AI ROLLUP #7: DeFAI Mindshare | Arc’s Multi-Chain Moves | ai16z: Sink or Swim? | Virtuals $40M Burn

Welcome Bank This Nation to the AI Rollup, where we cover the recent news, developments, and drama in the intersection of crypto and AI. I'm David Hoffman here with my co-host and AI expert, Ejaz, and we are here to help make sure that you are up to speed with the rapidly evolving AI agent space out there. Ejaz, how you doing, my man? How was your week last week? Anything, um

anything happened?

Nope, not much. Pretty quiet.

Um,

Okay, so there's going to be some listeners who do have context about what we're about to talk about, and there's gonna be other listeners who have zero context about what we're about to talk about. So maybe we can just start by flagging that.

yeah. So so I think it's important to provide context and also highlight that this is not a kind of like a jokey part of this segment. Um, this is kind of like I want to take a moment to kind of like address something that is uh serious to me and meaningful to me and a lot of other people. And um I think it's worth kind of just taking a moment. So for context here, um, last week myself um and two other folks core contributors, Marcus and Rope, uh, launched a DAO that will be fully dedicated to its mission of helping to grow this wonderful and wacky crypto AI space. And our founding principles from the start have been to use this DAO to help discover and support the best builders, uh, creators and enthusiasts, the leaders of tomorrow, basically.

Um, and I want to start by saying that the core team and I took some steps with the launch process, of which we truly regret and take full accountability for. Um, if I'm being completely honest, we were just so excited to launch and get this thing going. Um, and in hindsight, it's so obvious that we should have instilled things like vesting for the core team and advisors. And in hindsight, we should have taken the time to slow down and make sure more of our community was involved. And that's definitely like a fault on our side, and we take full accountability, but um, we just didn't, and and that's on us. Um, ever since Mark Rope and I started researching, building, and nerding out on this space, um, we've had builders reach out to us and um ask them to help them. And and whilst we did the best that we could, there was only so much time in the day. And we thought, well, we didn't want these builders to not get the support that they needed, right? So um we thought, like, you know, we'd rush to assemble a team across all the blockchain ecosystems, um, which we thought would be the most capable to help us and help these builders do what they wanted to do. Um, and that included you, David, and a host of other builders, investors, and thought leaders in the space that we believe can help us fulfill this mission of taking this small, you know, niche sector in crypto and grow it into the potential that we think it deserves. And unfortunately, that rushing cost us.

Um, none of us even thought for a second, like literally, if you if you could hear the conversations we had before, none of us thought for a second it would get as big as it did. And we just thought, you know, we're a bunch of like nerds, to be honest, launching at a time when markets are down. So we'll have, you know, this small launch, and then we can kind of build from here. But the opposite actually happened. And we learned, you know, some really hard lessons which tie back to the points I made earlier around vesting in and community distribution. Um, that being said, I'm so grateful for the community that came through and showed their support. It genuinely means the world to me. Um, and we're taking steps, which will be announced very shortly, to repair that damage and to kind of create and fulfill on our vision. Um, I just want to end this with saying that the core team advisors and I are fully committed to realizing our original mission. And I don't, I also want to say that this is the only time we'll be mentioning this DAO on this show. We want this series to focus on all the amazing teams building in this space and not focus on anything that we're doing, to be honest. Um, the goal of this series is to amplify and build up others, not.

ourselves or whatever we're doing on on the side, which is why we've never talked about AICC on the show prior to this too. Um David, I know you face some heat. Maybe you can shine some some light on that.

Yeah, yes, yes, we did. Um many times uh throughout Bankless's history, we've been like mobbed and dogpiled on crypto Twitter due to sets of like facts or conclusions that were simply wrong or heavily manipulated to look as bad as possible. Uh this is the first time that we actually did do something that I that we consider wrong, that we regret, uh, that we immediately tried to do as soon as Ryan and I both uh realized what had happened. So Ryan and I, advisors, um, we were able to contribute like our share of five soul alongside many of the other advisors. Uh, and that also included Bankless Ventures as well, got to contribute two Seoul, uh, along with our other third GP uh Ben Lakoff, who also contributed one Seoul. Um, upon the launch of the DAO, the price action of the token, the AICC token, was like pretty insane. I think like if you go look at uh CoinGecko or or some of the the charts, it hit like a it touched a billion dollars in market cap right on launch, just because like people were playing games, people wanted to buy, it was very exciting. Uh no one really expected that or like accounted for that. There was a decision made by the Bankless Ventures team to sell 8% of its supply of tokens on launch day, which it

