Exploring AI Tokens: advantages and steps for development

AI tokens gaining traction as a leading tech trend with major capital influx.

This is confirmed by the market dynamics in this segment and shows that AI projects are raising capital and users through the implementation of their own crypto tokens.

The total capitalization of AI tokens that are placed on the blockchain recently exceeded $20B, and the capitalization of the entire crypto market exceeded $2.3T.

What are AI tokens for? They allow you to upgrade the infrastructure of AI projects and raise new capital for them. The capitalization of some selected AI tokens already exceeds $3B. Don't want to fall behind this trend?

This article explains everything you need to know to take your AI project to the next technical and financial level.

What is AI tokens?

AI tokens are tokens placed on a decentralized blockchain network such as Ethereum. AI projects are behind their issuance.

By integrating the most cutting-edge global technologies - blockchain and artificial intelligence - tokens give these projects significant advantages. Issuing their own tokens allows AI projects to get all the benefits of the crypto world, and for crypto, it opens new horizons of interactions.

Now there is a major capital injection into AI tokens and they have a chance to become a leading technological trend.

AI tokens can represent an internal currency and can be used inside and outside the AI project infrastructure, can provide their owners with the authority to manage the project through a DAO (Decentralized Autonomous Organization), can be used to reward users, make airdrops, can be used in DeFi (Decentralized Finance) protocols, can raise new capital and drive the growth and expansion of AI projects, and much more.

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AI tokens use cases

Let's look at a few real-world examples before we break down specific use cases for AI tokens.

• Bittensor (TAO) is one of the largest AI tokens by capitalization. Its capitalization already exceeds $4.3B. Its own crypto tokens are used to reward members according to their contributions and to pay for the use of Bittensor's models.

• Fetch.ai (FET) is also one of the largest AI tokens, its capitalization already exceeds $1.6B. Fetch.ai (FET) tokens stand as a utility token and is a key medium of exchange within the project infrastructure. It can be used within the ecosystem to pay for services.
• OpenAI's new Sora model was recently announced. This event caused a sharp growth of AI tokens and increased their capitalization by billions of dollars. How the announcement of the Sora model impacted the growth of crypto tokens perfectly demonstrates the unbreakable connection between these two segments - AI and crypto.

Recently, we examined the transformative impact of AI tokens on both the blockchain and AI markets. Read the breakdown on our blog.

Due to the fact that AI is now a strong trend, it allows you to create your own AI token that will grow based on several parameters: the crypto market, the success of the AI company that released it, and the AI segment as a whole.

Therefore, creating a crypto token for an AI company is an opportunity to diversify its assets and not to invest large resources in the development of the token itself, continuing to work on the success of the product itself.

Fundraising: AI projects can issue their own tokens to raise capital. This can be realized through an ICO (Initial Coin Offering). The process of ICO represents the issuance by a project of its own crypto tokens that can be purchased by users and investors. The tokens that projects issue are usually backed by some kind of value, for example, they can be used to exchange for the company's AI products, represent participation rights in governance votes, etc.

This process can be paralleled to an IPO (Initial Public Offering), which is the initial public offering of a company's shares. This is a great opportunity for investors to enter the company at an earlier stage of growth, and for the company to raise capital for future growth.

Internal currency: A project's own AI tokens can be used as the platform's internal currency. It can be used to pay for access to models and other resources provided by the AI platform. For example, users can purchase tokens to access certain services such as AI-assisted text generation, video generation, image generation, etc.

Governance: Tokens can be used for voting in important decisions and project management. In this case, tokens grant voting rights, and the weight of these votes depends on the number of tokens the user owns. This is implemented using the Decentralized Autonomous Organization.

DAO can be similar to the management system of public companies, where shareholders can participate in decision making and the weight of their vote depends on the amount of shares of the company they own.

Only in the case of DAO it is a more transparent model. It greatly simplifies and automates the process by being implemented through smart contracts on the blockchain network. It can also increase the level of trust participants have in the project.

User motivation: Tokens can be used to motivate users to contribute to the development of the project. For example, to reward users for providing data or for participating in the training of AI models, which will contribute to improving their quality.

Monetization: Developers of AI modules can monetize the use of their modules by users by providing access to them and receiving internal project tokens as rewards. At the same time, this will actively involve developers and incentivize them to create modules for the AI platform.

