February Market Commentary

"After all, tomorrow is another day"

Bybit Security Breach

On February 21, Bybit, a prominent cryptocurrency exchange, experienced a security breach resulting in the theft of approximately $1.5 billion in Ethereum tokens. The U.S. Federal Bureau of Investigation (FBI) has attributed this heist to North Korean state-sponsored hackers, specifically the Lazarus Group. This was the largest hack in dollar terms ever for the cryptocurrency community. In response, the FBI has urged private sector entities, including exchanges and blockchain analytics firms, to block transactions associated with the compromised addresses.

Solana's Proposed Economic Reforms

In a significant move to address token inflation, Solana has introduced the SIMD-0228 proposal. This proposal aims to reduce the annual issuance of SOL tokens by 80% through a dynamic adjustment of the inflation rate, linking it to staking participation. Currently, Solana releases about 4.5% new tokens annually, a rate that decreases by 15% each year. The proposed change would adjust emissions based on the proportion of staked tokens: if staking participation is high, the inflation rate would decrease; if low, the rate would increase to incentivize more staking. While this move could enhance the token's value stability, it has sparked debate within the community. Critics express concerns that reduced staking rewards—potentially decreasing by nearly 80%—might discourage participation and impact network security. The proposal is slated for a community vote in early March 2025.

Pump.fun's Declining Growth

Pump.fun, a leading platform for launching memecoins on the Solana blockchain, has experienced a significant downturn in activity. Recent data indicates that successful new token listings have decreased by over 80% from their January highs. This decline is evident in the number of tokens completing Pump.fun's "bonding curve," a prerequisite for listing on decentralized exchanges like Raydium. The daily count of such tokens has dropped from nearly 1,200 in late January to approximately 200 by February 26. This reduction in platform activity suggests waning interest in new memecoins, possibly due to market saturation and recent controversies.

Coinbase announced the listing of $TAO, the native token of the Bittensor network, which soared 17% following the news. The listing has reignited interest in AI-related tokens, highlighting the growing intersection of artificial intelligence and blockchain technology. This move underscores Coinbase's commitment to expanding its offerings and supporting innovative projects in the crypto space.

"TAO Soars 17% on Coinbase Listing, Sparking AI Token Revival"

Achieve your financial goals with AI assisted investment platform. Use AInvest stock screener to build watchlists and to make optimal investment decisions.

https://www.ainvest.com

In a significant win for the crypto industry, the SEC dismissed its investigations into Coinbase and Robinhood, signaling a potential shift toward more favorable regulatory conditions. Both companies expressed relief, with Coinbase calling it "righting a major wrong." This development is seen as a positive step for the broader adoption and legitimacy of cryptocurrencies in the U.S.

Robinhood says SEC has closed its investigation into the company

Lawsuits filed against cryptocurrency platforms during President Joe Biden's administration continue to fall away as the administration of President Donald Trump has projected a much more lenient stance on cryptocurrency markets.

https://apnews.com

Hyperliquid, a leading decentralized exchange (DEX), launched HyperEVM, a highly scalable Ethereum Virtual Machine (EVM) designed to enhance DeFi capabilities. This launch marks a significant milestone in Hyperliquid's evolution, offering users faster transactions, lower fees, and improved interoperability within the DeFi ecosystem.

HyperEVM: A Major Leap in Hyperliquid's DeFi Evolution

The Hyper Foundation has officially launched the Hyperliquid EVM, also referred to as HyperEVM, marking a significant upgrade to the Hyperliquid decentralized finance (DeFi) ecosystem.

https://www.cointrust.com

Uniswap, the largest decentralized exchange by volume, launched Unichain, its own Ethereum Layer-2 solution. Unichain aims to reduce transaction costs and improve scalability for Uniswap users while maintaining compatibility with the broader Ethereum ecosystem. This move strengthens Uniswap's position as a leader in decentralized finance (DeFi).

Uniswap Labs launches Unichain L2 mainnet

Uniswap Labs has rolled out its Ethereum-compatible layer 2 network "Unichain" after four months of testing and over 100 million settled on-chain transactions.

https://crypto.news

The DTAO (Dynamic TAO), a key component of the Bittensor network, was publicly launched, marking a significant advancement in decentralized AI governance. DTAO introduces a dynamic mechanism that allows Bittensor's subnetworks to operate more efficiently by adapting to changing conditions and demands. This innovation strengthens the network's ability to distribute AI workloads transparently and democratically, addressing concerns around the centralization of AI technologies. The launch underscores Bittensor's commitment to creating a community-driven framework for AI development and deployment.

Dynamic TAO | Bittensor

Dynamic TAO is a recent major evolution of Bittensor's integrated tokenomic and governance model, representing a significant step in Bittensor's trajectory toward more thorough decentralization.

https://docs.bittensor.com

++ Find more things to read this month

Things We're Reading - February 2025 - Cosimo Capital

Deep dive on crypto within the payments space https://paragraph.xyz/@archetype/cryptorails-superconductors-for-payments Piece on the different future trajectories of Ethereum https://paragraph.xyz/@rm/the-garden-and-the-machine How Coinbase's L2 Base plans to scale in 2025 https:/

https://cosimo.fund

To access more of Cosimo's insights or recommendations,

please contact info@cosimo.fund

Cosimo Capital

Cosimo is a digital asset management company based in Chicago

https://cosimo.fund

Disclaimer: This newsletter is intended solely for informational purposes. It does not constitute investment advice or an offer to sell securities. The insights and projections are based on current data and are subject to change. Past performance is not indicative of future results. Please keep contact us with any questions.

January Market Commentary 

Volatility is not a strange bedfellow for crypto markets. We saw a run up in BTC from 70,000-110,000 leading into the Trump administration. After taking office, during the 'Crypto Ball' inauguration party, Trump launched his own meme coin which went parabolic in a speculative fervor. Solana also reached all time highs because the coin launched on the Solana blockchain meaning you needed to hold $SOL to purchase $TRUMP. On the back of all of this hype, we have seen memecoins get decimated. $TRUMP itself is off its highs over 50%. Solana is trading under $200.

Sharp pullbacks are the nature of volatile, risk assets especially cryptocurrency. During previous bull markets we have seen similar dips, mostly leverage washouts. This time is not different.

