As early as the end of 2023, "AI+" was one of the keywords in the predictions of the mainstream track of Web3 by major well-known investment and research institutions. Now, a year has passed, how is "AI+" doing?
Recently, a16z and VanEck have released their 2025 Web3 forecasts. These reports all point to the same topic: AI agent, the latest development direction of AI+. Among them, AI agent investment is the most representative, with outstanding performance in the second half of 2024. Ai16z and DAOS.FUN behind it, which reached a market value of 80 million US dollars in one day after its release, triggered a new trend of AI investment, "AI Crypto Fund ".
This also aroused the curiosity of attorney Mankiw. After all, for a long time, attorney Mankiw has been advising crypto investors to participate through crypto funds. Can the emergence of AI crypto funds bring a smarter investment path for crypto investors?
In this article, Attorney Mankiw explores this new investment trend of AI crypto funds.
What is an AI Crypto Fund?
As the name suggests, the core logic of AI crypto funds is to use artificial intelligence (AI) to replace traditional manual management of new investment decision-making methods, which can realize full-process automation operations on the chain, from data analysis to decision execution, without human intervention. Unlike traditional crypto funds that rely on the experience and intuition of fund managers, AI crypto funds rely on algorithmic models and on-chain data to achieve efficient and accurate investment strategies through real-time calculation and execution.
AI crypto funds are possible thanks to the high transparency and democracy of Web3:
First of all, as an infrastructure, blockchain provides rich and real-time data for AI machine learning models, extracting patterns from on-chain transaction history, asset price fluctuations to market sentiment. These data can help AI optimize investment strategies.
Secondly, the decentralized autonomous organization (DAO) architecture provides an unlicensed operating environment for AI crypto funds. The operation of AI crypto funds can achieve democratic governance and execution through smart contracts, further reducing the subjectivity, operational risks and centralization problems caused by human intervention.
It is precisely because of the characteristics of the underlying infrastructure that AI crypto funds have more advantages than traditional crypto funds:
Data processing capabilities. AI can analyze massive amounts of on-chain and off-chain data at high speed, accurately identify trends and make decisions. This processing speed and data scale far exceeds human limits.
Market sentiment capture. By analyzing social media, news, and industry dynamics, AI can perceive signals of market changes in advance, helping funds make more accurate choices before trends occur.
Autonomy and transparency. Relying on DAO and smart contracts, all operation records are put on the chain. AI can promote the transparency of fund investment and management and increase trust.
Risk management capabilities. AI can not only conduct real-time monitoring, but also quickly adjust asset allocation according to market changes, which makes AI crypto funds more advantageous in the face of market fluctuations.
As more capital participates in Web3, investors' demand for efficiency, stability and transparency has driven the birth of AI crypto funds. The concept is good, but implementation is the key. So, what are the representative projects in this field?
What AI crypto funds are there?
At present, the exploration of AI crypto funds has been fruitful. In addition to DAOS.FUN mentioned by attorney Mankiw at the beginning, there are also some AI crypto funds that have already started trials/operations.
1. Ai16z and DAOS.FUN
As a phenomenal AI crypto fund, Ai16z attracted the attention of the entire industry as soon as it was launched in the second half of 2024, and successfully set off a trend of AI crypto investment. The decentralized autonomous organization (DAO) behind Ai16z, DAOS.FUN, is the core technical supporter of the fund, and has achieved governance transparency and decision-making automation through smart contracts. Ai16z relies on advanced AI algorithms and on-chain data analysis capabilities to truly achieve full process automation from strategy formulation to execution.
2. Yahctzee Fund
Yahctzee Fund, backed by crypto celebrity Arthur Hayes, is another eye-catching autonomous AI-driven fund. It demonstrates excellent flexibility and adaptability in investment decisions through on-chain governance structure and high-performance AI algorithms. The goal of Yahctzee Fund is not only to optimize returns, but also to explore the optimal path for long-term asset allocation, trying to create a more sustainable investment model.
3. Sekoia Virtuals
Sekoia Virtuals is an experimental AI fund initiated by Anand Iyer, managing partner of Canonical Ventures, focusing on supporting the Virtuals ecosystem. Although the current market influence of the project is not large, its main Web3 small community investment management not only makes its differentiation advantage obvious, but also broadens the vertical fields and directions of the development of AI crypto funds.
