Yesterday, the crypto community was hit with a piece of news:

ElizaOS@elizaOS's founder Shaw@shawmakesmagic posted that the $ai16z token is “completely dead”, and the related foundation is gradually winding down operations.

I believe that many longtime readers who have witnessed the rise of the AI track in the crypto ecosystem over the past two years will not be unfamiliar with the ai16z token.

If GOAT is the first coin to ignite the AI wave in the crypto track, then in my opinion, ai16z is the second. The subsequent popularity and lasting attention of Virtual at that time were far from what these two had.

Although GOAT counts as the first AI coin, ai16z had a much greater impact on me.

This is because GOAT is purely a meme coin, and it lacks much imaginative space in its ecosystem and technology. However, ai16z at that time could definitely be regarded as a technical and geeky ecosystem coin that was full of imagination.

Therefore, my attention to ai16z at that time was far greater than to GOAT, and precisely because of ai16z, I bought Solana for the first time, which I didn’t particularly like, not for investing and holding Solana, but simply to buy ai16z.

Many old readers who experienced that period may not clearly remember the brilliance and avant-garde nature of ai16z in technology and philosophy back then, but I still remember it vividly.

The founder proposed to build an underlying framework specifically for the AI ecosystem around October or November 2024. Although the term he used, "operating system," is a bit outdated and not very suitable, the technical concept he proposed that the AI era needs a non-traditional, brand-new underlying architecture to support the operation of the AI ecosystem is very prescient.

The now popular MCP framework proposed by Anthropic in the AI ecosystem was not launched until late November 2024, which is later on the timeline.

From this perspective, if we look at the entire AI ecosystem (be it crypto or traditional), ai16z was ahead of its time in both technology and ideology.

Why did this project later decline?

I believe that fundamentally, if we look from a business perspective, it is quite clear. I think there are mainly two reasons:

- Advanced technological concepts and imaginative space can indeed quickly widen the gap between oneself and competitors in the sprint phase, but doing a project is not a sprint but a marathon. For a project to win in a marathon, it ultimately needs to land on the fundamental business model and profit. Without a model and profit, the project will ultimately come to an abrupt end.

This point is vividly illustrated on Wall Street:

A company with a filled narrative can have a high valuation and imaginative space before its IPO. But after going public, within at most six months, Wall Street will look at the company’s profits and cash flow, the most basic business performance. Without these data performances, the stock price will reflect this immediately.

Although I often think they are short-sighted, don't agree with many of their practices, and don’t believe that short-term stock prices can reflect a company's value, I do recognize their attitude and stance that is devoted to business performance and serious about business substance.

- This project, in its later evolution process, never found a business model that could generate profit and cash flow, nor did it build and expand into a stronger team to advance the project. This resulted in the project operating in a loose and almost non-profit organization style, unable to generate strong cash flow and income. Therefore, once the team encountered problems, it would quickly be overwhelmed.

Its development sharply contrasts with the later popular Virtual.

Virtual targeted business models, cash flow, and income from the very beginning. This is what allowed it to continue to persevere through the bear market and continuously expand its ecological territory.

For many projects, as long as they can survive the bear market and still have cash flow income, their future won’t be too bad.

Unfortunately, ai16z has fallen due to these reasons.

For investors, this is also a lesson; it reiterates:

When investing in projects, in the long term, it ultimately needs to return to the essence of business: business models and profit income.

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