Crypto takes a back seat as investment in AI accelerates

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Artificial intelligence is the shiny new thing that venture capitalists are throwing money at, leaving once-hot crypto projects chasing funding.

Mysten Labs co-founder and CEO Evan Cheng said this change is due to the ability of AI products and applications to cater to a wider audience as the crypto industry continues to focus on herself.

Multidisciplinary venture capitalists are increasingly turning their attention to AI investments, driven by the technologies’ proven value to consumers, Cheng said, contrasting the AI ​​boom with the crypto boom. -currency since 2017.

ChatGPT is out, and [developers] build products and applications for consumers and for developers, large-scale, large-scale use cases are immediately possible,” he observed.

Founded in 2021, Mysten Labs offers a technology infrastructure platform dedicated to the development and adoption of Web3 projects and has a management team that includes former scientists and engineers from Apple and Meta (then Facebook) . In March last year, Mysten Labs launched the Sui blockchain, which aims to provide fast transactions with reduced latency and cost.

Cheng says the growing interest in AI among VCs is evident in their social media activities, especially Twitter.

While Cheng didn’t give specific examples of the investment shift, a $150 million investment in Character AI last month by longtime investment firm Andreessen Horowitz might be illustrative. Lightspeed Venture Partners also participated in a $101 million fundraising round for Stability AI, the team behind the AI-powered computer graphics platform Stable Diffusion, in October 2022.

Even blockchain companies are investing in AI. In February, Tron founder Justin Sun said the company would launch a $100 million AI development fund.

Cheng believes that AI, blockchain and Web3 technologies are still complementary fields and can also be used in consumer products. Conversely, he expressed skepticism about integrating AI as a core component, as it may not be necessary or suitable for all applications.

One area we are very interested in and where we see many opportunities is the use of AI technology in development tools, Cheng said. We’ve already seen its value in smart contract auditing and code assistance, for example.

“While there are hyped products that combine AI and crypto, I would be skeptical of their true usefulness,” he continued. “However, when it comes to development tools for smart contract developers, it’s definitely a fruitful area.

VCs tend to follow trends and invest in compelling narratives, Cheng said, citing the rise of decentralized finance (DeFi) and non-fungible tokens (NFTs) as examples. However, he emphasizes the importance of providing tangible value in order to grab the attention of VCs. If crypto projects can do this, he said they can garner the necessary investment to continue innovating and growing.

Cheng said showcasing innovative and consumer-focused products will rekindle investment interest in the blockchain and crypto industries, and he maintains a positive outlook for the future of the web3, blockchain, and crypto industries. of cryptography.

I believe there will be many big, powerful and exciting consumer products out there, and that’s what really excites me, he said. By introducing people to some exciting and imaginative ideas, we can attract investment into this space.

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