AI represents the next step-function in the evolution of blockchains.

Every era of blockchain evolution tends to follows a familiar arc:

• A step-function “order of magnitude” improvement catalyzes a wave of innovation
• Progress plateaus as copycats pile in
• The next step-function emerges

Crypto’s initial step-function saw innovation at the consensus layer with the invention of Bitcoin and PoW. This initial wave from ~2009-2014 saw crypto increase its market cap by 10,000X+ (~750K to ~7.5B).

Crypto’s second step-function saw innovation at the execution layer with the smart contract, which enabled programmability. Today, the vast majority of infra (L1s/L2s/etc) and applications (tokens, stables, DeFi, etc) are composed on top of this core primitive. This wave from ~2014-present saw crypto increase its market cap by ~500X to ~3.5T, with projects born in this wave capturing an astounding ~43%, or 1.5T, of crypto’s overall market cap.

But progress has yet again plateaued. Why? My (likely controversial) view:

• Everything that could be built on top of smart contracts has probably already been built. Even more recent phenomena like memecoins are a “remix” of existing building blocks (tokens, bonding curve, NFT community hype), vs. net-new invention.
• Smart contracts represent the core bottleneck for UX. Crypto apps must directly interface with smart contracts, passing on complexity to users. Users are exposed to where the contract lives, what it represents, how to interact with it, signing txns, paying gas, etc.

Fortunately, the next step function improvement is here — and brings with it innovation at the application layer by enabling usability.

AI will become the front-end for crypto

New tech requires the right “front-end” (or UX layer) which abstracts complexity and aggregates capabilities in a native way. The PC had GUIs and operating systems. The Internet had web browsers + FAANG. Mobile had native apps + app stores.

AI will serve as this UX layer for crypto rails and offer an order of magnitude better experience to facilitate broader adoption. I take this view b/c AI can abstract the biggest UX challenges in crypto: onboarding, execution (which often takes several discrete steps that LLMs are well positioned for), and discovery. By 2030, I anticipate 40% of the world’s population will have transacted on-chain with 95+% of on-chain transactions coming via AI. The world will be using crypto-powered apps without knowing they’re using crypto.

To enable this, AI will serve as connective tissue between the app layer and crypto infra, working both upwards and downwards in the stack. Apps will instead directly interface with one-to-many AI agents and models, who will aggregate and execute on-chain on their behalf. Smart contracts will evolve to natively meld with AI in the form of ”intelligent tokens”, creating generative and customized experiences, vs. today’s one-size-fits-all, deterministic flavor.

When you put the AI lens on crypto apps, things suddenly pops into focus. For example, the next-gen finance super-app will likely use AI to aggregate, pro-actively recommend, and execute DeFi actions on-chain based on user intent, preferences (security, yield, etc), and real-time information from prediction markets. Users won’t need to know what L1s/L2s are, names of protocols or assets, how bridges work, etc. And we’re already starting to see

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