Which can can I can I just say which like shocked me, to be honest? I I think like I I just wanna come clean and say, like, I I mean you have the DMs. I hit you up and was like, you know, what's going on here, man? Like, this is

like unacceptable. And I yeah, anyway, I just

Uh

you know, you you were understanding of that. I think you were shocked as well.

I was also shocked because I was not aware of the fact that Bankless Ventures made the decision to sell eight percent of the tokens. Um that amounted to $65,000, uh, just to put that into perspective. Yeah, the decision to sell the 8% of tokens was made without my or Ryan's like input or knowledge, something that we would have never uh approved of had we been made aware. Uh once we found out, we were like sent a tweet by a friend about somebody saying, like, oh, Bankless Ventures is like dumping the token on day one. And I was like, well, that's not true. Uh that's that's gotta be a mistake. Uh turns out it was actually real. Uh once we found out it was real, we immediately just stepped in and and rebought the AICC token with all the proceeds from the sale, um, just a few hours later from the moment of the sale. So, like, because selling tokens so soon into a project's lifespan, not something that we want to do or that we support or we condone. Um, there's uh extra context for how and why this sale happened. There's a link uh to a tweet that kind of gives a play-by-play in the show notes. Uh, it's just it's just kind of like a domino of uh events. Um, unfortunately, noneet, it was done. Uh, then there are also parts of crypto Twitter who love to drag bankless through the mud. And we had just basically giving them the material that they needed to make this seem as bad as possible. Uh, the narrative for some people on crypto Twitter uh became that bankless had built this up, built this whole thing up all along. That bankless sold millions upon millions of dollars onto our followers, uh, that bankless conspired to create the whole AICC DAO in the first place in order to do this. Uh, that we started doing the AI rollup with e Jazz for the sole purpose of creating hype around the AI CC DAO, uh, which to be clear, the Accelerate DAO was never mentioned or promoted on any AI rollup or any other Bankless podcast prior to the segment that you're hearing right now. Um, there's also some alternative media organizations out there to took advantage of this very bad look and helped promote a twisted version of the truth. Um, perhaps one of the more, I'll say like valid bits of critiques is that Bankless had a role in elevating the prominence and clout of e-jazz here, which helped by proxy to generate hype and significance to the launch of the Accelerate DAO. Uh, to be clear, wasn't our intent. Orion and I found out about the existence of the DAO uh the Tuesday before it launched, five days before it launched. Also, EJazz, like you and the other two core team members had already assembled a pretty stacked organization without any help from us. We didn't do any help with assembling that. Um, I think many people out there perhaps first heard of you, eJazz, by us bringing you on to the Bankless Podcast as our AI roll up host. Uh, and that's because you are on the crypto AI frontier uh where you've already established uh the relationships that you needed to make the accelerate DAO a reality without again, without any help for uh

I'm just a nerd in the trenches that just want to geek out and learn about this. Literally, like if you look at most of my tweets, it's like, can you please teach me this or that? So yeah, you you kind of picked me up out of that, and it's been a roller coaster since, David.

Yeah. So a lot of people don't have all the context. Um overall, call it a pretty dramatic start to the accelerate DAO with a lot of lessons learned in hindsight. Um

Yeah.

Yep.

any final comments before we move on?

No, I just want to s reiterate that

we're

incredibly grateful for our community and the support that they've shown. And we are fully committed to realizing our mission despite this bumpy start. We're going to steer the ship and correct course and kind of forge ahead. And we've got some really exciting announcements, you know, that is going to kind of fulfill some of the things that we've heard from the community. But let's leave it at that, David. I don't want to talk about

First

this. I don't want us to.

time

Speak about this first and last time.

accelerate DAO has been mentioned on the roll up.

So now I have to ask you.

Yes.

