6 New Stories In Crypto AI
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Key Trends You Need To Know
In July, we published an article describing five key stories to follow at the intersection of crypto and AI. That was six months ago -- an eternity in this space.
So, we rounded up four more crucial narratives and projects to pay attention to. This time around, the entire industry has exploded and scaled up dramatically. What was once a field of nascent prototypes is now filled with full-fledged products, and some of the biggest names in tech are venturing into the blockchain AI fold.
The AI Crypto Landscape
We recently updated our list of crypto AI projects to know, with several new additions in the Aptos ecosystem. Check it out here.
In the past few months, the crypto AI space has exploded, with an entire tech stack emerging at the crossroads of these two technologies. David Attermann of M31 Capital identifies three layers in the ecosystem: infrastructure at the bottom, then middleware, then applications at the top.
At the bottom of the stack are AI infrastructure marketplaces, which aggregate computing power to run large language models (LLMs). These models undergird the AI applications we know and love. Crypto tokenomics can be used to incentivize the sharing of computing power, following the same template by which blockchains process transactions themselves.
Crypto AI middleware can be categorized into two main categories:
- Zero-Knowledge Inference Verification
This process uses zero-knowledge proofs (Read our “Zero-Knowledge 101” article here if that’s new to you) to privately verify if LLMs are providing accurate outputs. These marketplaces allow users to compete for rewards by verifying LLM results, without sacrificing the privacy of the model, weights, or input data.
- Developer Tooling & Application Hubs
Developer tooling is an umbrella term for software, services, and more which make it simpler to code. As crypto and AI are both highly specialized and novel fields, developer tooling can significantly lower the barrier to entry to create new products. Many developer tooling providers also offer application hubs, which are “one-stop shops” where end-users can find new products built with that tooling.
The application layer is where most users interact with crypto AI tools. These are the actual functions which people use. Current use cases for crypto AI applications include risk management, supply chain management, fake news detection, gaming, trading analysis, chatbots, and much more. We covered many of these applications in our “Crypto AI Projects to Know” article, so make sure to check that out.
Now that we’ve sketched out the crypto AI landscape, let’s take a look at four key stories to pay attention to right now:
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Crypto AI Dominates 2023
If you’re reading this, you probably already know that AI was the most hyped storyline in the crypto space. But you might not know that that frenzy also translated into real, bankable gains.
According to CoinGecko, AI was the leading narrative of 2023 as measured by web traffic, garnering 11.3% of total interest. GameFi was close behind at 10.5%. Numerous tokens that CoinGecko tracks saw triple and quadruple digit pumps, including: cloud computing service Akash Network (1,247%), distributed GPU network Render (1200%), machine-learning network Bittensor (276%), AI lab Fetch.ai (660%), and application hub SingularityNET (625%).
According to CoinMarketCap, numerous AI project tokens have broken into the top 100 coins by market cap. Decentralized computing platform Internet Computer was highest at number 17.
Binance Research found that AI coins soared 185% in Q4 2023, reported by CoinTelegraph. For this report, their team categorized “SingularityNET (AGIX), Cortex (CTXC), Fetch (FET), Ocean Protocol (OCEAN), Oraichain (ORAI), and Render (RNDR)” as AI coins.
One of the most intriguing new technologies in crypto is Decentralized Physical Infrastructure Networks (DePINs). DePINs are systems of physical infrastructure that are maintained in decentralized fashion, using crypto to incentivize individual participation. A DePIN is being used to tokenize a fleet of cars and create a blockchain-based rideshare service. Engineering giant Bosch is working to create a DePIN-based Internet of Things in Europe.
DePINs could be used to create internet hotspots using personal WiFi routers, decentralized maps based on car data, or energy systems where customers are paid to reduce consumption or contribute excess energy back to the grid. Messari recently wrote that the total addressable market for DePINs is north of $2 trillion.
Now, analysts and market players are speculating that AI could augment DePINs to accelerate their development in tandem. In CoinTelegraph, executives called the two a “power couple” and a “match made in heaven.” Many believe that DePINs can be used to provide the massive amounts of computing power that AI models require, or to incentivize feedback on outputs.
Microsoft and Aptos Collaborate on AI Tools
That’s why we’re closely following Aptos’s new partnership with Microsoft, developing products at the intersection of crypto and AI. The collaboration includes an AI chatbot called Aptos Assistant, powered by Microsoft’s Azure cloud service. Aptos Assistant can answer user and developer questions about Aptos, making it easier to enter the ecosystem.
The collaboration will also explore innovation around AI and decentralized finance, such as “asset tokenization, payments, and Central Bank Digital Currencies.” In addition, Aptos will run validator nodes on Azure to increase security for the entire blockchain.
Fox and Polygon Introduce Verify
Microsoft-Aptos is just one of many collaborations between a major corporation and crypto-native start-up. In fact, that type of relationship is a key trend to watch in itself in the crypto AI space.
Fox, the global media conglomerate, partnered with Polygon to create Verify, a blockchain-based protocol to identify AI-generated content. Publishers register their authentic content on Verify and sign it on-chain. The Verify Tool then allows users to check if the content is authentic. Nearly 100,000 pieces of content have been signed on Verify across the Fox media brands.
Verify also licenses content to AI developers, in order to access content that can be used to compliantly train new models. This may be one of the most compelling use-cases for the product, as the usage of online material for AI training has become highly controversial, and even led to major lawsuits.
Square Enix Focuses on AI and Web3
Square Enix is one of the most successful video game developers in the world, with franchises such as Final Fantasy, Dragon Quest, and Kingdom Hearts. Now, they are doubling down on blockchain and artificial intelligence in their operations.
In his New Year’s letter, President Takashi Kiryu identified “blockchain entertainment/Web 3.0, AI, and the cloud” as “focus investment fields” for the company. He added that Square Enix is “working to modify [its] organizational structure and optimize [its] resource allocations” to achieve those goals.
In December, Square Enix made its foray into Web3 with an NFT collection called Symbiogenesis. They have also created NFT trading cars based on the Kingdom Hearts franchise
Pontem is a blockchain product studio building for the Aptos ecosystem. We are currently building an AI crypto chatbot of our own, which will provide powerful insights for users and traders based on best-in-class data.
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