MT Capital Research Report: Opportunities and Challenges at the Intersection of AI and Crypto

Momentum Capital

2024-03-12 22:35:18

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The development of the AI x Crypto track is sustainable, not just a temporary craze.

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By Xinwei, Ian

TL;DR

We believe that the development of the AI x Crypto sector is sustainable and not just a temporary craze. With the advancement of AI technology and the passage of time, we expect to see more funding and attention continuously flowing into this field, bringing multiple rounds of development opportunities. Therefore, positioning in the AI x Crypto sector is not only feasible but also a necessary strategic choice.
In the AI x Crypto field, we can see several sub-sectors, including AI Agents, decentralized computing, data, oracle, ZKML, FHEML, co-processors, memes, universal basic income, generative art platforms, and gaming applications. Among these areas, decentralized computing is particularly noteworthy, whether in GPU computing or algorithm models, representing a huge space for innovation with extremely high demand for computing power. Computing power has become a form of consensus, and its value potential can rival the market cap ceiling of public chains. At the same time, we are optimistic about ZKML, FHEML, and co-processors, which are still in their early stages but have great potential.
Considering the current market liquidity, project fundamentals, and community influence, Worldcoin, Arkham, Render Network, Arweave, Akash Network, Bittensor, and io.net are all major projects we believe have leadership and development potential.

Introduction

In the past few years, the AI x Crypto field has undergone unprecedented development and transformation. This emerging field combines two of the most transformative technologies: blockchain and artificial intelligence, aiming to explore how decentralized approaches can empower AI applications, thereby enhancing transparency, security, and user control. With the rapid advancement of artificial intelligence technology, especially the rise of generative AI, and the growing demand for decentralized solutions, AI x Crypto has become one of the most exciting innovation frontiers in the tech field.

New Landscape of Assetization in the AI x Crypto Field: The Innovative Path of Computing Power, Models, and Data

The most direct use case of Crypto is assetization, and in the AI x Crypto field, "computing power assetization," "model/Agent assetization," and "data assetization" are the three main scenarios.

In computing power assetization, there are two main directions: decentralized computing and decentralized reasoning of AI Agents. Decentralized computing focuses on utilizing distributed networks for training AI models. AI Agents mainly use trained AI models for decentralized reasoning. These AI Agents can be deployed in decentralized networks to provide users with various intelligent services, such as automated trading, knowledge assistance, or security auditing.

However, from a technical perspective, the training of current large AI models involves massive data processing and high-speed communication bandwidth requirements, which pose extremely high demands on hardware facilities. Currently, training Transformer large models typically requires high-end CPUs like NVIDIA's H100 or A100, NVIDIA's NVLink technology for connecting GPUs, and specialized fiber optic switches to achieve network connections above 100Gbps to support training across multiple data centers. These models contain billions to hundreds of billions of parameters, requiring powerful computing capabilities and video memory to execute deep network algorithms. At the same time, to quickly supply data for processing, high-speed storage and network bandwidth must be available to reduce I/O bottlenecks. Parallel computing strategies such as model parallelism and data parallelism require high-speed internal and external network bandwidth to achieve effective synchronization among multiple GPUs. These requirements indeed pose significant challenges for decentralized AI training under current technological and cost conditions.

On the other hand, AI reasoning performed by AI Agents, due to its lower demand for computing power and communication bandwidth, makes decentralized approaches more feasible and practical. This is also why many projects related to computing power in the current market focus more on reasoning rather than training. Nevertheless, considering cost-effectiveness and reliability, centralized solutions often still prevail over decentralized solutions at this stage.

The assetization of models/Agents is also an important direction, especially driven by large language models like GPT, which has become a significant trend. Users can interact with AI-based virtual characters. Transforming these AI Agents into NFTs allows users to buy, sell, collect, or exchange them, similar to art transactions. However, projects in this direction often have lower technical barriers, lack innovation, and exhibit a lower degree of integration between AI and Crypto. Many projects merely convert AI models into NFTs without deeply considering the intersection of AI and Crypto, leading to market homogenization. Furthermore, Agents are mostly stored on cloud servers, merely proving ownership by placing NFTs on the chain, resulting in a shallow integration with Crypto.

