AI Market by the Numbers: TAO's market cap rebounded to approximately $2.5 billion by the end of July, signaling sustained investor interest in AI tokens
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AI Market by the Numbers: TAO's market cap rebounded to approximately $2.5 billion by the end of July, signaling sustained investor interest in AI tokens
The natural intersection of blockchain technology and artificial intelligence brings a steady stream of innovation.
Navigating Web3 tides with focused insightsAuthor: OurNetwork
Compiled by: TechFlow
The intersection of crypto and artificial intelligence (Crypto x AI) is an emerging space within our industry that is having a profound impact on the broader technology sector. While still an ambiguous category that we're only beginning to deeply explore, the past 18 months have already seen the rise of exciting projects leveraging AI in diverse ways across infrastructure, consumer applications, and decentralized finance (DeFi).
Whether creating peer-to-peer markets that turn machine learning into tradable products via decentralized compute, or using AI to build the first decentralized self-managing artist, the natural convergence of blockchain and artificial intelligence continues to drive innovation.
So let’s dive into some of these emerging projects!
1. Bittensor
Jack Forlines & Bhavin Vaid | Website | Dashboard
TAO market cap down $1 billion from all-time highs
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The Bittensor protocol establishes a marketplace that transforms machine learning intelligence into tradable commodities through a decentralized process, creating a peer-to-peer market for AI assets. Despite market volatility, trends do not indicate a cooling of AI enthusiasm—TAO, Bittensor’s token, saw its market cap drop from a peak of ~$3.5 billion in May to a low of ~$1.5 billion in July. However, despite recent broader crypto market corrections, TAO’s market cap rebounded to ~$2.5 billion by the end of July. This rollercoaster pattern suggests strong investor interest in AI-related tokens persists despite frequent pullbacks.
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An analysis of one of Bittensor’s 32 subnets reveals that primary revenue sources are validators holding large stakes. Additionally, the top earner generates less than $8,000 per day under more than $350 million in stake. This raises questions about network decentralization and its ability to foster an open AI marketplace.
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Bittensor’s economic model appears unfavorable for most miners. In the text prompt subnet, the average miner earns around $50 per day regardless of ranking. Even top 30 miners earn barely over $58 daily. The lack of significant income differentiation suggests model performance is not being adequately rewarded.
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Trade-level insight: Bittensor allocated no tokens to venture capital firms (VCs). They state that if VCs want exposure to Bittensor, they must buy tokens on the market or learn how to mine/validate. This stands in stark contrast to most AI-related crypto projects. 65% of TAO remains unissued; if Bittensor achieves its decentralization goals, the protocol could present a more compelling investment case compared to competitors.
2. Covalent
Anthony Loya | Website |Dashboard
Covalent unlocked 848.12 million CXT tokens worth ~$5.67 million
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Covalent is a decentralized finance (DeFi) protocol providing a unified API to access on-chain data across multiple blockchains. It offers a suite of products including customizable data solutions and verifiable AI infrastructure powered by Ethereum Time Machine. The platform has transitioned its native token from CQT to CXT for staking and governance. Their staking dashboard allows users to manage stakes, monitor network health, and claim rewards.
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Covalent’s token unlock schedule reveals important developments stakeholders should note. On August 22, 9.6 million tokens will be unlocked, adding approximately $64,730 to the circulating supply. Subsequent unlocks in September and October will release 21.78 million and 9.6 million tokens respectively.
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CXT’s price has dropped sharply over the past week, declining 24.2% in 24 hours and 42.6% over the past seven days. This sharp decline may be attributed to broader market dynamics.
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Trade-level insight: Recently, several key users in the Covalent X token (CXT) staking community have shown significant staking activity, indicating strong confidence in the token's future. Notably, on August 7, 2024, a major transaction was recorded where a user staked CXT worth $91,350.65. This large stake not only highlights confidence in the potential returns of staking CXT but also reflects overall positive sentiment.
3. Botto
miguel rubio | Website | Dashboard
Botto allocates 23% of sales revenue to art AI contributors
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Botto is a decentralized AI art experiment that distributes proceeds from weekly 1/1 art sales to users who trained its taste model. Botto’s 1/1 sales peaked at 100 ETH in 2024 and now average 6 ETH, with additional income from secondary sales, curated collections, and collaborative projects. Botto excels in its revenue distribution model—the DAO implemented a 50% revenue share, generating over 300 ETH for the community, accounting for 23% of total revenue—a blueprint for human-AI collaboration.
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Revenue distribution correlates with training effort—voting power uses VP proportional to staked $BOTTO (directly or as Uni-V2 shares). As a result, 27% of the $BOTTO supply is locked, 6% burned (via the old BB&B system), and 5.7% frozen as liquidity provider (LP) shares. Combined with protocol-held reserves, this reduces circulating supply by 50%.
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Botto’s future depends on its cultural impact (Sotheby’s proposed solo exhibition) and its ability to attract AI training contributors. The project integrated the Farcaster framework and considered partially migrating to Base, resulting in roughly a 4x increase in address engagement (from 5,000 to 19,000).
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Trade-level insight: Botto is an experiment in decentralized governance of AI, using an economic design that redistributes value to those providing input. Users are rewarded for training the AI through voting. To earn voting points, they must purchase and stake BOTTO, or add BOTTO-ETH to Uniswap and stake LP shares. To claim rewards, they must actively withdraw, which requires paying significant ETH gas fees. Botto strives for mainstream cultural relevance both on and off-chain. An L2 ecosystem could open an entirely new chapter.
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