The 'Christmas Tree' Revelation of AI Agent: the development logic behind the market Fluctuation

Author: Decentralized Finance Teddy

AI Agent valuation took a roller coaster ride, where is the road behind? As a Web3 AI entrepreneur and investor, here are some personal thoughts:

1. Why the market crash

AI Agent's crash has 2 triggering factors, one is that trump's meme coin drained the market liquidity, on the day of trump's launch, many people dumped AI coins to speculate on $trump; The other more important factor is the launch of low-cost deepseek, which reduces AI's reliance on computing power, leading to the collapse of NVIDIA, and the emotions also transmitted to the stock prices of other AI companies and the coin price of Web3 AI Agent, even a blow to the dominant technological innovation in the United States, and the coin circle and the United States (stock market) are strongly correlated.

However, in the long run, the reduction of underlying computing power costs is very beneficial for building AI Agents. For example, in the current development of AI applications, due to the cost of chatgpt, developers can only reduce the number of calls. With deepseek, the cost problem is greatly alleviated.

2. Valuation Logic of AI Agent

The current market value of AI Agent = (fundamentals + narrative) * market sentiment.

Fundamentals are the current situation of the project, such as cash flow, active user count, user engagement time, Twitter popularity, etc., while the narrative is the imagination of the project's future. If the fundamentals are average now, but the narrative has prospects, the market will also buy in. This is similar to the stock market, where users buy stocks at a loss but with development prospects. Market sentiment fluctuates greatly. The market had severe FOMO sentiment not long ago, giving many AI projects a premium; now FUD is severe, and valuations are shrinking significantly.

3. Successful Applications of AI Agent

Why focus on the successful application of AI Agent rather than AI Infra? Because with successful applications, Infra will inevitably have value; if only infra is considered without successful applications, the business model is not feasible.

Currently, @AIxbt_Agent has proven the product market fit of AI Agent by quickly building a more powerful crypto KOL than humans through LLM. AIxbt_Agent has consistently ranked in the top three in kAIto's mindshare.

In addition, @_kAItoAI is not an AI agent, but it is also a successful application of web3 AI, before kAIto did encrypted data analysis did not have a particularly good flashpoint, but through yaps suddenly found the product market fit, through LLM technology to find high-quality KOL and content, can also help the project party to do marketing, some top projects such as @StoryProtocol @monad_xyz Duhe KAIto has established a partnership. Let the project team and users roll up yaps at the same time, and the biggest beneficiary in the end is KAIto.

4. AI Agent faced with issues

The first issue is the issue of market sentiment, which can be fixed at this time; the second is the issue of liquidity. If the liquidity of the entire coin circle is in trouble, AI Agents rooted in the coin circle will definitely be affected; the third is that the AI Agent launched by pumpfun has many plate projects without long-term development plans, squeezing the space of true long-term builders, and there is a certain amount of Gresham's Law; the fourth is that AI has strong language abilities, but in terms of real trading decisions, there is no outstanding ability, and sometimes investment errors caused by illusions may occur.

5. Future Outlook

AI Agent may be constrained by the above issues in the short term, but in the long run, there is a great potential for development, depending on the progress of AI technology itself and the time and cost of training in the web3 field. @AIxbt_Agent has been a successful crypto KOL, and the next stage is DeFAI, but it is still early. Looking back, Decentralized Finance was first proposed in the summer of 2018, and the real prosperity came two years later in the Decentralized Finance Summer. Perhaps DeFAI also needs such a cycle.