Crypto Evolution Theory Episode 03 | OKX Ventures & Polychain & Delphi: Piercing Through the Hype, Exploring the Next Steps for Crypto & AI
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Crypto Evolution Theory Episode 03 | OKX Ventures & Polychain & Delphi: Piercing Through the Hype, Exploring the Next Steps for Crypto & AI
Software is eating the world, and AI is eating software.
Navigating Web3 tides with focused insightsSummary: Cycles and narratives have always been central themes in the global crypto market. In the past, industry participants primarily relied on Bitcoin halvings to perceive market cycles and identify major narrative trends. However, with the approval of spot Bitcoin and Ethereum ETFs, the crypto market has become increasingly correlated with global financial markets, and the variables influencing crypto's trajectory are multiplying.
Against a backdrop of surging volatility, the ability to clearly discern cyclical patterns and uncover emerging narrative trends is more critical than ever. Investment firms, as early detectors of innovative narratives, often possess forward-looking insights. With this in mind, OKX has launched the special column "Crypto Evolution," inviting leading global crypto investment institutions to systematically share their views on current market cycles, next-wave narratives, and key verticals—offering perspectives to inspire broader discussion.
Below is the third installment, featuring joint insights from OKX Ventures, Polychain Capital, and Delphi Digital on topics including the convergence of AI and crypto. We hope their analysis provides valuable inspiration.
About OKX Ventures
OKX Ventures is the investment arm of OKX, a leading cryptocurrency exchange and Web3 technology company, with an initial capital commitment of $100 million. It focuses on identifying top blockchain projects globally, supporting cutting-edge blockchain innovation, promoting the healthy development of the global blockchain industry, and investing in long-term structural value. By backing visionary entrepreneurs, OKX Ventures helps build innovative companies and brings global resources and institutional experience to blockchain projects.
About Polychain Capital
Polychain Capital is an investment firm dedicated to blockchain technology and decentralized finance. Since its founding in 2016, it has focused on supporting transformative projects that leverage blockchain to disrupt traditional industries and create innovative financial systems. With deep expertise in the crypto space, Polychain backs visionary founders and frontier technologies to drive the growth and adoption of decentralized networks and protocols.
About Delphi Digital
Delphi Digital is a research-driven firm committed to advancing understanding and development in the expanding digital asset market. It supports the ecosystem through four business lines: Delphi Research, Delphi Ventures, Delphi Creative, and Delphi Labs.
I. When Crypto Meets AI
OKX Ventures (William): The development of AI technology today heavily depends on tech giants such as OpenAI, Google, and Nvidia. Nvidia controls the "electricity" of the entire AI era, while OpenAI and Google hold the most critical data and technical frameworks. This centralized, giant-dependent model restricts innovation and progress across the industry. Crypto’s decentralized and permissionless nature can break these monopolies, foster technological innovation, and spark a new wave of industry growth.
Current common application areas include computing power, data, models, and applications.
• Computing Power
Distributed or decentralized compute markets like io.net and Prodia utilize idle global computing resources to challenge the dominance of centralized providers. We look forward to the moment when distributed compute supply surpasses centralized supply—what kind of transformation will follow? Additionally, due to the scarcity and high returns of AI compute assets, RWA (real-world asset) projects like Compute Labs have emerged, tokenizing compute assets and creating derivatives to form an AI-Fi ecosystem.
• Data
Crypto’s economic models effectively incentivize user participation in AI data domains. Various DePIN projects use tokenomics to reward users for contributing, labeling, or validating data, providing essential training sources for AI models. Space and Time combines tamper-proof on-chain and off-chain data via proof-of-SQL, building a verifiable computing layer for AI-blockchain integration. 0g.ai constructs a scalable data availability and storage system. Moreover, crypto’s privacy-preserving features enhance user data security—projects like Flock.io and Privasea.ai emphasize protecting user privacy during model training.
• Models
An open model marketplace could disrupt tech giants’ model monopolies. Users could contribute not only computing power but also data or models, interacting directly via network protocols. Distributed model training remains a significant technical hurdle; we are particularly eager to see breakthroughs in this area and hope entrepreneurial teams will soon fill this gap.
• Applications
At the application level, the fusion of AI and crypto enhances content creation. Users can build customized virtual characters and chatbots—for example, Myshell allows users to train models using personal data to create their own AI Smart Agents. This approach enables data contributors and model trainers to benefit from platform growth, forming a positive feedback loop of data accumulation.
