In this final part of our three-part series on major crypto and blockchain trends in 2022 and beyond, we look at the gradual integration and implementation of blockchain technology in Industry 4.0 technologies in relation to data security & integrity, tracking, and digital rights management. We also look at the the rise of the DAO (Decentralised Autonomous Organisaton) and how its restructuring of organisational control is gaining traction across a broad spectrum of digital asset verticals.
If you missed Part 1 of our trends overview in which we discuss macro decoupling, institutional investment, and NFTs, click here.
For Part 2, where we dissect the metaverse and sustainability initiatives in crypto & blockchain, click here.
TREND #6: Blockchain and the Industry 4.0
Another key trend gathering pace in the blockchain space is its integration and implementation with other technologies of the fourth industrial revolution. Known collectively as the industry 4.0, there is a growing body of work showing that industries deploying these foundational technologies which include 3D printing, Robotics, the IoT, and several others, are evolving their understanding of blockchain use cases. Consequently, we are seeing greater investment and R&D to develop solutions around the core utilities of distributed systems for the securing of trust, the transfer of value, process automation, and secure data storage. Further, the functional specificity and diversity of the technologies that comprise industry 4.0 mean that each application is developing in a highly specialised fashion.
Blockchain's integration with robotics
Though the integration of robotics with blockchain is still in an early prototype stage, the use cases are becoming increasingly clear to a large swathe of large businesses – in particular when it is deployed in conjunction with artificial intelligence (AI). And, as the technology matures and more production-grade blockchain systems are launched, a greater diversity of applications are being explored and evaluated (Figure 1). For example, blockchain technology can serve as a mechanism for transmitting information between different robots and have action triggers coded in smart contracts, improving both the efficiency and inter-connectivity of robots. For example, Aitheon, a company that offers businesses access to automation via robots as a service (BaaS) platform, has adopted blockchain technology based on the ERC-20 standard. Their blockchain-powered platform allows businesses to leverage AI and robotics that can provide automation for specified business workflows across five different modules.
Figure 1: Potential roles of blockchain for different fields of robotics
Additionally, of particular relevance to robotics is the improvement in managing large fleets, or swarms of robots, that must work cooperatively in a closed, industrial environment. Here, blockchain technology can provide benefits in relation to scaling entire fleets of robots as well as providing the necessary data integrity and data security. These advantages come from the fact that members of these swarms are distributed, with each robot used as a node in a network which lends itself particularly well for the industrial sector where secure data transfer between robots is key to achieving higher productivity.
Equally, blockchain integration with these systems can both provide robots with global (over merely local) information to expand application functionality and improve the speed of how the system changes the behaviour, since having global information allows the whole system to quickly modify behaviour to address specific robots’ needs (for more see A Survey on Blockchain in Robotics: Issues, Opportunities, Challenges and Future Directions).
Proof-of-Print: 3D Printing meets blockchain
At the same time, there is growing evidence also that blockchain solutions are becoming increasingly integrated with other spheres in the fourth industrial revolution. For example, in 3D printing, underdeveloped digital licencing models and digital rights management have emerged as some the biggest pain points in a rapidly-growing industry. This has made the resulting rise of intellectual property theft a serious are concern, and a growing number of firms are seeing the potential to leverage blockchain as a potential solution (Figure 2).
Figure 2: Blockchain's end-to-end application potential in 3D Printing
One example of this is from PrintParts, a 3D printing services provider that is developing a blockchain-based 3D printing solution that enables cryptographic protection of 3D design files. This industry-wide authentication and traceability solution, SmartParts, will serve as an authentication and traceability solution for additive manufacturing by embedding a unique signature within a part, to make it serialised, scannable, and cloud-connected.
