Variant Fund Partners: The intersection of AI and crypto

Author: Li Jin, Partner at Variant Fund; Translated by 0xjs@黄金财经

I spend a lot of time researching the intersection of AI and cryptocurrency. I believe that the combination of the two is critical to making AI more fair and user-owned.

Sharing some quick thoughts on what we’re seeing:

Projects at the intersection of AI x cryptocurrency fall into two broad categories: 1) Applying crypto to solve AI problems 2) Applying AI to solve crypto problems.

Applying Crypto to AI

Since the AI ​​market overall is larger than the crypto world today, most companies are focused on (1) applying crypto to AI. That is, applying AI to cryptocurrency (2) can make cryptocurrency easier to use and interact with, thereby helping to expand the pie.

In the first category, we are looking at projects across the AI ​​stack:

• Data collection (including collecting new proprietary datasets that don’t exist elsewhere)

• Model training and inference (including data labeling and RLHF)

• Infrastructure markets (including compute and storage)

• AI applications

We see opportunities for cryptocurrencies to have an impact on all of these categories.

Taking the data collection layer as an example, what we see is that amassing datasets that don’t currently exist or are difficult to access can be a huge unlock for AI companies. Cryptocurrencies can help by incentivizing users to contribute data (as in many DEPIN networks).

In the compute market, we are also seeing token incentives being used to aggregate the supply side of these networks. We believe that in an increasingly competitive environment, a differentiator will be offering additional services and models to attract developers.

In the application layer, we see projects that aim to create AI agents, equipped with wallets to enable them to transact independently. Or AI agents that run on decentralized compute (like Venice.ai).

We have made multiple early investments in the intersection of crypto + AI - Worldcoin, Mana, Modulus, Botto, Dawn Wallet - and we are excited to continue to support the space.

Applying AI to Crypto

Below I will outline the second category: companies applying AI to crypto.

The application of AI in the crypto space is similar to the broader impact we have seen with AI and large language models in non-crypto areas: creating a new computing user interface; helping content creators with their creative process; helping businesses improve their operational capabilities.

The categories of projects applying AI to crypto can be segmented by GTM: for consumers, creators, or developers.

On the consumer side, projects are building: 

• AI interfaces for users (e.g. natural language interfaces for wallets to process transactions on-chain)

• AI trading agents and strategies

• Valuation models (e.g. Upshot for NFTs) 

• User-owned AI DAOs (e.g. @hollyplusp_voice model, @BottoDAO) 

• AI games on-chain (e.g. Leela from ModulusLabs)