If you see startups mashing two of the hottest tech trends together \u2013 AI and crypto \u2013 you might be forgiven to think they\u2019re merely riding the buzzword wave. But is there something of actual substance at that intersection?<\/p>\n
Investors from CoinFund, Plaintext Capital and Archetype, who have all backed high-profile, AI-adjacent crypto projects, say yes.<\/p>\n
Investments in decentralized AI projects come on the heels of last month\u2019s captivating saga at OpenAI where the company\u2019s board fired CEO Sam Altman only for him to regain his post days later.<\/p>\n
To have Varun Mathur<\/a>, an entrepreneur working on a decentralized AI solution, tell it, the drama around OpenAI\u2019s leadership revealed a startling degree of power held by very few people. <\/p>\n \u201cIt turned out there were just two or three people who are making foundational decisions, which impact all of us as humans,\u201d he said, highling that OpenAI is a $100B company used by hundreds of millions.<\/p>\n There is a huge amount of money and influence at stake. OpenAI even created<\/a> a new kind of entity called a \u201ccapped profit\u201d company in 2019. This was in order to prevent itself from becoming too powerful in its mission to develop artificial general intelligence.<\/p>\n Altman has had so much confidence in OpenAI that he said<\/a> it was \u201chopeless\u201d to compete with the company\u2019s foundational AI models earlier this year.<\/p>\n It\u2019s too early to tell whether Altman is correct, but decentralized AI will certainly try to compete with its centralized counterpart. <\/p>\n One key potential advantage for decentralized AI lies in compute, said Jake Brukhman<\/a>, co-founder and CEO of CoinFund. Computational resources, or \u201ccompute,\u201d are used to train the models which underlie products like ChatGPT.<\/p>\n \u201cOne of the things that Web3 will do, and is currently doing, very fundamentally in this space is just democratize compute,\u201d he told The Defiant. \u201cEvery single item on the OpenAI roadmap is bottlenecked by compute.\u201d <\/p>\n Start for free<\/a><\/div>\n Coinfund led a seed round<\/a> of Gensyn, a protocol which rewards participants for providing compute in March 2022. The firm again invested in the project in an a16z-led round<\/a> in 2023.<\/p>\n Demand for compute has driven stock for companies like NVIDIA, which provides hardware and software critical to AI\u2019s development, to nearly triple this year and become the world\u2019s sixth<\/a> most valuable company.<\/p>\n \u201cNVIDIA decides who gets compute and the first people that get access to it are Microsoft and Google and OpenAI and so on,\u201d Brukhman said. \u201cIf you’re an individual researcher, you know, tough luck.\u201d<\/p>\n Currently, the compute required to develop a cutting edge model is extremely expensive \u2014 Altman said that GPT-4, the model behind ChatGPT\u2019s current pro version, cost<\/a> $100M to train.<\/p>\n That\u2019s a huge barrier for entry for researchers or entrepreneurs looking to develop models of their own, leading to concerns that a handful of well-capitalized entities will come to dominate the AI space.<\/p>\n These concerns have been voiced both within the crypto community, by the likes of Vitalik Buterin<\/a>, and outside of it, by people like the recently doxxed Twitter account Beff Jezos<\/a>, who founded the effective acceleration (e\/acc) movement.<\/p>\n Mathur, the prominent CEO and co-founder of a \u201cpeer-to-peer intelligence network,\u201d called Hyperspace, also believes blockchains can help decentralized AI.<\/p>\n \u201cThe AI industry is moving exceptionally fast and [is] exceptionally ambitious,\u201d he told The Defiant. \u201cWhat we’re trying to do at Hyperspace is to provide a fundamental decentralized alternative to OpenAI itself.\u201d<\/p>\n Mathur released a paper<\/a> outlining Hyperspace\u2019s design in late November. A point of emphasis of the design, which the CEO characterizes as \u201cBitTorrent-like,\u201d is that a world with lots of open-source models is a safer one than a world where the most influential models are proprietary.<\/p>\n Indeed, while some models, like the Meta-developed Llama 2 series, are open-source, the top nine models, according to a scoring method called Elo, are proprietary. GPT-4 is one of those leading models.<\/p>\n Traders are betting on the crypto-AI mashup, pushing demand for tokens to feverish highs. Market cap of AI-related tokens has surpassed $9 billion this year, according to CoinGecko<\/a>. <\/p>\n TAO, RNDR, and FET are the largest coins.<\/p>\n TAO, the token for Bittensor, a project which acts as an infrastructure layer to distribute any number of underlying AI models, has ripped to a market capitalization of $1.9B after its mainnet launched in March.<\/p>\n In one example of the complexity that is the crypto-AI space, Bittensor operates as more of a facilitator of AI solutions, rather than developing solutions itself.