Real AI use cases in crypto: Crypto-based AI markets, and AI financial analysis
We’re rolling out genuine use cases for AI and crypto each day this week — including reasons why you shouldn’t necessarily believe the hype. Today get two for the price of one: Blockchain based AI marketplaces, and financial analysis.
It may not seem like the most exciting use case blending AI and crypto, but both Near co-founder Illia Polosukhin and Framework Ventures founder Vance Spencer cite blockchain-based marketplaces that source data and compute for AI as their top pick.
AI is an incredibly fast-growing industry requiring ever-increasing amounts of computing power. Microsoft alone is reportedly investing $50 billion into data center infrastructure in 2024 just to handle demand. AI also needs enormous amounts of raw data and training data, labeled into categories by humans.
Polosukhin believes decentralized blockchain-based marketplaces are the ideal solution to help crowdsource the required hardware and data.
“You can use [blockchain] to build more effective marketplaces that are more equal,” he tells Magazine, explaining that AI projects currently need to negotiate with one or two big cloud providers like Amazon Web Services. Still, it’s difficult to access the required capacity due to a shortage of Nvidia’s A100 graphical processing units.
Spencer also cites blockchain-based marketplaces for AI resources as his current number one use case.
“The first one is sourcing actual GPU chips,” he says. “Where there’s a big shortage of GPU chips, how do you source them [without] actually having a network that sources and provides and bootstraps a market?”
Spencer highlights Akash Network, which offers a decentralized computing resources marketplace on Cosmos, and Render Network, which offers distributed GPU rendering.
“There are some pretty successful companies that actually do it at this point that are protocols.”
Another example of a decentralized marketplace offering cloud computing for AI is Aleph.im. Token holders in the project are able to access computing and storage resources to run projects.
Libertai.io, a decentralized large language model (LLM) is being run on Aleph.im. While you might think decentralization would slow an AI down to the point where it’s unable to function, Aleph.im founder Moshe Malawach explains that’s not the case:
“This is the thing: for one user the whole inference (when you generate data using a model) is running on a single computer. The decentralization comes from the fact that you get on random computers on the network. But then, it’s centralized for the time of your request. So it can be fast.”
Another blockchain-powered AI marketplace is SingularityNET, which offers various AI services — from image generation to colorizing old pictures — that users can plug into models or websites.
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An emerging blockchain based AI marketplace that Spencer is super excited about is tokenizing and trading AI models. Framework has invested in the Super Smash Brothers-like fighting game AI Arena, where users train AI models that battle each other. The models are tokenized as nonfungible tokens and can be bought, sold or rented. “I think that’s really cool,” he says. “It’s interesting having the crypto native monetization, but also ownership of these models.”
“I think one day, probably some of the most valuable models — some of the most valuable assets on-chain — will be tokenized AI models. That’s my theory, at least.”
Don’t believe the hype: You can currently source components, data and compute via traditional Web2 marketplaces.
Bonus use case: Financial analysis
Anyone who has tried to interpret the ocean of data produced by on-chain financial transactions knows that although it’s one thing to have an immutable and transparent record, it’s quite another to be able to analyze and understand it.
AI analytics tools are perfectly suited to summarizing and interpreting patterns, trends and anomalies in the data, and they can potentially suggest strategies and insights for market participants.
For example, Mastercard’s CipherTrace Armada platform recently partnered with AI firm Feedzai to use the technology to analyze, detect and block fraudulent or money laundering-related crypto transactions across 6,000 exchanges.
Elsewhere, GNY.io’s machine learning tool attempts to forecast volatility of the top 12 cryptocurrencies and its Range Report uses ChatGPT-4 to analyse trends and buy/sell signals.
But can AI help with traditional markets, too? That’s the hope of Bridgewater, which will launch a fund next year from its new Artificial Investment Associate (AIA) Lab that aims to analyse patterns in financial markets so it can make predictions for investors to capitalize on.
Previous attempts to do this have produced lacklustre results — with a Eurekahedge index of a dozen AI driven funds underperforming the its broader hedge fund index by around 14 percentage points in the five years until 2022.
This is mainly due to the issues involved with feeding in the large amounts of accurate information required.
Ralf Kubli, a board member with the Casper Association, believes AI can revolutionize traditional finance — but only if it combines blockchain records with rigorous standards to ensure the information fed to the models is comprehensive and accurate.
For years, he’s been advocating for the finance industry to adopt the Algorithmic Contract Types Universal Standards, or ACTUS, created in the wake of the Global Financial Crisis, which was partly caused by complicated derivatives where no one understood the liabilities or cash flows involved. He believes on-chain standardized data will be essential to ensure trust and transparency in model outputs.
