It’s way too soon for a marriage of AI and Web3

It’s still a tad premature to start making plans for a fully automated, decentralized future


Midjourney modified by Blockworks


Want to raise millions? 

Insert generic industry in need of “disruption.” Slap “AI” and “Web3” onto your pitch deck. Watch the funding frenzy begin. This approach has quickly become venture capital’s version of the ol’ “walks into a bar” joke. 

Like most great comedy, it’s funny because it feels true. Artificial intelligence, and what it could mean for crypto and blockchain technologies, has reached new heights of hyperbole. Both Twitter speculators and institutional investors are salivating at the promise of a better web run by AI and smart contracts.

Certainly, their vision of a fully automated and decentralized future will come. But the attention on it now is a tad premature, as such integrated technology is still likely a decade away. 

Inordinately focusing on that future reality risks missing the tangible value AI can add (and is already adding) to our present reality.

Phase 1: Built by AI

Before photographs, the concept of capturing a moment in time with anything but memory was completely foreign. Before electricity, the idea of cities filled with light, even at night, was science fiction. Before the internet, the thought of sending meaningful content instantly across the world was pure lunacy.

You don’t know what you don’t know. Each new epoch of technology expands humanity’s understanding of what is possible in practical, physical ways — and only then do people realize what they were missing out on. Society has an immense need for more applications on the web, which is quickly becoming where many of us spend the majority of our time. But it’s difficult to know how much our app deficit has cost us in terms of our online experiences, because we don’t know what the alternative looks like…yet.

AI will upend many sectors, in many ways. For programmers, much of its present-day value lies in its ability to help them build better applications, faster. This is already happening, with the help of dedicated AI coding assistants, such as Copilot, and generic ones, like Open AI’s ChatGPT interface. 

With coders able to offload the more tedious programming processes to AI — including quality assistance, which for some developers can consume most of their working hours — they can focus on solving deeper-level challenges and creating even more innovative solutions for security and scalability.

This stage will lead to immediate hyperbolic growth in application development, leading to a surge in AI-based tools meant to bridge the gap between the datasets that drive AI and the practical use cases that consumers are looking for.

That growth will assuredly include decentralized apps (dapps) as well, including Web3 games built on revenue-sharing blockchains and DeFi networks that democratize financial services to unbanked parts of the world.

Phase 2: Built-in AI

An increase in Web3 apps powered by AI building tools will push the ecosystem forward. The next transformative phase will come in the form of Web3 apps that actually build AI into their systems, using automation as the lighter fluid fueling an explosion in new decentralized business models and technologies. 

Blockchain technologies have already proven to be great tools for bootstrapping digital communities, encouraging virtuous cycles through aligned incentives, and creating greater network efforts through shared ownership. AI can help augment those natural strengths and further enhance them. 

Some examples: Consider the potential of a music app where creators were programmatically rewarded for how well they could use AI to increase the quantity and quality of their compositions. Or imagine how Web3 networks could use public data available on blockchain to identify revelatory trends — like connecting the work of charities building wells in Africa or Southeast Asia with DeFi applications expanding financial services to the estimated $1.4 billion people who remain unbanked across the world

If Web3 scales community building, then AI more easily scales content production. Together, they create rapidly scalable content built by a rapidly scalable community. And that equals a massive upside. 

Phase 3: Built with AI.

Now, to the stage of AI and Web3 integration that everyone is talking about prematurely.

AI-empowered blockchains and protocols will stack the powers of machine learning capabilities with the decentralization and aligned incentivization of Web3. The vision: For AI to enable greater transparency, greater value exchange, greater decentralization, greater education.

Some more tangible examples are the evolution of NFTs from static to dynamic, as it becomes possible to produce them at greater scale and with more adaptability while incorporating machine learning capabilities. And perhaps the biggest application will be in virtual worlds, including Web3 games and metaverses, which will rely on AI to handle core network functions, everything from content creation and moderation to verification of hundreds of millions of users and their digital assets. 

Read more from our opinion section: Blockchain can save the media

Eventually, I believe that AI will be incorporated in a way that it can essentially “govern” Web3 blockchains and networks. 

Instead of a DAO voting on every small tweak or adjustment to the protocol, the AI model could be given wide purview to make decisions that keep the DAO working efficiently.

The community could adjust this purview based on their own values and interests. Importantly, it could also adjust the parameters by which the AI model makes decisions about the network — and due to the transparency of the blockchain, these parameters could be public and easily accessible for all to see. 

Having public, automated AI decision-making would be similar to having greater visibility and control over the algorithms that drive social media platforms like, say, Twitter or Facebook. 

Don’t like the parameters that dictate what content gets promoted (or censored) on your favorite platform? You can vote, together, to change it.

This final stage of AI and Web3 integration will be difficult to achieve, and costly, which is why it won’t happen overnight. But once it comes, it opens up a whole new galaxy of apps and services that reward people with more ownership and control. 

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