Data assetization is also an important direction in the AI x Crypto sector, focusing on utilizing decentralized technology and incentive mechanisms to release and utilize vast data resources that are typically confined to private domains, including personal data and internal corporate data. Once these data are transformed into resources that can be used for training or fine-tuning large models, they can significantly enhance the professionalism and efficiency of AI models in different vertical fields. However, factors such as data diversity, quality, application scenarios, and privacy protection increase the complexity of data assetization, making standardization a challenge. While non-standardizable data can be tokenized as NFTs, this also highlights the difficulty of establishing a highly liquid and easily tradable market.

Decentralized data labeling, as part of data assetization, improves the availability and quality of data while reducing costs and time through the "Label to Earn" model or crowdsourcing platforms that incentivize community members to participate in data labeling. This decentralized labor approach not only ensures the efficiency and quality of data labeling but also guarantees fair rewards for participants, providing a new pathway for data assetization.

Source: MT Capital

As can be seen, the currently established scenarios in the AI x Crypto sector are relatively limited, with most directions having low barriers to entry. The recent market hype is mainly driven by capital operations and emotional FOMO. The AI x Crypto sector currently faces several core pain points:

Immature business models: AI x Crypto is still in a very early stage, and many projects attempting to combine the two are not mature enough to fully leverage their respective advantages. With teams that have a deep understanding of both fields getting involved, it is expected that more solutions will be developed that showcase the power of AI technology while deeply integrating Crypto characteristics.

Dual challenges of interdisciplinary expertise and practitioner preferences: In AI x Crypto projects, teams often have either a strong background in AI or a deep understanding of Web3 and cryptocurrencies, making it difficult to balance both. This not only limits the ability to innovate technologically and explore business models but also reflects practitioners' preferences when choosing fields, as excellent AI talent is often reluctant to venture into the crypto industry. This contradiction between the lack of interdisciplinary expertise and practitioners' preferences has become a major obstacle to driving innovation in this field. In the future, teams that can work across disciplines and have insights into both AI and crypto technologies will become key forces for innovation and progress in this field.

Internal empowerment technical challenges: When Crypto attempts to empower AI internally, such as through ZKML and FHEML, the main pain point is the poor scalability of these technologies, which limits their practical applications. Similarly, when AI tries to empower Crypto internally, it needs to address not only the complex engineering issues of integrating AI into existing systems but also ensuring that this integration works effectively without hindering system performance. These two challenges reflect that in deeply integrating AI and Crypto, innovative technical solutions are needed, as well as overcoming the complexities and scalability issues when implementing these solutions.

Despite the various difficulties, we still believe that AI x Crypto is one of the most important tracks in this cycle. The combination of AI and Crypto not only demonstrates strong technological potential and application prospects but also occupies a unique and important position in the current technology and investment fields:

The technological revolutionary status of AI: AI is widely regarded as a key force driving the next round of technological revolution. Compared to the previous round centered around the metaverse, it requires more practical applications and faces challenges in user data validation. Especially as the stock prices of metaverse concept companies like Roblox and Meta have plummeted, the hype around the metaverse has quickly faded. In contrast, high-tech companies like OpenAI do not need to prove their value through revenue at this stage. Compared to the metaverse, AI has a broader impact on practical applications and technological innovation, permeating various fields such as healthcare, education, transportation, and security, and has the potential to drive the enhancement of the entire high-tech industrial chain. Decentralized computing power further unleashes the potential of AI by providing necessary computing resources through distributed networks to support the training and reasoning of AI models, promoting the advancement and widespread application of AI technology.
The importance of computing power: In AI x Crypto projects, the importance of computing power is self-evident. Computing power is not only directly related to the efficiency and effectiveness of AI model training but also an important indicator of measuring a project's technical strength and market consensus. The higher the computing power, the stronger the consensus, and the higher the market value. As more enterprises and individuals participate in decentralized computing power contributions, it can not only achieve optimized resource allocation but also promote the exploration of new economic models and value distribution methods, such as through computing power mining and AI computing power hosting.

