- Grayscale’s new AI Crypto Sector reflects a surge in decentralized AI, growing over 4x to a $21B market cap since Q1 2023.
- Bittensor leads the AI Crypto Sector by market cap, with TAO set for a halving event and rising demand for subnet investment.
- The sector covers AI Platforms, Tools, and Applications, with projects like Grass and Virtuals generating tens of millions in revenue.
Grayscale Research has officially introduced the Artificial Intelligence Crypto Sector, making it the sixth recognized sector within its proprietary Crypto Sectors classification. The sector consists of 20 tokens with a current combined market capitalization of $21 billion, up from $4.5 billion in Q1 2023.
Grayscale Adds AI as a Distinct Crypto Sector
According to a post by Wu Blockchain on X, Grayscale has added a new sector dedicated to artificial intelligence in its Crypto Sectors framework. This change mirrors the model used in public equities like the GICS. The Artificial Intelligence Crypto Sector includes assets where AI is a core use case. Some tokens in this group were previously categorized under Smart Contract Platforms, Consumer & Culture, and Utilities & Services sectors.
The Crypto Sectors framework, developed in collaboration with FTSE/Russell, organizes tokens based on software use. This update allows investors to track AI-related digital assets with more precision. Grayscale Research pointed out that this categorization is needed due to AI’s expanding role within blockchain ecosystems.
Composition and Sub-Sectors of the AI Sector
The AI sector includes three sub-categories: AI Platforms, AI Tools & Resources, and AI Apps & Agents. Each group focuses on a distinct component of decentralized AI.
AI Platforms such as Bittensor and Near serve as infrastructure for building AI applications. Bittensor offers an open network for global AI development. Near, while a smart contract platform, is shifting its focus toward AI use cases with features designed to enhance cross-chain transactions.
AI Tools & Resources projects offer essential development inputs such as compute power and data. Grass enables decentralized data scraping, while Akash aggregates idle computing power to meet the demands of AI model training.
The AI Apps & Agents sub-sector focuses on software that interacts directly with end-users. Projects like Virtuals develop autonomous agents that execute tasks on users’ behalf. Story Protocol addresses content ownership in AI, and Worldcoin offers identity verification to separate humans from AI entities online.
Market Growth and Sector Size
The combined market value of the Artificial Intelligence Crypto Sector stands at $21 billion as of now. This is a more than fourfold increase from the $4.5 billion recorded in Q1 2023. Despite this growth, the sector represents only 0.67% of the overall crypto market cap.
Bittensor’s native token, TAO, leads the sector by market cap and recently saw growth due to the dTAO upgrade, which allows subnet investment. The token is also set to undergo its first halving this year, modeled after Bitcoin’s issuance schedule. Currently, more than 7% of TAO’s circulating supply is allocated to subnets.
Other leading assets in the sector include Near, Grass, Virtuals, and ElizaOS. While some projects have shown revenue generation and user adoption, others are still in their early stages.
Innovation Trends in Decentralized AI
Grayscale has pointed to a few innovation trends it is monitoring. Among them is distributed training, which uses globally distributed GPUs rather than centralized data centers. Projects like Prime Intellect have demonstrated the ability to train large-scale AI models using this approach.
These distributed systems aim to tap into the idle 30% of global data center capacity, potentially lowering costs for AI model development. Gensyn and Nous Research are also active in this area and may introduce tokens within the year.
Grass has reported tens of millions in annualized revenue from web data sales to AI labs. Virtuals, focused on AI agent tokens, has generated approximately $30 million in annualized fees.
AI Agents and the Role of Stablecoins
Grayscale expects the rise of crypto-native AI agents to benefit from increased adoption of stablecoins. Agents depend on programmable and instant payments, which traditional financial infrastructure does not support.
Several firms have moved toward enabling stablecoin use. Coinbase recently launched a payments standard tailored to AI agents. Meta announced its entry into stablecoins, and Stripe acquired a stablecoin firm for $1 billion. U.S. legislation, including the GENIUS stablecoin bill, could further enable this trend.
Grayscale’s sector update shows that decentralized AI is transitioning from concept to utility. By incorporating AI as a standalone sector, the firm provides clearer insights for institutional and retail investors seeking exposure to emerging blockchain-based AI systems.
