Breakthrough rise in the encryption AI field in 2024

In 2024, the encryption AI field has achieved unprecedented breakthroughs in growth. From only a few projects at the beginning of the year, it has now become an independent track in the crypto market that cannot be ignored.

According to the latest data, on December 7th, the total market value of the encryption AI sector exceeded $70 billion, reaching a maximum share of 2% in the entire encryption market, with an annual rise rate of up to 400%. At the same time, the number of encryption AI projects has also seen explosive growth, currently exceeding 600, covering various categories of products including decentralized AI infrastructure and AI Dapps.

Looking back at 2024, the narrative of encryption AI has undergone several significant changes. At the beginning of the year, the launch of new AI projects ignited a hype around encryption AI infrastructure. Subsequently, the AI annual conference brought decentralized GPUs to the forefront of market attention. Mid-year, the encryption AI sector witnessed an influx of investments, with numerous projects receiving funding support, accelerating technological research and application processes. By the end of the year, the explosion of AI Agent Meme pushed the narrative of encryption AI to a new climax.

Encryption AI assets total market value surpassed 70 billion USD this year

According to the latest data, the number of tokens included in the encryption artificial intelligence sector has reached 355, with a total asset market value exceeding 70 billion USD on December 7, peaking at 70.42 billion USD. Affected by the current overall correction in the encryption market, as of December 23, the total market value of the encryption AI sector has fallen back to 47 billion USD, with a 24-hour trading volume still reaching 5 billion USD.

Looking back at the beginning of the year, the total market value of the encryption AI sector was only $17 billion. In less than a year, this sector has achieved a rise of over 400%, demonstrating the vigorous development and enormous potential of the encryption AI field.

Analysts have pointed out that although the current encryption AI sector accounts for only about 1% of the total market capitalization of the cryptocurrency market, with the evolution of market cycles and the strong momentum of AI infrastructure and AI Agents, it is expected that the market capitalization of this sector will achieve a tenfold rise.

It is worth noting that on December 23, the total market capitalization of the entire encryption market reached $3.4 trillion, with the market share of encryption AI assets accounting for nearly 1.4% (over 2% during the peak market cap), further proving its potential for future market rise.

2024 is a key year for the rise of encryption AI from its infancy to a full-scale explosion. At the beginning of the year, the number of encryption AI projects was few, mainly represented by decentralized GPU projects and AI infrastructure. However, in just one year, the encryption AI field has been divided into multiple sub-tracks, covering various branches such as decentralized GPU, AI data platforms, AI infrastructure, and AI agents, with the number of projects skyrocketing to hundreds.

2024 encryption AI catalyst

From the trend of the total market value data of encryption AI assets, the rise in 2024 shows two significant peaks: the first occurs between February and March, and the second happens after October, ushering in a stronger wave of growth.

The rise in the encryption AI sector from February to March was mainly driven by the stimulus from two landmark events in the AI field.

In February, a certain AI company released the "Text-to-Video" large model, triggering a disruptive change in the AI field. At the same time, this event drove the token price of a certain iris authentication encryption project to soar, leading to a strong rise in the entire encryption AI asset sector. During this period, high-quality projects such as AI model incentive platforms and AI data platforms attracted wide market attention, igniting investment enthusiasm in the encryption AI market.

The annual AI conference of a certain company in March once again attracted global attention, driving its market value to soar and triggering a frenzy of GPU chip speculation. At the conference, leading figures in the encryption industry made appearances, injecting new vitality into the encryption AI field. This series of events has led to the emergence of concept projects such as decentralized GPUs springing up like mushrooms after rain.

Since then, encryption AI has officially developed into an independent track, with numerous projects such as AI infrastructure, decentralized GPUs, and decentralized AI data emerging, bringing more choices and opportunities to the market.

In October, the rise in the encryption AI field was mainly attributed to the explosion of AI Agent Meme. A certain AI Agent project token emerged, triggering a wave of speculation in the issuance of AI Agent Meme project tokens, leading to the mass issuance of nearly a hundred AI Agent Meme coins. This trend allowed AI Agents to quickly rise, becoming an independent segment in the encryption AI field, with products covering AI Agent Meme coins, AI Agent issuance platforms, and underlying infrastructure. As of December 23, the total market capitalization of AI Agent segment tokens has reached 9.8 billion USD, approximately 20% of the total market capitalization of the entire encryption AI sector (47 billion USD), and the speculation heat continues.

