Article reprinted from: ChainCatcher
Author: Xiyou, ChainCatcher
Editor: Nianqing, ChainCatcher
In 2024, the 'Crypto + AI' (cryptocurrency AI) sector achieved unprecedented breakthrough growth. At the beginning of the year, this sector was composed of only a few projects, but now it has become an independent track that cannot be ignored in the cryptocurrency market.
According to the latest data compiled by ChainCatcher, as of December 7, the total market capitalization of the cryptocurrency AI sector has surpassed $70 billion, reaching a maximum share of 2% in the entire cryptocurrency market, with an annual growth rate of 400%.
Meanwhile, the number of cryptocurrency AI projects has also seen explosive growth, currently exceeding 600, covering various categories of products including decentralized AI infrastructure and AI Dapps.
Looking back at 2024, the narrative of cryptocurrency AI has undergone several significant changes. At the beginning of the year, the Sora project launched by OpenAI sparked a speculative frenzy for cryptocurrency AI infrastructure. Subsequently, the holding of NVIDIA's annual AI conference further brought decentralized GPUs to the forefront of market attention, prompting investors to chase after AI decentralized infrastructure. By mid-year, the cryptocurrency AI track welcomed an investment boom, with cryptocurrency VC institutions announcing their active layouts, many projects receiving funding support, and accelerating the research and application of technologies. By the end of the year, the explosive rise of AI Agent Memes pushed the narrative of cryptocurrency AI to a new climax.
The total market capitalization of cryptocurrency AI assets broke through $70 billion this year, with the number of related projects exceeding 600.
According to the latest data from CoinMarketCap, the number of tokens in the cryptocurrency artificial intelligence (Crypto*AI) sector has reached 355, with its total market capitalization surpassing $70 billion as of December 7, peaking at $70.42 billion. Currently, affected by the overall decline trend in the cryptocurrency market, as of December 23, the total market capitalization of the cryptocurrency AI sector has fallen back to $47 billion, with a 24-hour trading volume still reaching $5 billion.
Looking back to the beginning of the year, the total market capitalization of the cryptocurrency AI sector was only $17 billion. In less than a year, this sector's total market capitalization has increased by over 400%, once again showcasing the vigorous development and immense potential of the cryptocurrency AI field.
Daniel Cheung, co-founder of Syncracy Capital, expressed on December 12 that although the current cryptocurrency AI sector only accounts for about 1% of the total market capitalization of the cryptocurrency market, with the ongoing evolution of market cycles and the strong momentum of AI infrastructure and AI Agents, he predicts that the sector's market capitalization is expected to achieve a tenfold increase.
It is worth mentioning that, despite the overall decline in the cryptocurrency market, the total market capitalization of the entire cryptocurrency market reached $3.4 trillion on December 23, with the market capitalization of cryptocurrency AI assets still accounting for nearly 1.4% of the total market (over 2% during peak market capitalization), further proving its future market growth potential.
The year 2024 can be regarded as a critical turning point for the cryptocurrency AI sector, transitioning from emerging prominence to full-scale explosion. At the beginning of the year, the cryptocurrency AI track was still in its infancy, with only a few projects, mainly represented by decentralized GPU projects like Render (RNDR), AI infrastructure Fetch.ai (FET), and WorldCoin. However, in less than a year, the cryptocurrency AI field has been subdivided into multiple segments, encompassing decentralized GPUs, AI data platforms, AI infrastructure, and AI Agents, with the number of projects reaching hundreds.
According to the cryptocurrency data platform Rootdata, the number of crypto projects containing AI keywords has exceeded 600, and this number continues to increase.
2024 cryptocurrency AI catalysts: OpenAI narratives and other external forces, VC's strong layout, and the explosion of AI Agent Memes.
From the data trend of the total market capitalization of cryptocurrency AI assets, the growth in 2024 shows two significant peaks: the first peak occurred between February and March, while the second occurred after October, ushering in a stronger wave of growth.
During the period from February to March, the growth in the cryptocurrency AI sector was primarily driven by the strong stimulation brought about by two iconic events in the AI field.
In February, OpenAI shocked the world with the release of the 'Text-to-Video' large model Sora, which sparked a revolutionary change in the AI field. At the same time, this event significantly boosted the price of the token WLD for the iris authentication cryptocurrency project Worldcoin, led by OpenAI founder Sam Altman, subsequently driving strong growth in the entire cryptocurrency AI asset sector. During this period, high-quality projects such as the AI model incentive platform Bittensor (TAO) and the AI data platform Arkham's ARKM began to attract widespread market attention, further igniting investor enthusiasm for this promising emerging field.
Immediately following, the grand opening of the annual NVIDIA AI conference GTC in March attracted widespread global attention and skyrocketed its market value, sparking a speculative frenzy for GPU chips. At the conference, leading figures in the cryptocurrency industry such as Illia Polosukhin, co-founder of Near, and Jules Urbach, founder of the distributed GPU rendering network Render Network, injected new vitality into the cryptocurrency AI sector. A series of events led to the emergence of decentralized GPU concepts, with projects like the once-popular decentralized io.net founded during this time.
