Market Metrics

Total Crypto Market Cap: up 2.8% to $2.276T
Total AI Sector Market Cap: up 3.8% to $24.9B

Top Movers (7 days):

📈 NodeAI (GPU): up 30.5% to $0.5651
📈 Phantasma (SOUL): up 25.8% to $0.09694
📈 PaLM AI (PALM): up 20.9% to $0.3001

Mindshare Check:

The AI sector still takes the top spot of all narratives, accounting for 20% of the total mindshare among all niches in the crypto market. Price has been choppy the past week, so try to avoid over-trading and making emotional decisions when the markets are still deciding which way to go.

Highlight of the Week

This year's Ethereum Community Conference (EthCC) in Brussels showcased the growing intersection of decentralized and open-sourced AI, with many projects pitching their ideas and connecting with one another. We attended many of these AI-focused side events and got to listen to some of the brightest minds in the sector.

Here were our key takeaways from the past week:

AI Has Created Serious Security Concerns

One of the most pressing issues highlighted at EthCC was the urgent need for enhanced security measures. Ilia Polushkin's keynote at DeAI underscored this concern, demonstrating how readily available AI tools could potentially be used to identify and exploit vulnerabilities in critical infrastructure.

Polushkin's presentation revealed that ChatGPT could easily discover and explain a recently patched bug in Geth, the most widely used Ethereum execution client. This capability raises alarming questions about the potential for AI-assisted exploitation of zero-day vulnerabilities.

In response to these challenges, Polushkin proposed a radical solution: rebuilding internet infrastructure from the ground up, based on cryptography and open-source primitives. He suggested that blockchain ecosystems could serve as testing grounds for this new approach, given their inherent need for bug-free smart contracts.

Debating the Agent-Centric Future

The conference revealed ongoing disagreements about the path towards an agent-centric future in AI. The core debate centered on infrastructure: should we build agents that can operate on existing systems, even if suboptimal, or create entirely new infrastructure optimized for AI agents? The latter approach, while potentially more effective, faces the challenge of attracting users and developers to a new ecosystem.

(Too)Many Decentralized Computing Marketplaces

EthCC 2024 showcased more decentralized computing marketplaces than anticipated. However, this abundance raised questions about differentiation and legitimacy. Many DePIN projects appear to lack substantial user bases, despite securing significant funding. This trend highlights the need for more rigorous evaluation of projects in the space.

The Builder-User Gap

A notable observation was the disparity between the number of builders and actual users or integrators in the DeAI space. This gap is partly attributed to the nascent state of the industry, with many projects still focused on developing infrastructure. However, it also underscores the need for more consumer-focused applications to drive adoption.

Still Many Misconceptions About DeAI

The conference revealed persistent misconceptions about DeAI, with many of the people we talked to viewing it as superfluous or failing to solve real problems. While we definitely see a huge number of the existing “AI coins” as nothing more than cash grabs, there is definitely good actors in this niche.

The projects with proper talent that have experience building in AI and posses a solid understanding of crypto economics are genuinely making significant strides in advancing AI towards a more open future.

Onchain vs. Offchain Debate

A key point of contention among projects was the extent to which AI systems should be integrated onchain. While some advocate for full onchain implementations, others argue for a more balanced approach, placing only essential components onchain. This debate reflects the ongoing challenge of balancing decentralization with practicality and user experience.

Notable Announcements

Several exciting announcements were made during the conference:

• Morpheus unveiled its MOR20 dashboard, simplifying the process for projects to launch MOR20 raises permissionlessly.

• Venice.ai announced web browsing capabilities for its AI through integration with Brave Browser, a feature not yet available in mainstream AI assistants like ChatGPT or Claude.

In conclusion, EthCC 2024 highlighted both the immense potential and the significant challenges facing the DeAI space. As the field continues to evolve, addressing security concerns, bridging the gap between builders and users, and finding the right balance between onchain and offchain components will be crucial for its success and wider adoption.