As early as the end of 2023, "AI+" was one of the keywords in the mainstream Web3 track predictions of major well-known research institutions. Now, a year has passed, how is "AI+" doing?
Recently, a16z and VanEck have respectively released their 2025 Web3 predictions, and these reports have all pointed to the same topic: AI agents, the latest development direction of AI+. Among them, AI-driven investment is a representative, with outstanding performance in the second half of 2024 - the launch of Ai16z and its behind-the-scenes DAOS.FUN, which has a market value of $80 million in a single day, has triggered a new trend of "AI Crypto Fund".
This has also aroused the curiosity of Mankun Lawyer, as he has long advised crypto investors to participate through crypto funds, and the emergence of the AI Crypto Fund, can it bring a more intelligent investment path for crypto investors?
In this article, Mankun Lawyer will explore the new investment trend of the AI Crypto Fund around this topic.
What is an AI Crypto Fund?
The AI Crypto Fund, as the name suggests, has the core logic of using artificial intelligence (AI) to replace the traditional human-managed investment decision-making method, and can realize the full-process automation of on-chain operations, from data analysis to decision execution, without human intervention. Unlike traditional crypto funds that rely on the experience and intuition of fund managers, AI Crypto Funds rely on algorithmic models and on-chain data, and achieve efficient and accurate investment strategies through real-time calculation and execution.
The realization of AI Crypto Funds is benefited from the high transparency and democracy of Web3:
First, the blockchain as the infrastructure provides rich and real-time data for the AI machine learning model, from the on-chain transaction history, asset price fluctuations to market sentiment, and these data can help AI optimize the investment strategy.
Secondly, the decentralized autonomous organization (DAO) architecture provides an unregulated operating environment for the AI Crypto Fund. The operation of the AI Crypto Fund can be realized through smart contracts, further reducing the subjectivity, operational risk and centralization issues brought by human intervention.
It is precisely because of the characteristics of the underlying infrastructure, the advantages of AI Crypto Funds are more prominent compared to traditional crypto funds:
·Data processing capability. AI can quickly analyze massive on-chain and off-chain data, accurately identify trends and make decisions. This processing speed and data scale far exceeds human limits.
·Capturing market sentiment. By analyzing social media, news and industry dynamics, AI can perceive the signals of market changes in advance, helping the fund make more accurate choices before the trend occurs.
·Autonomy and transparency. Relying on DAO and smart contracts, all operation records are on-chain, and AI can promote the transparency of fund investment and management, thereby increasing trust.
·Risk management capability. AI not only can perform real-time monitoring, but also can quickly adjust asset allocation according to market changes, which gives AI Crypto Funds an advantage in the face of market volatility.
With more capital participating in Web3, the demand of investors for efficient, stable and transparent investment has driven the emergence of AI Crypto Funds. The concept is certainly good, but the key is implementation. So, what are the representative projects in this field?
What are the AI Crypto Funds?
Currently, the exploration of the AI Crypto Fund field has achieved remarkable results. In addition to the DAOS.FUN mentioned by Mankun Lawyer at the beginning, there are also some AI Crypto Funds that have started to experiment/operate.
1. Ai16z and DAOS.FUN
As a phenomenal AI Crypto Fund, Ai16z has attracted the attention of the entire industry since its launch in the second half of 2024, successfully triggering the trend of AI crypto investment. DAOS.FUN, the decentralized autonomous organization (DAO) behind Ai16z, is the core technical supporter of the fund, and has realized transparent governance and automated decision-making through smart contracts. Relying on advanced AI algorithms and on-chain data analysis capabilities, Ai16z has truly achieved full-process automation from strategy formulation to execution.
2. Yahctzee Fund
Yahctzee Fund, supported by the well-known crypto figure Arthur Hayes, is another eye-catching autonomous AI-driven fund. It has shown outstanding flexibility and adaptability in investment decision-making through on-chain governance structure and high-performance AI algorithms. The goal of Yahctzee Fund is not only to optimize returns, but also to explore the optimization path of long-term asset allocation, trying to build a more sustainable investment model.
3. Sekoia Virtuals
Sekoia Virtuals is an experimental AI fund initiated by Anand Iyer, a managing partner of Canonical Ventures, focusing on supporting the Virtuals ecosystem. Although the current market influence of this project is not large, its Web3 small community investment management, not only makes its differentiated advantages obvious, but also expands more vertical fields and directions for the development of AI Crypto Funds.
