Author: Xiyou, ChainCatcher.
Editor: Nianqing, ChainCatcher.
In 2024, the 'Crypto+AI' (encrypted AI) field achieved unprecedented breakthrough growth. At the beginning of the year, this field was still composed of only a few projects, but now it has become an independent track in the encrypted market that cannot be ignored.
According to the latest organized data from ChainCatcher, as of December 7, the total market capitalization of the encrypted AI sector had surpassed $70 billion, reaching a maximum share of 2% in the entire crypto market, with an annual growth rate of 400%.
Meanwhile, the number of encrypted AI projects has also exploded, now exceeding 600, covering various categories of products, including decentralized AI infrastructure and AI Dapps.
Looking back at 2024, the narrative of encrypted AI has undergone several significant changes. At the beginning of the year, the Sora project launched by OpenAI ignited speculation in the encrypted AI infrastructure. Later, the holding of NVIDIA's annual AI conference pushed decentralized GPUs into the market spotlight, and investors began to pursue AI decentralized infrastructure. By mid-year, the encrypted AI track welcomed a wave of investment enthusiasm, as encrypted VC firms announced their active engagement, with many crypto projects receiving funding support, accelerating the development and application of technology. By the end of the year, the explosion of AI Agent memes further pushed the narrative of encrypted AI to a new climax.
The total market capitalization of encrypted AI assets has surpassed $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 encrypted artificial intelligence (Crypto*AI) sector has reached 355, with its total market capitalization surpassing $70 billion on December 7, peaking at $70.42 billion. Currently, due to the overall trend of the current crypto market correction, as of December 23, the total market capitalization of the encrypted AI sector has fallen to $47 billion, with a 24-hour trading volume still reaching $5 billion.
Looking back at the beginning of the year, the total market capitalization of the encrypted AI sector was only $17 billion. In less than a year, the total market capitalization of this sector has achieved an increase of over 400%, once again showcasing the vigorous development and huge potential of the encrypted AI field.
Daniel Cheung, co-founder of Syncracy Capital, expressed on December 12 that although the current encrypted AI sector accounts for only about 1% of the total market capitalization of the crypto market, with the continuous evolution of market cycles and the strong momentum of AI infrastructure and AI Agents, he predicts that the market capitalization of this sector is expected to achieve a tenfold increase.
It is worth mentioning that although the current overall crypto market has receded, as of December 23, the total market capitalization of the entire crypto market reached $3.4 trillion, while the market capitalization of encrypted AI assets still accounted for nearly 1.4% of the overall market (which exceeded 2% at peak), further proving its growth potential in the future.
The year 2024 is undoubtedly a key turning point for the encrypted AI field as it transitions from emerging to explosive growth. At the beginning of the year, the encrypted AI track was still in its infancy, with only a handful of projects, mainly represented by decentralized GPU projects like Render (RNDR), AI infrastructure like Fetch.ai (FET), and WorldCoin. However, in less than a year, the encrypted AI field has developed multiple sub-tracks, covering decentralized GPUs, AI data platforms, AI infrastructure, and AI Agents, with hundreds of projects.
According to data from the encrypted data platform Rootdata, the number of encrypted projects containing AI entries has exceeded 600, and this number continues to rise.
2024 Encrypted AI Catalysts: External forces like OpenAI narratives, strong VC layout, and the explosion of AI Agent memes.
From the data trends of the total market capitalization of encrypted 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 growth wave.
During the period from February to March, the growth of the encrypted AI field was mainly driven by two landmark events in the AI field.
In February, OpenAI shocked the world with the release of the 'text-to-video' large model Sora, a breakthrough that sparked a disruptive transformation in the AI field. At the same time, this event greatly boosted the price of Worldcoin's token WLD, a project led by OpenAI founder Sam Altman, thus driving strong growth in the entire encrypted AI asset sector. During this period, quality projects such as the AI model incentive platform Bittensor (TAO) and the AI data platform Arkham's ARKM began to receive widespread market attention. The rise of these projects further ignited investment enthusiasm in the encrypted AI market, attracting a large number of investors to this promising emerging field.
Following that, the grand opening of NVIDIA's annual AI conference GTC in March attracted widespread global attention again, driving its market value to soar and igniting a speculative frenzy for GPU chips. At the conference, leaders in the crypto 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 encrypted AI field. This series of events led to the emergence of decentralized GPU and other conceptual projects, among which the once-popular decentralized io.net was established at this time.
