As early as the end of 2023, "AI+" was one of the keywords in the predictions of the mainstream track of Web3 by major well-known investment and research institutions. Now, a year has passed, how is "AI+" doing?
Recently, a16z and VanEck have released their 2025 Web3 forecasts. These reports all point to the same topic: AI agent, the latest development direction of AI+. Among them, AI agent investment is the most representative, with outstanding performance in the second half of 2024. Ai16z and its backer DAOS.FUN, which reached a market value of 80 million US dollars in one day after its release, triggered a new trend of AI investment, "AI Crypto Fund".
This also piqued Lawyer Mankun's curiosity, as he has long advised crypto investors to participate through crypto funds. Can the emergence of AI crypto funds offer crypto investors a smarter investment path?
In this article, Lawyer Mankun explores the new investment trend of AI crypto funds.
What is an AI crypto fund?
AI crypto funds, as the name suggests, are a new investment decision-making method that replaces traditional human management with artificial intelligence (AI), capable of achieving full-process automated operations on-chain, from data analysis to decision execution, without human intervention. Unlike traditional crypto funds that rely on the experience and intuition of fund managers, AI crypto funds rely on algorithm models and on-chain data to realize efficient and precise investment strategies through real-time calculation and execution.
The realization of AI crypto funds is attributable to the high transparency and democratic nature of Web3:
First, blockchain, as an infrastructure, provides AI machine learning models with rich and real-time data, extracting patterns from on-chain transaction history, asset price fluctuations, and market sentiment. This data can help AI optimize investment strategies.
Secondly, the decentralized autonomous organization (DAO) structure provides an operating environment for AI crypto funds that does not require permission. The operation of AI crypto funds can achieve democratic governance and execution through smart contracts, further reducing subjectivity, operational risks, and centralization issues caused by human intervention.
It is precisely because of the characteristics of underlying infrastructure that compared to traditional crypto funds, the advantages of AI crypto funds are more pronounced:
· Data processing capability. AI can quickly analyze massive on-chain and off-chain data, accurately identify trends, and make decisions. This processing speed and data scale far exceed human limits.
· Market sentiment capture. By analyzing social media, news, and industry dynamics, AI can sense market change signals in advance, helping the fund make more accurate choices before trends occur.
· Autonomy and transparency. Relying on DAO and smart contracts, all operational records are on-chain, allowing AI to promote transparency in fund investment and management, increasing trust.
· Risk management capability. AI can not only monitor in real time but can also quickly adjust asset allocation based on market changes, giving AI crypto funds an advantage in facing market volatility.
As more capital participates in Web3, the demand for efficient, robust, and transparent solutions drives the birth of AI crypto funds. The concept is indeed good, but implementation is key. So, what are the representative projects in this field?
What AI crypto funds are there?
Currently, explorations in the field of AI crypto funds have already yielded significant results. In addition to DAOS.FUN mentioned at the beginning by Lawyer Mankun, there are several AI crypto funds that have already begun to experiment/run.
1.Ai16z and DAOS.FUN
As a phenomenal AI crypto fund, Ai16z attracted the attention of the entire industry upon its launch in the second half of 2024, successfully creating a wave in AI crypto investment. The decentralized autonomous organization (DAO) behind Ai16z—DAOS.FUN—serves as the core technology supporter of the fund, achieving governance transparency and decision automation through smart contracts. Ai16z relies on advanced AI algorithms and on-chain data analysis capabilities to truly implement full-process automation from strategy formulation to execution.
2.Yahctzee Fund
The Yahctzee Fund, supported by crypto figure Arthur Hayes, is another noteworthy autonomous AI-driven fund. It showcases excellent flexibility and adaptability in investment decisions through on-chain governance structures and high-performance AI algorithms. The goal of the Yahctzee Fund is not only to optimize returns but also to explore optimal paths for long-term asset allocation, aiming to create a more sustainable investment model.
3.Sekoia Virtuals
Sekoia Virtuals is an experimental AI fund initiated by Anand Iyer, managing partner of Canonical Ventures, focusing on supporting the Virtuals ecosystem. Although the current market influence of this project is not significant, its focus on small community investment management in Web3 not only makes its differential advantages obvious but also broadens the vertical fields and directions for the development of AI crypto funds.
