ideals, are ambitious and, if successful, have the potential to reshape the fabric of society.

Ethereum’s dilemma

Ethereum is absent from this list of innovative projects. Perhaps the evaluation of Ethereum is a bit harsh, but Vitalik’s vision of “cyberpunk Ethereum” is barely felt on social platforms.

The upcoming forks (upgrades) will only be minor changes for ordinary users. Ethereum has given up on sharding and main chain expansion. In the near future, at best, it will only slightly increase the gas limit of the block.

It seems that Ethereum has left transaction execution and ambition to the second layer network (L2). The future development direction of Ethereum is still not clear enough.

In contrast, Solana’s attitude is more radical, choosing to continue to promote the “integrated blockchain” model and refusing to compromise.

However, Ethereum’s future network expansion plans may prove that its modular path is correct. I want Ethereum to be great again, and I also want to see radical new ideas emerge.

Humans need boundaries

The world, especially the West, seemed to be at a standstill. From stagnant wages, repetitive music, new iPhones that no longer feel novel, to constant remakes of movies, people seem to be afraid of innovation because new content often means greater risks. In some ways, we are actually going backwards. For example, due to the grounding of Concorde, the flight time from London to New York is now longer than it was in the 1970s.

However, cryptocurrency remains one of the fastest growing and most innovative industries in the world, perhaps second only to AI.

Despite this, the industry’s pace of innovation and ambition are clearly diminishing. Part of this is due to the maturation of the aforementioned industries, but a deeper reason is that the limitations of many technologies appear to have been accepted and not sufficiently challenged. For example:

• It seems acceptable that DeFi and DAOs are no longer fully decentralized. Rather than making DeFi decentralized, redefine it as on-chain finance and the problem will be solved.
• Ethereum’s inability to scale at Layer 1 and the lack of innovation in token economics seem to be acceptable.
• In the current market, the low market capitalization of $LQTY compared to $ENA indicates that decentralized stablecoins are no longer really needed and high returns are better.

Perhaps each passing cycle slowly erodes the ambition to push the boundaries, and with it, the cryptocurrency industry flattens out. All in all, if the token price still goes up, why take the risk?