Attention AI vs. Real Utility AI: Understanding the Next Wave in Web3

In our latest X-Space session (#29), we explored the growing distinction between “attention AI” and “real utility AI.” While AI has emerged as an undeniable megatrend, not every project claiming to be AI-driven delivers concrete value. Below is a condensed overview of how we see the AI space evolving, especially at the intersection of Web3 and blockchain technology.

Listen the full X-Space here: https://x.com/ChainAware/status/1890743679553245506

Why We Started Discussing “Attention AI”

Over the past year, the number of “AI” projects in crypto skyrocketed. CoinGecko’s AI list alone ballooned from 20 projects to nearly 500. Many soared in market cap, then swiftly crashed. This phenomenon led us to coin the term “Attention AI”, projects or tokens that attract retail investors via flashy narratives but offer little real utility.

The Spotlight on Narratives

• Tokenized AI Assets: Buzz phrases like “tokenizing AI models” sound compelling but are rarely backed by functional code or partnerships.
• AI-Driven Smart Contracts: Generating contract code with large language models (LLMs) might be feasible, but there’s no built-in competitive advantage if everyone can do it.
• Decentralized AI Marketplaces: Dozens of projects promise aggregated compute or specialized data sets, yet almost none have real customers or verifiable transaction volumes.

The result? Many investors realized these concepts provided little beyond hype, leading to a market correction that primarily impacted Attention AI ventures.

Real Utility AI: What It Looks Like

“Utility AI” projects focus on providing genuine value to end users, often backed by proprietary models that solve tangible problems. They create measurable benefits, like reducing fraud, improving marketing, or enhancing compliance, and cannot simply be replicated with a three-line LLM prompt.

Characteristics of Real Utility AI

1. Active Products: There’s a live app or platform, something users can interact with, not just a white paper.
2. Tangible Benefit: The solution solves a specific, concrete problem (for example, fraud detection, compliance, user acquisition) with demonstrable results.
3. Competitive Advantage: Often involves proprietary AI models or unique data sets that are not trivially copyable.
4. User-Centric: Focused on end-user or business needs, rather than marketing buzzwords.

Why AI Is an Unstoppable Megatrend

Despite the hype and inevitable boom-bust cycles, AI remains an incredibly powerful technology. Properly applied, it can tackle deeply-rooted challenges in decentralized ecosystems, offering features that Web3 has struggled to implement efficiently:

• Predictive Fraud Detection: Better than after-the-fact AML, real-time AI flags suspicious behavior before it escalates.
• Marketing & Personalization: AI can segment users based on wallet history or transaction types, delivering relevant content that drives higher conversion rates.
• Transaction Monitoring & Compliance: Real-time analytics help businesses meet regulatory standards like MiCA for virtual asset service providers.
• User Behavior Forecasting: Predicting which wallets may borrow, lend, or trade, and tailoring services accordingly.

How We Approach Utility AI at ChainAware.ai

As builders with a background in both credit scoring and fraud detection, we pivoted from our lending platform (SmartCredit) to create ChainAware.ai, an AI-powered platform that focuses on tangible problems in Web3.

Live AI Agents and Tools

1. Web3 Marketing Agent
   • What It Does: Analyzes on-chain data to predict user intentions (like if they’re about to borrow or trade), then delivers personalized ads or messages.
   • Why It Matters: Significantly lowers user-acquisition costs and boosts conversion rates.
2. Transaction Monitoring Agent
   • What It Does: Continuously checks wallet activities to predict and flag high-risk or fraudulent behaviors.
   • Why It Matters: Helps businesses comply with regulations and keep malicious users out.
3. Credit Scoring Agent
   • What It Does: Evaluates a wallet’s reliability, producing a credit score that DeFi lenders can trust.
   • Why It Matters: Lays the groundwork for under-collateralized lending in decentralized finance.

Tools for Individual Users

• Predictive Fraud and Rug Pull Detectors: Identify suspicious wallets or tokens before a scam occurs, helping new users avoid losing funds.
• Wallet Auditor: Offers insights into any address’s risk profile and behavioral patterns, so you know who you’re dealing with.
• Telegram & Discord Bots: Simple integrations that let you check addresses without leaving your favorite chat apps.

Free Pixel and Analytics

• Pixel Integration: Easily added to a dApp, it collects on-chain activity to give founders a clear picture of user engagement.
• Dashboard: Breaks down what your visitors are actually doing, shedding light on whether they’re traders, lenders, or NFT enthusiasts.

Advice for Investors: Looking Beyond the Hype

If you’re exploring investments in AI-focused crypto projects, you can reduce the risk of falling for “attention AI” by asking a few critical questions:

1. Is There a Live Website or MVP? No working product often indicates an empty promise.
2. What Real-World Problem Is Addressed? If the project can’t articulate a clear use case, it’s probably just marketing spin.
3. Is There a Unique Competitive Advantage? Projects relying solely on LLMs can be cloned in days. Proprietary technology matters.
4. Do They Show Actual Engagement or Revenue? Anecdotal partner announcements and zero real metrics are red flags.

The Shift Toward Real Utility AI

We believe the market is undergoing a necessary correction, shedding tokenized illusions in favor of practical, value-driven solutions. AI as a technology is unstoppable, but only those building tools that solve genuine business or user needs will thrive in the long run.

ChainAware.ai stands by the principle that AI should directly benefit end users and businesses by solving persistent issues. From fraud prevention to personalized marketing, these use cases demonstrate what AI can accomplish today, not in a distant, hypothetical future.

Final Thoughts

The era of “attention AI”, superficial narratives crafted to attract speculative money, is drawing to a close. In its place emerges “real utility AI,” where genuine solutions and tangible outcomes define success.

If you believe in AI’s transformative power, do your due diligence. Seek projects that not only talk a big game but also deliver real products. In a fast-moving tech landscape, utility is the ultimate differentiator. By staying informed and focusing on verifiable impact, you can navigate this evolving ecosystem with greater confidence and a higher likelihood of long-term rewards.