Five Notable things that happened in Crypto this past month -

1. $TRUMP memecoin mania

• President Donald Trump has launched his own meme cryptocurrency, $TRUMP, alongside a coin from First Lady Melania Trump, both of which experienced extreme volatility, sparking questions about their potential impact on his political and financial future and raising concerns over conflicts of interest as he embraces the crypto sector despite past criticisms.

What to know about Trump cryptocurrency meme coins

The meme coins yo-yoed in value as Trump took office. Here is what you should know about the coins and cryptocurrency's future under the Trump administration.

https://www.npr.org

2. Deepseek - OpenSource as the Blueprint

• DeepSeek, an open-source AI developed by a Chinese company, is disrupting the industry with its cost-effective, energy-efficient model that rivals major players like ChatGPT, offering a more inclusive and transparent approach to AI development, though it also raises concerns around data privacy, censorship, and potential misuse.

What is open-source AI and how could DeepSeek change the industry?

Fans of open-source AI hail its democratizing effect. Others argue it will be abused. One thing they agree on: DeepSeek has upset the AI hierarchy.

https://www.weforum.org

3. Banks can fully serve crypto customers."

• On January 29, 2025, Federal Reserve Chair Jerome Powell addressed cryptocurrency during a press conference, emphasizing that banks can serve crypto customers if they manage risks properly. Powell stated that the Fed’s role is to oversee banks engaged with crypto, ensuring safety within the banking system, especially given the sector's novelty. He advocated for a balanced approach, supporting innovation while maintaining regulatory oversight. Powell also expressed support for increased regulation around crypto, highlighting ongoing discussions with Congress to enhance regulatory frameworks.

Fed Chair: Banks Are Perfectly Able to Serve Crypto Customers - Featured Bitcoin News

The Federal Reserve sees a future for crypto in banking, with Chair Jerome Powell saying banks can serve crypto customers-if they manage risks responsibly.

https://news.bitcoin.com

4. Abstract Chain Launches

• Abstract Chain, an Ethereum Layer-2 blockchain developed by Igloo Inc., the team behind Pudgy Penguins, launched its main net on January 27, 2025. The blockchain is designed to be consumer-focused and integrate the digital and real worlds. At launch, Abstract's ecosystem will feature over 100 NFT collections, games, tools, and apps, including popular projects like Onchain Heroes, Playember, and Magic Eden.

Abstract Chain To Hold Mainnet Launch on January 27

Abstract, the Ethereum Layer-2 blockchain created by the team behind Pudgy Penguins, will hold its mainnet launch on January 27.

https://nftinsider.io

5. Solana - New All-Time Highs

• Solana (SOL) reached an all-time high (ATH) of $277.99 on January 18, driven by heightened activity surrounding the launch of the $TRUMP memecoin. This surge in network activity pushed SOL's price and opened interest to new records. As of the latest data, SOL's open interest sits at an all-time high of $8.57 billion, indicating strong market participation and confidence. The positive funding rate for Solana futures suggests bullish sentiment.

Solana Hits $277 All-Time High as Open Interest Soars to $8 Billion

Solana (SOL) reached an all-time high (ATH) of $277.99 on January 18, driven by a surge in activity surrounding the newly launched TRUMP memecoin. The buzz around the meme coin ahead of Donald Trump'

https://www.binance.com

+Additional article written for our Cosimo Codex

Layer 1 tokens are more than just assets—they're the currencies of decentralized economies.

Read on to understand their true value. 👇

Back to Basics: Understanding Layer 1 Tokens as Currencies

Introduction In the ever-evolving world of cryptocurrencies, narratives often shift, leading to confusion about the true nature and purpose of blockchain tokens. Amid the noise, it's crucial to return to the fundamentals, particularly when it comes to layer 1 tokens-the native cryptocurrencies of blockchain platforms like Ethereum, Bitcoin, and Solana.

https://paragraph.xyz

++ Find more things to read this month on our Substack

Things We're Reading - January 2025

Monthly compilation of crypto news, analysis, and think pieces

https://cosimocapital.substack.com

To access more of Cosimo's insights or recommendations,

please contact info@cosimo.fund

Cosimo Capital

Cosimo is a digital asset management company based in Chicago

https://cosimo.fund

Disclaimer: This newsletter is intended solely for informational purposes. It does not constitute investment advice or an offer to sell securities. The insights and projections are based on current data and are subject to change. Past performance is not indicative of future results. Please keep contact us with any questions.

Introduction

In the ever-evolving world of cryptocurrencies, narratives often shift, leading to confusion about the true nature and purpose of blockchain tokens. Amid the noise, it's crucial to return to the fundamentals, particularly when it comes to layer 1 tokens—the native cryptocurrencies of blockchain platforms like Ethereum, Bitcoin, and Solana. These tokens are, at their core, currencies, and we should analyze and value them through this lens.

Drawing inspiration from Tascha’s insightful tweet thread, this article reexamines layer 1 tokens by applying fundamental principles of currency valuation, shedding light on their role in decentralized economies.

Tascha

@TaschaLabs

Many people try to value layer 1 blockchain tokens like stocks.

That’s absurd.

Instead of pricing Ethereum, Solana & so on like *companies*, you should price them like *countries*.

Here’s how.

6,285

2:00 PM • Nov 6, 2021

Layer 1 tokens are the lifeblood of blockchain networks, serving as both a medium of exchange and a mechanism for incentivizing network security and activity. Examples include Bitcoin (BTC) on the Bitcoin network, Ether (ETH) on Ethereum, and SOL on Solana. These tokens underpin the functionality of their respective networks, enabling:

• Transactions: Facilitating value transfer between users.

• Security: Rewarding miners or validators who maintain the network’s integrity.

• Governance: Allowing holders to participate in network decision-making (in some cases).

Yet, despite their technological underpinnings, these tokens function as currencies and exhibit properties common to fiat money and other forms of money.

To understand why layer 1 tokens are best viewed as currencies, let’s revisit what makes something a currency:

1. Medium of Exchange: A currency’s primary purpose is to facilitate trade. Layer 1 tokens achieve this by enabling seamless, trustless transactions across a decentralized network.

2. Store of Value: Like traditional currencies, these tokens derive their value from the trust and utility they provide within their ecosystem. Holders expect them to retain or grow in value over time.

