If that's true, and at the same time people dislike adverts enough that a significant proportion will refuse to interact with them or even block them, then the market won't generate enough money to pay for the production of those apps. In the short term people will pay to make those apps by subsidising them with investment money (and lose it all if they don't make any money back), but in the long term we simply won't have people making the apps.

At that point the market will be underserved, customers who have a demand for the product will start to pay, and the pay-for business model starts working, driven by revenue rather than DAUs and ad impressions.

There's no reason to believe the end for advertising means the end of media. There is a demand for the products, and suppliers will continue to provide such products. What's needed is a working business model that both sides of the market are happy with. That doesn't appear to be advertising-lead.