Despite the growing hype and rising valuations of Artificial Intelligence (AI) tokens, the industry now faces a serious challenge from a new and more efficient player: DeepSeek. On Monday, AI tokens experienced a 9% drop, significantly underperforming the broader CoinDesk 20 index, which saw only a 5% decline. DeepSeek has been gaining traction for its remarkable performance while operating with just a fraction of the resources compared to giants like OpenAI.
While OpenAI recently raised a whopping $6.6 billion with a valuation over $157 billion, DeepSeek has managed to outperform it using just $6 million in funding and far fewer GPUs. What’s even more impressive is that DeepSeek’s model is so efficient it can even run on mobile devices. This efficiency has shaken up the market, especially for projects like Nodes.AI and Aethir, both of which rely heavily on GPU-based infrastructure. The market responded with a notable downturn in their values, with Nodes.AI dropping nearly 20%, while Aethir saw a 6% dip.
This shift in focus to more efficient AI models serves as a stark reminder to the crypto industry about its struggles to make a meaningful impact outside of finance. A similar scenario unfolded in the crypto gaming sector, where despite significant investments and high valuations for projects like Sandbox and Decentraland, they have yet to reach the same level of success as traditional gaming companies. Blockchain gaming, valued at $19 billion, saw a significant 38% drop in investment in 2024, according to DappRadar.
While blockchain gaming saw a rise in active wallets, it is still struggling to maintain a sustainable user base compared to traditional games on platforms like Steam. Even some lesser-known games on Steam, from companies with much smaller market caps, have managed to attract more users. This ongoing challenge illustrates that, beyond financial applications, the crypto industry still faces significant hurdles in catering to broader use cases. The rise of DeepSeek serves as a strong indicator that the crypto sector needs to focus on more innovative and efficient solutions if it is to compete with traditional industries in areas beyond finance.