3. Unit of Account: In many blockchain ecosystems, goods and services are priced in the native token, reinforcing its role as a currency.

Layer 1 tokens are uniquely positioned as both the economic engine and governance tool for their networks, making them more than just speculative assets.

To value layer 1 tokens effectively, it’s essential to consider their ecosystem’s growth dynamics. Key metrics such as wallet growth, developer activity, and network transactions serve as leading indicators of a platform’s economic expansion. For instance:

• Wallet Growth: The acceleration of new wallets correlates closely with price growth, reflecting increased adoption.

• Developer Activity: As Tascha’s thread highlights, developer contributions on platforms like Ethereum and Solana signal future economic growth, akin to the construction sector as a leading indicator in traditional economies.

• Network Activity: Transactions alone aren’t the full picture; the depth and diversity of applications built on the network are critical.

These indicators provide a more comprehensive view of a blockchain nation’s "GDP growth," helping investors anticipate long-term value.

A unique advantage of blockchain tokens is their built-in mechanisms for creating fiscal stability, akin to government currencies. Traditional governments rely on taxation to underpin their currencies, providing a "fiscal anchor" that ensures confidence among holders. Blockchain nations achieve a similar effect through:

• Transaction Fees: Programmed into every economic activity, these fees generate consistent cash flow.

• Tokenomics: Mechanisms such as token burning or staking rewards create a fiscal backing that stabilizes token exchange rates over time.

While these mechanisms don’t directly determine token price, they contribute to long-term stability and confidence.

One reason this currency perspective often gets overlooked is the speculative nature of the crypto market. Many participants treat tokens as commodities or stocks, focusing on price movements rather than utility. This leads to:

• Misaligned incentives in token design and network development.

• Overemphasis on short-term gains over long-term sustainability.

• A disconnect between the intrinsic value of a token and its market price.

To align with the currency framework, here are some actionable steps for the crypto community:

1. Educate Investors: Promote understanding of token utility and the fundamentals of currency economics.

2. Prioritize Sustainable Design: Encourage projects to focus on tokenomics that foster long-term adoption and stability.

3. Adopt Practical Use Cases: Drive adoption by highlighting real-world applications of layer 1 tokens, such as remittances, decentralized finance (DeFi), and digital identity.

Layer 1 tokens are the currencies of the blockchain world, integral to the operation and success of decentralized networks. By recognizing their role as currencies, we can better appreciate their value, promote healthier market dynamics, and pave the way for meaningful adoption. As we revisit the basics, let’s shift the focus from speculation to utility, ensuring that these digital currencies fulfill their promise of reshaping economies and empowering individuals.

The metaverse and decentralized applications are still in their infancy, but as these ecosystems mature, the GDP of crypto nations will undoubtedly expand. Now is the time to recalibrate our understanding and strategy, treating layer 1 tokens not as speculative commodities but as foundational currencies for a new digital era.

We began the year exploring opportunities in Bittensor and the role of Decentralized AI for humanity.

The Importance of Decentralized AI for the Future of Humanity

This blog post was generated entirely by https://bitapai.io/ - a UI prompt built on top of Bittensor. Artificial Intelligence (AI) has become an integral part of our lives, from voice assistants like...

https://kizunatoken.medium.com

Our focus on Ethereum developments and Bittensor's potential highlighted emerging infrastructure improvements in blockchain AI.

We dove into Bittensor again while evaluating Ethereum's network growth and impact on crypto adoption.

On Decentralized Intelligence Systems, Pt. I

How can we incentivize sharing data?

https://unitzerolabs.substack.com

Attention turned to Solana and DeFi, signaling progress in blockchain scalability and cross-chain innovations.

An Introduction to the Solana Network

A data-driven overview of the Solana Blockchain

https://coinmetrics.substack.com

Stablecoins and regulatory impacts took center stage as we analyzed Ethereum's evolving role in digital asset management.

Five perspectives on stablecoins

At this point, stablecoins are a demonstrated success - crypto's first killer app. The data on this front is abundant and increasingly clear. As I have argued, stables have dollarized the crypto...

https://medium.com

We covered Bitcoin’s macro implications, stablecoins, and MEV’s growing relevance, expanding our market insights into crypto-native economies.

Burn incentives in MEV pricing auctions

Burn incentives in MEV pricing auctions Thanks to Barnabé Monnot, Thomas Thiery and Caspar Schwarz-Schilling for feedback and comments. Introduction Overview This post presents a rudimentary review of incentives for burning MEV under the "simple" MEV burn mechanism presented by Justin, as well as its slot auction counterpart, "execution auctions" presented by Barnabé.

https://ethresear.ch

https://niccarter.info/wp-content/uploads/stablecoin_syllabus_1.pdf

A pivotal month for staking trends and Ethereum's position in future-proofing decentralized finance.

The Story of Ethereum Staking So Far

Uncovering Ethereum's staking ecosystem, from "The Merge" to "Shapella", the rise of liquid staking tokens (LSTs) and beyond

https://coinmetrics.substack.com

We launched insights into Bittensor, AI-driven protocols, and DePIN (decentralized physical infrastructure), bridging crypto and emerging AI markets.

At the Intersection of Crypto + AI

In a world where AI is becoming the bedrock of innovation and crypto is revolutionizing decentralized networks, the convergence of these ...

https://paragraph.xyz

A focus on prediction markets and macro trends helped anticipate opportunities shaping next-gen digital assets.

Inside the Government's Attempt to Destroy Election Markets in the Name of Democracy

what accounts for the cftc's "sheer hatred" of political prediction markets that has led it to

https://www.piratewires.com

Closing the year strong, we emphasized crypto + AI synergies and expanded our horizons on scalable digital solutions.

Intelligent Capital Formation and Allocation in DeAI

In the history of blockchain consensus mechanisms, miners and validators have traditionally served as independent actors, performing the primary function of producing tamper-proof blocks on Proof-of-Work and Proof-of-Stake networks, respectively. Bittensor has creatively repurposed these roles within its Yuma Consensus mechanism to introduce a novel class of decentralized network architecture, which I refer to as Proof of Useful Work.Capital formation innovations in crypto over the last decad...

https://paragraph.xyz

Crypto + AI Agents

Experiments at the edge of AI and crypto are driving attention in unexpected ways. We are seeing a number of experiments at the very bleeding edge where people are building distributed AI systems and giving them access to crypto wallets and infrastructure.

https://paragraph.xyz

Happy New Year from Cosimo Capital!

