We know the cryptoverse is dynamic. New stories and wave of new tech have created a gold rush bipolarization effect, seducing the imaginations of investors and writers alike. With AI tokens and DePINs all the rage, the new buzzword seems to be networks we can’t see. All of this natural growth warns of a second crypto adoption wave on the horizon. As one of the earliest investment firms focused on blockchain technology, CoinFund has been nimbly following these trends. They understand that if done right, they have the power to compute industries and reshape what Web3 can become. DreamingCrypto just published an in-depth exploration of CoinFund’s investment thesis. It reveals the most important forces driving the AI tokens and DePIN boom while providing practical strategies for investors looking to cash in on this exciting new frontier.

The Rise of AI Tokens: Real-World Impact Over Hype

The AI crypto sector is flourishing! This growth is largely driven by increasing trust in AI systems and demand for AI-based applications. AI tokens recently experienced a meteoric rise in market cap. Just two years ago, it was $4.5 billion. Today, it has skyrocketed to over four times that amount, underscoring a dramatic boom of investment and interest. A complex web of interrelated factors drives this expansion. The democratization of AI technology, the introduction of cutting-edge AI platforms, and the buzz surrounding forthcoming token launches from emerging AI projects has created this perfect storm.

One big trend has been the rise of projects supporting distributed training. Prime Intellect has trained large AI models entirely with GPUs distributed across the globe. This breakthrough heralds thrilling new opportunities for decentralized AI development. Platforms such as Bittensor have been increasing in popularity. They deliver critical infrastructure for most every AI app and service you’ve used today. These platforms are democratizing access to AI technology and empowering innovation across many sectors. The AI crypto sector is rapidly achieving adolescence. The bottom line is investors need to focus on the projects that best provide real-world utility and deliver the true outcomes they are looking for. Investors need to bet on the projects that have real fundamentals and real technology. Building a clear vision for the future should be their first priority—not chasing hype.

Key Considerations for Investing in AI Tokens

By strategically weighing these elements, investors can recognize AI projects that stand out and demonstrate potential for long-term growth and success.

  • Technology and Innovation: Does the project utilize cutting-edge AI technology? Does it offer a unique solution to a real-world problem?
  • Real-World Utility: Does the project have a clear use case? Is there a demand for its AI-powered services or applications?
  • Team and Expertise: Does the team have the necessary expertise in AI, blockchain, and relevant industries?
  • Tokenomics: Does the token have a clear use case within the ecosystem? Is the token supply capped or unlimited?

DePIN is a major shift in paradigm from the way we typically build and manage physical infrastructure today. DePIN uses blockchain technology and decentralized networks to provide real-time monitoring and control. Its aim is to create more secure, transparent, and resilient infrastructure across all industries. DePIN’s potential is so much greater. The burgeoning industry is expected to hit a $25 billion market cap by 2024, with more than 350 tokens. That’s because over 13 million devices are actively helping power the different DePIN projects every day. This is a testament to the rapidly expanding adoption and engagement with this exciting technology.

DePIN: Building the Decentralized Infrastructure of the Future

One of the main promised benefits of DePIN is enhanced security and transparency. DePIN constructs a decentralized grid that provides physical infrastructure supporting digital networks. This method reduces the potential for systemic failures and greatly enhances data security. This should be especially true in capital-intensive industries with a high degree of inherent security and reliability needed such as energy, transportation, and telecommunications. In addition, DePIN can be used to align community interests by bringing communities into greater ownership and control over infrastructure. This helps create a more equitable allocation of resources and builds the resiliency of communities large and small.

Another exciting avenue of growth for DePIN is its collaboration with smart cities. Decentralized systems might be better employed to coordinate urban infrastructure, including energy grids, public transportation, and waste management servicing metro areas. This realization can move the world towards safer, more efficient, and more sustainable urban environments. In a DePIN-based energy grid, locals can offload energy production onto mutualised networks that integrate cleaner systems. They can sell it back to the grid, fostering a more decentralized and resilient energy system. Likewise, a DePIN-based transportation network would be able to better manage traffic flow and keep people moving even during periods of congestion, increasing the productivity of urban transit.