Since then, cryptocurrency AI has officially developed into an independent track, with projects related to AI infrastructure, decentralized GPUs, and decentralized AI data emerging like mushrooms after rain, providing more choices and opportunities for the market.
In October, the growth in the cryptocurrency AI sector was primarily attributed to the explosive rise of AI Agent Memes. The emergence of the AI Agent project Truth Terminal's token GOAT triggered a speculative frenzy for AI Agent Meme projects, leading to the mass issuance of nearly a hundred AI Agent Meme coins. This trend has allowed AI Agents to quickly rise, becoming an independent sub-sector within the cryptocurrency AI field, with products covering AI Agent Meme coins, AI Agent issuance platforms (IAO), and AI Agent underlying infrastructure. Specific projects can be viewed in the ChainCatcher report released in November (Systematic Organization of AI Agent Track: AI Meme, Issuance Platforms, and Infrastructure). According to Coingecko, as of December 23, the total market capitalization of AI Agent track tokens has reached $9.8 billion, accounting for about 20% of the total market capitalization of the entire cryptocurrency AI sector (which is $47 billion), and the speculative heat is still ongoing.
If the release of OpenAI's text-to-video tool Sora, NVIDIA's market value rise, and the AI summit it hosted constitute robust external forces driving the development of the cryptocurrency AI sector, then the explosive growth of AI Agent Memes undoubtedly serves as a fire ignited internally in the cryptocurrency market, accelerating the rise of this field. Under the dual catalytic effect of internal and external forces, the cryptocurrency AI track has quickly become a key area in the cryptocurrency world that cannot be ignored, with its importance becoming increasingly significant.
Additionally, in 2024, the cryptocurrency AI market welcomed an unprecedented investment boom, with major investment institutions rushing in and investment amounts soaring. In this field, top venture capital firms in the cryptocurrency industry, such as Grayscale, Delphi Venture, Coinbase Ventures, Binance Labs, and a16z, have all actively laid out 'Crypto + AI' projects.
Among them, Delphi Ventures expressed strong optimism about the combination of Crypto and AI at the beginning of the year and invested in several related projects, such as io.net, OG Labs, and Mythos Ventures. a16z raised a new fund of $6 billion, focusing on investing in the AI field and selecting five cryptocurrency AI projects for its fall cryptocurrency startup accelerator. As the second half of the year approached, institutions like Pantera Capital, Grayscale, Binance Labs, and Coinbase Ventures also announced their entry into the cryptocurrency AI sector, establishing dedicated funds or increasing investment intensity. According to a report released by Messari, cryptocurrency venture capital institutions injected over $213 million into AI projects in the third quarter of 2024, a 250% increase from the previous quarter and a staggering 340% year-over-year increase.
'Crypto for AI' has a larger market outlook than 'AI for Crypto'
Currently, the cryptocurrency AI products in the market can mainly be divided into two major forms: 'AI for Crypto' and 'Crypto for AI'.
The former 'AI for Crypto' refers to empowering crypto with AI, primarily focusing on applying AI technology to cryptocurrency products, enhancing user experience or strengthening various product performances by integrating AI elements. For example, using AI for code optimization and security auditing: AI technology can automatically detect and analyze the code of Web3 projects, identifying potential security vulnerabilities and errors, thereby improving the security and stability of the projects; participating in on-chain yield strategies: using AI algorithms to analyze market trends and user behavior, developing more efficient on-chain yield strategies to help cryptocurrency users achieve higher returns; integrating AI chatbots to answer user questions and enhance user experience; leveraging AI Agents to eliminate barriers in the on-chain user experience, such as automated trading, asset management, etc., enabling users to participate in the cryptocurrency market more conveniently.
'Crypto for AI' focuses on utilizing cryptocurrency technology to empower the AI industry, leveraging the unique advantages of blockchain technology to address or improve certain aspects of the AI industry. For instance, the privacy and transparency of blockchain technology can resolve privacy and security issues in the data collection, processing, and storage processes of AI models; by using model assetization, communities can own or use AI models in a decentralized manner; and through blockchain token technology, scattered computing resources can be aggregated to form a computing power market, reducing the cost of AI model training and improving the efficiency of computing resource utilization.
In summary, the essence of Web3 technology lies in its decentralized blockchain infrastructure. It relies on the operation of a token economic system, the autonomous execution of smart contracts, and the powerful efficiency of distributed technology, which not only ensures the precise definition of data ownership but also greatly enhances the transparency and efficiency of business models through the incentive model of tokens. This characteristic serves as a remedy for the common issues in the AI industry, such as data opacity and vague business models, providing effective solutions. This aligns with the macro concept that 'AI aims to improve production efficiency, while Web3 focuses on optimizing production relationships'.
Therefore, industry insiders generally agree that 'Crypto for AI' shows broader prospects and potential compared to 'AI for Crypto' in terms of market application. This trend has also prompted more and more insiders from the AI industry to actively seek to tackle various challenges and problems faced by the AI industry using cryptocurrency technology.
