2024 Encryption AI Track: The Evolution from Inception to Prosperity

In 2024, the encryption AI sector has experienced unprecedented growth and transformation. At the beginning of the year, there were only a few projects in this field, but it has now developed into an independent track in the encryption market that cannot be ignored.

Data shows that on December 7th, the total market value of the encryption AI sector surpassed 70 billion USD, reaching a peak share of 2% in the entire encryption market, with an annual growth rate as high as 400%. At the same time, the number of encryption AI projects has also exploded, currently exceeding 600, covering various categories of products including decentralized AI infrastructure, AI Dapps, and more.

Looking back at 2024, the narrative of encryption AI has undergone several significant changes. At the beginning of the year, breakthroughs in the new generation of AI technology ignited a hype wave around encryption AI infrastructure. Subsequently, the convening of major annual AI conferences in the industry brought decentralized GPUs into the spotlight. By mid-year, the encryption AI sector saw an influx of investments, with numerous encryption projects receiving funding support, accelerating the research and application process of technology. By the end of the year, the explosion of the AI Agent concept pushed the narrative of encryption AI to a new climax.

Encryption AI total market value surpasses 70 billion USD, with over 600 projects.

The latest data shows that the number of Tokens included in the encryption artificial intelligence sector has reached 355, with a total asset market value surpassing 70 billion USD on December 7, peaking at 70.42 billion USD. As of December 23, affected by the overall market correction, the total market value of the encryption AI sector has fallen back to 47 billion USD, with a 24-hour trading volume still high at 5 billion USD.

At the beginning of the year, the total market capitalization of the encryption AI sector was only $17 billion. In less than a year, the sector achieved an increase of over 400%, showcasing the robust development and immense potential of the encryption AI field.

Industry experts have pointed out that although the current encryption AI sector accounts for only about 1% of the total market capitalization of the encryption market, with the evolution of market cycles and the strong momentum of AI infrastructure and AI Agents, it is predicted that the market capitalization of this sector is expected to achieve a tenfold increase.

It is noteworthy that on December 23, the total market capitalization of the entire encryption market reached $3.4 trillion, with the market share of encryption AI assets accounting for nearly 1.4%, further proving its market growth potential in the future.

2024 is a key year for the encryption AI field, marking its transition from inception to full explosion. At the beginning of the year, the encryption AI sector was still in its early stages, with a limited number of projects. However, in less than a year, the encryption AI field can now be divided into several sub-sectors, covering decentralized GPUs, AI data platforms, AI infrastructure, and AI Agents among others, with the number of projects surging to hundreds.

Data shows that there are currently over 600 encryption projects containing AI entries, and this number continues to grow.

Key Catalysts for the Growth of Encryption AI in 2024

From the data trend of the total market value of encryption AI assets, the growth in 2024 shows two significant peaks: the first peak occurs during the period from February to March, and the second occurs after October, ushering in a stronger wave of growth.

The growth in the encryption AI sector from February to March was mainly due to significant breakthroughs in the AI industry. The release of next-generation AI technologies has sparked a wave of transformation in the AI field, while also driving up the prices of related encryption projects, leading to robust growth across the entire encryption AI asset sector. Several AI-related encryption projects have begun to receive widespread market attention, igniting investment enthusiasm.

In March, the globally anticipated AI conference once again attracted widespread attention and fueled the hype around GPU chips. The appearance of several leading figures in the encryption industry injected new vitality into the crypto AI field. This series of events has led to the emergence of concept projects like decentralized GPUs springing up like mushrooms after rain.

Since then, encryption AI has officially developed into an independent track, with projects such as AI infrastructure, decentralized GPU, and decentralized AI data emerging one after another, bringing more choices and opportunities to the market.

In October, the growth in the encryption AI field was mainly attributed to the explosive emergence of the AI Agent concept. The debut of a new AI Agent project triggered a development boom of related projects, leading to the mass issuance of nearly a hundred related projects. This trend allowed AI Agents to quickly rise and develop into an independent sub-track within the encryption AI field, with products covering various aspects. As of December 23, the total market value of AI Agent track tokens had reached $9.8 billion, accounting for about 20% of the total market value of the entire encryption AI track projects, and the enthusiasm continues.

