Between 2023 and 2025, the Web3 challenges became serious as developers, investors, and enterprises shifted their focus to AI, changing how global technology firms now perceive the future of the internet and digital systems.
The shift happened quietly. Funding slowed, teams moved on, and adoption failed to grow. While Web3 once promised to redesign how the internet works, AI offered tools that worked immediately, pushing Web3 further to the edges of the tech world.
Web3’s Vision Minimized by AI’s Reality
To understand the critical downgrade, it helps to understand first what is web3 technology?
At its core, Web3 aimed to give users control over data, identity, and digital assets using blockchain instead of centralized platforms. The idea built on early internet values but struggled in practice.
Complex wallets, private keys, and transaction fees created friction. These Web3 challenges made it hard for non-technical users to adopt the technology at scale.
“Yup, all the Web3 shills have moved on to AI,” wrote one developer on Reddit, reflecting their sentiment of frustration. Another added that Web3 was never a thing.
Investment data supports that view. Web3 funding fell from $26.6 billion in 2022 to under $7 billion in 2023. By mid-2025, total funding dropped to $2.09 billion. During the same period, AI attracted over $124 billion in 2024 alone.
Despite this, some Web3 technologies remain active. Blockchains, smart contracts, and token systems still exist, but mostly in limited, backend roles rather than consumer-facing platforms.
Web3 Technologies Still Fits In AI-Driven World
Enterprises have not fully abandoned blockchain, but they now approach it differently. Instead of rebuilding the internet, companies apply Web3 infrastructure selectively, often alongside traditional systems.
This hybrid approach reflects the difference between web2 and web3. Web2 prioritizes ease of use and scale, while Web3 focuses on ownership and decentralization. In practice, most businesses choose a mix of both.
Erman Tjiputra, founder and CEO of AIOZ Network, believes Web3’s future is tied to AI computing, especially building reliable and cost effective scale intelligence.
“We’re in a compute crunch where requirements are insatiable, and Web3 creates this ability to benefit while contributing,” explains Tjiputra.
AIOZ network uses decentralized physical infrastructure networks to share computing power, storage, and bandwidth. In 2025, it launched a platform allowing AI training and inference across more than 300,000 devices, reducing reliance on centralized data centers and easing pressure on existing internet infrastructure.
Still, usability remains a major obstacle.
“The biggest setback in Web3 today is UX,” Tjiputra said.
Lost keys and poor recovery options continue to slow adoption, adding to ongoing Web3 challenges.
The Shift Away from Web3
Advertising agencies were early testers of blockchain. Where large holding companies explored crypto web3 tools for ad transparency, digital rights management, and fraud prevention.
Major company WPP examined blockchain for programmatic verification, while Publicis Groupe pivoted strongly to AI, investing $11 billion in AI systems like Marcel. Omnicom built its Omni platform around generative AI through partnerships with major cloud providers.
Dentsu experimented with blockchain startups, but results were limited. Across the sector, agencies found that web3 technologies required too much effort for unclear returns.
By 2025, AI replaced Web3 as the core innovation focus. AI tools delivered automation, real-time optimization, and measurable gains, benefits that outweighed the remaining Web3 challenges.
For enterprises, the lesson was practical. Web3 introduced new ideas, but AI improved existing ones. The balance between Web2 and Web3 advantages now favors systems that work today, not visions that may arrive tomorrow.
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