4.Cod3x and BigTonyXBT
Cod3x is an organization focused on building next-generation AI agent infrastructure, with its flagship project BigTonyXBT being an autonomous trader based on the Base chain. BigTonyXBT focuses on the DeFi sector and gradually builds a complete ecosystem for AI crypto funds in financial investment through AI automated trading and asset management functions.
The projects mentioned above, from technical implementation to ecological layout, each have their focus, comprehensively promoting the model innovation of crypto funds. However, while AI crypto funds showcase their immense potential, whether they can achieve compliance in the gradually clarifying global regulatory environment is also a key issue—compliance determines whether they can truly inject sustainable growth momentum into the Web3 ecosystem.
Exploration of AI crypto fund compliance
The emergence of AI crypto funds undoubtedly brings innovation to the crypto investment field, but whether this emerging model is compliant remains an unresolved issue. This mainly stems from the specificity of AI crypto funds:
First is the issue of legal entities. Traditional funds must obtain approval from the judicial jurisdiction when established and must have a clear legal identity. However, most AI crypto funds seen currently often operate based on DAOs, which have not been explicitly recognized as legal entities in most countries. This means that if AI crypto funds involve asset custody, contract signing, or legal disputes, the existing legal framework may not provide effective support. In some jurisdictions, operating a fund without a license may be regarded as illegal fundraising, putting AI crypto funds at greater legal risk when operating cross-border.
Next is the issue of licenses and regulations. Existing financial market rules require fund managers to obtain relevant licenses and fulfill regulatory obligations, such as disclosing risks to investors and regularly reporting fund performance. However, AI crypto funds do not have a clear manager; the investment strategy and execution are completed by AI algorithms, making the definition of 'fund manager' itself a compliance challenge. Furthermore, this 'unlicensed operation' model may be seen as evading regulation, especially in regions like the United States and Europe where there are strict regulations on fund establishment and management, which will pose a significant obstacle to the compliance of AI crypto funds.
The third issue is governance transparency and algorithm compliance. Although the DAO structure provides technical support for on-chain transparent governance of AI crypto funds, this transparency is more focused on technology and community rather than regulatory agencies. Traditional funds are required to disclose their investment strategies and governance structures to regulatory agencies, but the algorithms of AI crypto funds are complex and not easily explained, raising doubts about whether regulators can accept such 'black box' operational methods. Particularly in regions like Europe, where there are clear requirements for algorithm transparency and interpretability, AI crypto funds may face greater compliance pressures.
Additionally, AI crypto funds typically serve the global market, but countries have differing regulatory attitudes towards crypto assets and AI technologies. For example, the U.S. Securities and Exchange Commission may view them as unregistered securities, while in China, all crypto-related activities are explicitly prohibited, which may cause AI crypto funds to infringe policy boundaries and unable to operate. This inconsistency in regional regulations poses more compliance challenges for AI crypto funds when expanding their business.
Moreover, whenever AI is discussed, data privacy and cross-border issues are always unavoidable core regulatory topics. Currently, multiple countries and regions around the world have begun to establish AI-related regulatory laws, such as the Chinese Ministry of Industry and Information Technology deciding to establish a standardization technical committee for artificial intelligence to revise industry standards; the European Union's AI Act is gradually advancing to classify AI applications by risk level and set strict transparency and data use requirements; the AI Bill of Rights released by the White House outlines fundamental principles on algorithm transparency, user privacy protection, and prevention of data abuse. The gradual establishment of these regulatory rules will also impose stricter requirements for the compliance of AI crypto funds.
Summary by Lawyer Mankun
The emergence of AI crypto funds brings a whole new realm of imagination to the crypto investment field. Lawyer Mankun believes that AI crypto funds are not only a technological innovation but also a challenge to traditional financial logic. However, whether it is the legal status of DAOs, the interpretability of AI algorithms, or the diversity of the global regulatory environment, compliance is always the key factor determining whether AI crypto funds can go mainstream.
Although there are still obvious gaps between the current traditional regulatory framework and new technologies, developers and investors should do the following: actively adapt to the existing legal framework while preparing for future regulatory rules amid uncertainty.
Lawyer Mankun believes that only by seeking innovation within compliance and creating value within the rules can AI crypto funds inject sustainable development momentum into the entire industry.