The True Value of Web3 AI After the Burst of the AI Agent Bubble

In the fourth quarter of 2023, the field of AI agents experienced explosive growth, with market value rapidly climbing from nearly zero to over 20 billion dollars. Various "agent" projects emerged, ranging from humorous and interesting to "financial agents" that promise automated cryptocurrency trading profits, and even DAO organizations investing in other agents. However, this craze came quickly and left just as fast. After the bubble burst, many projects successively shut down, but some AI infrastructure projects with practical value began to stand out. As true value gradually becomes apparent, the next wave of Web3 AI is brewing.

When emerging tracks or hotspots appear, the market often pays little attention to the fundamentals of the project. As long as the concept is attractive and the demonstration is impressive, even if the actual utility is limited, the market value can easily surpass 100 million USD. Some projects rapidly occupy the minds of users with outstanding market narratives, attracting developers and retail investors. Other projects choose to open-source AI, allowing developers to easily get started, and this concept has also quickly gained widespread recognition.

However, the market environment has undergone significant changes. The newly launched agent projects are performing well, with market capitalizations mostly between 3 million and 10 million dollars; the market capitalizations of older projects have also been compressed to the range of 10 million to 50 million dollars. The valuation ceiling of the entire sector has been significantly compressed, with the total market capitalization dropping from a peak of 20 billion dollars to the current range of 4 billion to 6 billion dollars.

The Rise of Infrastructure, Accelerating the Development of Web2 AI

The current market no longer blindly chases seemingly high-end bubble projects, but instead begins to focus on real fundamentals. Especially against the backdrop of the rapid development of Web2 AI models, people are paying more attention to the long-term value of infrastructure and decentralized AI.

AI models from major technology companies are updated and iterated almost every month, becoming more powerful, faster, and smarter. The enhancement of these underlying AI capabilities has made many previously unattainable product experiences now possible. Emerging AI tools have greatly improved developers' efficiency, and the speed of feature updates is also increasing. AI agents and intelligent workflows have penetrated various fields, and the entry barriers are continually lowering.

Awakening of Data Sovereignty Awareness

As AI applications become more widespread, more and more people are beginning to focus on an important question: who really owns our data? Most AI agent applications use centralized technology, which means that users' chat records and other sensitive information may be uploaded, analyzed, and even used to train other models.

The "memory function" of certain AI assistants, while providing a more personalized experience, also means that users' data will be stored on the platform for a long time. Once others gain control over users' conversations, preferences, emotions, and even lifestyle habits, the consequences may be far more complex than just "a better experience." Therefore, "data sovereignty" is becoming the next hot topic in the AI+Web3 field. Data that truly belongs to users is the most valuable future.

The Rise of Decentralized AI (DeAI)

By the second quarter of 2025, decentralized AI is likely to truly enter the public eye. Against the backdrop of increasing emphasis on privacy and data ownership, the underlying infrastructure that can provide confidentiality, verifiability, and transparency of user data ownership will receive more attention and usage.

Currently, we can observe three main trends:

1. The venture capital trends of Web2 AI:

   • Some startups are launching vertical domain AI agents.
   • Investment institutions are beginning to lay out the next phase of consumer AI products.
   • Investment funds specifically targeting AI have emerged

2. Venture Capital Trends in Web3 AI:

   • Start investing in decentralized AI infrastructure
   • The fields of distributed training networks and computing power sharing are gradually heating up.

3. Retail Investment Trends in Web3 AI:

   • The AI Agent ecosystem remains one of the hotspots.

• Consumer-grade AI applications are becoming increasingly diverse, attempting to land from productivity tools to emotional companionship. Users are increasingly concerned about whether AI products truly serve them, rather than harvesting data.

These trends intertwine to collectively drive DeAI from concept to practical stage. The year 2025 will be a critical moment for validating the value of decentralized AI.

The Different Development Paths of Web2 and Web3 AI

The Web2 AI market is much larger than Web3. Many traditional enterprises are seeking to transform through AI, optimizing business processes such as acquiring more customers, improving conversion rates, and increasing sales. These enterprises typically have clear demands, focusing on specific areas, which has attracted many young entrepreneurs to develop AI agents in vertical fields.

Compared to traditional SaaS, AI agents can bring more direct benefits, either significantly reducing costs or directly attracting more customers to generate revenue. This allows the subscription prices of AI tools to be sold at a higher rate, with many startups achieving annual revenues of millions or tens of millions of dollars within just a few months of launch.

The development path of Web3 is completely different. Blockchain technology provides a natural infrastructure for decentralized AI (DeAI). It supports on-chain verification of actions and immutability, provides a trustless environment, supports decentralized computing, allowing users to truly own their data, models, and use cases. In short, the future of Web3 AI will enable users to understand how their data is being used, comprehend the decision-making process of AI, take control of models and use cases, and profit from them.

Retail Investors' Preference for AI Agents

For Web3 retail investors, the concept of decentralized AI (DeAI) may be difficult to understand. Therefore, they are initially more attracted to intuitive and entertaining AI agents, such as chatty robots that tell jokes. These "entertainment AI agents" are indeed appealing, but over time, retail investors begin to realize that these projects may lack practical utility. Coupled with a sluggish market, many useless projects are gradually eliminated, while those with actual functionality, despite a decline in valuation, continue to survive.

This wave of "cleansing" has made more and more people realize that only AI projects with practical use cases and core product capabilities have a future. Project parties are beginning to shift in two directions: either independently developing AI products that solve real problems or collaborating with DeAI projects that truly possess technical strength and value.

This transformation has resulted in two positive effects: it has led people to start paying attention to the originally "difficult to understand" underlying infrastructure; it has made AI agents not just performance tools but products that can solve real problems. Some projects have already become typical cases, not only powerful in functionality but also bringing advanced DeAI technology into the public eye. This indicates a trend: although retail investors may not understand the technical details, they will gradually be educated by "truly useful" products.

One highlight of certain DeAI projects is that they allow ordinary people to participate in investing in decentralized AI ecosystems. Although most DeAI projects are still in their early stages, where only venture capital or "insider strategic partners" can invest, there are also some projects that allow users to vote directly with tokens to support promising subnets, which is equivalent to gaining early access to the sub-tokens of these DeAI projects.

Although these projects may still have room for improvement in cross-chain bridges and trading experiences, their underlying technology, product logic, and overall atmosphere are very strong. In particular, the inclusion of some teams focused on enhancing user experience is guiding the entire ecosystem towards a more "user-friendly" direction.

In these ecosystems, each subnet needs to gain market recognition to earn more rewards (mining incentives). Therefore, for these subnets, "making users understand what you are doing" becomes crucial. Some teams are working on optimizing UI/UX for ordinary users and have launched multiple practical subnets, such as a convenient AutoML platform and a no-code AI agent creation platform.

The clear logic and user-friendly team behind this product are key factors that make the entire ecosystem attractive.

We are in an era of transformation led by Web3 AI. The past bubble that relied on hype to inflate market value has been replaced by actual infrastructure, decentralized AI, and real application scenarios. Whether it is businesses optimizing operations with AI in Web2 or retail investors experiencing the convenience of new agents in Web3, future data sovereignty and user participation will become key. The development of Web3 AI is far from reaching its peak; the real spectacle is just beginning.