AI tokens are the real losers of the deep revolution

Artificial intelligence (AI) tokens are in red during morning trading hours in Asia, with the Coingecko category down 9%, recording bigger losses than the Coindesk 20 – a crypto index – which is in drop of 5%.

Crypto investors, like their traditional finance counterparts, are likely digesting the impact that Deepseek, a new AI model, is having on the industry.

Deepseek data published on Hugging Face, an AI industry forum, shows its model outperforms OpenAI, while being built on a budget of $6 million and a fraction of the graphics processing units (GPUs) that Openai uses – which recently closed a $6.6 billion round with a valuation of over $157 billion.

Perhaps most concerning to perpetual GPU bulls is that Deepseek is so efficient that a version can be run on your phone.

Naturally, some of the worst performing AI tokens are those with the most exposure to GPUs. Small-cap nodes, which facilitate access to GPUs, are down almost 20% The Coindesk 20 benchmark.

Crypto Gambling Lessons

While Deepseek will make for a stressful week at Openai, Nvidia and other tech giants that have pivoted into AI, it’s also a more pressing lesson for crypto projects – one that might be familiar to those with the foray into Crypto in gaming years ago.

Despite the pools of capital available to crypto AI projects, they simply haven’t been able to do anything as revolutionary or interesting as what Deepseek has done.

Coingecko data puts the value of the crypto gaming industry (GameFI) at $19 billion. If the biggest entries on this list, like Sandbox, Gala or Decentraland, were entries on the 30 largest gaming companies by market, they would occupy respectable positions alongside the household names responsible for recognizable franchises.

But despite these projects simply haven’t had the same success as their traditional counterparts.

Last year, Blockchain Gaming received the lowest investments since 2020, according to Data Source Dappradar. Just $1.8 billion was invested in blockchain games and metaverse projects, representing a 38% slide from 2023.

And while daily unique active wallets in blockchain games jumped 421% last year, the sector’s dominance within the industry has fluctuated between 26 to 29%, with Defi taking the lead. Still, the count is lower than games on Steam.

Additionally, some older, less popular games on Steam, companies with market caps, a fraction of the GameFi giants, have larger audiences. Over the years, many crypto games have struggled to build a sustainable user base.

So, for now, it could be said that crypto faces challenges in catering to use cases beyond finance.