Representative Projects

Worldcoin

The reason WLD has performed well recently is simple. On February 15, OpenAI released the video generation large model Sora. Through text instructions, Sora can generate high-definition videos up to 60 seconds long, featuring highly realistic backgrounds, complex multi-angle shots, and emotionally rich multi-character narratives, demonstrating a profound understanding of the physical laws of the real world. While people are eagerly awaiting the release of GPT-5, the impact of Sora is comparable to that of a GPT-5 release.

This event reignited enthusiasm for the AI field. It is well known that Sam Altman, the founder of Worldcoin, is also the CEO of OpenAI. Under the manipulation of the market makers, WLD quickly became the most eye-catching focus in the market at the beginning of the year.

Worldcoin mainly involves two areas: identity verification and the issuance of digital currency. It is rumored that OpenAI is developing two robotic agents capable of deeply understanding human instructions and acting according to them, which is seen as the final step towards artificial general intelligence (AGI). Once this step is reached, almost all jobs may be replaced, and the vast majority of people will face unemployment, but they cannot starve. At this point, OpenAI will need to issue basic income (UBI) through Worldcoin, allowing individuals to receive 6 WLD monthly simply through iris recognition.

However, a detailed analysis reveals that WLD does not have substantial empowerment; its existence is more of a speculative air coin. If WLD is indeed used for issuing basic income in the future, this non-stablecoin form may trigger various issues. This is also why the Worldcoin white paper and the founder's discussions about WLD's role seem ambiguous.

WLD is likely to remain a meme coin forever. Nevertheless, this does not mean that WLD lacks investment value. In terms of market capitalization, WLD is similar to DOGE. If Altman's fame can surpass Musk's, WLD may have a chance to reach DOGE's market cap. However, its high unit price somewhat limits its potential as a top meme coin. If Worldcoin's price were more affordable, it would undoubtedly greatly increase its attractiveness as a top meme coin. As a top figure in the AI field, Sam Altman's every public statement or significant event in the AI sector will have a significant impact on Worldcoin's market, increasing its attractiveness and uncertainty as an investment target.

If there are future operations to split the coin, redefining Worldcoin's market positioning with a lower unit price and higher circulation, such a strategy could trigger a rapid price increase.

Although the current market positioning and practical applications of Worldcoin are somewhat ambiguous, leading some to view it as a meme coin, Altman's influence and the rapid development of the AI field provide Worldcoin with unique market dynamics. If reasonable market strategies, such as coin splitting, are adopted in the future, Worldcoin has the potential to become a force that cannot be ignored in the market.

Source: https://foresightnews.pro/article/detail/53744

Arkham

Founded in 2020 and headquartered in the United States, Arkham is led by founder and CEO Miguel Morel, with a team that includes operations director Zachary Lerangis, BD director Alexander Lerangis, and institutional relations expert John Kottlowski. Arkham has raised over $12 million in funding, including $2.5 million in a public round from Binance Labs. The founders are seasoned professionals in the crypto industry, having previously founded Reserve, a stablecoin project designed for high-inflation economies, with investors including Peter Thiel, Sam Altman, Coinbase, and Digital Currency Group.

On July 10, 2023, Binance announced that Arkham's token $ARKM would be listed on its Launchpad, marking Binance's first launch of a tool-based product, which generated significant interest.

Arkham is a platform that utilizes artificial intelligence algorithms to analyze blockchain data, allowing it to associate blockchain addresses with real-world entities, providing users with a complete view of underlying behaviors. Arkham recently launched a blockchain intelligence trading platform called Arkham Intel Exchange, which allows users to request needed information through bounties, while information providers can earn rewards by providing information. Arkham also offers powerful tools that allow users to search, filter, and sort any crypto transactions, revealing the entities and personal information behind market activities.

In addition to being listed on Binance, several exchanges such as Kraken, OKX, and Hotbit also support $ARKM trading.

Arkham has introduced a model called "Intel-to-Earn," which matches buyers and sellers on the blockchain to create an intelligence economy. Its platform token $ARKM is used to pay for analysis platform fees, governance voting, and user incentives. The total supply of $ARKM is 1 billion, with a circulating supply of 150 million at launch (15% of total supply), and the number of registered users on the test site has reached 200,000. After being listed on exchanges, trading volume is expected to reach $100 million.

