I often share my thoughts on the AI + Crypto track in my articles. Although my focus is mainly on AI + Crypto, in reality, AI competition is not limited to the crypto ecosystem and faces competition from various AI in traditional fields. Compared to the crypto ecosystem, the latter has a broader base of users and talent.
Recently, a very popular AI project called Concourse emerged in the traditional financial field. This project focuses on a very niche area - helping companies process various financial data. It is claimed that this system can improve the efficiency of corporate financial processing by 10 times.
Frankly, compared to the numerous AI agents in the AI + Crypto track that have little practical utility, I find such AI applications much more valuable.
However, what causes me more concern about the current AI + Crypto track is another piece of data disclosed by this project:
It raised $4.7 million in seed funding from top giants like and YC.
Note: This $4.7 million is seed funding, meaning the project obtained this amount in its first round of external financing.
This immediately reminded me of Virtual's ongoing Genesis Launches, which allows for a direct comparison.
Projects launched on the Genesis Launches platform must offer 37.5% of their total token supply for pre-sale. How much funding does this pre-sale generate?
Currently, it's around 40,000 Virtual tokens, which at the current Virtual price is nearly $80,000. Let's round it to $100,000 for easier calculation.
Comparing these, a problem becomes apparent:
Projects launched on this platform have low funding. If the funding is low, the project's complexity will also be limited.
I'm not saying that more complex projects or more funding are always better, but if a project is too simple and underfunded, how much can we expect in terms of practicality and utility?
Compared to Concourse's $4.7 million funding, $100,000 is extremely small. What kind of project can be developed with such a small amount of funding? What problems can it solve?
This is a question worth serious consideration.
Let's continue thinking:
If a project successfully develops through funding on Genesis Launches, it will certainly need to continue raising funds to progress - $100,000 alone cannot nurture a small seedling into a towering tree.
But once it needs to raise more funds, new problems arise:
With the current state of venture capital, the project will likely find it hard to avoid traditional VCs, as they generally have stronger financial and networking capabilities compared to crypto VCs.
If seeking traditional VCs, what will the project use for funding?
Tokens or equity?
If using tokens, will traditional VCs accept them?
I believe there's a legally undefined gray area here. I've written in previous articles: What actual rights do these tokens have? How significant are these rights? If I obtain over 50% of the tokens, can I actually fully control the project?
This is currently very unclear. If it's unclear, will traditional VCs accept it?
If using equity, what do the already issued tokens represent? How are tokens and equity linked? What differences exist in terms of rights?
This is also currently very unclear. If undefined, it could be a source of future disputes.
Let's take a step back. Suppose the project is lucky and doesn't need to seek traditional VCs, but finds a well-funded whale in the crypto ecosystem willing to invest in its tokens according to crypto ecosystem conventions.
This also presents problems:
In recent years, the crypto ecosystem has almost formed a trend: mocking VCs for missing selling opportunities due to token lock-ups and being the most severely cut.
Many VCs have not only gained no returns but have lost significantly in crypto ecosystem investments. In this situation, they have become extremely cautious.
Under these circumstances, are they still willing to invest in project tokens?
If a project can neither easily raise funds from traditional VCs nor attract crypto VCs, how can its future growth be advanced?
While starting a project with crypto ecosystem funding methods might be relatively easy, many issues still need to be resolved to continue funding and progress.