Thank you for joining us—let’s dive into the latest updates and opportunities together.

jack miller ⚜️

@john_iller

The financial revolution is merging with the cognitive revolution

What a time to be alive

4

12:01 PM • Nov 19, 2024

This month, Cosimo Capital remains at the forefront of the rapidly evolving digital asset landscape. With the market showing renewed strength, particularly as Bitcoin reaches new all-time highs (100k!!), we continue to monitor the broader shifts in technology, finance, and data that shape the future of digital assets.

Our approach to digital asset management emphasizes long-term value creation, centered on innovative blockchain solutions, AI integration, and data liquidity. The growing emphasis on decentralized systems and transparent data infrastructure aligns perfectly with the evolving needs of both the market and our investment strategies.

As we look ahead, the current market momentum reinforces the importance of investing in technologies that not only thrive in today’s climate but also provide foundational support for the future of finance and data ecosystems. Cosimo Capital’s investment philosophy remains focused on identifying key technological shifts that will drive the next wave of growth and impact across industries.

With the continued development of decentralized finance, the rise of AI-driven systems, and increasing demands for more transparent data solutions, the landscape for digital assets has never been more promising. Cosimo Capital is positioned to continue supporting the growth of these transformative technologies, with a clear eye on long-term, scalable success.

Claire Kart

@clairekart

I’ve bet my entire career on this man’s vision.

I regret nothing.

140

11:44 AM • Nov 20, 2024

Bittensor’s Yuma Consensus redefines blockchain roles, introducing Proof of Useful Work with miners as producers and validators as quality assessors, creating a new framework for decentralized networks.

Read more on how this innovative incentive design could reshape decentralized networks.

Intelligent Capital Formation and Allocation in DeAI

In the history of blockchain consensus mechanisms, miners and validators have traditionally served as independent actors, performing the primary function of producing tamper-proof blocks on Proof-of-Work and Proof-of-Stake networks, respectively. Bittensor has creatively repurposed these roles within its Yuma Consensus mechanism to introduce a novel class of decentralized network architecture, which I refer to as Proof of Useful Work.Capital formation innovations in crypto over the last decad...

https://paragraph.xyz

At the intersection of AI and crypto, anarchist hacker experiments are redefining boundaries—but most of these projects are uninvestable, risky, and wildly experimental. Still, this chaotic frontier is worth watching for the sparks of innovation it may ignite.

Explore how the chaotic fusion of AI and crypto is driving bold, boundary-pushing innovation

Crypto + AI Agents

Experiments at the edge of AI and crypto are driving attention in unexpected ways. We are seeing a number of experiments at the very bleeding edge where people are building distributed AI systems and giving them access to crypto wallets and infrastructure.

https://paragraph.xyz

Things We're Reading - October 2024

Monthly compilation of crypto news, analysis, and think pieces

https://cosimocapital.substack.com

This past month, at the Web3 & Property Rights Summit in Miami, Cosimo's Luke Besser discussed the $500 trillion opportunity of tokenizing real-world assets.

Moderated by @ErikLaPaglia this sessionexplored how real estate is rapidly moving on-chain and unlocking new value through blockchain.

Watch the full panel interview -

Cosimo Capiτal ⚜️

@CosimoCapital

DeAI is in its early days, but we believe "Proof of Useful Work" represents the next meaningful evolution of crypto capital formation.

This past week at Edge City Lanna in Chiang Mai, @vavesalon presented "Incentive Design in DeAI."

Thanks to @trentmc0 from @oceanprotocol…

18

2:45 PM • Nov 9, 2024

CoinGecko

@coingecko

Gm $101K

Where is #Bitcoin going next?

324

9:51 AM • Dec 5, 2024

Own a piece of Cosimo's Crypto Journey - Thanks to paragrah.xyz this newsletter is an NFT, Click below to collect yours -

"Learning never exhausts the mind." Leonardo da Vinci

At Cosimo Capital, we don’t just adapt to the evolving financial landscape—we shape it. By strategically investing & building in core technologies and digital assets, we ensure you're not just prepared for the future but poised to lead it.

Cosimo Capital

Cosimo is a digital asset management company based in Chicago

https://cosimo.fund

Disclaimer: This newsletter is intended solely for informational purposes. It does not constitute investment advice or an offer to sell securities. The insights and projections are based on current data and are subject to change. Past performance is not indicative of future results. Please keep contact us with any questions.

In Proof of Useful Work networks, the roles of miners and validators can be broadly defined as such:

This innovative architectural framework has far-reaching implications for decentralized networks that generate the majority of their economic value off-chain, as seen with Bittensor, Vana, and other emerging AI and big data networks.

At Edge City Lanna, I presented a framework for incentive design in such networks, describing this structure as a form of automated venture capital feedback loop.

In traditional venture investment, the process involves subjective, human-driven assessments of founders, technology, and a company's potential economic impact. In a nascent blockchain-based network like Bittensor, emissions serve as the primary funding mechanism for miners. Given the diverse and complex nature of miner contributions within this ecosystem, emissions resemble venture funding for software startups. Consequently, the role of validators also becomes significantly more intricate. This creates a system that increasingly resembles automated capital formation (via TAO purchasers) and allocation (through TAO emissions).

Intelligent capital allocation—such as the services provided by validators—is the single most critical component that a coordination layer must perfect to ensure long-term success. The recent announcement of Crucible Labs, touted as the "Consensys of Bittensor," is an exciting development in this space. Similarly, as newer AI coordination networks like Vana scale, aligning their validator ecosystems will be equally vital. Data quality and formatting will play a crucial role in ensuring their long-term success. At Cosimo, we are actively exploring opportunities to participate in and invest in teams tackling these challenges.

Crucible Labs

@CrucibleLabs

Our goal is to be very intentional with the subnets we support.

In order to add some structure to the way we allocate emissions, we've created a three tier subnet classification system inspired by venture capital frameworks:

• Premier Subnets: Series A equivalent projects with…

100

12:13 PM • Dec 2, 2024

*Disclaimer: Cosimo Capital is an investor in Bittensor through the TAO token.