Arkham mainly consists of two components: blockchain analysis tools and an intelligence trading market. The analysis tools provide users with comprehensive data insights through entity pages, token pages, network mapping, etc. Arkham utilizes its self-developed AI engine Ultra to de-anonymize blockchain data and matches addresses with real-world entities through algorithms. The intelligence trading market allows users to buy and sell information through bounties, auctions, and data sharing. Arkham maintains the long-term operation of the platform by charging certain fees—2.5% manufacturing fees for listings and auctions, and 5% acceptance fees for bounties and successful auctions.

Compared to other data analysis platforms in the market, Arkham has several unique advantages, such as creating token usage scenarios, realizing on-chain data value trading through the intelligence exchange, providing knowledge monetization channels for data analysts, achieving self-incentivization through commissions, which is beneficial for the platform's sustainable development, offering users the ability to track historical investment portfolios, and visualizing data graphs to reduce research costs. However, Arkham also faces challenges, such as limited support from public chains, functional gaps with platforms like Nansen, limited replicability of token scenarios, a user base primarily consisting of professionals with limited appeal to ordinary investors, and its own weak data processing capabilities, relying on external data teams.

The Arkham project has a first-mover advantage and a broad market space in the field of blockchain information analysis, but it is still in its early stages, and its business model needs to be validated, with ecosystem building and scaling requiring time to cultivate. Risks include the time required for the popularization of on-chain information analysis, high user education costs, limited replicability of the business model, a user base mainly consisting of professionals, reliance on personnel for information processing, high operational costs and risks, varying quality of information, reputation risks, and uncertainties regarding regulatory policy changes.

https://foresightnews.pro/article/detail/48222

Render Network

Since its launch in April 2020, Render Network has become a leading decentralized rendering platform, bridging users who need GPU computing power with suppliers who have spare computing resources. This platform primarily serves high-demand computing fields such as artificial intelligence, virtual reality, and multimedia content creation, providing a fair and competitive market environment through its unique dynamic pricing strategy, which considers task complexity, urgency, and available resources. In this way, GPU owners can connect their devices to Render Network and use OctaneRender software developed by OTOY to accept and complete rendering tasks. In exchange, users pay RNDR tokens to individuals who complete rendering tasks, while OTOY takes a small portion of RNDR as a fee to facilitate transactions and network operations.

Render Network is headquartered in the United States and was founded by Jules Urbach. Urbach is not only the founder of Render Network but also the founder and CEO of OTOY, and he has profound insights and contributions to the development of 3D rendering technology and decentralized computing platforms.

Render Network has completed several rounds of funding, including strategic financing. On December 21, 2021, Render Network successfully raised $30 million in a strategic financing round, with investors including well-known investment institutions and individuals such as Multicoin Capital, Alameda Research, Sfermion, Solana Ventures, Vinny Lingham, and Bill Lee. Additionally, Render Network raised $1.16 million through an ICO in January 2018, which not only supported the technical development and market expansion of Render Network but also reflected market recognition of the potential of decentralized rendering services.

Render Network utilizes the peer-to-peer network functionality of the RNDR token to effectively allocate workloads among idle GPU resource providers while encouraging nodes to share their unused computing power through incentive mechanisms. This not only maximizes resource utilization efficiency but also creates value for participants, promoting the prosperous development of the decentralized rendering ecosystem.

In December 2023, Render achieved a significant technological leap by migrating its infrastructure from Ethereum to Solana, bringing new capabilities such as real-time streaming, dynamic NFTs, and state compression, significantly improving the network's performance and scalability while opening up richer and more diverse application scenarios for users.

DePIN (Decentralized Physical Infrastructure Network) is a new concept consisting of two main areas: digital resource networks and physical resource networks, aiming to incentivize individuals to participate in the construction and efficient utilization of real-world infrastructure through a proof-of-physical-work (PoPW) mechanism. The emergence of DePIN not only brings innovative solutions to the traditional information and communication technology (ICT) industry but also heralds the arrival of a more decentralized and efficient infrastructure network model.

