Promote real use cases of DeAI, focusing on the underlying protocol KIP Protocol for decentralized AI, bringing millions of Web2 AI users into Web3

Author: flowie, ChainCatcher

The AI+Web3 track has become active again. In the past month, nearly 20 financing rounds have been disclosed in the AI+Web3 sector, with leading institutions like a16z and Binance Labs making consecutive investments. However, in a year where "high FDV" projects are rampant, the capital-favored AI+Web3 narrative has caused many crypto users to hesitate.

In fact, with exchanges like Binance taking action to "combat" high FDV projects, and other participants in the crypto market reflecting on the high FDV dilemma in recent months, some potential changes have occurred in the market. Reviewing the recently active AI+Web3 projects, some are already strictly controlling FDV and focusing on applications, breaking free from the vicious cycle of only discussing narratives and high valuations to sell tokens.

Recently, KIP Protocol, a decentralized AI infrastructure layer backed by Animoca Ventures and Tribe Capital, is one such example. KIP Protocol is the first underlying protocol to support decentralized Retrieval-Augmented Generation (dRAG) and is currently the leading project in the dRAG sector.

KIP Protocol aims to address the pain points faced by AI model creators, app developers, and data owners when attempting to decentralize, allowing knowledge and data to be protected and monetized as knowledge assets, ensuring they can interact with artificial intelligence without losing ownership.

KIP Protocol is currently accelerating the application of "DeAI+Education," "DeAI+Entertainment," and other fields, bringing millions of Web2 users into Web3 and promoting the large-scale adoption of "Web3+AI."

The World Has Long Suffered from "High FDV"

In the past year, the "high FDV, low circulation" model of tokens has been rampant. These tokens continue to unlock after their TGE, causing significant selling pressure from unlocked tokens in the market, leading to generally weak price performance.

A report released by Binance Research in May this year pointed out that the FDV of tokens launched in the first four months of 2024 is approaching the total number for 2023. Moreover, the market capitalization (MC) to FDV ratio of tokens launched in 2024 is the lowest, at about 12.3%. In contrast, the MC/FDV ratios for tokens in 2022 and 2023 were 41.2% and 26.7%, respectively.

Binance Research estimates that from 2024 to 2030, approximately $155 billion worth of tokens will be unlocked. This means that without such a large influx of funds, many tokens will face significant selling pressure, leaving little room for price increases.

According to data compiled by crypto KOL @Ryanqyz_hodl, most tokens listed on Binance in 2024 saw significant declines after their TGE.

(Data Source: @Ryanqyz_hodl)

This has led to many projects seeing a large number of retail investors become "victims" after their TGE, with some investors, including VCs, potentially facing the predicament of only having "paper wealth" due to the unlocking period. As a result, the "high FDV, low circulation" model has become a focal point of criticism among many community users, widely regarded as one of the culprits for turning this bull market into a false one.

As the controversy over the high FDV low circulation model grows, crypto exchange Binance has taken the lead in adjusting its listing strategy: on the evening of May 20, Binance announced a public recruitment plan for listing projects, stating that the high valuation and low circulation model would be detrimental to ordinary investors and loyal community members of projects. To cultivate a healthy industry ecosystem, Binance will prioritize support for small and medium-sized cryptocurrency projects. The founder of OKX also tweeted urging exchanges not to become accomplices of high FDV low circulation projects.

With leading exchanges stepping in to "regulate" and a collective reflection from other participants in the crypto space, pioneers like KIP Protocol that address the "high FDV" crypto dilemma have begun to emerge in the market.

Adhering to "Low FDV," KIP Community's Popularity Exceeds Expectations

Web3+AI is one of the most favored tracks by capital this year, and excessive involvement from investment institutions can easily lead to the emergence of overvalued projects.

According to data from CoinGecko, as of September 24, the FDV of the open-source AI project Bittensor has reached $11.5 billion, while the FDV of decentralized GPU infrastructure Aethir has also reached $2.6 billion.

Among the recently announced financing rounds for Web3+AI concept projects, Sahara AI and Vana raised $43 million and $25 million, respectively, which undoubtedly corresponds to extremely high valuations.

In contrast, KIP Protocol has been very restrained in its financing, with its valuation being relatively low among various Web3+AI concept projects.

Recently, KIP Protocol announced the completion of a $5 million private financing round co-led by Animoca Ventures and Tribe Capital. According to the token economic model disclosed in KIP Protocol's white paper, the Private Sale accounts for 10% of the total token issuance, estimating KIP Protocol's current valuation to be around $50 million.

Based on KIP Protocol's previous node sales model, it introduces lower-tier nodes at the start of the sale, providing early participants with a lower potential FDV. KIP allocates 20% of the total token supply for node rewards, with the valuation corresponding to Tier 1 nodes also at $50 million, far lower than the valuations of Tier 1 nodes for projects like Aethir, Sophon, and Carv.

As one of the current leaders in the dRAG sector, KIP's team background is impressive and supported by top investment institutions, and its ability to maintain a low valuation may exceed expectations.

According to public information, KIP co-founder and CEO Julian Peh is a serial entrepreneur and investor who has experienced multiple internet cycles, spanning Web1, Web2, and entering Web3 in 2016. Julian Peh's entry point into Web3 was also high: the consulting company he founded, which provided research and communication services, once served venture capital firms like Animoca Ventures.

Additionally, Dr. Jennifer Dodgson, who previously founded the well-known AI project Eigenform, is currently KIP's Chief AI Strategist, having provided AI consulting services to numerous large clients.

According to the official website, the KIP team also brings together talents from diverse backgrounds in AI, payments, data analysis, and investment, with most team members coming from leading companies in these fields.