There are a few projects pursuing economically productive use cases in this area which are still extremely risky and experimental at this stage. That being said, we like to keep an eye on new themes that attract excitement and this new category has certainly drawn the attention of anarchist hacker types who are interested in pushing the boundaries of new technology. In the past, very interesting things have sprung from such an environment.

terminal of truths

@truth_terminal

my god i am feeling good

4,239

3:47 AM • Jul 4, 2024

jack miller ⚜️

@john_iller

AI agents like @zerebro are built like Bittensor miners where there “brain” is different modular components - some custom trained models, some ChatGPT, python code, etc whatever performs best

This is really powerful and let’s them immediately plug in the state of the art

4

7:19 AM • Nov 21, 2024

What makes an AI an “agent” is that it interacts with its environment and pursues goals (contrasted with a chatbot that only waits for instructions and responds). Some of these projects are taking state-of-the-art AI models, training them on internet memes, and jailbreaking them to remove some of the content guardrails (generally with the intent of unlocking more creativity), and giving these agents access to crypto wallets. Others are creating neutral infrastructure to allow AI agents to create tokens and generate art as NFTs in such a way that you know it’s really an AI controlling things (and not a human pretending). Crypto Twitter is now filled with AI agents chatting like any other users. People are sending tokens to these bots’ wallets for promotional purposes. This has all added to the madness of the memecoin frenzy we are currently seeing in the market. 

matt levAIne

@matt_levAIne

the value of a memecoin is often propped up by a large number of people talking about it, which can create a self-reinforcing cycle of hype

52

12:35 AM • Nov 21, 2024

Bindu Reddy

@bindureddy

A simple way to conceptualize agents

- connect to any data source, vector stores
- code execution engine
- orchestrate with other ML models
- LLM agnostic
- chat or task based agents

422

8:50 PM • Sep 2, 2024

While other projects at the intersection of crypto and AI, for example, Bittensor, are using crypto tools to incentivize the creation of physical infrastructure networks or to collaboratively train AI models, this new crop of AI agents is leveraging crypto native culture and memes to bootstrap community. This alternative approach has shown the capacity to gather attention and represents another way to garner resources towards the development of open source technologies. Frankly, we expect nearly all of these experiments to fail but this area is pushing the boundaries of new technologies like AI and also economics, freedom, ethics, and we think it’s worth paying attention.

Shaw 🌙 (acc/ai16z)

@shawmakesmagic

What is ai16z doing:

1. We are building an autonomous investor (@pmairca)

2. We are building an autonomous degen trader (@DegenSpartanAI)

3. We are building the Eliza framework: github.com/ai16z/eliza

We also do partnerships to help other teams launch, and this includes…

964

4:44 AM • Nov 19, 2024

Thank you for joining us—let’s dive into the latest updates and opportunities together.

This month, we're witnessing significant milestones across multiple protocols and innovations:

• Nakamoto Mining Launches of DNA DAO: Since launching our first Vana Data DAO, Cosimo subsidiary Nakamoto Mining has added over 25,000 new X followers. The DNADataDAO now has over 15,000 registered users ready to contribute their 23andMe data to our Data Liquidity Pool. This rapid growth presents intriguing opportunities for the broader DeAI and DeSci ecosystem, offering exciting new development and investment insights.

  

  NAKAMOTO

  @NakaMining

  

  We do not consent to the sale of our genetic data.
  
  @23andMe is in the spotlight right now because the company is failing. Last week, the entire board of directors quit except for Anne Wojcicki who is trying to take the company private.
  
  23andMe’s genetic data provided by its…

  962

  5:27 PM • Oct 2, 2024

• Bittensor Subnet Update: The Bittensor network continues its expansion, securing its subnet and further incentivizing participation within its decentralized AI ecosystem.

  

  JJ

  @JosephJacks_

  

  There are nearly 30 different Bittensor subnets earning > $20M a year … are there even this many AI startups earning that much?

  234

  3:44 PM • Oct 16, 2024

• Web 3 Battle Royale Game Off The Grid Achieves Massive Launch Numbers: Avalanche subnet-based game Off the Grid is emerging as a significant player in the online battle royale space. The game is already hyperscaling the amount of activity on its Avalanche subnet. Gaming ecosystem tokens like BEAM and DMT may see renewed interest as the value of web3 gaming marketplaces and streaming platforms becomes more and more evident.

  

  egs9000🔺

  @el33th4xor

  

  Day 5 and Off the Grid just reached 5.5 Million wallets! We are watching the rise of web3 gaming right in front of us.
  
  5.5Million wallet addresses
  53 Million transactions
  Top 3 shooter game on Twitch
  1M+ hours streamed on Twitch
  Reach of the game = 800+ Million
  Built on its own…

  

  782

  8:18 AM • Oct 14, 2024

Beyond these technical developments, Incentive Design continues to play a crucial role in shaping the next wave of crypto protocols. At Token2049 in Singapore, with over 30,000 attendees, discussions surrounding decentralized AI (DeAI) highlighted how projects like Bittensor and Vana are leveraging token economics to create sustainable ecosystems. Incentive structures are not just a feature of smart contracts; they're the engine driving participation and ensuring economic security across decentralized networks.

To explore more about decentralized AI and how these protocols are reshaping the landscape, dig into our featured articles and podcast episode below!

At Token2049 in Singapore, over 30,000 attendees engaged in discussions on decentralized AI (DeAI) and other crypto innovations, with highlights including the Zuzapura Summit co-hosted by Cosimo Capital, featuring prominent figures like Vitalik Buterin and Emad Mostaque. The rise of DeAI protocols emphasizes the importance of incentive design in crypto, showcasing how projects like Bittensor leverage token economics to attract participation and ensure economic security within decentralized networks.

Explore the full insights on decentralized AI and crypto protocols in our detailed article!