In 2024, the encryption AI market has ushered in an unprecedented investment boom, with major investment institutions rushing in and investment amounts soaring sharply. Several top venture capital institutions have actively laid out "encryption + AI" projects. Some institutions have expressed high optimism about the combination of encryption and AI, investing in multiple related projects. Some institutions have also raised dedicated AI investment funds or focused on encryption AI projects in their accelerator programs. According to reports, in the third quarter of 2024, encryption venture capital injected over $213 million into AI projects, a month-on-month increase of 250%, and a year-on-year increase of as much as 340%.

Two Major Forms of Encryption AI Products and Their Market Prospects

Currently, the encryption AI products on the market can mainly be divided into two forms: "AI-enabled encryption" and "encryption-enabled AI."

"AI Empowered Encryption" mainly focuses on applying AI technology to encryption products, enhancing user experience or strengthening various product performances by integrating AI elements. For example, using AI for code optimization and security audits, participating in on-chain yield strategy formulation, integrating AI chatbots to answer user questions, and leveraging AI Agents to simplify on-chain operations, etc.

"Encryption empowers AI" focuses on leveraging encryption technology to empower the AI industry, utilizing the unique advantages of blockchain technology to address or improve certain aspects of the AI industry. For example, using blockchain technology to solve privacy and security issues in data processing for AI models, achieving decentralized ownership of AI models through model assetization, and aggregating computing power resources using Token technology to reduce the training costs of AI models.

The industry generally believes that "encryption empowering AI" shows broader prospects and potential in market applications compared to "AI empowering encryption". This trend has prompted more and more insiders in the AI industry to actively seek to leverage encryption technology to tackle the various challenges faced by the AI industry.

Building the encryption AI ecosystem

Based on the three core elements that drive the development of AI large models, "data, computing power, and algorithms," the encryption AI product ecosystem has gradually formed.

At the data level, encryption AI projects encompass data collection, storage, and processing. Some projects encourage users to share data through Token incentive mechanisms or launch dedicated data markets. Decentralized data labeling platforms provide developers with high-quality training datasets to optimize the learning process of AI models. In terms of data storage, some solutions ensure the security and permanence of data.

At the computing power level, in response to the challenges of the imbalance between supply and demand for GPU resources, decentralized GPU computing networks have emerged. These networks create open markets and GPU aggregation platforms, allowing anyone to contribute GPU computing power and receive rewards. Some projects even tokenize physical GPUs, promoting the decentralization and liquidity of computing power.

At the algorithm model level, a decentralized AI algorithm network is essentially an AI algorithm service market that connects numerous AI models with different expertise. Some projects aggregate and evaluate AI models through subnetworks or competition points, and incentivize model contributors through tokenization to promote innovation and optimization of AI algorithms.

The Development Prospects of the Encryption AI Track in 2025

Since the AI Agent concept gained popularity in October, related products have become the new favorites in the encryption AI market. Some projects are specifically building frameworks and infrastructure for AI Agents, securing substantial funding. The market's focus has gradually shifted from the original infrastructure sector to the enthusiastic pursuit of AI Agent applications.

Multiple organizations have expressed optimism about the development of the encryption and AI markets in their 2025 outlook for the encryption industry trends, specifically noting that AI Agent-related products are expected to experience explosive growth in 2025.

The popularity of the external AI field continues to rise. Large tech companies' AI projects are continuously receiving massive funding, further driving the prosperity of the AI market. Narratively, mainstream AI companies are experiencing a shift from traditional models to general artificial intelligence, planning to launch new AI Agent products in 2025, which is expected to ignite the AI market again.

Every time a major AI company's model is upgraded, it ignites the hot topics in the AI track, attracting new capital influx, further promoting the development of the encryption AI track.

At the policy level, some countries have begun to pay attention to the integrated development of AI and encryption, appointing experts in relevant fields to formulate policies, which is believed to have a positive impact on the field of integration between encryption and AI.