Despite the current challenges faced by the ICT industry, such as high barriers to entry and inefficient resource utilization, DePIN introduces a peer-to-peer network model that allows idle resources to be reused while reducing participation barriers through disintermediation, enhancing market competitiveness and efficiency.

The successful upgrade of Render Network and its close integration with Solana demonstrate the advantages of decentralized rendering platforms in responding to real-time responsiveness and reducing transaction costs, which not only strengthens Render's leadership in the DePIN field but also opens new avenues for its future development.

As Render Network continues to advance technological innovation and ecosystem building, its potential in decentralized rendering, artificial intelligence, and digital rights management across multiple cutting-edge fields is gradually emerging. Render is not just a rendering service platform; it is a powerful engine driving innovation, connecting resources and demands, and promoting decentralization and digital transformation. With continuous technological advancements and growing market demand, Render Network is expected to become a key force in driving the new development of the digital economy.

Source: https://dune.com/lviswang/render-network-dollarrndr-mterics

Arweave

Arweave is an innovative decentralized data storage protocol designed to achieve permanent data storage. Through its unique permaweb, Arweave allows stored data to be accessed in a human-readable format (such as through web browsers), creating a persistent, immutable internet. This ability for permanent storage is revolutionary for ensuring the immutability and permanent accessibility of information, especially in applications requiring high data integrity and persistence, such as legal document storage, academic research archiving, and copyright protection.

Arweave incentivizes data storage providers in the network through its native token AR, ensuring the sustainability and scalability of the network's storage capacity. As an infrastructure and storage network project, Arweave aims to reshape the way data is stored and accessed. Originally named Archain, it was founded in 2017 and is headquartered in Germany. The founding team of Arweave includes co-founder and CEO Sam Williams, COO Sebastian Campos Groth, and legal officer Giti Said. They possess extensive experience in technology, operations, and law, making them key forces driving the development of the Arweave project.

Since the launch of its mainnet in June 2018, Arweave has attracted widespread attention and received support from several important investors, including well-known firms such as a16z Crypto, Coinbase Ventures, and Union Square Ventures. The public round in May 2018 raised $1.57 million. Subsequently, the project conducted two rounds of financing in November 2019 and March 2020, raising $5 million and $8.3 million, respectively, with investors including a16z Crypto, Multicoin Capital, Union Square Ventures, and Coinbase Ventures.

The AO solution launched by Arweave represents a significant innovation in blockchain technology, primarily reflected in its provision of a super-parallel computing architecture. This architecture allows any number of processes to run concurrently in a decentralized computing environment, greatly enhancing computing efficiency and scalability. The core features of AO include large-scale computing capabilities, the realization of verifiable computing, and highly parallel processing capabilities achieved through the construction of three different sub-networks (messenger units, scheduling units, computing units) based on Arweave.

Named AO (Actor Oriented), the inspiration comes from the Actor model in computer science, which is particularly suitable for designing and implementing highly concurrent, distributed, and fault-tolerant systems. Through AO, the Arweave team demonstrates its profound understanding and innovative solutions for the future development of decentralized computing environments.

Source: https://foresightnews.pro/article/detail/54511

AO is built on top of the Arweave base layer, utilizing Arweave's on-chain storage as its permanent host for running data, enhancing its decentralized computing capabilities and allowing any number of parallel processes to run simultaneously, achieving a collaborative approach similar to data centers and internet computers. Additionally, a key component of AO is AOS, a specific operating system based on the AO architecture that allows developers to use the Lua language to develop applications, further enhancing its usability and flexibility.

The launch of AO aligns with Arweave's long-term goal of supporting a highly scalable blockchain network through its data storage platform. Although the Arweave team has faced challenges in achieving this goal, their persistence and innovation have ultimately made AO possible. This not only enhances the functionality of the Arweave chain, enabling it to support more smart contracts and blockchain protocols but also provides a new and powerful solution for decentralized computing.

The working principle of Arweave AO breaks through the limitations of traditional blockchain technology by decomposing the three main components of blockchain into independent components that can communicate with each other and execute a large number of transactions simultaneously, achieving unprecedented horizontal scalability. This innovation not only opens new possibilities for Arweave's own development but also provides new perspectives and inspiration for the entire blockchain and decentralized technology field.