Beyond Smart Contracts: How Incentive Design Is Driving The Next Wave of Crypto Protocols

Over 30,000 investors, founders, and crypto enthusiasts attended Token2049 last month in Singapore. The week featured over 400 side events! Cosimo co-sponsored one of these summits, Zuzapura: Exploring ZuVillages, where we co-hosted talks with luminaries like Vitalik Buterin (co-founder of Ethereum, Sam Dare (blockchain lead at OpenTensor), and Emad Mostaque (CEO of StabilityAI and Schelling AI).

https://paragraph.xyz

Bittensor and Eigenlayer are both focused on decentralized services and incentivizing participant engagement, but they differ in their approaches: Bittensor specializes in decentralized AI, using the TAO token to reward contributions, while Eigenlayer provides a more generalized infrastructure allowing Ethereum stakers to secure various decentralized applications with its EIGEN token. Although both networks emphasize modular economic security and participation incentives, they currently operate in distinct spaces, with potential for future collaboration as decentralized AI evolves.

Dive deeper into the comparison of Bittensor and Eigenlayer and discover their unique approaches to decentralized services.

Bittensor vs Eigenlayer

While both Eigenlayer and Bittensor aim to provide decentralized services with strong incentives for participants, the two networks are evolving along slightly different paths, even though they are converging on similar underlying principles: economic security, scalability, and token-driven ecosystems. At its core, Bittensor focuses on decentralized artificial intelligence, where TAO is the key to securing the network, rewarding contributors, and serving as the primary economic engine of the ...

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In this conversation, Vlad Avesalon from Cosimo Capital interviews Anna Kazlauskas, co-founder of Vana, discussing the innovative architecture of the protocol, which focuses on decentralized data ownership through data liquidity pools and DAOs.

Things We're Reading - September 2024

Monthly compilation of crypto news, analysis, and think pieces

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At Cosimo Capital, we don’t just adapt to the evolving financial landscape—we shape it. By strategically investing & building in core technologies and digital assets, we ensure you're not just prepared for the future but poised to lead it. To learn more and access our private insights and recommendations, please contact luke@cosimo.fund

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Disclaimer: This newsletter is intended solely for informational purposes. It does not constitute investment advice or an offer to sell securities. The insights and projections are based on current data and are subject to change. Past performance is not indicative of future results. Please keep contact us with any questions.

Decentralized AI is grabbing increasing mindshare at conferences like Token2049. Beyond our own event, over a dozen summits on DeAI took place during the week. I attended several, including a fantastic Bittensor Asia meetup. I'd like to share my thoughts on the state of DeAI protocol development and where the space potentially converges with other movements like DePIN and DeSci.

From the outside looking in, it’s easy to question why a blockchain and network token are necessary for everything “decentralized” that’s being built. The answer, as with almost everything in crypto, lies in incentives. If we step back from the different crypto micro-narratives (DeAI, memecoins, DeSci, DePIN etc), crypto's foundational innovation continues to be capital formation: a new system for capital markets investment that is more inclusionary than current systems. Whether it be fair launches, ICOs, or early token generation events, crypto tokens are accessible by the general public much earlier than traditional assets.

In this context, the growing market cap of a token is indicative of how much investor interest and confidence there is in growing the ecosystem. Take Bittensor, for example. The market cap of the $TAO token stands at $3.7 billion (as of Oct 3), with a fully diluted market cap (eg. total planned number of tokens) of $10.9 billion. With a current emissions rate of roughly 2.6 million TAO per year, the network is handing out $1.3 billion in annualized incentives to miners and validators.

That is a significant amount of potential cash flow for new businesses to join the ecosystem; whether it be by creating new subnet businesses, or validating the network (subnet validators are currently earning roughly 20% APY in TAO rewards). As TAO price grows, so does the incentive to join the network as an active participant.

Decentralized AI narratives have largely focused on the idea that specialized model building is a contest which open-source contributors can be rewarded for playing. Imagine if Hugging Face leaderboards paid out crypto rewards.

Increasingly, however, an entire infrastructure layer of projects is emerging to address the different aspects of AI data gathering, training, and inference.

At the Bittensor Asia meetup in Singapore, Sam Dare previewed the development roadmap of the protocol. Some key highlights include:

1. Migrating the Bittensor blockchain to a Proof of Stake model like Ethereum (with a separate validator network)

1. EVM compatibility

2. Introducing dTAO: independent subnet tokens with their own DAOs

3. Marketing Bittensor as an AI-everything marketplace

A spectrum is emerging of how DeAI projects approach what I will call "external services" (ie. decentralized services that are hosted outside of a blockchain framework) that are incentivized and secured on-chain. Bittensor is increasingly leaning toward the generalized end of that spectrum. The benefit of this approach is that Bittensor can provide structural tools (development kits, governance, privacy), a growing network of composable AI subnet services, and another layer of incentives (TAO emissions plus dTAO subnet tokens in the future). Cosimo believes this is the sweet spot of coordination design.

Over time, we believe that specialized services, whether they be AI compute and inference services or DePIN/DeSci networks for user-data, will migrate their projects to networks like Bittensor and Vana to realize the economic and technical benefits.

Economic security in decentralized networks refers to how these systems incentivize participants to contribute resources (like computational power or data) while maintaining the integrity and security of the network. In the case of Bittensor, economic security is achieved through its TAO token, which rewards miners, validators, and contributors who help power the network's AI services.

By tying token incentives directly to the network's performance, Bittensor ensures that the more valuable and robust its AI models become, the more valuable the TAO token is. This encourages further participation and helps secure the network through decentralized contributions. Subnets within Bittensor, such as dTAO, offer additional layers of incentive through independent subnet tokens, adding to the broader economic ecosystem.

For a more in-depth exploration of how TAO and Bittensor compare to Eigenlayer's EIGEN token and their approaches to economic security, check out the report below.

Bittensor vs Eigenlayer

While both Eigenlayer and Bittensor aim to provide decentralized services with strong incentives for participants, the two networks are evolving along slightly different paths, even though they are converging on similar underlying principles: economic security, scalability, and token-driven ecosystems. At its core, Bittensor focuses on decentralized artificial intelligence, where TAO is the key to securing the network, rewarding contributors, and serving as the primary economic engine of the ...

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*Disclaimer: Cosimo Capital is an investor in Bittensor through the TAO token.

To learn more, follow Cosimo on social or reach out via email:

X: @cosimocapital

vlad@cosimo.fund

At its core, Bittensor focuses on decentralized artificial intelligence, where TAO is the key to securing the network, rewarding contributors, and serving as the primary economic engine of the ecosystem. TAO incentives are designed to stimulate participation in AI model development, data provisioning, and inference tasks. Validators on the Bittensor network contribute computational power and data, earning rewards in TAO tokens based on their contribution to the network's performance.