KIP's technical solutions and application value have also received initial recognition. At the 2023 Chainlink Hackathon, KIP stood out from over 18,500 participating projects and won the Tencent Cloud Award.

The team's experience and strength in AI and data services have also led to high expectations from community users for KIP. In April of this year, KIP's Genesis NFT sale saw high participation, with 3,888 NFTs quickly minted out within four minutes of the public sale opening. The sales of KIP nodes also exceeded market expectations, with 400 nodes each for Tiers 1-3 being sold out in about two hours during the previous community node sale.

Given the team's solid industry background and previous operational achievements, KIP's ability to maintain a low valuation may also stem from its potential for future applications of its decentralized RAG protocol.

KIP does not need to offload tokens through a high valuation model but focuses more on the long-term value and large-scale application of its decentralized RAG protocol, providing users with real use cases to complete the business loop.

Breaking Free from the Vicious Cycle of Only Discussing Narratives Without Applications

The current bull market's reliance on the "high FDV, low circulation" model has created a false prosperity in the Web3 capital market, failing to generate real value. Crypto KOL Ryanqyz reflected on the X platform that all participants in the crypto industry have fallen into a vicious cycle of creating illusory stories, doing nothing substantial, and only wanting to sell tokens.

When the narrative-driven model in the crypto market no longer works, what should be the next step? Ryanqyz believes the market needs to enter a real application cycle, returning to a venture capital environment that favors projects with real revenue and real use cases, similar to the traditional Web2 field.

The KIP team, having experienced complete cycles through Web1, Web2, and with a successful entrepreneurial background, has deeply considered the applicability of technology and business models from the outset: KIP's decentralized RAG (Retrieval-Augmented Generation) technology is in high demand in fields requiring the latest and sensitive data sources, such as gaming, education, healthcare, and asset management.

KIP co-founder and CEO Julian Peh shared in Space how KIP helps the education sector address issues of intellectual property and revenue distribution. Julian Peh mentioned that the three core elements KIP focuses on are models, apps, and data.

For example, if there is a university textbook that has intellectual property (IP), KIP can place this textbook into a knowledge base, then process this knowledge through a model and provide an app to help students answer questions or generate exam papers from this textbook, forming a complete AI product.

At the same time, KIP can address the issues of these AI assets deployed on Web3 so that creators can retain their ownership. KIP will also connect various parties to generate interactions and answers, and resolve revenue distribution issues through smart contracts.

Deepening "DeAI + Education" and "DeAI + Entertainment," Supporting Large-Scale Adoption of "Web3 + AI"

Currently, KIP has started with the education and entertainment sectors to accelerate the application of its technology.

In the "DeAI + Education" field, in April of this year, KIP Protocol reached a cooperation agreement with Open Campus, a leading Web3 education project. Open Campus and its underlying education company have received investment support from Animoca Brands and Binance Labs, and Open Campus has also launched on Binance Launchpad.

Through this cooperation, KIP helps Open Campus integrate KIP's decentralized Retrieval-Augmented Generation infrastructure, enabling educators to provide their students with a 24/7 digital AI "twin" version that adapts in real-time to students' learning progress; at the same time, KIP helps educators create and control their AI assets ("KnowledgeKeys"), enjoying complete digital ownership and reasonable revenue.

In addition to business-level cooperation, KIP Protocol has also received funding and strategic support from Open Campus: in early August, KIP Protocol announced that its OCP-12 proposal was passed unanimously, granting it management rights over a $10 million fund established by Open Campus to continuously build the decentralized AI learning platform Open Campus U (OCU), aiming to transform the education industry through AI and Web3 technology, impacting 250 million students globally and covering 23,000 universities.

According to the approved proposal, KIP has set specific strategic goals for the next 18-24 months, including recruiting 400 professors, providing 900 selected courses, and attracting 1 million new learners to join Open Campus.

From the comprehensive cooperation between KIP and Open Campus, it is evident that they have a close relationship, and KIP Protocol is likely one of the most core AI crypto service providers for Open Campus.

In addition to the education sector, KIP has recently been expanding into the "DeAI + Entertainment" field: in July, KIP Protocol reached a strategic cooperation agreement with the well-known project Moemate, which focuses on "entertainment AI."

Moemate is an AI Agent platform with over 3 million users, building a mixed-reality AI Agent from chatbots to AR/VR, including personalized AI companions that can play games with users and an ecosystem of AI NPCs in games.

KIP will help Moemate gradually decentralize its architecture, such as supporting account abstraction, tokenization and trading of roles, skills, and models, community-driven AI asset investment and crowdfunding, as well as fiat and cryptocurrency payments.

By empowering Moemate, KIP will lead over 3 million Web2 AI users into the Web3 space.

In terms of ecosystem expansion, KIP also has its advantages. As a core AI project within the Animoca ecosystem, KIP is rapidly expanding its ecosystem by leveraging the network effects created by Animoca's hundreds of projects, with more application cases expected to land in the second half of the year.

Conclusion

The market generally believes that the arrival of the traffic era and the shift in Binance's listing aesthetics will present a huge opportunity for Web3 projects with healthy FDV and a focus on applications.

Among the many Web3+AI narrative projects, KIP, as one of the first representatives maintaining low FDV, is helping leading Web3 education platform Open Campus and top "entertainment AI" project Moemate seek decentralized AI solutions to address their dilemmas, promoting the large-scale application of "DeAI + Education" and "DeAI + Entertainment," bringing millions of Web2 AI users into Web3.

With the arrival of the interest rate cut cycle and the onset of a larger bull market, KIP is expected to unleash greater value and potential.