Polychain Capital (Sven): The AI field is shifting from closed-source models toward complex open-source solutions. While this democratizes access to AI capabilities, it introduces new challenges—particularly around value capture for model creators. The financialization of open-source models represents an innovative intersection between crypto and AI. Blockchain’s combination of openness, ownership, and verifiability lays the foundation for value accrual. Ora’s Initial Model Offering (IMO), for instance, demonstrates how tokens can represent AI models, allowing holders to earn returns from model revenues. This incentivizes open-source development while ensuring fair compensation for creators and contributors.
Beyond financialization, the integration of crypto and AI fosters innovation in public governance and system transparency. As concerns grow over AI bias and centralized control, blockchain-based solutions offer decentralized mechanisms for training, inference, and governance—ensuring transparent decision-making and community involvement.
However, the core of innovation lies in infrastructure. Advances in decentralized computing networks, novel data ownership frameworks, and new token standards make model ownership and revenue sharing possible. These foundational developments enable more sophisticated applications at the intersection of crypto and AI.
A promising direction is the emergence of AI agents integrated with executable task systems. Acting as personal extensions, they could autonomously execute complex tasks—from personalized assistants to advanced automation in DeFi. Their realization, however, depends on strong data privacy protections, verifiable computing systems, and seamless infrastructure integration.
Though still early, crypto-AI projects are making progress through rapid iteration and experimentation. While best practices remain undefined, cryptographic techniques are increasingly recognized for their potential to address key AI challenges.
In the future, we expect to see more refined applications that combine the strengths of both fields. This convergence will not only lead to more transparent and accountable systems but also significantly enhance the usability and functionality of both AI and blockchain technologies. As exploration continues, exciting developments lie ahead.
II. Unpacking the Investment Methodology Behind Crypto + AI
OKX Ventures (William): We can approach this question by examining current sector trends.
• The sector is transitioning from hype to substance.
Over the past year, numerous Crypto & AI projects have emerged, mostly in infrastructure, with few genuine applications. Many are merely rebranded shells lacking innovation and technical depth—riding the hype without delivering real value. Hype and bubbles are natural in early-stage technological revolutions. But as market resources reallocate efficiently, we expect to see technically competent teams entering the space. Markets will increasingly favor projects offering real value, scalability, and usability over those relying solely on marketing and speculation.
• From speculation to demand
The market is shifting from speculation-driven to demand-driven dynamics. Focus is moving from theoretical value to actual usage and adoption. Founders can no longer rely solely on storytelling to attract investors—pure narrative plays now face skepticism. Projects with real market demand and sustainable revenue streams will become prerequisites for investor support. This forms a core principle in our Crypto & AI investment strategy.
Based on these trends, we’ve distilled three core investment principles:
• Market Demand Orientation
Many AI startups launch products only to find no market interest—often because they failed to validate real user needs from the outset, mistaking unproven assumptions for genuine demand.
Therefore, we place strong emphasis on addressing real market needs. First, we assess which subsector the project belongs to within Crypto & AI, its total addressable market, growth potential, and competitive landscape. Second, we examine what specific problem it solves and what need it fulfills—even small, well-targeted solutions to real pain points can be viable.
• No Pure Narrative Plays
The Crypto & AI space is frequently criticized for prioritizing narrative over utility. While we don’t entirely agree with that critique, markets are no longer willing to fund purely conceptual projects. Real-world use cases and sustainable business models are essential.
Startup teams must generate sustainable operational revenue. Relying solely on NFT or token sales as income is unsustainable. Teams must define clear business models and revenue pathways beyond market sentiment.
• Teams Must Have AI Expertise
The AI boom has ignited enthusiasm in Web2 and VC circles, and this wave has naturally spilled into crypto. Many crypto-native teams have rushed to rebrand around AI, resulting in a flood of low-quality, superficial projects. Without AI technical backgrounds, these teams lack competitiveness and are quickly eliminated. AI presents high technical barriers—especially when integrating with crypto—requiring deep knowledge in both domains to achieve meaningful synergy. Without this, projects struggle to gain credibility.
In summary, our investment philosophy centers on identifying large-potential markets, spotting real problems and needs, and finding the right teams to solve them—then supporting founders from 0 to 1 in building solutions that meet actual demand.
