Original author: flowie, ChainCatcher
The AI+Web3 track has become active again. In the past month, the AI+Web3 track has disclosed nearly 20 financings, and leading institutions such as a16z and Binance Labs have made continuous moves. However, with the rampant "high FDV" projects this year, the AI+Web3 narrative favored by capital once discouraged many crypto users.
In fact, with exchanges such as Binance "cracking down" on high FDV projects, and other participants in the crypto market reflecting on the high FDV dilemma in recent months, the market has also undergone some potential changes. Looking at the recently active AI+Web3 projects, some projects are strictly controlling FDV and making efforts to apply them, getting rid of the vicious circle of only talking about narratives and selling coins at high valuations.
Recently, KIP Protocol, a decentralized AI base layer led by Animoca Ventures and Tribe Capital, is one of them. KIP Protocol is the first underlying protocol to support the decentralized retrieval-augmented generation network (dRAG), and is also the leading project in the current dRAG track.
KIP Protocol attempts to solve the pain points faced by AI model makers, App developers, and data owners when trying to decentralize through dRAG, so that knowledge and data can be protected and monetized as knowledge assets, ensuring that they interact with artificial intelligence without losing ownership.
KIP Protocol is currently accelerating the implementation of applications in fields such as "DeAI+Education" and "DeAI+Entertainment", bringing millions of Web2 users into Web3 and promoting the large-scale adoption of "Web3+AI".
The world has suffered from "high FDV" for a long time
In the past year, tokens with "high FDV, low circulation" have been rampant. These tokens will continue to unlock after TGE, causing a large amount of selling pressure on the market for unlocked tokens, and prices have also generally weakened.
Binance Research pointed out in a report released in May this year that the FDV of tokens launched in the first four months of 2024 is close to the total number in 2023. And the market value (MC) to FDV ratio of tokens launched in 2024 is the lowest, at about 12.3%. The MC/FDV ratios of tokens in 2022 and 2023 are 41.2% and 26.7%, respectively.
Binance Research estimates that approximately $155 billion worth of tokens will be unlocked from 2024 to 2030. That is to say, without such a large inflow of funds, many tokens will face huge selling pressure and there will be little room for growth.
According to the statistics of crypto KOL @Ryanqyz_hodl, most of the tokens listed on Binance in 2024 have all fallen sharply after the TGE.
This has also led to a large number of retail investors becoming "victims" after the TGE of many projects, and even some investors such as VCs may face the dilemma of only "paper wealth" due to the unlocking period. Therefore, the "high FDV, low circulation" model has also become the focus of criticism from a large number of community users, and is widely regarded as one of the culprits that caused this round of bull market to become a false bull market.
As the high FDV and low circulation model becomes more and more controversial, the crypto exchange Binance took 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 the project. In order to cultivate a healthy industry ecosystem, Binance will take the lead in supporting small and medium-sized cryptocurrency projects. The founder of OKX later tweeted that exchanges should not become accomplices of high FDV and low circulation projects.
With the "rectification" of the head exchanges and the collective reflection of other crypto participants, pioneers such as KIP Protocol that solve the "high FDV" crypto dilemma have begun to appear on the market.
Adhering to "low FDV", the popularity of KIP community exceeded expectations
Web3+AI is one of the most favored tracks by capital this year. Too many investment institutions and institutional funds are also likely to give rise to high-valuation projects.
According to CoinGecko data, as of September 24, the FDV of the open source AI project Bittensor has reached 11.5 billion US dollars, and the FDV of decentralized GPU infrastructure Aethir has also reached 2.6 billion US dollars.
Among the Web3+AI concept projects that have recently announced financing, Sahara AI and Vana have raised $43 million and $25 million respectively, which is bound to correspond to super high valuations.
In contrast, KIP Protocol is very restrained in financing, and its valuation is also at a relatively low level among a number of Web3+AI concept projects.
Recently, KIP Protocol announced the completion of a $5 million private equity financing led by Animoca Ventures and Tribe Capital. According to the token economic model published in the KIP Protocol white paper, Private Sale accounts for 10% of the total token issuance, which estimates that the current valuation of KIP Protocol is about $50 million.
According to KIP Protocol's previous node sales model, it provides lower potential FDV for early participants by introducing lower-level nodes at the beginning of the sale. KIP takes out 20% of the total tokens for node rewards, and the corresponding valuation of Tier 1 nodes is also 50 million US dollars, which is much lower than the corresponding valuation of Tier 1 nodes of projects such as Aethir, Sophon, and Carv.
As one of the leaders in the current dRAG track, KIP's team background is very impressive and is supported by top investment institutions. It may be beyond everyone's expectations that it can insist on low valuations in such a pattern.
According to public information, KIP co-founder and CEO Julian Peh is a serial entrepreneur and investor who has experienced multiple Internet cycles, spanning the Internet Web1, Web2 and entering We 3 in 2016. Julian Peh also had a high starting point in Web3: he founded a consulting company that provides research and communication services, and has provided services to venture capital firms such as Animoca Ventures.
In addition, Dr. Jennifer Dodgson, who founded the well-known AI project Eigenform, is currently the Chief AI Strategy Officer of KIP. She has provided consulting services in the field of AI to many large clients.