Since then, encrypted AI has officially developed into an independent track, with projects like AI infrastructure, decentralized GPUs, and decentralized AI data emerging like mushrooms after rain, bringing more choices and opportunities to the market.
In October, the growth in the encrypted AI field was mainly attributed to the explosive rise of AI Agent memes. The emergence of the AI Agent project Truth Terminal's token GOAT sparked a wave of speculative issuance for AI Agent meme projects, leading to the mass issuance of nearly a hundred AI Agent meme tokens. This trend enabled AI Agents to rapidly rise and grow into an independent niche within the encrypted AI field, with products covering AI Agent meme tokens, AI Agent issuance platforms (IAO), and AI Agent underlying infrastructure. Specific projects can be reviewed in the ChainCatcher report published in November (Systematic Review of AI Agent Track: AI Meme, Issuance Platform, and Infrastructure). According to Coingecko data, 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 encrypted AI track projects ($47 billion), and the speculative enthusiasm is still ongoing.
If the text-to-video tool Sora introduced by OpenAI, the rise in NVIDIA's market value, and the hosting of AI summits constitute strong external driving forces for the development of the encrypted AI field, then the explosive growth of AI Agent memes is undoubtedly an internal spark that has accelerated the rise of this field. Under the combined effect of both internal and external catalysts, the encrypted AI track has rapidly become a key area in the crypto world that cannot be ignored, with its importance becoming increasingly significant.
In addition, in 2024, the encrypted AI market welcomed an unprecedented wave of investment, with major investment institutions rushing in and investment amounts soaring sharply. In this field, leading venture capital firms in the crypto industry, such as Grayscale, Delphi Venture, Coinbase Ventures, Binance Labs, and a16z, have actively laid out 'Crypto+AI' projects.
Among them, Delphi Ventures expressed high hopes for the combination of Crypto and AI early in the year and invested in several related projects like io.net, OG Labs, and Mythos Ventures. a16z raised a new $6 billion fund focused on investing in the AI field, selecting five encrypted AI projects in its autumn crypto startup accelerator. Entering the second half of the year, institutions such as Pantera Capital, Grayscale, Binance Labs, and Coinbase Ventures have also announced their entry into the encrypted AI field, establishing dedicated funds or increasing investment efforts. According to a report released by Messari, in the third quarter of 2024, crypto venture capital firms injected more than $213 million into AI projects, with a quarter-on-quarter growth of 250% and a year-on-year increase of 340%.
The market prospects for 'Crypto for AI' are greater than 'AI for Crypto'.
Currently, the encrypted 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, mainly focusing on applying AI technology to encrypted products to enhance user experience or strengthen various product performances by incorporating AI elements. For example, using AI for code optimization and security auditing: AI technology can automatically detect and analyze the code of Web3 projects to identify potential security vulnerabilities and errors, improving project security and stability; participating in on-chain yield strategies: utilizing AI algorithms to analyze market trends and user behaviors to formulate more efficient on-chain yield strategies, helping crypto users achieve higher returns; integrating AI chatbots to answer user inquiries and enhance user experience; leveraging AI Agents to eliminate obstacles in on-chain user experiences, such as automated trading and asset management, enabling users to participate more easily in the crypto market.
'Crypto for AI', on the other hand, focuses on empowering the AI industry with encryption technology, using the unique advantages of blockchain technology to solve or improve certain aspects of the AI industry. For example, the privacy and transparency of blockchain technology can address privacy and security issues in the data collection, processing, and storage processes of AI models; through the assetization of models, communities can own or use AI models in a decentralized manner; through blockchain's token technology, idle computing resources can be aggregated to form a computing power market, reducing the cost of training AI models and improving the utilization efficiency of computing resources.
In summary, the essence of Web3 technology lies in its decentralized blockchain infrastructure, which, relying on the operation of the token economic system, autonomous execution of smart contracts, and the powerful capabilities of distributed technology, 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, providing effective solutions to the common problems of data opacity and vague business models in the AI industry. This aligns well with the macro concept that 'AI aims to enhance production efficiency, while Web3 focuses on optimizing production relationships'.
Therefore, industry insiders generally agree that 'Crypto for AI' shows broader prospects and potential in market applications compared to 'AI for Crypto'. This trend has also prompted more individuals within the AI industry to actively seek to leverage encryption technology to tackle various challenges and problems faced by the AI industry.
