10 challenges facing Web3 that will open up a new world once they are overcome

Source: Blockchain Knights

The crypto asset space is currently fascinated by the concept of generative AI and “agents” that are supposedly powered by crypto asset “rails” and coordinated by on-chain smart contracts.

This is not a good approach for a simple reason: we cannot build “agents” on the random quicksand of large language models (LLMs).

LLMs can be useful in creatively generating ideas and content (such as code), but that same creativity can manifest through malicious potential (i.e. deception).

In addition, it has become fashionable to discuss quantum computing (i.e., moving towards post-quantum crypto and “future-oriented crypto protocols”).

Currently implemented elliptic curve crypto technology does have risks.

However, most of the remaining surface area is at best threatened by polynomial scale, and the application of quantum technology is likely to cause a rising tide to lift all boats.

The key is: real-world quantum computing is still decades away.  

While we are enthralled by all these shiny new things, core design priorities, choices, and trade-offs are rusting and in danger of becoming “good enough” and should be actively revisited.

Here are 10 of them:

1. Social consensus. If there is anything that is out of place in the crypto ecosystem, the concept of “social consensus” is the best example. Social consensus is how so-called community leaders govern their tribes; it has no place in a crypto protocol in 2025.

2. On-chain governance. After social consensus, what happened to on-chain governance? Is it too hard? Are we just giving up? Yet we believe we can govern AI agents on-chain?

3. Miner-extractable value. Is it now acceptable for miners and block proposers to extract revenue by manipulating the priority, exclusion, reordering, or alteration of transactions in a block?

4. The oracle problem. Is it conventional wisdom that the oracle problem is an economic problem and no longer a technical one? Is this collateral damage from the shift to “proof of stake”? Isn’t this a slippery slope back to pseudo-centralization?

5. Centralized stablecoins. Speaking of centralization, aren’t centralized stablecoins essentially CBDC-light? Since the wheels of Crypto assets are greased by (private) centralized stablecoins, why bother playing two-faced with (private) central banks?

6. There is no so-called settlement layer, nor is there a so-called L1 and L2. Any chain (including so-called L1 and alternative L1) can become the L2 of another chain by publishing ledger data and deploying bridge contracts. We must stop confusing and clean up the terminology.

7. Privacy. I don’t know when we lost the need for privacy protection. Maybe the concept of “privacy pools” is how Crypto protocols will eventually balance regulatory compliance and privacy.

8. Rollup. In fact, Rollups are mini blockchains. Unfortunately, Rollups are mostly ignored, and there are a host of issues: from multi-sig rug-pulls to centralized sorters MEV and CR, and everything in between. We need to comprehensively clean up the terminology and execution semantics around Rollups.

9. Centralized accounting and block construction. As Proof of Stake technology develops, we will have to face more and more mergers. As private order flows dominate, this will increasingly weaken resistance to censorship. This brings us back to square one: where does permissionless and trustless go? Or do we not care as long as the number increases?

10. Public welfare funding. Rising numbers bring long-term challenges and problems to funding public goods. Crypto protocols play a unique and meaningful role in funding public goods, and this opportunity remains the most important. We need to remind ourselves that this is a high priority backlog project.