It is a confident sign that the Web3 industry is growing and maturing. It is also a healthy indicator that there is ripe opportunity for bleeding edge technologies to combine, developing disruptive innovation for the marketplace. Yes, Mergers & Acquisitions in the Web3 space have been growing in the last several years, but 2024 has shown a clear direction on where the industry is likely headed in the near future.
There were 200+ crypto M&A actions in 2022, and around 150 in 2023. The vast majority of these were either smaller firms connecting, or a larger firm acquiring a smaller firm. However, 2024 has given reason to expect much more substantial M&A activity within the Web3 industry, and it will likely involve much more than simply merging token projects together. Rather, there is a growing opportunity for blockchain technology to reach across industry boundaries and partner with other advanced technologies such as AI. The combination of technologies has already shown promise, and the market is filled with opportunities where AI/blockchain products and services could create entirely new markets.
Why now? There are a number of key reasons, along with interesting speculation on what the next few years will hold for the blockchain, AI, and other advanced tech industries. To help answer these questions, we invited Mario Casiraghi, Co-Founder of SingularityDAO, CFO of SingularityNET, and an executive at ASI, to weigh in on the current M&A environment.
Casiraghi was instrumental to 2024’s massive three-way merger between AI-related crypto projects Fetch.ai, SingularityNET and Ocean Protocol. The ASI (Artificial Superintelligence Alliance) merger creates a roadmap and precedent in the DeFi-AI space.
Interview with Mario Casiraghi
The ASI merger was major headlines for the Web3 industry this year. How do you view this partnership from a decentralized perspective?
The ASI merger represents a significant step towards a more robust, decentralized ecosystem for advancing AI. Bringing the AGIX, FET and OCEAN tokens together into a unified ASI token is a strategic move where we’ll be able to streamline operations and also open up collaboration across different AI and DeFi projects.
The ASI has a multi-layered decision-making process that aims to maintain decentralization and enable efficient governance. This, combined with resources from SingularityNET, Ocean Protocol and Fetch.ai, will help scale up the decentralized AI efforts, which will be crucial for competing against centralised ‘Big Tech’ companies in the AI space, and ensures that AGI development remains open and inclusive.
The M&A activity within Web3 is starting to gain ground not just in terms of scope, but also in terms of reaching out across industries. What are the key drivers behind this, and why is it happening now?
First, we’re operating in a highly fragmented market right now, with gaps between AI, DeFi, RWAs, and TradFi. By merging, projects are able to bring together their talent and connections from these different domains. For example, professionals with TradFi backgrounds. Second, regulatory changes are another major reason we see mergers and acquisitions happening. The DeFi space is under more scrutiny than ever. Finally, it’s simply a brutal market. Competitive and fast-paced. Mergers and acquisitions can be a strategic move for us, to keep long-term success in volatile market conditions.
You mentioned regulation as a key driver for increased M&A activity. How do you foresee that M&A activity and consolidation in Web3 will help strengthen the industry’s ability to drive increased adoption, while at the same time navigating regulatory challenges successfully?
Mergers and acquisitions allow complementary technologies to come together, leading to greater innovation, better user experiences, and more effective navigation of the regulatory landscape. Larger, more established players have greater influence and can work directly with policymakers to shape the future of this industry.
Improved security, user experience, and risk management– these are the keys to bringing Web3 to the mass market. And this consolidation process is what will get us there.
Web3 M&A’s have additional challenges they have to overcome compared to traditional businesses, with the merging of two or more DAOs being a major complication. For a typical merger or acquisition within Web3, how do two separate DAOs or organizations come together in a way that protects the interests of both communities? What lessons have been learned in this area so far?
When it comes to merging two separate DAOs, you need to ensure that the vision and mission of both are in alignment, and that the interests of both communities are protected every step of the way. This means aligning on critical issues like decentralization, governance, tokenomics, and how to reward the community through the transition.
Transparent and clear communication is an absolute must. Both sides need to be in sync, and the communities need to be brought along in a positive way, whether you decide to take a gradual approach or a more sudden, full-scale “surprise” merge.
We saw this play out with the ASI merger, as well as the Rari Capital and Fei in 2022. In the case of the Rari-Fei merge, there was some initial skepticism, but they listened to their communities, adapted their ideas, and went to and fro until this resulted in 90% voting yes to the merger.
There are a lot of advanced technologies being developed in the marketplace right now. What are some of the key skill sets most sought out in the M&A activity you've seen within Web3? For example, are you seeing a particular focus on platforms that specialize in DeFi, DAOs, RWAs, AI, etc.?
In my view, the more knowledge we can combine, the better. The most needed skills these days are tokenomics, being able to create incentive networks, corporate legal structuring, and deep understanding of DAOs, DeFi, Layer 1s and Layer 2s. Specialising in an area of decentralized governance systems is becoming more sought after these days, along with growing privacy and security concerns.
We need to bridge the gap between TradFi and blockchain technology, and RWAs are an emerging trend that we should be embracing. I feel that the use of AI will be useful in how we understand the bigger picture within blockchain.
Final Thoughts
This is an interesting point of time for Web3, as well as the AI, Big Data, and other advanced technology industries. Each is facing similar challenges and opportunities: new use cases are being developed, while regulation continues to be fluid and uncertain. Competition grows stronger by the day, and market appetite for risk can change overnight.
The M&A growth seen in the last few years will likely continue, but will grow much more strategic in nature, combining major skill sets, platforms, and even industry expertises to develop strong partnerships. These new entities will be able to stand market volatility better, be able to work more directly with ongoing regulation development, and build up a wider range of use cases for their communities. 2025 will likely continue to see this M&A growth, showing a continued maturity of the Web3 market and an indication of strength that Web3 is finding a strong foundation across industries.