Ultimately, Arweave aims to make AO a stable system that requires only low-frequency updates, similar to Bitcoin, ensuring the continuity of core functions and user rights. This stability and transparency are crucial for users, as it allows them to have a deeper trust and understanding of the protocols they use. As Arweave AO continues to develop and improve, it has the potential to become an important participant in decentralized smart contract platforms, forming strong competition with existing blockchain technologies such as Ethereum.

Akash Network

The core value of Akash Network lies in its role as a decentralized computing platform that utilizes globally underutilized GPU resources, connecting these resources with users who need GPU computing power. This platform not only provides profit opportunities for GPU resource owners but also offers users a more cost-effective option for accessing these resources. According to data from September 2023, Akash Network has successfully deployed 150 to 200 GPUs on its network, achieving a utilization rate of 50% to 70%. This achievement translates to an annual total transaction value of $500,000 to $1 million, showcasing the market potential of the decentralized computing resource sharing model.

Further analysis of Akash Network's business model reveals a close analogy to Airbnb in the real estate market. Akash creates a marketplace where GPU resource owners can rent out their unused computing power like Airbnb hosts, while users in need of these resources can obtain the required computing power at a lower cost. This model not only increases the utilization of GPU resources but also lowers the barriers to entry into the fields of artificial intelligence and machine learning.

With the rapid development of artificial intelligence, the demand for high-performance computing resources such as GPUs has surged. Nvidia, as a leading GPU manufacturer, is expected to see its revenue grow significantly in the coming years, from $27 billion in 2022 to $60 billion in 2023, and is projected to reach approximately $100 billion by 2025. This growth forecast reflects the strong global demand for GPU computing power and provides a broad market space for Akash Network.

The decentralized model of Akash Network is particularly well-suited to the current market environment, where the demand for cloud computing services is increasing, while a large amount of GPU computing power remains underutilized globally. Through Akash, suppliers can offer idle GPU resources, while demanders can obtain the necessary computing power at a lower cost. This model not only optimizes resource allocation but also promotes the democratization of computing power, enabling more enterprises and individuals to participate in the research and development of artificial intelligence and high-performance computing.

The native token of Akash Network is AKT, which plays several important roles in the network. Firstly, AKT is used to pay for computing resource fees on the network, including but not limited to GPU computing, storage, and bandwidth. Secondly, AKT is also part of network governance, allowing holders to participate in network decision-making processes, such as protocol updates and improvement proposals, through token voting. Additionally, AKT serves as an incentive mechanism to encourage users to participate in network maintenance, including providing computing resources and validating transactions.

To encourage more users to provide unused computing resources, Akash has designed an incentive mechanism primarily realized through two methods: token rewards and transaction fees.

Token rewards: The Akash network rewards users who provide computing resources with newly issued tokens, which are distributed as incentives to resource providers, encouraging them to connect more resources to the Akash network. Additionally, network validators and users participating in network governance can also receive AKT token rewards to incentivize their involvement in the network's security and governance.
Transaction fees: The Akash network charges fees for transactions using its services, which are paid in AKT tokens. According to Akash's policy, a portion of the transaction fees is allocated to nodes providing computing resources as direct economic incentives for their services.

Akash charges a 4% fee on transactions paid in AKT, while transactions paid in USDC (a stablecoin) incur a higher fee of 20%. This differentiated fee structure aims to promote the circulation and use of AKT tokens while also providing funding support for the maintenance and development of the network.

Akash Network has also established a community pool that collects a portion of the network's revenue, including tokens generated from inflation and transaction fees. The funds in the community pool are used to finance projects and proposals for network development, such as technological improvements and marketing activities, with funding allocation decided by community voting.

Through this complex yet effective token model and incentive mechanism, Akash Network not only ensures the active and healthy development of the network but also provides users with opportunities to participate in the network and benefit from it. These incentives help attract more resource providers and users to join the Akash ecosystem, promoting the long-term success and sustained growth of the decentralized computing platform.