According to the official website, the KIP team also brings together talents from diverse backgrounds such as AI, payment, data analysis, and investment, and most of the team members come from the top companies in these fields.
KIP's technical solutions and application value have also been initially recognized. At the 2023 Chainlink Hackathon, KIP stood out from more than 18,500 participating projects and won the Tencent Cloud Award.
The team's own experience and strength in AI, data services and other fields also make community users have high expectations for KIP. In April this year, the Genesis NFT sold by KIP received a high level of participation, and 3,888 NFTs were quickly minted out within 4 minutes of the public sale. KIP node sales also exceeded market expectations. In the previous community node sales, 400 nodes for Tiers 1-3 were sold out in about 2 hours.
From the team's solid industry background and previous operating results, KIP's ability to maintain a low valuation may also stem from the potential for future applications of its decentralized RAG protocol.
KIP does not need to dump 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 closed loop.
Get rid of the vicious circle of only talking about narratives and not talking about applications
Behind this round of bull market relying on the "high FDV, low circulation" model is the Web3 capital market that has created a false prosperity without creating 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 unreal stories, not doing practical things, and only wanting to sell coins.
When the narrative-driven model of the crypto market no longer works, what should be the next step? Ryanqyz believes that the market needs to enter the real application cycle and return to a venture capital environment similar to the traditional Web2 field, which prefers projects with real income and real use cases.
As a team that has experienced the complete cycle of Web1 and Web2 and has successful entrepreneurship, the KIP team has in-depth thinking about the applicability of technology and business models since its inception: KIP's decentralized RAG (retrieval-augmented generation) technology is in high demand in areas that require the latest and sensitive data sources, such as games, education, healthcare, and asset management.
KIP co-founder and CEO Julian Peh once shared in Space how KIP can help the education sector solve the problems of intellectual property rights and profit distribution. Julian Peh mentioned that the three core elements that KIP focuses on are models, apps, and data.
Suppose there is a university textbook that has intellectual property rights (IP). KIP can put this textbook into a knowledge base, and then use a model to process this knowledge, and provide a built app to help students answer questions, or use this textbook to generate test papers, forming a complete AI product.
At the same time, KIP can solve the problems of these AI assets deployed on Web3 so that each creator can retain their ownership. KIP will also connect all parties to generate interactions and answers, and solve the problem of profit distribution among all parties through smart contracts.
Deeply cultivate "DeAI + Education" and "DeAI + Entertainment" to promote the large-scale adoption of "Web3 + AI"
KIP has started from the fields of education and entertainment to accelerate the application of its technology.
In the field of "DeAI + Education", in April this year, KIP Protocol reached a cooperation with Open Campus, a leading Web3 education project. Open Campus and the education company behind it have received investment support from Animoca Brands and Binance Labs, and Open Campus has also been launched on Binance Launchpad.
Through this collaboration, KIP helped Open Campus integrate KIP's decentralized Retrieval Augmented Generation infrastructure, enabling educators to provide students with their 24/7 digital AI "twin" version, adapting to students' learning progress in real time; at the same time, KIP helps educators create and control their AI assets ("KnowledgeKeys"), enjoying complete digital property rights and reasonable returns.
In addition to business-level cooperation, KIP Protocol also received funding and strategic support from Open Campus: In early August, KIP Protocol announced that its OCP-12 proposal was passed unanimously, and obtained the management rights of the $10 million fund established by Open Campus to continue building the decentralized AI learning platform Open Campus U (OCU), which aims to transform the education industry through AI and Web3 technologies, affecting 250 million students worldwide and covering 23,000 universities.
According to the approved proposal, KIP has set specific strategic goals in 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 all-round cooperation between KIP and Open Campus, it is not difficult to see their close relationship. KIP Protocol should be one of the most core AI encryption service providers of Open Campus.
In addition to the field of education, KIP has also recently expanded the field of "DeAI + Entertainment": In July, KIP Protocol reached a strategic cooperation with Moemate, a well-known "Entertainment AI" project.
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, and fiat and cryptocurrency payments.
By empowering Moemate, KIP will lead more than 3 million Web2 AI users into the Web3 field.
KIP also has its own advantages in ecological expansion. As a core AI project in the Animoca ecosystem, KIP is rapidly expanding its ecosystem with the help of the network effect of hundreds of Animoca projects, and more application cases are expected to be implemented in the second half of the year.
Conclusion
At present, the market generally believes that the advent of the traffic era and the change in the aesthetics of Binance listings will be huge opportunities for Web3 projects with healthy FDV and application focus.
Among the Web3+AI narrative projects, KIP, as one of the first representative projects to maintain low FDV, is using its decentralized RAG protocol to help Web 3 education leader Open Campus, "Entertainment AI" head project Moemate and other platforms seeking decentralized AI solutions to solve the dilemma, so as to promote the large-scale application of "DeAI + Education" and "DeAI + Entertainment", and bring millions of Web2 AI users into Web3.
With the advent of the interest rate cut cycle and the start of a larger bull market, KIP is expected to release greater value and potential.
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