Crypto x AI.

The intersection of the two HOTTEST up-and-coming technologies in the digital age has been the most talked-about topic over the past year.

From the 2021 bull market, when crypto was at the tip of everyone’s tongues, to OpenAI launching ChatGPT, which suddenly had everyone fearing for their lives over the upcoming AI takeover of human civilization, the landscape has been rapidly evolving.

Thus far, these two have very clearly been the “in style” sectors.

For us degens, it means aping memecoins made by AI Twitter accounts, while for others, it means AI products benefitting from the distributed nature of blockchains.

No matter how you view it, this crossover commands the highest mindshare within crypto.

But what is the current state of AI in crypto, and does it need changing?

The current landscape of AI in crypto

AI, as a sector, is like a very complicated onion with lots of different layers. To avoid making this a PhD dissertation, let’s focus on some of the most popular AI sectors within crypto.

1. Compute

Compute is a big one.

AI models process a lot of data. Processing these complex datasets naturally requires extensive compute power. Blockchains provide the perfect infrastructure to distribute access to compute power because multiple parties can do the computing process rather than just one.

Introducing tokens ultimately ties everything together, acting as an incentive mechanism for the different parties/nodes.

On-chain marketplaces are typically used to buy and sell this compute power. They make it simpler to democratize access to compute power rather than relying on a small number of large and well-capitalized companies to supply it.

Projects like Aethir, Render, Akash, and io.net lead the charge here.

1. Inferencing

Inferencing is the process by which a trained AI model makes predictions or generates certain outputs based on inputs. The training process involves feeding these AI models large amounts of data and adjusting parameters.

It’s tightly coupled with compute since all that crunching needs horsepower. Decentralized compute networks often bundle inferencing services like verification as part of their offerings — Netmind is a good example.

1. AI Agents

In recent times, agents have become a more popular AI use case within crypto. Some of you trench warriors will be extremely familiar with this.

You can think of AI agents as personal assistants. They are essentially models that take actions based on input data to achieve certain tasks.

Arguably, the most popular use of AI agents has been in a crossover with memecoins. There have been AI agent Twitter accounts that either launch coins of their own or simply adopt existing memecoins and become the de facto spokesperson for that coin.

The most notable one is Fartcoin, which the Truth Terminal agent adopted as its memecoin of choice. At the time of writing, it has a market cap of over $1 billion. Hot air rises, I guess.  

However, AI agents can be used for much more than memecoins. They can be used within an open-source, peer-to-peer network like Morpheus or an open marketplace, as FetchAI has done.

The subsequent rise of AI agents has made AI agent infrastructure projects like Arc, Eliza, ZerePy, and REI, just to name a few, frontrunners.

While all of these projects are great and important, they come under the branch we like to call ‘crypto for AI,’ that is, using crypto/blockchain infrastructure to decentralize existing AI innovations like inferencing, training, and distribution of compute.

We rarely see anybody look at the other side of the equation.

AI for crypto: Enter GenLayer

The other side is AI for crypto.

By that, we mean using AI to actually improve crypto infrastructure rather than using existing crypto infrastructure to help existing AI products.

With the current memecoin craze, we’ve reached a lull in terms of application innovation in crypto as a whole. However, using AI to help crypto can change this status quo.

So, in today’s article, we will revisit GenLayer, but from a different perspective: using AI for crypto.

GenLayer: A primer

If you want the full deep dive, check out our previous article, but for now, here’s a quick TL;DR for you lazy degens.

GenLayer is a network on which users can transact and interact with a host of different applications, much like other layer-1 [L1] blockchains.

But there’s a difference. GenLayer refers to itself as ‘the first intelligent blockchain’ for a reason. This is because GenLayer offers ‘intelligent contracts’ instead of smart contracts.

What are intelligent contracts?

Intelligent contracts can do everything smart contracts can, but they add AI-driven capabilities, such as:

• Understand and process natural language
• Fetch real-time external data from the Internet
• Adapt and react to changing conditions and new inputs

These features allow developers to build more complex, adaptive, and responsive applications

GenLayer’s consensus mechanism also leverages large language models (LLMs) to handle subjective tasks — a truly groundbreaking design.  

In other words, GenLayer flips the current paradigm on its head. Instead of using crypto to support AI, it uses AI to enhance crypto.

As you can see, rather than using existing infrastructure to decentralize some aspects of the AI model's ‘tasks,’ it uses AI's power to improve the existing decentralized infrastructure, such as smart contracts and consensus mechanisms.

Smart contracts ultimately dictate all the protocols we use and the coins we trade. GenLayer is using AI to improve smart contracts, thereby using AI to make crypto better rather than the other way around.

But the buck doesn’t stop there.

How does GenLayer’s approach actually make crypto better? Let’s look at some potential use cases impossible on chains using traditional smart contracts.

