After the bubble of AI Agents bursts, where is the true value of Web3 AI?

Introduction

In the fourth quarter of 2023, the AI agent sector has rapidly risen, with its market value soaring from nearly zero to over 20 billion USD. Various "agents" have become a sensation, ranging from funny to quirky. People are starting to expect "financial agents" that can automatically trade cryptocurrencies and help make money, and even DAOs investing in other agents and organizations for "human-agent co-governance" have emerged. Various innovative ways to play are constantly appearing, and it seems that getting rich overnight is just around the corner.

However, the craze comes quickly and goes just as fast. After the bubble bursts, many projects have successively collapsed. However, some infrastructure AI projects with practical value are gradually taking a dominant position in the market. True value is beginning to emerge, and the next wave of Web3 AI is brewing, which may not just be hype this time—it's worth our close attention.

As we all know, whenever a new track or hotspot emerges (such as the combination of Web2 AI, cryptocurrency, and AI, etc.), the market often overlooks the fundamentals. As long as a project appears lively, has a gimmick, and demonstrates well, regardless of its actual utility, its market capitalization can easily reach hundreds of millions of dollars.

A well-known project is the best storyteller among this wave of trends. They accurately grasp the market and occupy users' minds, demonstrating top-notch narrative ability. As a result, developers are increasingly launching projects on their platform, and retail investors are following suit in speculation.

Subsequently, another project took a completely different approach—open-source AI, allowing any developer to easily get started and innovate independently. This concept resonated widely, and the community rapidly grew, with the number of stars and forks on its GitHub continuing to soar.

The total valuation of the former ecosystem once surpassed 5 billion USD, while the latter also approached half that size at its peak. Other interesting AI agent projects have also seen their market capitalization exceed 1 billion USD at one point.

Today, the market landscape has undergone significant changes. New agent projects that perform well generally have a market value between 3 million and 10 million dollars; the market values of older projects have also been compressed to a range of 10 million to 50 million dollars. The upper limit of the valuation for the entire sector has been compressed, with the total market value dropping from a peak of 20 billion dollars to the current range of 4 billion to 6 billion dollars.

The Rise of Infrastructure, Accelerating Development of Web2 AI

The current market no longer blindly chases after those "superficially glamorous" bubble projects, but rather begins to focus on the true 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.

Mainstream technology companies' AI models are updated and iterated almost every month, becoming more powerful, faster, and smarter. For example, a well-known chat AI recently launched an image generation feature that caused a sensation as soon as it went live, with related style images quickly going viral.

The consumer-level products in Web2 are also evolving rapidly. Due to the enhancement of underlying AI capabilities, many product experiences that were previously impossible are now becoming feasible. Emerging development tools have significantly improved developers' efficiency, with frequent and numerous feature updates. AI agents and intelligent workflows have permeated various fields, and the entry barriers continue to lower. For users, switching tools is almost costless—if a tool is not user-friendly or is expensive, alternatives with better UI and smoother experiences can be found immediately. The overall market competition is becoming increasingly fierce, but it also accelerates the landing of truly valuable products.

Awakening of Data Sovereignty: Who is the True Master of Data?

Amidst all this rapid development, more and more people are beginning to realize a problem: there are various AI agent applications everywhere, but most of them use centralized technology—so who really owns the user's data? Where do the chat records go? If private content is discussed with an AI, will it really keep it confidential? Or will it be uploaded, analyzed, and used to train other models?

This issue has become even more critical after a recent update from a well-known AI company—its chat AI's "memory function" can now reference all past conversations with users, generating more personalized responses. This feature is indeed cool; imagine a future where everyone has their own AI personal assistant, chat partner, emotional support... But this also means that user data will be "long-term held" by a certain platform, and users will no longer be the masters of their data.

Once others control the user's conversations, preferences, emotions, and even lifestyle habits, the consequences may not be just "a better experience".

This is also why the topic of "data sovereignty" is becoming the next focus of AI + Web3. Data that truly belongs to users is the most valuable future.

The Rise of Decentralized AI (DeAI)

It was predicted as early as last year that by the second quarter of 2025, decentralized AI would truly enter the public eye. Especially against the backdrop of increasing emphasis on privacy and data ownership, underlying infrastructures that can provide confidentiality, verifiability, and transparency of user data ownership will receive more attention and usage.

Currently, we see trends emerging in three main directions:

The Venture Capital Trends of Web2 AI

• Some startups supported by a well-known incubator are launching vertical AI agents (specifically designed to solve problems in a certain field);
• A well-known venture capital firm has begun to lay out the next phase of consumer AI product trends, proposing its own investment logic;
• A certain AI search engine has launched a fund specifically for investing in AI.