However, despite the broad market prospects of Akash Network, the challenges it faces cannot be ignored. In addition to needing to compete with traditional cloud service providers, Akash must continuously optimize its technical platform to ensure efficient and secure services. Furthermore, building and maintaining a decentralized marketplace requires ongoing efforts to attract new resource providers and users while maintaining a high level of market activity.

Source: https://www.modularcapital.xyz/writing/akash

Bittensor

Bittensor was founded in 2019 by AI researchers Ala Shaabana and Jacob Steeves, initially conceived as a parachain on Polkadot. In March 2023, the project strategically shifted to develop its own blockchain, aiming to incentivize global machine learning nodes through cryptocurrency to promote the decentralization of AI development. Bittensor introduces a new paradigm by allowing these nodes to collaborate in training and learning, enhancing the collective intelligence of the network through integrated incremental resources, expanding the contributions of individual researchers and models to the whole.

Bittensor introduces several innovative concepts and mechanisms, such as distributed expert models (MoE) and proof of intelligence, aimed at promoting the development of a decentralized AI ecosystem by rewarding useful machine learning models and results. Its tokenomics design and ecosystem structure are intended to support and reward network participants, promoting fair distribution practices and network participation through the TAO token.

The architectural design of Bittensor reflects its pursuit of establishing a robust AI ecosystem. Through a layered structure of miners, validators, enterprises, and consumers, Bittensor aims to create a network that fully supports AI innovation. In this structure, the miner layer drives innovation with AI models, the validator layer maintains the security and integrity of the network, while the enterprise and consumer layers ensure that technological achievements can be transformed into practical applications to meet market and societal needs.

The core participants in the Bittensor network include miners and validators. Miners submit pre-trained models in exchange for rewards, while validators are responsible for confirming the validity of model outputs. Bittensor creates a positive feedback loop through incentive mechanisms, encouraging competition among miners and promoting the refinement and performance enhancement of models.

Although Bittensor itself does not directly participate in model training, its network provides a platform that allows miners to upload and fine-tune their models. This approach enables Bittensor to integrate various models and process different tasks through specific sub-networks, such as text generation and image generation.

Source: https://futureproofmarketer.com/blog/what-is-bittensor-tao

The sub-network model adopted by Bittensor is a significant feature of its architecture, focusing on executing specific tasks. Through this approach, Bittensor aims to achieve model composability and decentralized intelligence, although this goal still faces challenges under current technological and theoretical limitations.

Bittensor's token economic model is heavily influenced by Bitcoin, adopting a similar token issuance mechanism and incentive structure. The TAO token is not only part of the network rewards but also a key to accessing Bittensor's network services. The project's long-term goal is to democratize artificial intelligence technology, promoting the iteration and learning of models within intelligent networks through decentralization.

Compared to traditional centralized AI models, Bittensor's greatest advantage lies in promoting the openness and sharing of AI technology, allowing AI models and algorithms to be iterated and optimized within a broader community, accelerating technological progress. Additionally, through its decentralized network structure, Bittensor is expected to reduce the application costs of AI technology, enabling more individuals and small enterprises to participate in AI innovation.

io.net

io.net is an innovative decentralized GPU network aimed at solving the challenges of accessing computing resources in the machine learning (ML) field. This project creates a vast pool of computing power by integrating GPU resources from independent data centers, cryptocurrency miners, and participants in projects like Filecoin and Render. The idea was conceived by founder Ahmad Shadid while building a GPU computing network for the machine learning quantitative trading company Dark Tick in 2020, facing high costs and resource acquisition challenges. Subsequently, this project gained broader attention and recognition at the Austin Solana Hacker House.

The main challenges faced by io.net include limited availability of computing resources, lack of choices, and high costs. By aggregating underutilized GPU resources, io.net provides a distributed solution that enables machine learning teams to build and scale their model service workflows on a decentralized network. In this process, it utilizes advanced distributed computing libraries, such as RAY, to support data and model parallel processing, optimizing task scheduling and hyperparameter tuning.