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“Fundamentally, we believe that without blockchain, AI will be quite lost,” he tells Magazine. “Imagine you’re going to invest in an AI company, and you’re updated every three months about the progress of their LLMs, right? If you cannot verify what they fed into the model, you have no way of knowing whether they are making any progress.”
He explains blockchain guards against companies fudging their results, “and the past would indicate that […] there’s so much money, they will fudge about what’s going on.”
“AI, without this assurance layer of the blockchain — what happened, when, where, what was used — I think will not be effective going forward.”
He says that combining the two will give rise to new predictive abilities.
“The hope for AI for me going forward is that the prediction models become much more powerful and behavior can be much better predicted,” he says, pointing to credit scores as an example.
“AI used in the right way could potentially lead to much more powerful prediction models, which would mean that certain people who currently cannot get credit — but would be creditworthy — can obtain credit. That’s something I’m very passionate about.”
Don’t believe the hype: AI’s predictive abilities have been shown to be poor at best so far, and trusted and reliable data that’s not recorded on blockchain can be useful input for AI analysis.
Also read:
Real AI use cases in crypto, No. 1: The best money for AI is crypto
Real AI use cases in crypto, No. 2: AIs can run DAOs
Real AI use cases in crypto, No. 3: Smart contract audits & cybersecurity
Real AI & crypto use cases, No. 4: Fighting AI fakes with blockchain
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US President Donald Trump’s crypto businesses are drawing increased scrutiny on Capitol Hill and beginning to influence the progress of US digital asset legislation. As Republican lawmakers in the US House of Representatives unveiled their draft of a digital asset market structure bill on May 5, Democrats prepared for a united response to Donald Trump’s deepening connections with the industry.
Speaking to Cointelegraph on May 5, a Democratic staffer with knowledge of the matter said that House Financial Services Committee Ranking Member Maxine Waters planned to lead some members of her party out of a Republican-led hearing discussing digital assets. The May 6 hearing, entitled “American Innovation and the Future of Digital Assets” and led by Committee Chair French Hill, could address draft legislation proposed by Republican lawmakers to establish a crypto market regulatory structure.
In a May 5 statement, Rep. Hill and three top Republicans unveiled the draft bill, which could clarify the treatment of digital assets by the US’s financial regulators: the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Hill and others echoed some of Trump’s talking points on crypto — e.g, making the US a “crypto capital of the world” — suggesting deference to the president’s previously announced policies.
The draft bill included a provision requiring the SEC and CFTC to issue joint rules defining digital commodities. According to the text, transactions involving digital commodities “shall be deemed not to be an offer or sale of an investment contract” as long as the purchaser did not have “an ownership interest or other interest in the revenues, profits, or assets.”
According to the Democratic staffer, rules required all members of the House Financial Services Committee to agree to move forward with the digital asset hearing, suggesting that Waters intended to block the Republican-controlled event and conduct a shadow hearing to explore Trump’s and his family’s ties to the crypto industry. At least nine Democrats have reportedly considered a similar move to oppose a proposed stablecoin bill in the Senate.
Calls for impeachment, criticism from both sides
Some members of Congress have already called for Trump’s impeachment after he offered the opportunity for some of his top memecoin holders to tour the White House and attend a private dinner. In addition to the memecoin, the president’s family has backed the firm World Liberty Financial, which recently launched its own stablecoin, and an Abu Dhabi-based investment firm used the USD1 stablecoin to settle a $2 billion investment in Binance.
Related: US Senator calls for Trump impeachment, cites memecoin dinner
Waters, according to the staffer, requested that Hill and Republicans amend any proposed legislation to explicitly prevent potential conflicts of interest in which Trump could personally enrich himself through crypto ventures. Cointelegraph reached out to Hill’s office but did not receive a response at the time of publication. The Arkansas lawmaker reportedly said in March that the Trump family’s involvement in the crypto industry makes related legislation “more complicated.”
Republican lawmakers in the United States currently have control of the House, Senate, and presidency. At least two senators supportive of Trump have criticized his memecoin dinner, hinting that the president was selling access to his office. It’s unclear at the time of publication who among the memecoin holders could attend the May 22 dinner in person.
Magazine: Trump’s crypto ventures raise conflict of interest, insider trading questions
This is a developing story, and further information will be added as it becomes available.
Asset manager VanEck has asked US regulators for permission to list an exchange-traded fund (ETF) holding BNB, the native token of Binance’s BNB Chain, regulatory filings show.