Polychain Capital (Sven): Today, the crypto-AI landscape is largely narrative-driven—a typical feature of early-stage transformative technologies. Narratives aren’t just marketing—they’re necessary for attracting attention, building communities, and driving early adoption. However, we believe evaluation must go beyond storytelling to assess technical foundations and practical applicability. Our investment strategy stems from deep research into both crypto and AI technologies and their synergistic potential. We prioritize projects with compelling visions, clear paths to market adoption, and solid technical underpinnings. Cutting through the noise requires rigorous research.
Currently, most crypto-AI integration occurs at the infrastructure layer—GPU networks, inference and intelligent networks, verifiable and private computing, and data management solutions—all laying the groundwork for the next wave of innovation.
Looking ahead, privacy-enhancing technologies such as homomorphic encryption, multi-party computation, and zero-knowledge proofs will play vital roles in securing AI privacy. Decentralized data markets, verifiable inference networks, and AI agent infrastructure will continue to grow, democratizing AI capabilities and enabling fair, transparent, and efficient systems. The integration of AI and blockchain may spark a new generation of crypto applications—including AI-powered DeFi analytics, predictive models for asset management, and AI-augmented DAO governance. Small, efficient models trained on high-quality datasets will advance further, enabling more personalized AI experiences with reduced friction.
Delphi Digital (Pondering): Software is eating the world, and AI is eating software. At its core, AI is about data and computation. Therefore, entities that most efficiently acquire these two key inputs (infrastructure), coordinate them (middleware), or leverage them to serve end users (applications) will capture immense value.
Currently, Delphi Ventures’ investment thesis centers on the DeAI ecosystem, actively investing across every layer of the DeAI stack.
First, at the infrastructure layer: DeAI relies on data and compute, especially when crypto-incentivized mechanisms enable efficient resource acquisition. This is the most challenging yet highest-potential segment. Distributed training protocols and GPU markets provide cost-effective solutions by coordinating heterogeneous hardware, while DePIN networks—by leveraging low-cost hardware deployment—will play a crucial role in the future intelligent economy.
Second, at the middleware layer: DeAI aims for highly composable and efficient computation—akin to DeFi’s “Lego” model. We are particularly excited about efficient routing mechanisms (selecting optimal models for specific use cases), graph neural networks, coprocessors that scale data and computation in constrained on-chain environments, and crypto-based mechanisms that solve incentive alignment for open-source developers. If executed well, DeAI middleware could present a compelling modular AI architecture—one that ultimately surpasses today’s integrated, closed-source offerings from tech giants.
Finally, at the application layer: On-chain agent protocols may be key to improving user experience in crypto. By connecting compute networks with end users, these protocols can reduce costs and unlock the full potential of web3 infrastructure, enabling new economic models.
In conclusion, AI will profoundly reshape our economic landscape. While DeAI narratives may currently seem overly optimistic, the opportunity size is undeniably vast. For those with patience and insight, the true vision of composable computing in DeAI may ultimately prove the fundamental value of blockchain itself.
III. Future Opportunities
OKX Ventures (William): Technological breakthroughs and innovation remain perpetual opportunities.
AI faces severe technological monopolization, with data and core technologies concentrated among tech giants—leaving little room for startups. How to overcome this dominance is the primary challenge for entrepreneurs. We are eager to see more teams move beyond imitation, leveraging the convergence of crypto and AI to break monopolies, achieve real innovation, and deliver products that fulfill market needs.
Remaining in the game is a key consideration for startup teams.
• Teams must develop viable, sustainable business models. Pure narrative-driven projects are no longer acceptable. Startups need stable revenue or a clear, feasible path to monetization.
• Teams require sound financial management and cost control to ensure long-term operational stability. Poor financial oversight is one of the most common causes of startup failure.
• Teams must maintain flexibility and agility. The market evolves rapidly—a single breakthrough can render entire cohorts obsolete. Startups must adapt quickly, adjusting strategies and timing based on market shifts.
Polychain Capital (Sven): Sentiment in both AI and crypto is undergoing a significant shift. Institutional and regulatory attitudes toward crypto are improving—the approval of Bitcoin and Ethereum ETFs in the U.S. reflects growing mainstream acceptance, paving the way for further innovation. Meanwhile, the AI field is also evolving: several OpenAI co-founders have departed to advance the concept of "superalignment," opening new avenues for innovation in AI development and governance that align well with crypto’s decentralized ethos—creating unique synergies.
While AI remains in its early stages with strong demand, dominant strategies are not yet clear. Projects that embody fairer, more open AI principles and effectively integrate blockchain technology have broad development prospects. The "superalignment" movement alleviates concerns about AI’s impact on employment and information integrity, fueling interest in user-owned AI systems. Crypto projects that promote user ownership and aligned incentives are already gaining traction.
