During the morning trading hours in Asia, artificial intelligence (AI) tokens experienced notable declines, with the CoinGecko category falling by 9%, outpacing the 5% drop of the CoinDesk 20 crypto index. This downturn reflects investors' responses to the disruption caused by DeepSeek, a new AI model affecting the industry landscape.
According to data shared on Hugging Face, DeepSeek outperforms existing models like OpenAI's at a significantly lower cost—utilizing just $6 million and a fraction of the Graphics Processing Units (GPUs) that OpenAI employs. Noteworthy to the technology sector is DeepSeek's efficiency, which allows for its operation on mobile devices. Consequently, AI tokens most linked to GPU resources are among the hardest hit.
Among the affected tokens, small-cap Nodes.AI, a platform offering GPU access, saw a steep decline of nearly 20% as per CoinGecko statistics. In contrast, Aeither, which operates with a considerably larger market cap, experienced a smaller drop of 6%, only slightly surpassing the CoinDesk 20 index's losses. This development signals a broader industry shift towards more resource-efficient AI models, presenting challenges for businesses heavily reliant on traditional GPU frameworks.
This situation parallels experiences from the crypto gaming sector, known as GameFi, where large investments have not necessarily translated into groundbreaking advancements. According to CoinGecko, the GameFi sector is valued at $19 billion. While prominent entries like Sandbox and Decentraland hold their ground among top gaming companies, they have not matched the success of more established industry players.
Last year highlighted the investment slump in blockchain gaming, with only $1.8 billion funneled into such projects, marking a 38% drop from 2023, according to DappRadar. The sector saw a 421% surge in daily active wallets, yet it struggled to outpace DeFi in market dominance, fluctuating between 26-29%. Despite substantial crypto game ventures, many face difficulty in cultivating a lasting user base. Comparatively, even relatively underfunded traditional game companies often enjoy larger followings.
The evolving narrative indicates that, like the earlier gaming endeavors, crypto faces uphill battles in expanding beyond financial applications. As the sector adapts, project viability and user engagement remain critical challenges, mirroring issues seen in the broader tech industry.