Uh the theme of the week in AI crypto. What would you say? Update us on the last seven days of action, seven days of activity, seven days of fundamentals. What was the last seven days like?

The last seven. Well, let me start with something which isn't fundamental but is important to cover, which is the markets were down, David. And I have this saying, which is by no means my own. Um, someone much wiser said this before me. But uh, the narrative follows price. So what that means is uh if the price go up, all these narratives are like, oh, this is the reason why, and and this is like amazing. Check out this new project. When the prices are down, David, uh the pendulum swings back with ferocity the other way. When the prices are these are

Autonomous

Sovereignty.

AI agents when prices are down, these are just glorified bots.

These are glorified bots. So uh we experienced some of the latter um over the last seven days. Markets, um, in my opinion, did a healthy correction, David. Um, and this was not just within crypto AI, this was um within the macro perspective uh at all. And actually, uh maybe a spicy take here is um overall, if you look at like the price performance of the crypto AI agent sector over the last, say, three months or two months, um, let's call it one and a half months, actually, because this sector, I keep forgetting how how young it is, has actually outperformed macro like to a crazy amount of times. Yeah, yeah, significantly, right? But obviously, people like look at their tokens, they see a wild price accrual and they're like, oh my God, I'm used to this portfolio number that I'm looking at on my screen. And then when it corrects healthily, you know, after like a whatever or 5x or something, people are like, oh, what's happened and all this kind of stuff. So that's what we experienced over the last week a kind of like macro correction in majors, so like Bitcoin and stuff, and then that affecting crypto AI uh specifically. So

Especially, yeah. And maybe maybe just to put some numbers on this, like Bitcoin got up to $107,000 and then bottomed at $91,000. You know, Ether touched below $3,000. And then

Yeah.

Uh AI crypto tokens got hit especially hard. Uh AI16Z, like one of the premier tokens, uh topped out at $2.25, bottomed out at a dollar, so lost 60% of its value. It's back up to a dollar and fifty cents. Virtuals, uh, which topped out at $5, fell all the way down to $2.30, and is now back up to $3.60. Uh, this is what uh a very skitterish, bullish bull market looks like, I would say, is like things go up and down 30 40% in a week because people's sentiments can change on a dime.

Yep. Yep. 100%. And if I kind of like could add a few other figures to this, is uh well, probably the main one. Um, the total AI agent market cap, which I think peaked at around uh $17 billion um about a week and a half ago, uh, retraced to I think around 11 to 12 billion dollars, right? Um, and as you can see, you know, markets have kind of I think this yeah, this cookie data might be maybe slightly lagging or something, but um uh markets are up today as we're recording this um conversation on on Wednesday. AI XPT is up.

Up 82% on the week.

Yes. So these things are very, very reflexive, David. And like, you know, it's just interesting that like when the markets are down, people aren't very convicted in their thesis in general. But some of these things uh still stand, and the market shows that when markets flip back to the positive, right? Um, so we've seen kind of a healthy correction within the AI agents market. And um, what's happened this last week, if I were to summarize it, was um a mixture of teams still shipping stuff and then a bunch of critics out there that were saying, you know, I think this is the end of the crypto AI agent sector. Now, obviously, like us on this show and and having this whole segment around AI agents, we're kind of biased, but um, I do not think that's the case. I think we're actually furthest from that case. Um, I put out a tweet uh a while ago which basically said if you want to know in times of uncertainty or even certainty what on earth is going on, talk to the builders.

Put your heads down and get in the weeds with things, and you'll see that there are people that truly care about this space that are building some awesome stuff. Um, so yeah, I think we should kind of like get into things, David. I wanted to start off with this really interesting um chart um that I saw on Kaito, um, which is kind of like a social sentiment um tracker where

Typically they've had um this metric called AI mind share, David. Okay. And AI mind share um started off like this. If you imagine like a little a little square, it looked like this

Tiny little blip at the corner.

tiny little baby little thing. And then halfway through last year,

that just grew.