<\/p>\n \u201cBittensor is a hydra,\u201d Phil Bonello<\/a>, an investor at Plaintext Capital who previously was director of research at Grayscale, told The Defiant.<\/p>\n \u201c\u200b\u200bIf at any point GPT-4 starts to degrade in performance or censor any of the outputs that are coming out then that model will drop down in rank,\u201d he said. \u201cAnd the new model will come up and be king.\u201d<\/p>\n RNDR, a token offered by the graphical processing unit (GPU) marketplace Render, has also gained in price by a factor of nine year-to-date. RNDR now has a market capitalization of $1.36B as the project inked<\/a> its partnership with io.net last month. Io.net itself also partnered with Filecoin as it also looks to offer startups decentralized computing resources.<\/p>\n And FET, the token of the decentralized marketplace for AI agents called Fetch.ai, has had its own jump of 600% in the last year to reach a $500M-plus market capitalization.<\/p>\n That said, decentralized systems don’t necessarily have to have a token.<\/p>\n \u201cMy view is that 99% of decentralized AI [will] actually happen in a token-less environment for this BitTorrent-like system,\u201d Mathur said. \u201c1% happens with a token-based environment where some people say \u2018look, I want to provide a higher quality of service, because I want to earn these protocol rewards.\u201d<\/p>\n There\u2019s momentum in the private markets as well \u2014 Ritual, a decentralized computing project raised $25M from last month.<\/p>\n To be sure, wherever there\u2019s hype and jargon, naive investors are going to be tempted to throw money at projects they don\u2019t understand. Combining crypto and AI gives twice the buzzwords to bamboozle retail traders with, increasing the likelihood of some duds in the decentralized AI space.<\/p>\n Looking forward, Brukhman is eyeing other elements of the AI stack.<\/p>\n The CoinFund CEO was one of Worldcoin\u2019s<\/a> earliest investors in February based on what the firm sees<\/a> as the need for proof-of-personhood. Now Brukhman is looking around different areas of AI \u2014 he said he\u2019s looking at companies in the data sector and led a soon-to-be announced round in the space.<\/p>\n \u201cIf you have an AI assistant and you’re giving that assistant a lot of data, you want to own and permission the data,\u201d he said.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":" Tokens at the intersection of crypto and AI have ballooned to a market cap of $9.2 billion. If you see startups mashing two of the hottest tech trends together \u2013 AI and crypto \u2013 you might be forgiven to think they\u2019re merely riding the buzzword wave. But is there something of actual substance at that […]<\/p>\n","protected":false},"author":2,"featured_media":212900,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[274,273,272,244,266,271,268,270,269,267],"class_list":["post-212899","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-de-fi","tag-crypto-finance","tag-decentralized-finance","tag-liquidity","tag-metamask","tag-pancake","tag-slippage","tag-sushiswap","tag-tronlink","tag-trust-wallet","tag-uniswap"],"_links":{"self":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/212899","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/comments?post=212899"}],"version-history":[{"count":2,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/212899\/revisions"}],"predecessor-version":[{"id":212902,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/212899\/revisions\/212902"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media\/212900"}],"wp:attachment":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media?parent=212899"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/categories?post=212899"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/tags?post=212899"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Compute is Key<\/h2>\n
\n
NVIDIA’s Power<\/h2>\n
Proprietary Models<\/h2>\n
![\"the-defiant\"](\"https:\/\/thedefiant.io\/_next\/image?url=https%3A%2F%2Fcdn.sanity.io%2Fimages%2F6oftkxoa%2Fproduction%2Faa7684aa77e94dd097fa99a0302da56d78dfc03c-594x215.png&w=828&q=100\")
<\/figure>\n![\"the-defiant\"](\"https:\/\/thedefiant.io\/_next\/image?url=https%3A%2F%2Fcdn.sanity.io%2Fimages%2F6oftkxoa%2Fproduction%2Ffb155c8b941ee88818b850a6092ac8f81ec7b015-1258x509.png&w=828&q=100\")
Crypto-AI Tokens<\/h2>\n
![\"the-defiant\"](\"https:\/\/thedefiant.io\/_next\/image?url=https%3A%2F%2Fcdn.sanity.io%2Fimages%2F6oftkxoa%2Fproduction%2F6f6a6a289e7d5aa3f21a40ac9befef612aad98a8-806x566.png&w=828&q=100\")
![\"the-defiant\"](\"https:\/\/thedefiant.io\/_next\/image?url=https%3A%2F%2Fcdn.sanity.io%2Fimages%2F6oftkxoa%2Fproduction%2F51bb3cdb4a8ebafe3741709047b4983d4daf6423-830x714.png&w=828&q=100\")
![\"the-defiant\"](\"https:\/\/thedefiant.io\/_next\/image?url=https%3A%2F%2Fcdn.sanity.io%2Fimages%2F6oftkxoa%2Fproduction%2F40e4b686ddb4acb055dd59c920beb827c5d4a4e5-807x559.png&w=828&q=100\")
Token-less <\/h2>\n
Other Areas of the AI Stack<\/h2>\n