Binance Research has found that artificial intelligence (AI) coins in 2023 saw notably larger gains than crypto giants bitcoin and ethereum. At the same time, funding for AI-related Web3 projects has surged.
According to a report by the research arm of the Binance exchange, AI tokens benefited from a rise in interest in the sector. Over both the past quarter and last year, AI tokens “experienced a significant surge” and outperformed the broader market.
They ranked as the second-best-performing category over the last three months.
What’s more, they outperformed the world’s two largest coins in 2023. By the year’s end, BTC saw a 150% gain, while ETH saw 44%.
Meanwhile, the report said,
“The top five AI coins by market capitalization significantly outperforming BTC and ETH, culminating in gains ranging from 200% to 650% in 2023.”
However, Binance Research also stressed that BTC and ETH have much larger market capitalizations compared to AI tokens. Therefore, the two registering smaller gains in terms of percentage is not surprising.
The comparison is just meant to show the recent strong performance of and interest in AI coins.
AI Reshaping Crypto Industry
The massive surge in AI token prices and Google search trends clearly indicate an increase in interest in AI over the last few months. AI chatbots (particularly ChatGPT), new AI tools, and media coverage are among the factors that have contributed to this rise.
Subsequently, AI has “started to reshape the crypto landscape.” Besides AI tokens, this can be seen in practical use cases as well.
“The fusion of these two disruptive technologies has quickly risen to a prominent narrative within the industry.”
This has naturally led to the development of AI-related crypto applications. Consequently, it is likely to result in “continuous innovation” in the sector.
Some of the already existing use cases emerging from the AI-crypto convergence include AI-powered data analytics platforms, interactive consumer-facing applications, decentralized physical infrastructure networks (DePIN), and Zero-Knowledge Machine Learning (ZKML).
Binance Research concluded that it is evident that AI has been “gaining significant traction.”
And as the AI app adoption rises (and fast), it is attracting “sustained” interest from investors and retail.
AI Tokens for Web3 Projects Raised Nearly $300M in 2023
Funding for AI-related Web3 projects jumped last year and reached $298 million.
Per the report,
“This is more than the collective funding amount raised for AI projects from 2016 to 2022, at $148.5M.”
The report described the AI sector’s performance when it comes to investor interest as “robust” and resilient compared to the broader market. There was a general reduction in funding in 2023, both in AI and non-AI sectors. Yet AI funding in US startups still surged 230%.
Furthermore, funding AI within the Web3 industry experienced “explosive growth.” This is clear from the $298 million figure received in 2023, which is double the total funding of the previous seven years.
Compared to other Web3 sectors, AI projects’ funding ranked 7th. It’s ahead of non-fungible tokens (NFTs) and decentralized autonomous organizations (DAOs). Infrastructure took the first place by far.
The report noted that we still haven’t reached mass adoption of AI. When it comes to AI-powered crypto projects specifically, they are still in early development and/or are created for a smaller user base.
Nonetheless, says the report, “the increase in tangible use cases is an encouraging trend that is positive for long-term growth.”
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