Bigger and bigger and bigger. And then when agents came about, well, it looks like what you're looking like, um, what it looks like on this screen, right? Where it takes up like half the page. And for people who are confused or aren't looking at the screen right now, it's kind of like uh blocks of um kind of like it's squares that repres each represent um a specific segment. So it could be DeFi, it could be NFTs, and each square is proportional, its size is proportional to how much it's being talked about within the uh ecosphere, within Twitter, within social media sites, within the crypto realm. And if I if you're looking at the screen right now, the AI square is taking up half the screen. So it used to be 48%. 48%.

Used to be seven.

Well it used to it used to be 70, but there's a reason. And this is why I actually brought up this chart. It wasn't to show that AI was taking up 50%, but it's to point to a square that sits adjacent to it, David. Do you do you know which one I'm talking about?

Yeah, it's the one that's extremely green, which me implies extreme growth, called DeFi, which we talked about last week. It was a big segment last week. And I think I'm gonna beat you run uh beat you to the punchline, each jazz. You're gonna talk about how AI used to have a single block of mind share. And now there are two AI sectors that are different. You have AI and AI agents, probably, and now there's DFI, DeFi with AI in it. So AI enabled DeFi that it has its own independent amount of mind share coming in at six and a third percent. Number three after memes. So memes coming in at 10%, AI coming in at 48%, and then third is DeFi. Uh DeFi DeFi. We need a better word. AI, AI finance, AI decentralized finance coming in at 6.3%.

Yeah. Yeah. I think we need to either say DeFi AI or uh AI finance. We're still working on it. AI DeFi.

Is the easiest thing to say. AI

Fine. Yeah, and it doesn't sound ridiculous at all, David. But yes, you are you are smack bang on, um, you know, hammer on the nail. Um, the AI category has split into it's um into AI and DeFi AI, which um kind of shows that there's a lot of attention, investment, and focus on this particular subsector of crypto AI, which I think is super, super cool. Um, and so we have to ask ourselves, well, why? What why is this whole sector even being spoken about at all? Well, we kind of spoke about this um, I think two episodes ago, David, where we were saying, okay, well, what have we got so far in terms of like crypto AI agents? Well, there's some really smart, kind of sassy, um

Twitter bots, right? You know, they people like to call them Twitter bots. Um influencer bots, right? And AI XPT has kind of like uh embellished that quite a bit. Um I've been the leading example.

But the next question was like, okay, I'm kind of getting bored of these Twitter influences with. Yeah. Well, there you go. There you go. Um, and it's kind of like, well, what comes next? And the natural reaction to that was, which I think is actually kind of on the money here, is well, hang on a second. We've just built up an alternative financial stack over the last eight years.

Maybe they'll have some relevance there. And we've spoken about this before, saying, like, I think agents are going to be the connectors of all this complex um blockchain stuff into a really neat UX where instead of having to spin up a wallet and sign transactions, you just ping an agent. So basically, DeFi AI is the emergence of that. It's combining these AI agents with DeFi capabilities. So, what does that mean? It means these agents will have their own wallets. It means these agents will be able to trade. It means these agents will be able to invest. It means these agents will be able to do all the things that you can do within DeFi today. And one might ask well, why is that important? I mean, I think that's a good question to ask. Um, there are many reasons. Number one,

I think a super smart, aligned AI agent that can work 24-7 and um costs almost nothing to pay to do the work of 10 different humans is probably a value, valuable proposition. But of course, realizing this is gonna take some time. But it's really cool to see the kind of focus and um emerge on this particular sector, David.

this reminds me of something I I said last week, which is like

This is kind of just like we're talking about AI agents as like a focus point of this whole, you know, technological revolution that we're covering, but it's really the AI efication of everything in crypto. Uh last week we talked about how Virtuals partnered with Alluvium, the game. Uh so now we have AI innovating with gaming. And gaming has its own sector. It's it's actually number fourth. Uh so you can kind of see AI starting to integrate with everything that makes up crypto in the same way that people are predicting that AI is integrating with everything about the rest of our normal lives. Uh, I do want to bring up this tweet uh from Sammy talking about Franklin Templeton that just re published a ref a report on AI agents. This is triggering some memories of uh I remember when for like back in 2020 and 2021 when we started to see institutional reporting about you know the emergence of DeFi. Uh, this is kind of the next step in the adoption of the mind share of AI agents and what's going on. So it's