🌵 The Intersection of Crypto & AI 🌵

Big Brain Breakdown

Market Metrics

Total Crypto Market Cap: down 4.4% to $2.48T
Total AI Sector Market Cap: down 11% to $21.76B

Top Movers (24hrs):

📈 Thought (THT): up 10.7% to $0.05136
📈 Forta (FORTA): up 4.8% to $0.3145
📈 Aleph.im (ALEPH): up 2.5% to $0.2589

🧠 Big Brain Breakdown

Welcome back to another Big Brain Breakdown, where we help you understand the fundamentals of blockchain AI projects so you can stay ahead of the herd and invest in projects poised for outperformance.

In recent years, the rapid advancements in artificial intelligence (AI) and the growth of blockchain networks have given rise to a revolutionary new concept: Agentic Protocols.

These self-developing, AI-driven entities aim to generate cash flow without the need for human employees, leveraging the power of AI to automate and optimize various business functions. The concept of Agentic Protocols represents a significant opportunity for investors who believe in the disruptive potential of AI and crypto.

As described by goodalexander in his piece on Agentic Protocols are:

This innovative model challenges the traditional assumptions that traditional companies will be the beneficiaries of AI, reasoning that instead of benefitting from AI, they will be replaced by it altogether. This presents a compelling investment opportunity for those who believe in the disruptive potential of AI.

goodalexander points out that while Nvidia, a leading AI chip manufacturer, has surged in value, the ARK Innovation ETF (ARKK), which focuses on disruptive innovation (like AI), has massively underperformed. In fact, if you longed Nvidia in 2021 and simultaneously shorted ARKK, you would have generated 1,200% return. But, how could this be?

ARKK’s fund is positioned in companies that are supposed to be the “beneficiaries of AI”, when it appears that AI may not benefit these companies at all and, in fact, even replace them. The divergence in performance highlights that, while AI will be immensely powerful and disruptive, investing in existing companies that are not “AI-native” is likely not the way to profit from the revolution.

Agentic Protocols and Crypto

At the core of Agentic Protocols lies the idea of autonomy and self-improvement. These entities are designed to operate independently, making decisions based on predefined algorithms and learning from their own experiences. As they generate cash flow, a portion of the profits is reinvested into the protocol, allowing it to expand its capabilities, acquire new resources, and adapt to the changing landscape in which it operates.

Cryptocurrency networks provide the essential infrastructure and mechanisms that make Agentic Protocols possible. The decentralized nature of these networks allows for permissionless innovation, meaning that anyone can launch and participate in an Agentic Protocol without the need for centralized control or approval.

This permissionless innovation, combined with the censorship-resistant properties of decentralized networks, ensures that Agentic Protocols can operate without interference from external entities, preserving their autonomy and ability to innovate freely. Moreover, the open-source nature of blockchain technology allows Agentic Protocols to access and interact with everything on the blockchain, enabling them to complete any task autonomously and without restrictions that would normally be faced on the traditional internet.

Furthermore, the open and collaborative nature of the crypto ecosystem fosters innovation and knowledge sharing, allowing Agentic Protocols to benefit from the collective intelligence of the community. Projects like Autonolas, which is exploring on-chain AI agents, and Ora Protocol, which enables tokenization of AI models through Initial Model Offerings (IMOs), demonstrate the growing interest and development in this space.

Why We're Bullish on Agentic Protocols

1. AI-Native: While we don’t entirely agree that all companies in the innovation economy will lose out to AI, we do agree that the outsized returns will come from AI-native companies. We believe Agentic Protocols could be ‘the ultimate AI-native company’ given they are built on the blockchain, which has foundational advantages over traditional infrastructure.

2. Efficiency and Scalability: By eliminating the need for human employees, Agentic Protocols can operate with unparalleled efficiency and scalability. In today’s world, there is a focus on running a lean, efficient and profitable company. Gone are the days where businesses can get away with thousands of redundant employees and useless middle managers. AI is infinitely scalable (limited only by compute), so if AI can replace a job, it will.

3. Advantages of Blockchain: Agentic Protocols are built on a technical foundation that fundamentally provides significant benefits over the traditional web. Blockchain offers the ability for permissionless innovation and global accessibility while also being transparent and censorship resistant. These factors enable Agentic Protocols to operate in ways that traditional businesses (or even centralized AI models) cannot.

The potential market size for Agentic Protocols is vast, as they have the ability to disrupt and replace traditional business models across various industries. Currently, the AI crypto market is around $25 billion, less than 1% of the total crypto market cap. However, the specific market cap of Agentic Protocols is still an undeveloped niche and would be even smaller. As the decentralized AI community grows and attracts key talent from the centralized world, we expect to see an increasing number of projects adopting the Agentic Protocol model.

As investors, we see a significant asymmetric upside in being long on AI in general, with a particular focus on AI-native companies, and more specifically, decentralized AI projects that are well-positioned to capitalize on the Agentic Protocol model. This space is rapidly evolving, so if you want to take advantage of this revolution, you need to keep your finger on the pulse and keep a close eye on developments in this space. Luckily for you, if you’re reading this, you’re already a million miles ahead of the rest of the world.

In Other News

🟠 Aethir Cloud announced its airdrop campaign, the Aethir Cloud Drop, launching today and continuing until May 12. More on this in Tuesday’s Airdrop Radar 😉 

🟠 Eternal AI announced its mainnet launch and token generation event. Key dates:
*May 3rd: TGE and Mainnet launch
*May 10th: Ability to run an EAI node
*May 17th: Token listed on DEXes like Naka Chain and Uniswap

🟠 NIM Network has partnered with Ligero to provide economic ownership and verified access to AI models through Ligero’s zero-knowledge proofs.

🟠 Daniel Wang, CEO and Co-founder of Aethir stated "GPU shortage is kind of misleading. It is not that there is GPU shortage, it is improper matching of GPU to its demand-side.”

🟠 Vivek Raghunathan, former VP of Google and Founder of Neeva, an AI search engine, has announced that SnowFlake will be developing its LLM openly and transparently.

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