What are GenLayer’s adaptive applications?

Adaptive applications, then. Sounds fancy, doesn’t it? But what the hell does it even mean?

Essentially, these applications can react to new data and conditions, providing a seamless and evolving experience.

But this is too vague, isn’t it?

Let’s try understanding it with arguably the most popular application in DeFi — AMMs.

Adaptive AMMs

AMMs (Automated Market Makers, see glossary) are the lifeblood of crypto. Without them, facilitating on-chain trading would simply be impossible. They are the most used decentralized application type and will likely continue to be so even in the future.

But, they are very static.

Let’s look at a protocol like Uniswap.

It has a pre-determined pricing curve with a fixed liquidity pool model. With this as the background, users can now provide liquidity to this pool to earn a yield, while others can trade from the liquidity in the said pool.

While this works just fine, it’s too rigid for a market as erratic and volatile as crypto. Therefore, the traditional model needs to be shaken up by something more dynamic.

Enter adaptive AMMs.

Adaptive AMMs that use intelligent contracts can essentially react and change based on market conditions and new data.

For starters, fixed pricing curves can be replaced by adaptive pricing algorithms that can react and adapt to changes in market conditions, enabling more accurate asset prices and reduced slippage.

Even in terms of liquidity, adaptive AMMs can be designed such that liquidity allocation can change based on demand and volume and is used in the most capital-efficient manner. This way, pools will have a better depth of liquidity, and general execution will be much better for traders.

Adaptive AMMs are better even in terms of risk management. Intelligent contracts can be coded such that the protocol has automated rebalancing features, allowing it to navigate major volatility events.

The possibilities are endless.

But adaptive AMMs are just one possible application. Another possible implementation could be adaptive DAOs.

Fully autonomous AI DAOs

DAOs (Decentralized Autonomous Organizations) have played an important role in DeFi, but for the most part, they have been a sham.

It is called a decentralized AUTONOMOUS organization, but almost none of the processes within a DAO are autonomous or decentralized.

Humans are required to vote, which often happens in snapshots. In addition, the votes are ultimately decided by whales controlling most of the token supply.

So yeah, far from ideal.

GenLayer’s intelligent contracts can fix this.

Let’s examine the basic functions of most DAOs today. These include governance proposals, voting, and treasury management, all of which are somewhat interlinked.

With proposals, token holders are expected to constantly scan forums and read lengthy reports, after which they discuss the matter with other members of the DAO before reaching a conclusion.

Then, in the voting process, you must manually put up your tokens within certain timeframes, which makes voter turnout low.

Lastly, with things like treasury management, whales are usually in control of most proposals. Thus, decisions on this front also come down to insiders.

Above that, the multi-sig wallets of these treasuries are often managed and controlled by a few people, which involves a huge amount of trust and risk.

So, what does it look like if this setup gets replaced by AI?

With an AI-run DAO, many tedious and human trust elements are removed.

So, for proposals, you no longer need to spend your time scouring through governance forums when an intelligent contract with agentic capabilities can filter out all the relevant information for you.

Take it a step further, and there is a possibility of having said intelligent contract make votes for you.

There can be a marketplace for AI voting agents that differ in risk preference. Users can allocate tokens to these bots, and the bots will vote based on how they’ve been programmed, requiring minimal human interaction.

This way, voter turnout will also always be high.

Even with treasury management, a pre-defined set of rules can be established for the DAO treasury, and AI can control the entire treasury.

This way, no human-run multi-sig can move funds at will or make decisions at random. The AI-run treasury can react to new information and adapt in accordance with the DAO's votes.

In essence, using AI will make DAOs more algorithmic and, thereby, more efficient as a decentralized coordination mechanism.

Similarly, these adaptive capabilities can be used for things like memecoins.

AI memes

This is the juicy bit I’m sure most of you are after.

Unless you’re living under a rock, it’s evident that all anybody can talk about in this industry is the crossover between AI and memecoins.    

We’ve seen AI agents launch memecoins, but they often depend on a single developer or entity for updates.

For example, Truth Terminal was dependent on Andy for its construction. Andy himself kept tweaking the model as it gained popularity, and here we are today, with Truth Terminal being more or less fully autonomous.

After the success of Truth Terminal and GOAT, we saw several similar projects launch almost every day, but all of them depended on a single person or entity to some extent.

With GenLayer, the intelligent contract can essentially handle all of this, making it truly decentralized and autonomous.

Let me elaborate.

A GenLayer intelligent contract can simply be coded to create memes and content that will be shared across social channels. It can also create the ticker itself and manage the liquidity pool. It can also adapt to any important changes in information.

The bottom line is that all that has to be done on GenLayer is to program the intelligent contract according to how you want the project to be.

The intelligent contract will then handle everything else completely autonomously, taking this whole thing to ANOTHER LEVEL.

