Interpreting the New Model of AI Financing IMO

Yesterday, while reflecting on the main narrative of the current market in the article, I couldn't help but mention AI again. Speaking of AI, I suddenly thought of a new model that has emerged this year, which uses crypto assets to finance AI: IMO (Initial Model Offering).

It was proposed by the Ethereum-based AI project ORA (ora.io).

Before explaining IMO in detail, let's first review the core elements of AI.

There are three core elements of AI: computing power, models, and data.

Currently, all three elements are monopolized by centralized institutions/companies:

In terms of computing power, the monopoly is held by NVIDIA.

In terms of models, the monopoly is held by major internet companies led by OpenAI.

In terms of data, the monopoly is held by search engine giants.

This monopolistic situation has always been something that entrepreneurs in the tech industry, especially in the crypto ecosystem, do not want to see. Some projects among the many so-called "AI + Crypto" initiatives that have emerged in recent years are dedicated to solving these monopolistic issues, hoping to decentralize them.

However, each of these elements requires a massive capital investment. Even if decentralization is ultimately achieved, a large amount of capital is still needed during the project's startup phase.

IMO targets the funding aspect during the project's startup phase.

But it focuses on solving one of the three elements: models.

So, what is IMO?

According to the project team's explanation, it is a means of financing AI models through tokenization.

When it comes to tokenized financing, investors who experienced the frenzy of the 2017 bull market will immediately think of ICOs.

That was a method of financing projects using Ethereum ERC-20 tokens:

The project team sells project tokens at a certain price, and investors buy these tokens with Ethereum. Once the project team receives the Ethereum, they have the capital to develop and promote the project. Then, token holders can share in the rights represented by the project tokens.

In form, IMO is not fundamentally different from ICOs, except that the financing targets are different: ICO financing can be used to develop any crypto project, while IMO financing is specifically for developing AI models.

According to ORA's detailed explanation of IMO, it provides funding support for the continuous development of projects by tokenizing open-source AI models and achieving community-driven development. The project team implements IMO on the AI model, issuing corresponding ERC-20 tokens, and investors participate in purchasing these tokens and enjoy the rights represented by the tokens.

This application does not have significant innovation in form, but it does have certain characteristics in terms of scenarios, as it at least provides a new financing idea for the development of open-source AI models.

I seem to have never seen any AI model team use this method for financing before.

However, there are still many questions to be verified regarding whether this idea is feasible:

• Is the capital raised through this method sufficient to initiate the development of an AI model?

• Even if a team develops an AI model using this method, what are its use cases? In a situation where Apple has started integrating OpenAI models, will these models have advantages compared to OpenAI's models?

• So far, existing AI models have not generated visible commercial value; can this type of model generate commercial value?

• Even if this method can succeed, once it scales up, it will inevitably encounter regulatory challenges. How will it be handled then? Unless the models it creates can quickly grow to an unshakeable position like Ethereum.

The above questions assume that this model is used in positive scenarios. If this model is also widely used in mixed situations, the consequences may be just as unimaginable as those of ICOs.

In summary, there is still too much uncertainty and high risk.

However, any innovative idea is always filled with questions and challenges upon its emergence. Although this project has a lot of uncertainties, in my view, it is at least stronger than a bunch of so-called "AI + Crypto" projects that are merely dressed in AI but lack any new substance.