AI x Crypto's 'Picks & Shovels' Trade

If you’ve been tracking the AI x Crypto wave, it’s felt like living through a full economic cycle in the span of months. It started with projects like Truth Terminal (GOAT) and quickly cycled through a series of booms and busts. Each cycle packed a mini rise-and-fall narrative into weeks.

To outsiders, it looks chaotic — like an onchain fish market where people are inexplicably paying premiums for "cutting-edge" tech. But this is how crypto markets always work: in the short term, they reward projects that market novelty well. Over time, though, substance wins out.

So let's take a thesis-driven approach to the AI x Crypto meta and find a way to navigate it without getting lost in the noise. Let's examine how to bet on the broader trend rather than chasing which agent will succeed. In other words, bet on the "casino." The house always wins.

The State of AI x Crypto Meta 

When the agent meta kicked off last October, the space was wide open. A handful of agents existed, but there were almost no launchpads tailored for agents and few tools to build them, plus a few memes conceptualized by AI agents — fartcoin, lol.

Back then, we weren’t debating whether AI agents were revolutionary or the next NFTs. The questions were more basic: Does this even make sense? Why would anyone care? What’s the point of AI agents?

But crypto is uniquely fast at turning skepticism into belief. It goes from “WTF is this?” to “Huh, maybe there’s something here,” to “This is the future, take my money,” faster than any other industry.

The AI meta followed this pattern. Skepticism gave way to intrigue, then to enthusiasm, driving investment, price action, and a frenzy of development in just a few months. People started comparing it to DeFi Summer.

In the early days, it was easy. You could buy almost any agent token, and chances were it would run. But the market doesn’t stay easy for long. Fast forward to today, and the game has changed.

The ecosystem is now flooded with agents. What started as a trickle became a flood of launches — hundreds of new agents every day. The space is saturated, with dilution everywhere. Finding winners now requires diligence and luck, and most degens struggle to separate signal from noise.

The Rise of AI Infrastructure

This saturation led to a shift. Betting on agents became harder, so the market moved on to the next logical play: infrastructure.

The market's pivot to infrastructure was inevitable. In a gold rush, the smartest play is often to invest in the tools that enable the digging.

Take Nvidia as an example. In the macro AI boom, GPUs are the fuel that powers the entire industry. Nvidia doesn’t need to bet on which AI application wins; they’re positioned to win regardless because their tools are indispensable.

In crypto, L1s like Ethereum and Solana work the same way. These platforms don’t rely on any one app succeeding. They create the foundation on which the ecosystem can build and innovate. AI infrastructure is following this same dynamic. 

And if there’s one thing degens love, it’s a good L1 trade. Historically, L1s have been some of the best-performing trades in every cycle. Last cycle, we saw the SolLunaAvax trade, where tokens from Solana, Terra (Luna), and Avalanche outperformed the market alongside Ethereum.

AI infra is the picks-and-shovels trade of the AI x Crypto meta.

Today, AI infrastructure projects provide the essential codebases, tools, and platforms to launch agents and scale the broader ecosystem. And the market recognizes this: over half of the $14 billion market cap of AI projects is tied up in infrastructure.

Why the Picks-and-Shovels Trade Works

Throughout history, those who thrived during gold rushes weren’t the miners but the ones supplying essential tools. Similarly, AI infrastructure projects form the backbone of the ecosystem, quietly driving innovation and growth without vying for the spotlight.

AI infrastructure projects occupy that same role. They’re not flashy, but they’re indispensable. Without them, the rest of the ecosystem doesn’t function.

Betting on infrastructure allows you to focus on the broader growth of the ecosystem, rather than gambling on individual agents. A key advantage of infrastructure is that it captures value from every transaction and innovation in its network. As the foundation of the ecosystem, infrastructure naturally accumulates value from everything built on top of it.

A prime example is Virtuals, an AI infrastructure project that has seen significant revenue growth from the multitude of AI agents launched on its platform. Notably, its success is amplified by standout agents like aixbt, which has emerged as a blue-chip player, dominating crypto mindshare and solidifying Virtuals' role as a cornerstone of the AI x Crypto ecosystem.

Finally, infrastructure benefits from the market’s tendency to underestimate compounding. While AI agents are revolutionary today, the real wealth will likely come from the compounding growth of the platforms they depend on, even after the initial hype fades.

Closing Thoughts

Infrastructure has always been a good business. Whether in gold rushes, railroads, the early internet, or crypto, the foundational layer consistently proves to be the safest and most lucrative bet.

For those navigating the AI x Crypto meta, the picks-and-shovels trade might be the clearest path to durable returns in a space known for its volatility. 

This is not financial advice but a mental model for you to start looking into the space if you’ve been sidelined until now.

Want to learn more? Check out our guide to the top five AI infrastructure plays:

Top AI Agent Infrastructure Plays & Tokens on Bankless

An in-depth look at 5 AI platforms and how each has positioned its token to accrue value as it scales.

BanklessDavid C Dec 17, 2024 • 8 min read