Building an encrypted 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 subdivide them into products that cover infrastructure and applications related to data, computing power, and algorithm models. Among them, 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 required to execute these algorithms, and these three elements are also essential for the continuous updating and iteration of models.
The specific product forms within the encrypted AI product ecosystem include the following aspects:
At the data level, encrypted AI data projects cover data collection, storage, and processing. Firstly, in terms of data acquisition, to ensure the richness and diversity of data, some encrypted AI projects leverage a token economy mechanism to incentivize users to share their personal or proprietary data. For instance, the Grass project encourages data providers through a reward mechanism, Sahara AI capitalizes AI data assets and launched a dedicated data marketplace, and Vana provides specialized or customized datasets for AI applications through a data pool; in terms of data processing, decentralized data labeling platforms contribute high-quality training datasets for developers, thereby improving the reinforcement learning and fine-tuning mechanisms of AI models. Projects like Fraction AI (which completed a $6 million financing on December 18), Alaya AI, and Public AI provide developers with high-quality training datasets, optimizing the reinforcement learning and fine-tuning processes of AI models. As for data storage, solutions like Filecoin and Arweave ensure data security and permanence.
In terms of computing power, the training and inference execution of AI models cannot be supported without powerful GPU computing resources. As the complexity of AI models continues to increase, the demand for GPU computing resources is also on the rise. In light of challenges such as high demand for quality GPU resources, rising costs, and longer 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 perform AI tasks and receive rewards through tokens. Representative projects include Akash, Render, Gensyn, io.net, and Hyperbolic. Additionally, projects like Exabits and GAIB have tokenized physical GPUs, transforming them into financial digital assets on-chain, further promoting the decentralization and liquidity of computing power.
At the algorithm model level, the decentralized AI algorithm networks currently on the market essentially serve as a decentralized AI algorithm service market, connecting 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 produce high-quality content for users; while Pond selects the best decentralized models through competition points and incentivizes each model contributor by tokenizing AI models, thus promoting innovation and optimization of AI algorithms.
From this perspective, the current encrypted market has constructed a thriving encrypted AI ecosystem around the three pillars of 'data, computing power, and algorithms'.
What are the favorable conditions for the encrypted AI track in 2025?
However, since the rise of the AI Agent meme market in October, products related to AI Agents have become the new favorites in the encrypted AI market. Projects like Talus Network, which announced a $60 million financing completion in November, have officially created frameworks and infrastructures specifically for AI Agents.
Additionally, the AI Agent meme trend not only ignited a new speculative hotspot in the encrypted AI track but also shifted market attention from the original infrastructure areas of decentralized data and GPUs to a fervent pursuit of AI Agent applications. For instance, ai16z's market value has surpassed $1 billion, and this trend continues to heat up.
In recent trend outlook reports for the crypto industry in 2025 released by several institutions, companies like a16z, VanEck, Bitwise, Hashed, Blockworks, Messari, and Framework have expressed optimism about the development of the crypto and AI markets, specifically noting that AI Agent-related products will experience explosive growth in 2025.
At the same time, the heat in the external AI field continues to rise. On December 23, Elon Musk's AI company xAI announced it had completed another $6 billion in financing, directly boosting its valuation to $40 billion, further driving the prosperity of the AI market.
At the narrative level, OpenAI is undergoing a transition from GPT to a general artificial intelligence agent AI Agent. It is reported that OpenAI plans to launch a new AI Agent product 'Operator' in January 2025, which can automatically execute complex operations such as coding, travel booking, and e-commerce shopping. It is expected that it will ignite the AI market again, just like Sora did at the beginning of 2024. Additionally, NVIDIA's annual AI summit will also be held in March 2025, remaining a focal point of attention for the encrypted and AI industries.
Each upgrade of large models from Web2 companies like NVIDIA and OpenAI ignites hotspots in the AI track, attracting new funds and further igniting the encrypted AI track.
At the policy level, the newly elected President of the United States, Donald Trump, has announced the appointment of former PayPal executive David O. Sacks as the head of artificial intelligence and cryptocurrency affairs at the White House, responsible for guiding the government in formulating policies in the fields of artificial intelligence and cryptocurrency. This individual has dual investment experience in the crypto and AI industries, having previously invested in several crypto companies and AI companies such as Multicoin, and is naturally believed to formulate policies that will promote the integration of crypto and AI.