In terms of products, io.net offers a range of tools and services, including IO Cloud, IO Worker, and IO Explorer. IO Cloud aims to deploy and manage decentralized GPU clusters, achieving seamless integration with IO-SDK, providing a comprehensive solution for scaling AI and Python applications. IO Worker provides a comprehensive user interface that allows users to effectively manage their computing resource supply operations, including account management, real-time data display, and temperature and power consumption tracking. IO Explorer offers comprehensive visualization of network activity and important statistics, helping users better monitor and understand the network status.

To incentivize participation and balance supply and demand, io.net introduces the IO token, which serves functions such as rewarding AI and ML deployment teams for continued usage, pricing IO Worker computing units, and participating in community governance. Additionally, considering the price volatility of cryptocurrencies, io.net has developed a stablecoin pegged to the US dollar, IOSD, to stabilize the payment system and incentive mechanisms.

Source: https://io.net/

io.net demonstrates strong innovation capabilities and market potential in both technology and business models. Through collaboration with Filecoin, it is expected to further expand its capabilities in model storage and computing resources, providing robust support for the development and expansion of decentralized AI applications. At the same time, by offering a cost-efficient, easy-to-access, and user-friendly platform, io.net aims to become a strong competitor to traditional cloud service providers like AWS, driving innovation and progress across the entire AI field.

In terms of capital, io.net has successfully completed a Series A financing round, raising $30 million with a valuation of $1 billion. This round of financing attracted participation from several well-known investment institutions, including Hack VC, Multicoin Capital, Delphi Digital, Animoca Brands, Solana Ventures, Aptos, OKX Ventures, and Amber Group. This series of investments reflects the market's high recognition of io.net's innovative capabilities and market potential in the fields of decentralized computing and artificial intelligence.

Conclusion

With the continuous advancement of AI and blockchain technologies, the AI x Crypto field showcases tremendous potential and opportunities while also facing a series of challenges. A deep analysis of the three core scenarios of "computing power assetization," "model/Agent assetization," and "data assetization" reveals the innovative paths and existing obstacles in this field. Decentralized computing power opens up new possibilities for AI training and reasoning, although it needs to address the reliance on high-performance computing resources and communication bandwidth. The assetization of models and Agents provides proof of ownership through NFTs, enhancing interactive experiences, but the technological integration still needs to deepen. Data assetization unlocks the potential of private data, facing challenges of data standardization and market liquidity, yet it also opens new pathways for AI efficiency and specialization.

It is noteworthy that as AI technology continues to develop and iterate, it will periodically attract hotspots and capital inflows into the AI x Crypto field, bringing continuous waves of development for AI rather than a single phase of opportunity. The enduring value and innovative potential of the AI x Crypto field mark it as a key track in the technology and investment landscape.

Looking ahead, the development of AI x Crypto will rely on technological innovation, interdisciplinary collaboration, and exploration of market demands. By breaking through technological limitations, deepening the integration of AI and blockchain, and developing practical application scenarios, this field is moving towards long-term development, providing safer, more transparent, and fairer AI services. In this process, the principles and technological practices of decentralization will continue to drive the AI x Crypto field towards a more open, efficient, and innovative direction, ultimately achieving a dual leap in technological innovation and value creation. Therefore, the AI x Crypto track in the current cycle is an important opportunity that should not be missed, representing not only the forefront of technological innovation but also a significant trend in future technological advancement and investment direction.

References

MT Capital

MT Capital is a global investment institution managed by a team of seasoned investors, focusing on investing in innovative Web3 projects worldwide, with a presence in the United States, Hong Kong, Dubai, and Singapore. Our main investment areas include: 1) Mass adoption: decentralized social platforms, games, applications, and DePIN, which are key to driving the widespread dissemination of Web3 technology to a broad user base; 2) Crypto-native infrastructure: we focus on investing in public chains, protocols, and other infrastructures that support and strengthen the ecosystem, as well as native DeFi solutions. Additionally, our team has years of expertise in secondary trading.

Official website: https://mt.capital/

Twitter: https://twitter.com/mtcap_crypto

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AI and Web3 Dynamic Research

What new narratives will emerge when Web3 meets AI?

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Momentum Capital Momentum Capital is an emerging crypto fund focused on the Web3 space, dedicated to investing in promising blockchain and cryptocurrency projects worldwide.

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