"Traceability and part serialisation is a challenge that has yet to be solved for additive manufacturing. SmartParts is a unique opportunity to scale production and unlock the Additive Manufacturing 2.0 era." Ashley Kerth – Chief Product Officer, PrintParts
Providing a complete overview of blockchain application is beyond the scope of this analysis, but it is clear from the examples presented here that despite still being in its infancy, blockchain's role at the intersection with industry 4.0 technologies will expand considerably in the years ahead. Key to this growth will be establishing complementary standards for platforms both within and between industries and technologies that have the capacity to achieve high levels of interoperability and interconnectivity
TREND #7: DAOs
Just as the original concept of bitcoin was to distribute the operational power of a payments network to its participants via a cryptographic consensus mechanism in order to remove central authorities, the DAO applies this concept to the organisation. Originally developed by Ethereum co-founder Vitalik Buterin in 2013, DAOs, or Decentralised Autonomous Organisations, are hierarchy-less organisations whose governed rules and structures are auto-enforced on blockchain smart contracts and voted on by participating stakeholders (i.e., the token holders). This provides increased visibility and transparency on how decisions are made – a form of digital direct democracy of sorts.
After a fairly inauspicious start for many reasons, these cryptofied versions of cooperatives have come a long way since their maiden voyage, the ill-fated “The DAO” launched in 2016 by Slock.it, and DAO treasury war chests showed rapid growth in 2021. Now valued in the billions of dollars, they are not only expanding into every segment of the digital assets space (Figure 3), they are increasingly been perceived as real companies with cashflows and assets under management. For example, the top five DeFi DAOs (Uniswap, Lido, Radicle, Compound & Olympus DAO) alone control over $45 billion in assets, so definitely something to pay attention to.
Figure 3: Leading DAOs by category
DAOs to be transformative, but not a cure-all for organisational complexity
Because power is distributed to the participants, and operations are essentially carried out in a machine-like, automated fashion, automated DAOs can have certain fundamental advantages over traditional organisational structures. For example, the low barriers to entry and borderlessness of DAOs can make them more cost-effective than traditional company structures and with a broader pool of human capital. Additionally, rather than the control by special or ordinary resolution being conferred on shareholders of a traditional company, token holders of a DAO have control over the organisation's collected assets, based on the number of governance tokens owned.
Figure 4: The Pros and Cons of DAOs
However, even though DAOs have real potential to help mitigate some of the age-old, human-centred pitfalls that often plague traditional hierarchical organisational structures (e.g., corruption, greed, poor risk management, etc.), it would be naive to think that they hold the keys to remedy these issues. As can be seen in Figure 4 above, the distributed nature of decision-making power can be both a blessing and a curse: although there are more stakeholders in governance, the lack of an executive decision-making authority can lead to conflict, can slow down operations, and even result in the DAO splitting into separate units, in the event of extreme disagreements.
DAOs are gaining in traction and importance
Despite their shortcomings, recent developments suggest that DAOs are gaining traction and may well be a dark horse trend for 2022 and beyond, with governments and regulatory bodies moving to establish legal frameworks to recognise DAOs. This is a critical step, given that their lack of legal personhood prevents them from owning property or entering into contracts in most jurisdictions, thus limiting their use for typical corporate purposes.
Figure 5: The top 10 DAOs by assets in treasury
For example, in 2021 Wyoming became the first state in the US to officially recognise DAOs as a new form of LLC. This creates a state-sanctioned regulatory scheme for registering a DAO LLC with specific requirements such as, for example, requiring DAO LLCs to be domiciled in the state. Should more states, and indeed countries, follow suit, this could see increased interest in DAOs, as entrepreneurs explore ways to circumnavigate regulatory intervention. Added to the fact that the total combined AUM of DAO treasuries increased 40x between January and September of 2021, from $380 million to approximately $16 billion (Uniswap alone accounting for $2.5 billion), then we have a clear signpost that DAOs will continue to be developed and become a legally-recognised and -regulated part of the corporate and organisational structure over the long term.
Disclaimer: The information contained within is for educational and informational purposes ONLY. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.