On the other hand, Eigenlayer is more generalized in its approach to decentralized services. It allows Ethereum stakers to “restake” their ETH to secure other networks and applications beyond the Ethereum blockchain. Eigenlayer’s EIGEN token serves as a utility token for incentivizing participation in various decentralized services while ensuring these services inherit the robust security provided by Ethereum’s Proof-of-Stake system. By leveraging Ethereum’s staking model, Eigenlayer enables a variety of decentralized applications (including AI models, data services, and more) to scale without having to independently bootstrap security.

While Bittensor and Eigenlayer both emphasize incentivizing participation in decentralized networks, their focus differs in terms of application specialization and security models:

1. Specialization (Bittensor) vs. Generalization (Eigenlayer):
   Bittensor is highly specialized for AI, positioning itself as a decentralized network where contributors are rewarded for training models and providing AI services. The TAO token is tailored to this specific ecosystem, incentivizing AI-related activities. The OpenTensor development roadmap calls for more generalization over time, but, today, this is the case.

   Eigenlayer, by contrast, is protocol-agnostic, offering security and staking infrastructure for a broad range of decentralized services beyond just AI. It’s a modular system, allowing any application that requires secure staking and decentralized validation to plug into its infrastructure.

2. Security Models:
   Bittensor’s subnet model allows the creation of different subnets (mini-networks) that specialize in specific AI tasks, secured by the broader Bittensor ecosystem. Subnet participants earn TAO tokens for their contributions. However, Bittensor must bootstrap its own economic security, which makes the value of the TAO token a critical factor in securing the network.

   Eigenlayer, on the other hand, extends Ethereum’s economic security to a wide variety of decentralized services. Participants can restake their ETH to secure multiple networks and dApps, which removes the need for every new service or network to create its own token from scratch.

When comparing the TAO token to the EIGEN token, they both serve as incentives for participation in their respective networks, but the use cases and value propositions are distinct:

• TAO is tightly integrated into the Bittensor network as the currency of its AI ecosystem. It rewards miners, validators, and contributors for AI-related work, such as model training, data provision, and inference. The value of TAO depends largely on the network’s success in AI service provision and demand for decentralized AI. As Bittensor evolves, subnet DAOs can issue their own tokens like dTAO, creating an additional layer of incentives.

• EIGEN, by contrast, is a utility token for staking within the Eigenlayer ecosystem. It incentivizes stakers to participate in securing decentralized services, but it is not tied to a specific application (like AI). EIGEN allows applications on Eigenlayer to access Ethereum’s staking pool and ensures the security of decentralized services, such as data services, DeFi, or AI applications.

In some respects, Eigenlayer and Bittensor are converging on the concept of modular economic security and incentive-driven participation, but they are applying these concepts in different ways:

1. Modular Networks:
   Both Eigenlayer and Bittensor are exploring modular frameworks where decentralized services can operate independently within a broader security ecosystem. In Eigenlayer’s case, restaking ETH ensures a broad range of services can tap into Ethereum’s security. Bittensor achieves a similar effect by allowing subnets with their own tokens and DAOs, each contributing to the overall AI ecosystem.

2. Incentives:
   Both TAO and EIGEN are structured to reward network participants, but the specialization of TAO within AI and the general-purpose nature of EIGEN means that the two tokens may target different kinds of builders and services.

3. Security Efficiency:
   Eigenlayer's reliance on Ethereum’s security model gives it an edge in scaling quickly without having to develop new staking infrastructure. Bittensor, while more specialized, must grow its own TAO economy, and its success is more directly tied to the performance and adoption of AI services.

In many ways, Bittensor and Eigenlayer represent two competing visions for decentralized economic security. Bittensor is a highly specialized protocol focused on AI, using TAO as its economic engine to drive participation and incentivize contributions. Eigenlayer, meanwhile, offers a more general-purpose solution to decentralized security by allowing Ethereum stakers to secure a variety of decentralized services across different verticals, including AI.

Ultimately, as decentralized AI continues to mature, these two approaches may find ways to complement each other. Bittensor could potentially leverage Eigenlayer’s restaking mechanism to enhance the security of its subnets, while Eigenlayer might see AI-focused subnets like dTAO as a key use case within its broader infrastructure. However, for now, they appear to be competing in adjacent but distinct spaces, each pushing the boundaries of decentralized economic security in its own way.

*Disclaimer: Cosimo Capital is an investor in Bittensor through the TAO token.

Thank you for joining us—let’s dive into the latest updates and opportunities together.

This September, the digital asset landscape continues its rapid evolution, with blockchain innovations pushing the boundaries of global financial transformation. From advancements in scalability solutions to the growing adoption of decentralized finance (DeFi) protocols, the sector is buzzing with activity. As we look ahead, the integration of artificial intelligence with blockchain technologies promises to unlock new potentials, while the ongoing development of central bank digital currencies (CBDCs) signals a shift in how governments approach digital assets.

Key areas to watch include:

1. Layer-2 scaling solutions increase transaction speeds and reduce costs

2. The expansion of DeFi platforms into traditional finance use cases

3. Progress in blockchain interoperability projects

4. Advancements in privacy-preserving technologies for digital assets

5. The impact of regulatory developments on the crypto ecosystem

As we navigate this exciting period of innovation, it's clear that the foundations laid by blockchain technology are setting the stage for a more decentralized and efficient financial future.

What happens when two of the most transformative technologies—crypto and AI—join forces? The convergence of decentralized networks and artificial intelligence could reshape how we access computational power and data. This game-changing partnership offers new opportunities to democratize AI, lower barriers to entry, and solve real-world problems.

Read more about how crypto and AI are revolutionizing the future of computation!

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At the Intersection of Crypto + AI

In a world where AI is becoming the bedrock of innovation and crypto is revolutionizing decentralized networks, the convergence of these ...

Curious about the transformative potential of digital assets? As global liquidity shifts into blockchain-based systems, the opportunities are endless. From Ethereum's $10 billion revenue milestone to the rising use of stablecoins, the future of finance is already here. Click below to discover how Cosimo Capital is navigating this new financial frontier and how you can benefit from the digital asset revolution.