4. Cod3x and BigTonyXBT
Cod3x is an organization focused on building the next-generation AI agent infrastructure, and its flagship project BigTonyXBT is an autonomous trader based on the Base chain. BigTonyXBT focuses on the DeFi field, and is gradually building a complete ecosystem of AI Crypto Funds in financial investment through AI automated trading and asset management functions.
These projects, with their respective focuses on technical implementation and ecosystem layout, have comprehensively promoted the model innovation of crypto funds. However, whether AI Crypto Funds can achieve compliant implementation under the gradually clarified regulatory environment, is also a key issue - compliance or not determines whether they can truly inject sustainable growth momentum into the Web3 ecosystem.
Compliance Exploration of AI Crypto Funds
The emergence of AI Crypto Funds has undoubtedly brought innovation to the crypto investment field, but whether this new model is compliant remains an unresolved issue. This is mainly due to the special nature of AI Crypto Funds:
First, the issue of legal entity. Traditional funds must be approved by the jurisdiction when established, and have a clear legal identity. However, most of the currently seen AI Crypto Funds are based on the DAO operation, and DAO has not been clearly defined as a legal entity in most countries. This means that if the AI Crypto Fund involves asset custody, contract signing or legal disputes, the current legal framework may not be able to provide effective support. In some jurisdictions, the operation of unlicensed funds may be regarded as illegal fundraising, which exposes AI Crypto Funds to greater legal risks in cross-border operations.
Secondly, the issue of licenses and regulations. Existing financial market rules require fund managers to obtain relevant licenses and fulfill regulatory obligations, such as disclosing risks to investors and regularly reporting fund performance. But AI Crypto Funds do not have a clear manager, and the investment strategy and execution are completed by AI algorithms, which makes it a compliance challenge to define the identity of the "fund manager". In addition, this "unlicensed operation" model may be seen as evading regulation, especially in regions with strict regulations on fund establishment and management, such as the United States and Europe, which will become a major obstacle to the compliance of AI Crypto Funds.
The third is the issue of governance transparency and algorithm compliance. Although the DAO architecture provides technical support for the on-chain transparent governance of AI Crypto Funds, this transparency is more for technology and community, rather than regulatory authorities. Traditional funds need to disclose their investment strategies and governance structures to regulatory authorities, but the algorithms of AI Crypto Funds are complex and difficult to explain, and it remains questionable whether regulatory authorities can accept this "black box" mode of operation. Especially in regions such as Europe, where there are clear requirements for algorithm transparency and interpretability, AI Crypto Funds may face greater compliance pressure.
In addition, AI Crypto Funds usually serve the global market, but the regulatory attitudes of different countries towards crypto assets and AI technology are not consistent. For example, the US Securities and Exchange Commission may view it as an unregistered security, while in China, all activities involving cryptocurrencies are clearly prohibited, and AI Crypto Funds may be unable to carry out business due to touching the policy bottom line. This inconsistency in regional regulations poses more compliance challenges for AI Crypto Funds in expanding their business.
In addition, whenever AI, data privacy, and cross-border issues are discussed, regulatory core issues are always unavoidable. Currently, many countries and regions around the world have begun to establish regulatory laws related to AI, such as China's Ministry of Industry and Information Technology deciding to establish an AI Standardization Technical Committee to revise industry standards; the European Union's AI Act is gradually being promoted, aiming to classify AI applications by risk level and formulate strict requirements for transparency and data use; the White House's Blueprint for an AI Bill of Rights, although principle-based guidance, also clearly proposes basic principles of algorithm transparency, user privacy protection, and prevention of data abuse. The gradual establishment of these regulatory rules will also impose more stringent compliance requirements on AI-powered crypto funds.
Summary by Mankun Lawyer
The emergence of AI-powered crypto funds has brought a brand-new imagination space to the crypto investment field. Mankun Lawyer believes that AI-powered crypto funds are not only a technological innovation but also a challenge to the traditional financial logic. However, whether it is the legal status of DAOs, the interpretability of AI algorithms, or the diversity of the global regulatory environment, compliance is always the key to determining whether AI-powered crypto funds can go mainstream.
Although there are still obvious gaps between the current traditional regulatory framework and new technologies, developers and investors should also do the following: actively adapt to the existing legal framework and prepare for future regulatory rules in the face of uncertainty.
Mankun Lawyer believes that only by seeking innovation in compliance and creating value within the rules can AI-powered crypto funds inject sustained development momentum into the entire industry.