In 2024, the encryption AI market is experiencing an unprecedented wave of investment, with major investment institutions rushing in and investment amounts soaring sharply. Several top venture capital firms have already actively positioned themselves in "Crypto+AI" projects.

At the beginning of the year, some institutions expressed strong optimism about the combination of Crypto and AI, investing in multiple related projects. Additionally, another institution raised a new fund of $6 billion, focusing on investments in the AI sector. In the second half of the year, more institutions announced their entry into the encryption AI field, establishing dedicated funds or increasing investment efforts. According to reports, in the third quarter of 2024, crypto venture capital injected over $213 million into AI projects, a quarter-on-quarter increase of 250% and a year-on-year increase of 340%.

The market prospects for "Crypto for AI" are vast.

Currently, the encryption AI products on the market can be mainly divided into two forms: "AI for Crypto" and "Crypto for AI".

"AI for Crypto" focuses on applying AI technology to encryption products, such as AI code optimization and security auditing, participating in on-chain yield strategies, integrating AI chatbots, etc., to enhance user experience or strengthen product performance.

"Crypto for AI" empowers the AI industry by utilizing encryption technology, such as addressing data privacy and security issues of AI models, achieving community sharing through model assetization, and aggregating computing power resources to reduce the training costs of AI models.

Overall, the decentralized blockchain architecture of Web3 technology, the Token economic system, and the autonomous execution of smart contracts provide solutions to common issues in the AI industry such as data opacity and ambiguous business models. This aligns perfectly with the concept that "AI enhances production efficiency, and Web3 optimizes production relationships."

Therefore, it is widely believed in the industry that "Crypto for AI" shows broader prospects and potential at the market application level. This trend has prompted more and more professionals in the AI industry to seek to overcome industry challenges with the help of encryption technology.

Encryption AI Ecosystem Construction

Based on the three elements of "data, computing power, and algorithms" that drive the development of large AI models, the encryption AI product ecosystem includes the following aspects:

Data Layer: Encryption AI data projects cover data collection, storage, and processing. Some projects incentivize users to share data through tokens, such as a project that launched a data marketplace; decentralized data labeling platforms provide developers with high-quality training datasets; certain solutions ensure data security and durability.

At the computational power level: In response to the imbalance of supply and demand for GPU resources, decentralized GPU computing networks have emerged. These networks create open markets and GPU aggregation platforms, allowing contributors of idle GPU computing power to earn rewards. Some projects even tokenize physical GPUs, promoting the decentralization and liquidity of computing power.

Algorithm model level: The essence of the decentralized AI algorithm network is the AI algorithm service market, connecting AI models with different expertise. One project aggregates various AI models through subnetworks; another project selects the best decentralized models through competitions and tokenizes the AI models to incentivize contributors.

2025 Outlook for the Encryption AI Track

Since the AI Agent Meme market became popular in October, related products have become the new favorites in the encryption AI market. A certain project announced the completion of a large financing round, specifically to build a framework and infrastructure for AI Agents.

The AI Agent Meme craze not only ignites new hype hotspots but also shifts the market's focus from infrastructure to AI Agent applications, with the market value of a certain project exceeding 1 billion USD, and the popularity continues.

Many institutions have expressed optimism about the development of the encryption and AI markets in their 2025 outlook, particularly noting that AI Agent-related products will experience explosive rise.

The heat in the external AI field continues to rise. An AI company announced the completion of a new financing round of $6 billion, with its valuation soaring to $40 billion, driving the prosperity of the AI market.

On the narrative level, a certain company is undergoing a transition from GPT to AI Agent, planning to launch a new AI Agent product in January 2025. Another company's annual AI summit will be held in March 2025, which is also highly anticipated.

Every time a major model in the AI field is upgraded, it ignites the hot topics in the AI track, attracting new funds to pour in, further triggering the rise of encryption AI track.

In terms of policy, a certain country's newly appointed officials responsible for artificial intelligence and encryption affairs have relevant industry investment experience and are expected to promote the development of the integration of encryption and AI.