Gaining new users: A company's own AI crypto tokens can be used for airdrops. An airdrop is the process of distributing tokens by a project to its users or investors. It is primarily used to raise awareness of the project, so a portion of the tokens are allocated for the airdrop. As a rule, an airdrop generates increased interest and activity, including from participants who have not initially heard of the promoted platform.

Advantages of tokens for AI projects

Automatization: By implementing tokens in blockchain networks that support smart contracts, it is possible to develop additional smart contracts. They will automate various actions and operate with the platform's AI tokens, as well as augment the platform's ecosystem.

Capital Raising: Due to the fact that the crypto market is actively growing, there are great opportunities to raise capital, especially those already placed in this sector. It is important to say that the realization of this can happen much faster than in the case of traditional markets. If tokenomics tools are used in the right way, their value can increase significantly, which will bring profit to the project.

Fast listing: Realizing your own crypto tokens allows you to quickly make them available to the broader market. To achieve this, you can list on decentralized exchanges such as Uniswap. Unlike traditional exchanges, token listings on decentralized exchanges are instantaneous and can take only a few minutes. Provided that everything is technically prepared, there are no multi-step and lengthy approvals.

High compatibility: One of the most popular standards for implementing tokens is ERC-20. This standard is widely used and it is compatible with a large number of decentralized applications, including financial protocols deployed in the Ethereum ecosystem. This allows tokens to be used in a variety of protocols, which expands their capabilities.

Flexible customization: Due to the fact that tokens are smart contracts, it is possible to flexibly implement your own logic required by the project. It is also possible to set the logic of tokenomics directly in the code of smart contracts, for example, to limit its issuance and other things that affect supply and demand.

Project credibility: The transparency of smart contracts and the blockchain in general greatly increases the credibility of the project. In contrast to a scenario where all logic is hosted on servers that are inaccessible to users.

Increased attention to the project and diversification of the audience: Through the realization of its own AI crypto tokens, the project makes itself known in the crypto community and expands into this market. This significantly increases the attention to the project and allows diversifying the audience.

Involvement of developers: The implementation of the program for the stimulation of developers with crypto tokens of the AI project will allow the involvement of new developers and the support of those who are already involved. By attracting new developers, the project supports its progress, improves and accelerates this process.

How to develop your own AI Token?

There are many specifics in developing your own AI token.

• First, you need to design the logic with which the AI token will be integrated into the project, what role it will perform and how it will interact with it.
• It is absolutely worthwhile to carefully consider tokenomics. This is necessary to give it a chance to survive in the market. For example, it is important to provide for a token lock period: when it enters the market, this will prevent it from dumping its value. The last one can lead to serious reputational and financial losses.
• The token lock period is also important to demonstrate the seriousness of the project and guarantee that neither investors nor the project team will not immediately sell all available tokens to make a quick profit. Such practices are not welcome.
• It is also important to provide an infrastructure that will motivate users to hold the token instead of selling it, because this will negatively affect its value. There are various tools, for example, ensuring that the token has value and implementing a protocol that will generate revenue from token holding.

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Perfect implementation consists of:

Smart contracts, which should represent a unified ecosystem and correspond to the necessary logic of the project because they are a key element in the entire architecture. Smart contracts are programs that are deployed and functioning on the blockchain network. Any tokens are smart contracts and are controlled only by the logic that is built into them. Therefore, to run a crypto token, it must be developed and deployed in the network.

The client side of the application, which is a practical and usable user interface. It is required for users to interact with smart contracts in the blockchain network and the other infrastructure of the project.

The server side of the application, which is responsible for data storage and processing. This allows one to realize additional business logic of the project and improve its performance.

Each step will require the use of Web3 infrastructure and must be implemented in compliance with security requirements and industry best practices.

Security is a key factor here, so it is important that a smart contract audit is executed by a team with a high level of experience in this.

The creation of crypto tokens by AI projects is one of the strongest trends in the crypto and AI industry. As we can see in the growth of capitalization of this segment - the inflow of capital into it is growing at a high rate, which shows the huge perspective of combining blockchain and crypto with AI.

Therefore, if you are planning to develop your AI token and want your project to benefit from its launch and run for the long term, the best solution is to take the help of professionals in blockchain development.

Benefit from our 8 years of experience crafting blockchain projects, with expertise in custom token creation. We stay ahead with industry trends and deep insights to ensure your project's success. Let us handle the development while you focus on your business goals. Schedule a consultation with our specialist to discuss token development for your AI project. Explore our services on our website for more information.