Building a cryptocurrency AI ecosystem around the three elements of 'data, computing power, and algorithms'.
Based on the three core elements that drive the development of large AI models—'data, computing power, and algorithms'—we can further categorize them into data, computing power, and algorithm model products that encompass infrastructure and applications. Among these, data is the foundation for training and optimizing AI models; algorithms refer to the mathematical models and program logic that drive AI systems; computing power refers to the computational resources needed to execute these algorithms, and these three elements are also necessary conditions for the continuous updating and iteration of models.
The specific product forms within the cryptocurrency AI product ecosystem include the following aspects:
At the data level, cryptocurrency AI data projects encompass the collection, storage, and processing of data. Firstly, in terms of data acquisition, to ensure the richness and diversity of data, some cryptocurrency AI projects leverage token economic mechanisms to incentivize users to share their private or proprietary data, such as the Grass project, which encourages data providers through reward mechanisms; Sahara AI tokenizes AI data assets and launches a dedicated data market; Vana provides specialized or customized data sets for AI applications through a data pool, etc. In terms of data processing, decentralized data labeling platforms contribute high-quality training datasets to developers, thereby improving the reinforcement learning and fine-tuning mechanisms of AI models, such as Fraction AI (which completed a $6 million financing on December 18), Alaya AI, and Public AI, providing developers with high-quality training datasets that optimize the reinforcement learning and fine-tuning processes of AI models. As for data storage, solutions like Filecoin and Arweave ensure data security and durability.
At the computing power level, training and executing AI models cannot do without strong GPU computing resources support. As the complexity of AI models increases, the demand for GPU computing resources continues to rise. In the face of challenges such as insufficient supply of high-quality GPU resources in the market, rising costs, and extended waiting times, decentralized GPU computing networks have emerged. These networks create open markets and GPU aggregation platforms, allowing anyone (such as Bitcoin miners) to contribute their idle GPU computing power to execute AI tasks and earn rewards through tokens. Representative projects include Akash, Render, Gensyn, io.net, and Hyperbolic. In addition, projects like Exabits and GAIB have tokenized physical GPUs, turning them into on-chain financial digital assets, further promoting the decentralization and liquidity of computing power.
At the algorithm model level, the decentralized AI algorithm networks currently available on the market essentially represent a decentralized AI algorithm service market that connects numerous AI models with different expertise and knowledge. When users pose questions, this market can intelligently select the most suitable AI model to provide answers. Representative products include Bittensor, which aggregates various AI models through subnetworks to deliver high-quality content to users; while Pond selects the best decentralized models through competition scores and incentivizes each model contributor by tokenizing AI models, thereby promoting innovation and optimization of AI algorithms.
From this perspective, it can be seen that the current cryptocurrency market has built a thriving cryptocurrency AI ecosystem around the three pillars of 'data, computing power, and algorithms'.
What are the favorable factors for the cryptocurrency AI track in 2025?
However, since the rise of the AI Agent Meme market in October, AI Agent-related products have become the new favorites in the cryptocurrency AI market, with projects like Talus Network, which announced completing a $1.5 million financing round with $600,000, specifically built for AI Agents.
Additionally, the current wave of AI Agent Memes not only ignites a new speculative hotspot in the cryptocurrency AI track but also shifts the market's focus from the original infrastructure fields of decentralized data, GPUs, etc., gradually turning to enthusiastic support for AI Agent applications, such as ai16z's market value exceeding $1 billion, and this trend is still continuing to heat up.
In the recent trend outlook for the cryptocurrency industry in 2025 released by several institutions, a16z, VanEck, Bitwise, Hashed, Blockworks, Messari, and Framework have all expressed optimism about the development of the cryptocurrency and AI markets, and specifically pointed out that AI Agent-related products will experience explosive growth in 2025.
At the same time, the heat in the external AI field is also continuously rising. On December 23, Elon Musk's AI company xAI announced that it had completed another $6 billion in new financing, with its valuation skyrocketing to $40 billion, further promoting the prosperity of the AI market.
On the narrative level, OpenAI is undergoing a transformation from GPT to a general artificial intelligence agent, AI Agent. It is reported that OpenAI plans to launch a brand new AI Agent product called 'Operator' in January 2025, which will be capable of automatically executing complex operations such as coding, travel booking, and e-commerce shopping. It is expected to ignite the AI market again, similar to Sora in early 2024. Additionally, NVIDIA's annual AI summit will also take place in March 2025, remaining a focal point of interest for the cryptocurrency and AI industries.
Each time the large models of AI field Web2 companies like NVIDIA and OpenAI are upgraded, they ignite a hotspot in the AI track, attracting new funds and further igniting the cryptocurrency AI track.
At the policy level, the newly elected U.S. President Trump has announced the appointment of former PayPal executive David O. Sacks as the head of the White House's artificial intelligence and cryptocurrency affairs, responsible for guiding government policy in the fields of artificial intelligence and cryptocurrency. This individual has dual investment experience in both the crypto and AI industries, having previously invested in several crypto and AI companies, such as Multicoin, and is naturally believed to formulate policies that will promote the integration of cryptocurrency and AI.