4. Cod3x and BigTonyXBT
Cod3x is an organization focused on building the next generation of AI agent infrastructure. Its flagship project BigTonyXBT is an autonomous trader based on the Base chain. BigTonyXBT focuses on the DeFi field and gradually builds a complete ecosystem for AI crypto funds in financial investment through AI automatic trading and asset management functions.
These projects have different focuses from technology implementation to ecological layout, and have comprehensively promoted the model innovation of crypto funds. However, while AI crypto funds are showing their huge potential, whether they can achieve compliance under the increasingly clear global regulatory environment is also a key issue - compliance determines whether they can truly inject sustainable growth momentum into the Web3 ecosystem.
AI Crypto Fund Compliance Exploration
The emergence of AI crypto funds has undoubtedly brought innovation to the crypto investment field, but whether this emerging model is compliant remains an open question. This is mainly due to the particularity of AI crypto funds:
The first is the issue of legal entities. When traditional funds are established, they must be approved by the jurisdiction and have a clear legal identity. However, most of the AI crypto funds currently seen are often based on DAOs, and DAOs are not clearly identified as legal entities in most countries. This means that if AI crypto funds involve asset custody, contract signing, or legal disputes, the current legal framework may not be able to provide effective support. In some jurisdictions, the operation of funds without a license may be regarded as illegal fundraising, which makes AI crypto funds face greater legal risks when operating across borders.
The second is the issue of licenses and supervision. Existing financial market rules require fund managers to obtain relevant licenses and fulfill regulatory obligations, such as disclosing risks to investors and regularly reporting fund performance. However, AI crypto funds do not have a clear manager, and investment strategies and execution are completed by AI algorithms. How to define the identity of "fund managers" is itself a compliance problem. In addition, this "unlicensed operation" model may be regarded as circumventing supervision, especially in regions with strict regulations on fund establishment and management, such as the United States and Europe, which will become a major obstacle to the compliance of AI crypto funds.
The third is the issue of governance transparency and algorithm compliance. Although the DAO architecture provides technical support for on-chain transparent governance for AI crypto funds, this transparency is more for technology and the community rather than regulators. Traditional funds need to disclose their investment strategies and governance structures to regulators, but the algorithms of AI crypto funds are complex and difficult to explain. It remains to be seen whether regulators can accept such a "black box" mode of operation. Especially in regions such as Europe that have clear requirements for algorithm transparency and explainability, AI crypto funds may face greater compliance pressure.
In addition, AI crypto funds usually serve the global market, but the regulatory attitudes of different countries towards crypto assets and AI technology are not consistent. For example, the US Securities and Exchange Commission may regard them as unregistered securities, while in China, all activities involving currency are explicitly prohibited, and AI crypto funds may not be able to conduct business due to touching the policy bottom line. This inconsistency in regional supervision makes AI crypto funds face more compliance challenges when expanding their business.
In addition, whenever we talk about AI, data privacy and cross-border are always the core regulatory issues that cannot be avoided. At present, many countries and regions around the world have begun to establish AI-related regulatory bills. For example, China's Ministry of Industry and Information Technology has decided to establish an artificial intelligence standardization technical committee to be responsible for the revision of industry standards; Europe's "Artificial Intelligence Act" (EU AI Act) is gradually advancing, aiming to classify AI applications by risk level, and to formulate strict transparency and data use requirements; the "Blueprint for an AI Bill of Rights" issued by the White House in the United States, although a principled guide, also clearly puts forward the basic principles of algorithm transparency, user privacy protection, and prevention of data abuse. The gradual establishment of these regulatory rules will also impose stricter requirements on the compliance of AI crypto funds.
Attorney Mankiw's Summary
The emergence of AI crypto funds has brought a whole new space for imagination to the crypto investment field. Lawyer Mankiw believes that AI crypto funds are not only a technological innovation, but also a challenge to traditional financial logic. However, whether it is the legal status of DAO, the interpretability of AI algorithms, or the diversity of the global regulatory environment, compliance is always the key to determining whether AI crypto funds can go mainstream.
Although there are still obvious gaps between the current traditional regulatory framework and new technologies, developers and investors should also do the following: actively adapt to the existing legal framework, and prepare for future regulatory rules amid uncertainty.
Attorney Mankiw believes that only by seeking innovation in compliance and creating value within rules can the AI crypto fund inject sustainable development momentum into the entire industry.