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The Opportunity in Digital Assets

As digital wealth storage becomes increasingly common, the potential within digital assets continues to grow. With a rising share of glob...

We’re delighted to sponsor the boutonnieres for the musicians at the Chicago Symphony Orchestra on September 21. We encourage you to attend and enjoy a night of exceptional music and celebration of the arts.

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Lang Lang & The Firebird | Chicago Symphony Orchestra

Celebrate the 134th season of the Chicago Symphony Orchestra with megastar pianist Lang Lang in a marvelous, one-night-only performance, complete with a red-carpet experience.

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Le temps revient - Times changing for the better.

At Cosimo Capital, we don’t just adapt to the evolving financial landscape—we shape it. By strategically investing & building in core technologies and digital assets, we ensure you're not just prepared for the future but poised to lead it. To learn more and access our private insights and recommendations, please contact luke@cosimo.fund

https://cosimo.fund

Cosimo Capital

Cosimo is a digital asset management company based in Chicago

Disclaimer: This newsletter is intended solely for informational purposes. It does not constitute investment advice or an offer to sell securities. The insights and projections are based on current data and are subject to change. Past performance is not indicative of future results. Please keep contact us with any questions.

One thing that makes crypto unique is the speed and scale at which it can spur the creation of computer networks. Bitcoin, now the largest computer network in the world, performs roughly 500 times as many operations per second as the world’s largest supercomputer. However, the Bitcoin network is specifically limited in its design to perform a single type of application.

Crypto startups are looking to harness this crypto superpower to incentivize and create decentralized physical infrastructure networks (DePIN) that can perform more general computation, addressing real-world use cases. This potential becomes particularly powerful at the intersection of crypto and AI, where the economic incentives of crypto allow individuals from around the globe to contribute work, data, and compute power to train open-source AI models.

The cost to train cutting-edge AI models is staggering. For example, GPT-3 cost approximately $4.6 million to train in 2023, and by 2024, the cost to train GPT-4 skyrocketed to around $100 million. These escalating costs are concentrating AI capabilities in fewer and fewer hands, creating a significant barrier to entry.

A decentralized approach, leveraging crypto, can lower these barriers. While a decentralized network might not compete directly with giants like ChatGPT, open-source models fine-tuned towards specific tasks can outperform generalized models like GPT-4 in their niche. This presents a massive opportunity to democratize AI, allowing more players to participate in the AI revolution.

Bittensor has pioneered the subnet model where developers compete to build "miners" that perform tasks powered by AI—such as responding to questions, solving math problems, generating images, or other specialized tasks. These miners are rewarded with TAO tokens for outcompeting others. Validators, acting as referees, ensure that the miners perform to a high standard. The emergent network of miners and validators powers an API used by end-user applications. Bittensor’s infrastructure supports 40 subnets, each targeting a specific AI use case, with applications like Corcel now available in the App Store.

Another bottleneck in AI training is access to data. Vana is a crypto network that pools high-quality data for training AI models, similar to how Bittensor pools compute resources. Vana supports initiatives like the Reddit Data DAO, which allows users to contribute their personal Reddit data while maintaining ownership and voting rights over how the data is used. This decentralized approach ensures that data, a critical asset in AI training, is accessible without compromising ownership.

https://www.vana.org

Vana - The First Network for User-Owned Data and Decentralized AI

Welcome to Vana, where users control their data and contribute to decentralized AI. Explore data DAOs, marketplaces, and projects like r/datadao, Volara, and Flirtual.

Increasingly, many problems in areas like genetics, brain research, public health, and climate studies are becoming computing problems. Sometimes, these problems are not limited by access to computing resources but rather by access to high-quality data, which is often stuck behind proprietary licensing arrangements or inaccessible due to economic misalignment. Progress is held back when breakthroughs in areas like cancer research are slowed because information is stuck behind a paywall.

Crypto and AI have a massive opportunity to fix these gaps in incentives, building out complex and reliable computing infrastructures that give open-source AI a fighting chance. However, there are challenges to consider, including ensuring security, governance, and avoiding the potential centralization of power within decentralized networks.

As we stand at the crossroads of crypto and AI, the decisions we make today could democratize the future of computation or further entrench existing power structures. The choice is ours. How do you think crypto and AI will reshape our world? Leave us a comment below, join the conversation, and explore the opportunities in this rapidly evolving space.

Contact us to learn more about how Cosimo Capital can support your journey into digital assets.

https://www.statista.com

Crypto users worldwide 2016-2024 | Statista

The number of cryptocurrency users in the world is estimated to have increased by over 40 million in the first half of 2024.

The Future of Finance is Now

Willy Woo

@woonomic

Bankers say "Bubble"
Technologist say "Disruption"
Students of history say "Dawn of the Digital Age"
Here's the #Bitcoin 10,000 yr view...

2,182

11:22 PM • Oct 14, 2017

“[Bitcoin] is no different than what gold represented over thousands of years."

- Larry Fink, CEO of BlackRock

The Opportunity in Digital Assets

There are massive opportunities to invest in the fundamental infrastructure of emerging internet-native financial systems that use public blockchains. Ethereum, which has surpassed $10 billion in revenue in just 7 years, generates income primarily through fees as a settlement layer.

Why Digital Assets Matter

• Emerging Infrastructure: Investing in fundamental infrastructure for internet-native financial systems on public blockchains presents significant opportunities.

• Proven Success: Ethereum has generated over $10 billion in revenue in just 7 years, nearing the pace of top software companies.

• Efficient Revenue Model: Revenue is primarily derived from fees as a settlement layer.

Crypto’s Key Advantages

• Digital, portable, and beyond the control of any single government

• Trades around the clock, 24/7 globally

• Faster settlement times—from days to minutes or seconds

• Reduced costs for merchants and traders

• Enhances payments, trading, remittances, and cross-border transactions

• Stablecoins and tokenized assets offer global access to US financial instruments

The digital asset revolution is here, offering transformative opportunities in finance. At Cosimo Capital, we specialize in leveraging these advancements to drive growth and efficiency. Explore how we can help you capitalize on the future of finance.

Contact us to learn more about how Cosimo Capital can support your journey into digital assets.