Coinbase Analyst Calls Overvaluation of AI Tokens

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The fusion of artificial intelligence (AI) and blockchain technology has sparked significant interest, evident from the surge in AI-related crypto tokens.

According to CoinGecko data, AI crypto projects have surged to $26 billion this year. Around 30% of this surge occurred within a day following the rise in Nvidia's stocks, an industry leader. Currently, AI crypto coins have a market capitalization of $25.4 billion, up 5% in 24 hours.

Amidst this enthusiasm, Coinbase analyst David Han observes an excessive surge in interest in AI-related crypto assets.

"Our contrarian view is that the potential value of many AI tokens may be overestimated due to the widespread attention on the AI industry, and that many AI tokens may lack sustainable demand drivers in the short to medium term," Han said, as reported by dlnews on March 8th.
He added, "While interest in AI tokens may continue to rise, driven by ongoing enthusiasm for AI and crypto, achieving meaningful AI token adoption will require more than just decentralization."

Primary Challenges for AI Projects

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One of the main challenges for crypto AI projects, he noted, lies in the core of both technologies. Although crypto projects often aim for decentralization, current AI offerings heavily rely on centralized components and data sources.

Highlighting specific challenges, Han pointed to projects like Akash Network and Render, facing supply and demand issues despite increasing usage.

He suggested these projects need to reconsider their token distribution strategies to attract more attention and potentially compete with centralized services like Amazon Web Services or ChatGPT.

"The decentralized AI future, as currently envisioned by many in the crypto industry, is still far from guaranteed. The future of the AI industry itself largely remains uncertain, making us cautious about the long-term sustainability of this technology," Han concluded.

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