After the AI Agent bubble bursts What is the real value of Web3 AI
The next wave of Web3 AI is brewing
Introduction
The AI agent sector experienced a meteoric rise in Q4 2023, surging from near-zero to a $20 billion market valuation before the bubble burst. Projects like @virtuals_io and @elizaOS gained traction, with the latter open-sourcing AI to empower developers. However, as hype faded, valuations plummeted from $20 billion to $4-6 billion, leaving only infrastructure and practical AI projects standing.
The Rise of Infrastructure and Web2 AI Acceleration
With Web2 AI models like Meta's Llama and OpenAI's GPT advancing rapidly, the focus has shifted to infrastructure and decentralized AI. Tools like Lovable, Bolt, and Cursor are enhancing developer efficiency, while consumer AI products are becoming more accessible and competitive.
Data Sovereignty Awakening
The growing use of centralized AI raises critical questions: Who owns user data? OpenAI's memory feature, which stores past conversations, highlights the risks of data control by platforms. This has sparked interest in data sovereignty, where users retain ownership of their information.
The Emergence of Decentralized AI (DeAI)
Decentralized AI is gaining traction as concerns over privacy and data ownership grow. Key trends include:
- Web2 AI VC Activity: Y Combinator and a16z are backing vertical AI agents and consumer AI products.
- Web3 AI Investment: VCs are betting on decentralized infrastructure, distributed training networks, and compute-sharing platforms.
- Retail Investor Interest: AI agents remain popular, but practical use cases are now prioritized.
Web2 vs. Web3 AI: Diverging Paths
Web2 AI focuses on niche solutions for businesses, while Web3 AI leverages blockchain for trustless, verifiable, and user-owned data. Projects like @AlloraNetwork and @opentensor (Bittensor) are bridging the gap by making DeAI accessible to retail investors.
Why Retail Investors Love AI Agents
Initially drawn to entertainment-focused AI, retail investors are now gravitating toward practical tools like @AskBillyBets and @thedkingdao. Bittensor's decentralized ecosystem, enhanced by @rayon_labs' user-friendly interfaces, exemplifies this shift. Its subnet model rewards useful projects, fostering innovation.
The Future of Web3 AI
The era of hype-driven valuations is over. Infrastructure, decentralized AI, and real-world applications are leading the next wave. Whether in Web2 optimization or Web3 participation, data sovereignty and user empowerment will define the future of AI.
Original link: https://x.com/Defi0xJeff/status/1910634579654041891?utm_source=agenthunter.io&utm_medium=news&utm_campaign=newsletter
Related News
Microsoft Rebrands Teams Toolkit as 365 Agents Toolkit for AI Automation
Microsoft has rebranded the Teams Toolkit to Microsoft 365 Agents Toolkit, a developer framework for building AI-powered agents to automate tasks across Microsoft 365 applications.
The Future of Identity Management in the AI Agent Era
Enterprise architecture is evolving as AI agents transition from supporting roles to autonomous decision-makers, requiring identity management to adapt for non-human actors. This shift demands new authentication, access control, and auditing frameworks to ensure security and scalability.
About the Author
David Chen
AI Startup Analyst
Senior analyst focusing on AI startup ecosystem with 11 years of venture capital and startup analysis experience. Former member of Sequoia Capital AI investment team, now independent analyst writing AI startup and investment analysis articles for Forbes, Harvard Business Review and other publications.