AI Tokens: Long-Term Viability Over Trendy Fads
Scott Stuart, co-founder of Kava Labs, recently shared insights with CoinDesk, asserting that artificial intelligence (AI) tokens possess enduring viability and will not fade away like the non-fungible token (NFT) craze. Despite the ups and downs the sector has experienced, including several unsuccessful projects, Stuart believes that AI has a solid foundation. “The initial wave of AI was characterized by projects like Fetch that promised mergers but failed to deliver real results, alongside ventures like Virtuals or AI16z, which saw initial success but plummeted by 80% to 90%,” he noted during the interview.
Market analysis reveals that since the start of the year, Virtuals, the token linked to the AI-focused Virtuals Protocol, has seen a significant downturn of nearly 85%. Similarly, Fetch.ai’s token, FET, has dropped by 60%. In contrast, KAVA has performed relatively better, experiencing only a 5% decline, thus outperforming the CoinDesk 20 index, which has fallen by 29%.
Kava’s Evolution and AI Focus
Kava initially gained recognition as a decentralized finance (DeFi) project built on the Cosmos network. However, in response to the evolving cryptocurrency landscape, it shifted its focus toward decentralized AI to stand out in a crowded market. Since this strategic pivot, Kava has launched its Kava AI platform and marketplace, introducing a blockchain-based chatbot similar to ChatGPT, powered by DeepSeek’s R1 large language model, as well as the autonomous AI agent Oros and a decentralized GPU network.
Stuart emphasized that this transition was crucial, as altcoins are increasingly struggling without a strong narrative; hence, the clarity and value of decentralized AI are vital. “Unlike the speculative nature of NFTs, decentralized AI boasts inherent utility, granting it resilience in the market. Trends like NFTs are mere memes on top of other memes, destined to fluctuate with market hype,” he explained.
Building an Open and Transparent AI Infrastructure
Kava is in the process of developing an auditable, transparent, and open-source decentralized AI infrastructure. Given its relative success compared to others in the market, it is evident that they are on a promising path. “AI as a technology serves as a new medium for corporations to relay information to you,” Stuart remarked. “With entities like OpenAI, there exists an element of secrecy, allowing them to adjust their models at will to cater to specific interests.”
Stuart stressed the importance of differentiating AI from opaque systems as it becomes more embedded in everyday life. “With closed-source AI, models can be altered in ways that are not visible to users. It raises questions about whether the optimization serves the user, a corporation, or even a government’s agenda,” he stated.
Concerns about the lack of transparency in AI are shared by others in the field. Simon Kim, CEO of Hashed, South Korea’s leading web3 investment firm, previously expressed similar worries, referring to closed-source AI as a ‘God’ figure whose inner workings are enigmatic yet has become an integral part of society.
In contrast, Kava Labs advocates for an “open-weight” approach that permits users to verify the parameters of AI models, akin to Ethereum’s transparent smart contracts. Recognizing the increasing regulatory emphasis on AI transparency as a strategic priority for the U.S., Stuart sees a chance to establish decentralized AI infrastructure that is verifiably ‘made-in-the-U.S.A.’ and supported by open-source funding initiatives. “In the past, the trend leaned toward offshoring,” he noted. “Now, there appears to be a serious commitment to reversing that trend, and we are seizing this moment to bolster U.S.-based infrastructure.”
Stuart concluded by asserting, “The future of AI will not be dominated by corporations. Instead, it should be open, transparent, and decentralized, and Kava aims to be at the forefront of this transformation.”