The ETF is designed to accumulate spot BNB (BNB) tokens and “may, from time to time, stake a portion of the [fund’s] assets through one or more trusted staking providers,” according to the ETF’s S-1 prospectus. The filing marks the first time an asset manager has filed for a BNB ETF in the United States.
The BNB token has a market capitalization of roughly $84 billion, according to data from CoinMarketCap. As of May 5, BNB stakers earn a yield of approximately 2.5%, according to data from Stakingrewards.com.
Binance’s BNB Chain is among the most popular smart contract networks, with a total value locked (TVL) of nearly $6 billion, according to data from DefiLlama.
Related: Binance co-founder CZ proposes Bitcoin, BNB for Kyrgyzstan reserves
Bitcoin’s “spillover” effect?
The filing comes days after Binance co-founder Changpeng “CZ” Zhao reportedly said he expects the popularity of Bitcoin (BTC) ETFs to eventually “spill over” into altcoins.
“This cycle so far has been the ETFs. And it’s almost all Bitcoin. Ether hasn’t had as much success but Bitcoin success will spill over to the others eventually,” CZ reportedly said during the Token2049 conference in Dubai.
Spot Bitcoin ETFs attracted net inflows of more than $40 billion since launching in January of 2024, according to data from Farside Investors.
VanEck’s filing is the newest in a flurry of filings seeking to list ETFs holding altcoins.
The US Securities and Exchange Commission (SEC) has acknowledged dozens of cryptocurrency ETF proposals since US President Donald Trump took office on Jan. 20.
They include plans for ETFs holding native layer-1 tokens such as Solana (SOL) as well as memecoins such as Dogecoin (DOGE).
VanEck has filed to list other cryptocurrency ETFs over the past few months, including funds holding Solana and Avalanche (AVAX).
Magazine: ZK-proofs are bringing smart contracts to Bitcoin — BitcoinOS and Starknet
Crypto users are weighing in as Alex Mashinsky, the former CEO of Celsius Network, prepares to stand before a judge on May 8 to face sentencing for commodities fraud and a fraudulent scheme to manipulate the price of the platform’s token.
In a May 2 filing in the US District Court for the Southern District of New York (SDNY), prosecutors released several impact statements from individuals affected by the collapse of Celsius filed after the initial deadline. Though at least one suggested clemency for the former CEO, many told the court about the financial and personal losses caused by the crypto firm filing for bankruptcy, and hinted that Mashinsky should be held accountable for misrepresenting the company.
“Many of the people who participated in this fraud, benefited from this fraud, and potentially orchestrated this fraud will get away with zero legal consequences,” said Daniel Frishberg of Hillsborough County, Florida, in an April 24 statement. “Please do not allow Mr. Mashinsky to be one of those people (such as with probation/house arrest, as some people supporting him have requested). Please throw the book at him.”
Prosecutors have requested that Mashinsky serve up to 20 years in prison for his role in Celsius’ fraud, while the former CEO’s legal team asked for a year and one day. The judge will consider guidelines and victim statements at sentencing on May 8.
Calls for leniency and harsh prison time
Not everyone who sent in a letter to the prosecutors seemed to be in favor of Mashinsky being sent away for decades, as was former FTX CEO Sam “SBF” Bankman-Fried. SBF stood before a different federal judge in the same district in March 2024 and was handed a 25-year sentence, which he is currently serving in a California prison.
“While Celsius [sic] collapse caused significant losses, particularly for Bitcoin holders, shareholders, and borrowers, despite his mistakes, Mr. Mashinsky was, at times, the more conservative voice in an industry overflowing with unchecked greed,” said Artur Abreu in a victim impact statement.
“The twenty-year sentence suggested by the US DOJ is fair in my opinion, as Mashinsky caused pain and suffering for many crypto investors across the globe – even resulting in suicide for some of those involved,” said Web3 Deep Dive podcast host and former Cointelegraph reporter Rachel Wolfson, who lost access to Bitcoin worth about $5,000 at the time. “Harsh punishment for bad actors in the crypto industry has become necessary to ensure that the space legitimizes over time.”
Mashinsky’s sentencing will be one of the first in significant crypto cases in the district since Jay Clayton became interim US Attorney for SDNY. A Trump appointee, Clayton was previously the chair of the US Securities and Exchange Commission and a crypto proponent on many issues.
Critics have suggested that Clayton would take a softer approach to crypto enforcement, given his ties to Wall Street firms and the industry. However, he also released a statement in April regarding a $12-million crypto case, suggesting that he supported accountability for fraudulent actions. His response to Mashinsky’s sentencing and other future cases could be a bellwether for the US Attorney’s approach to crypto.
Related: US prosecutors file over 200 victim statements in Celsius ex-CEO’s case
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