The Integration of DePIN with Smart Cities

So it is easy to understand why, as the DePIN ecosystem matures, it will attract ever-increasing interest from both institutional and retail investors. The potential for DePIN to revolutionize various industries and create a more decentralized and equitable future is attracting significant attention.

By critically considering these factors, investors can find the DePIN projects with the best potential for long-term growth and impact.

Key Considerations for Investing in DePIN

We know the fast-paced world of crypto can be intimidating. It’s easy to get swept up in the excitement of new initiatives and innovations. Smart investors know there’s no substitute for a focus on fundamentals, not speculation. As Hillary Adler, chief commercial officer and co-founder of BitcoinOS says, “Hype dies quick—fundamentals last.” This feeling speaks to the need for good, hard research and due diligence before you touch a crypto project.

  • Real-World Impact: Does the project address a real-world problem? Does it have the potential to improve existing infrastructure or create new opportunities?
  • Decentralization and Security: How decentralized is the network? What security measures are in place to protect the infrastructure and data?
  • Community Engagement: Is the project actively engaging with the community? Are there opportunities for community members to participate in the governance and development of the network?
  • Scalability and Sustainability: Can the project scale to meet growing demand? Is the project sustainable in the long term?

One of the preliminary steps for investing in any project is to go through and gauge the quality of its whitepaper. A legitimate project's whitepaper should provide detailed information about the project's goals, technology, and tokenomics, rather than reading like a marketing brochure. The whitepaper should clearly articulate the problem the project is trying to solve, the proposed solution, and the underlying technology that will be used.

Fundamentals Over Hype: A Winning Strategy for Crypto Investing

Investors need to consider the project’s tokenomics, including the supply, demand and distribution of the token. Purpose Build for a reason—determine if the token has a clear purpose within the ecosystem. Additionally, investigate whether its supply is fixed or infinite. By creating an effective tokenomics model you can incentivize participation, long-term growth and success of the platform and everyone’s interests.

Security should be the top priority. Security is a big deal in the crypto space. Investors need to scrutinize the project’s security protocols. Key outside protections to look for are security reviews, reward programs for finding programming flaws, and shared control systems. Even seemingly small projects that increase the use of strong encryption and secure communication protocols as a default create a strong foundation for protecting sensitive data by design. Consequently, they are considered to be more trustworthy.

Evaluating Tokenomics and Security Measures

We can’t emphasize it enough; a great founding team is the most important factor in the success of any startup, crypto or otherwise. The team's breadth of knowledge and experience plays a vital role in navigating the challenges of building and scaling a successful business. Two or three co-founders with complementary skills are generally considered ideal for the success of a startup.

Domain expertise, or often referred to as “Founder Market Fit,” is equally essential. A founding team that has lived experience with a problem has unique domain knowledge. This provides them a more than five times higher advantage over their competition. Building stable teams Working with people that you’ve worked with and have a history track record with previously usually creates the most stable teams.

The Importance of a Strong Founding Team

By focusing on fundamentals, evaluating tokenomics and security measures, and assessing the strength of the founding team, investors can increase their chances of identifying promising crypto projects with the potential for long-term success. We all know that the cryptoverse is a crazy place. So follow the signs, read the runes, and welcome in the dawn of the decentralized age!

Having domain expertise, also known as "Founder Market Fit," is also crucial. If a founding team has assembled domain knowledge with experience of a problem firsthand, they are at a huge advantage over their competition. Working with people with whom you have a previous track record tends to result in the most stable teams.

By focusing on fundamentals, evaluating tokenomics and security measures, and assessing the strength of the founding team, investors can increase their chances of identifying promising crypto projects with the potential for long-term success. The cryptoverse is a wild place, so remember to follow the signs, read the runes, and ride the rise of the decentralized age.