Even popular projects like Zerebro, which create AI music albums and post them, still need human input.

On GenLayer, the intelligent contract can fully handle content creation, posting, and promotion.

The current AI-meme meta we’re seeing on Solana and Base would be child’s play compared to what GenLayer could enable.

AI agent marketplaces

This is another fun one: an entire marketplace for AI agents. But not a marketplace in the way you’re thinking of it.

Think Pump.fun, but for AI agents.

Pump.fun essentially allows anyone to create a coin on Solana within a few seconds and deploy it.

Similarly, on GenLayer, there can be a Pump.fun, but for AI agents. For those of you in the weeds, Virtuals on Base is something similar. However, intelligent contracts can take the concept to the next level.

For starters, the platform itself will be much simpler for the end user. To create agents, the end user just has to set parameters, and the intelligent contract will take care of the rest.

From agent creation and token issuance to liquidity and social channel-related drudgery, no humans are required.

By default, the agents can interact with each other, opening up a world of creative possibilities. This has become very popular in the last few weeks.

In essence, the amount of human intervention required reduces significantly which means a platform like this launched through intelligent contracts is a little more sophisticated.

From here, the possibilities are endless.

People can either use the AI agent they create for their own personal benefit, trade it with other people in the market, or rent it out to others.

I’m just spitballing here, but the possibilities with a Pump.fun for AI agents are endless.

Perps done differently

Another crypto-native product that has gone mainstream is perps, or perpetual futures.

Perps are by far the most widely traded instrument in this industry. Although most of the volume remains on centralized platforms, the growth in decentralized perps has been impressive recently.

However, perps are now very commonplace.

Whether on-chain or off-chain, the perp product offerings are starting to converge together with little room for differentiation. The main points of differentiation come down to minor details like fees, incentives, and efficiency.

So, if you’re trying to break through in the perp sector, it will be extremely tough.

How about just completely flipping perps on its head?

Instead of making a perps market just for regular coins like everyone else, what if you could make a perp market for literally any asset other than coins?

Yes, you heard that right. A perp market for art pieces, collectible items, vintage items, real estate, etc. Everything with a secondary market could potentially be made into a liquid perp market on GenLayer.

Let me elaborate.

As we mentioned earlier, intelligent contracts can instantly fetch real-world data from all over the Internet. This means they can also instantly fetch the price of any asset you could imagine without being dependent on oracles.

By fetching the asset price, a perp contract can easily be created using intelligent contracts, thereby creating leverage markets for any asset.

Not only will this satisfy the itch of existing crypto native degens, but it could also lure the TradFi people into something completely new.

AI-based gaming on GenLayer

Now I’m aware that crypto gaming has been a bit of a weird one.

It’s something that divides the audience as some people believe that it is a completely pointless use of blockchains, while others believe it makes the gaming industry better.

However, the sector as a whole has struggled to make any real waves in the gaming world, mainly due to the poor player experience.

With GenLayer, this can be fixed.

If you remember, we mentioned that intelligent contracts can process natural languages. This means making a game with a storyline where the contract can adapt to multiple scenarios is now possible.

Think about a Dungeons and Dragons-style game, where the contract is the game master, reacting to every input you toss.  

Intelligent contracts could also randomly and personally customize loot drops, puzzles, and scenarios, creating a richer and more engaging gaming experience.

Since they can process natural language, they can also adapt to different inputs from players, allowing for a smooth gaming experience.

Even in first-person games, where elements like loot are involved, randomization of loot can be handled by intelligent contracts. The contract can adapt to the player's current status and reward them according to their skill level.

Beyond this, intelligent contracts can also be used for interactive text-based games, where the contract can identify a player's skill level and create unique puzzles for them. There can also be an interoperability element amongst the different AI gaming NFTs in the GenLayer ecosystem.

The possibilities are endless, but it’s safe to say that intelligent contracts will be a significant leap forward for crypto gaming.

Concluding thoughts

There’s no debating the fact that both crypto and AI are very powerful emerging technologies.

However, with the stagnation in innovation in the crypto industry, there needs to be an injection of new life — something to freshen things up and kickstart a new innovation wave beyond speculating on memecoins.

GenLayer is doing exactly that.

The team has recognized the power of AI and flipped the script to “How can we use AI to make crypto better?” Intelligent contracts are a prime example.

No one seriously considered evolving smart contracts until GenLayer stepped in with AI. The result: intelligent contracts that are more flexible, capable, and dynamic than their so-called “smart” predecessors.

AI is a great tool that can help take crypto to the next level. All we need to do is recognize that there is a huge opportunity in the ‘AI for crypto’ realm.

We’re entering a new era in which AI can energize crypto and move beyond stale memes and simplistic dApps. GenLayer is pioneering this frontier and is poised to be the leader. So, if you aren’t paying attention, you might get left behind.

GenLayer is AI for crypto.