Web3 AI Venture Capital Trends

• Start investing in decentralized AI infrastructure;
• Distributed training networks, computing power sharing and other sectors are gradually heating up.

Retail Trends of Web3 AI

• The AI Agent ecosystem is still one of the hot topics;
• Consumer-level AI applications are gradually becoming more diverse, attempting to land from productivity tools to emotional companionship;
• Users are increasingly concerned about "whether the AI products I use truly serve me, rather than harvesting my data"

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

Web2 vs Web3 AI: Completely Different Rhythms and Playstyles

In the Web2 space, the market size is much larger than that of Web3. This is because many traditional enterprises are seeking to transform and optimize their business processes using AI— for example: acquiring more customers, improving conversion rates, increasing sales, etc. These types of companies usually have very clear demands, and many are concentrated in specific niches, so they hope to find AI tools that can precisely address their "specific pain points." This has also attracted many young entrepreneurs aiming to become vertical AI agents targeting these niche demands.

Compared to traditional SaaS, the benefits brought by AI agents are more direct—either saving a significant amount of costs or directly attracting more customers to generate revenue. Therefore, the subscription prices of such AI tools can also be sold at a higher price, and many startups reach annual revenues of millions or tens of millions of dollars within a few months of launch, which is not without reason.

However, the gameplay of Web3 is completely different. The blockchain itself is a foundational layer tailored for decentralized AI (DeAI). All actions can be verified on-chain and are immutable; it inherently provides a trustless environment; supports decentralized computing; users can truly own their data, models, and use cases. In simple terms, the future of Web3 AI aims to let users know how their data is being used, understand the decision-making processes of AI, gain autonomous control over models and use cases, and also profit from it.

Web3 venture capitalists have begun to position themselves for this future.

Why Retail Investors Favor AI Agents

For Web3 retail investors, DeAI (Decentralized AI) is indeed difficult to understand: it is filled with new words and concepts that sound like an alien language. Therefore, initially, they are most easily attracted to those AI agents that are easy to understand and fun—like talking chatbots that can tell jokes and be funny. These "entertainment-type AI agents" are indeed very appealing, but over time, retail investors also begin to realize that these things seem to have no real use. Additionally, with the poor market conditions during this period, many useless projects have gradually been eliminated, while those agents with actual utility and functionality, although their valuations have also declined, still survive.

This wave of "cleansing" has made more and more people realize that only AI projects with real use cases and core product capabilities have a future. As a result, project teams have started to turn in two directions: either develop genuine AI products independently to solve real problems, or collaborate with DeAI projects that have real technology and value.

This transformation has two positive implications: it makes everyone start paying attention to the underlying infrastructure that was originally "incomprehensible"; it allows AI agents to no longer just be performance tools, but products that can solve real problems. Some projects have already become typical cases—not only are they powerful, but they also bring some advanced DeAI technologies into the public eye. This indicates a trend: although retail investors may not understand the technology, they will gradually be educated by "truly useful" products.

One of the most interesting aspects of a well-known DeAI project is that it is a decentralized AI ecosystem that ordinary people can also invest in. Currently, most DeAI projects are still in the early stages, and only venture capitalists or "strategic partners within the circle" can invest, with many projects not having issued tokens yet. However, this project is different. Users can directly vote with their tokens to support promising subnets, which is equivalent to entering these DeAI project's sub-tokens in advance.

Although there have been complaints before: cross-chain bridges and trading experiences can be a bit troublesome... but their underlying technology, product logic, and overall atmosphere are indeed very strong. Especially with the presence of a certain team, the entire ecosystem's UX/UI design is developing more towards a "user-friendly" direction. Because in the mechanism of this project, each subnet must rely on market recognition to obtain more rewards (mining incentives) — those who are useful and powerful can receive more distribution.

Therefore, for these subnetworks, "making users understand what you are doing" becomes extremely important. The aforementioned team is doing this. Their product direction is very clear: optimizing UI/UX for regular users. They not only have several practical subnetworks (such as a super convenient AutoML platform, where users can directly train models with just a click of a button. And their latest flagship product is also very cool: the AI Agent platform, where users can combine modules like dragging and dropping blocks to create AI Agents, truly achieving "zero-code building of AI agents". This experience is somewhat like a Web3 version of a "foolproof AI factory", which is very suitable for users who do not understand technology to get started).

Overall, this ecosystem is now not only one of the most advanced DeAI projects technologically, but it also leads the way in terms of user participation friendliness. This product, with its clear logic and user-friendly team, is the key role that makes this ecosystem vibrant.

We are in a transformative era dominated 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's enterprises optimizing their businesses using AI in Web2 or retail investors experiencing the convenience of new agents in Web3, data sovereignty and user participation will become key in the future. Web3 AI is far from its peak. The real drama is just beginning.