Yet, opportunities come with challenges. Global economic pressures—including conflict, recession risks, high inflation, and elevated interest rates—are prompting cautious consumer behavior, potentially dampening investment in crypto assets. However, such conditions may also increase appeal for crypto as an alternative to traditional finance—reinforcing Bitcoin’s role as “digital gold” and a store of value during uncertain times.
Regulatory uncertainty persists. Legal frameworks for crypto and AI vary widely across jurisdictions, requiring projects to remain agile amid ambiguity. Talent scarcity is another major hurdle: competition for skilled professionals in AI and blockchain is intense, potentially slowing development timelines.
Looking ahead, the current market cycle may act as a filter for crypto-AI projects. Those capable of addressing real needs, adapting to regulation, and integrating technologies effectively will lead the next phase of industry evolution. As markets mature, crypto and AI will trend toward greater sustainability and practical application—placing stronger emphasis on user ownership of AI systems and data rights, advancing decentralized AI infrastructure, and deeply integrating AI capabilities into blockchain ecosystems to enable new economic models.
Delphi Digital (Pondering): The biggest challenge for DeAI lies at the infrastructure layer—particularly the capital intensity required to build foundational models and the economies of scale in data and computation.
Big tech holds clear advantages here: having used monopoly profits from the second-generation internet to build massive capital reserves—and reinvested them into cloud infrastructure during a decade of low interest rates—they now aim to monopolize data and computing markets, thereby controlling the intelligence market—the core of AI.
Due to the capital demands and high bandwidth requirements of large-scale training, superclusters remain optimal, giving big tech access to the most powerful closed-source models. They plan to rent these models for monopoly profits, then reinvest earnings into next-gen technologies. However, AI’s moats are shallower than web2’s network effects. The value of frontier models is rapidly depreciating—especially as Meta adopts a “scorched earth” strategy, investing tens of billions into high-performance open-source models like Llama 3.1.
With the rise of low-latency distributed training methods, commoditization of frontier models is becoming evident. This shifts the competitive landscape away from hardware-dominated superclusters controlled by big tech, toward environments where open-source and crypto-enabled software innovation thrive. Simultaneously, the cost of intelligent capabilities is falling rapidly.
We explore the tension between big tech and DeAI in depth in our DeAI research series, available free to interested readers.
Given the computational efficiency of "Mixture of Experts" architectures and LLM composition/routing, the future may not be dominated by 3–5 supermodels, but rather a vast network of millions of models—varying in shape, size, and use case. This creates immense coordination challenges, precisely where blockchain and crypto-incentive mechanisms show great promise.
OKX Ventures Disclaimer, please read OKX Disclaimer.
Delphi Digital Disclaimer, please read Delphi Digital Disclaimer.
Polychain Capital Disclaimer: This article is for informational purposes only. The views expressed are those of the authors and do not necessarily reflect the opinions of Polychain Capital LP or its affiliates (collectively “Polychain Capital”). Any forecasts, estimates, targets, outlooks, or opinions discussed may change and may differ from or contradict views expressed by others. Forward-looking statements are based on various assumptions, risks, and uncertainties that could cause actual results, performance, or achievements to differ materially from those implied. This article is not directed at any investor or prospective investor, nor constitutes an invitation to consult. The information should not be construed as specific investment advice, final recommendations, or relied upon as such. Assets discussed do not represent all investments held by Polychain Capital, and there is no assurance that identified investments will be or have been profitable. Due to changes in market, economic, political, and regulatory conditions, past performance is not indicative of future results. Content should not be interpreted or relied upon as investment, legal, tax, or other advice. Certain information may be derived from third-party sources believed to be reliable, but Polychain Capital has not independently verified such information and makes no express or implied representations regarding its accuracy, reliability, or completeness.
Risk Warning and Disclaimer
This article is for general informational purposes only. The views expressed are those of the authors and do not represent the position of OKX. This article does not constitute (i) investment advice or recommendation; (ii) an offer or solicitation to buy, sell, or hold digital assets; or (iii) financial, accounting, legal, or tax advice. We make no guarantees regarding the accuracy, completeness, or usefulness of the information provided. Holding digital assets—including stablecoins and NFTs—involves high risk and may result in significant price volatility. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. Please consult your legal/tax/investment professionals regarding your specific circumstances. You are solely responsible for understanding and complying with applicable local laws and regulations.
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