AI Excitement is Causing Projects to Pump — For Now: Travis Kling
Travis Kling cast doubt on AI-related projects but recognized DePin’s prospects
By: André Beganski
February 8, 2024
With enthusiasm for AI propelling shares of firms like Nvidia to all-time highs, Wall Street’s tech-based infatuation should shine brightly on crypto projects that can capture the trend, according to Ikigai Chief Investment Officer Travis Kling.
“It would be my base case that a basket of AI names will outperform crypto broadly this year,” Kling wrote in a recent post on X. “But I don’t think it will be sustainable.”
From his perspective, a similar situation is set to play out in crypto that he witnessed in 2017. Chasing coins attached to networks with novel use-cases, many assets pumped as the market swelled, only to crater once the market turned due to poor execution, he said. In a Monday interview with Coinage, he specifically pointed to VeChain and Ripple as examples.
“You bought VeChain because blockchain is good for logistics, and VeChain is the blockchain. And it's like, ‘Oh, you need a blockchain for banks and Ripple is the bank coin,’” he said. “None of these tokens ended up fulfilling this narrative, but they still pumped to the high heavens because of that, and I think you've got setups like that specifically around AI.”
Among crypto projects tracked by GoinGecko in its AI category, only two coins rank among the industry’s top 100 by market capitalization: Bittensor and Render. With market capitalizations $2.9 billion and $1.6 billion, respectively, the two projects represent a particularly small slice of the overall $1.7 trillion crypto market.
Last June, Coinage highlighted how Render and Akash are addressing needs associated with machine learning as decentralized compute services — effectively letting users rent out chips similarly to Airbnb, so people can train AI models and render advanced graphics. When it comes to Render, however, Kling described the project as somewhat of a hybrid.
“I do think DePin is setting up to be probably the brightest spot of actual adoption, and I include Render in that category,” he said, referring to decentralized physical infrastructure networks. “You're using a token economy to incentivize real world behavior.”
Kling said that DePin is one area within crypto, “starved for actual adoption,” where certain projects could drive real change. Referencing Helium Mobile’s recent partnership with T-Mobile and growing decentralized wireless network, he said its $20 per month unlimited data, talk and text plan is a positive development for the space, overall.
“It actually works, and there's just not a long list of crypto projects that have done anything like that,” he said. “That's a great story in a universe that has a real dearth of successful stories like that.”
Still, Kling cast doubt on the ability for tokens attached to DePin projects to accrue value in certain circumstances, based purely on tokenomics. Seeing certain structures that lend pause to projects’ ability to “accrue value through cycle,” he said many look poised to pump, but “they're [also] set up to collapse into, down 90 to 95%” from any highs.
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