What if NFTs did more than just provide provenance and prove possession? As Dan writes in this newsletter, turning agents into NFTs would also let their holders improve their digital property.

Then, Dan discusses how crypto ownership can solve the "resource problem" in open software—including AI foundation models—by letting speculative resource providers fund development in exchange for ownership. Finally, we share our latest seed investment: Pluralis Research, a decentralized training protocol for AI foundation models that leverages crypto ownership. 

For more on the intersection of AI and crypto, we’ve pulled some of our favorite pieces from the archive.

We’re always eager to connect with early crypto founders—not just in AI, but also in energy, infrastructure, DeFi, social, and beyond. If you're building in these areas, reach out to anyone on the Variant team. And if you're looking to join one of our amazing portfolio companies, we would love to hear from you.

Enjoy the newsletter!

Agents as NFTs

Daniel Barabander

One way to look at NFTs is that they are valuable because they allow digital property to reflect features we associate with property in the physical world. 

Think about owning a house. When you buy the house, you get a deed, which provides provenance via a chain of title. As the owner, you unilaterally possess the property and have the right to exclude others from using it. And if you improve the house, those improvements run with the property. Normal digital assets do not have these features, but NFTs can embody them.

NFTs have so far only reached product-market fit with art, which generally only utilizes the first two features. Take Asymmetrical Liberation, a piece from Botto. It certainly utilizes provenance to prove it was the first piece generated in Botto’s Genesis Period, and its holder has unilateral control over it. But there’s no way its holder can improve the art (nor would that make sense). The closest that NFTs have leaned into this improvement feature is probably video game NFTs, like when a player’s action in the game levels up a character. This feature is far too underexplored with NFTs.

I think one really interesting use case for NFTs that can impart all three of these features of property in the physical world is agents.

Read the full post on our blog.

Using Crypto Ownership to Solve the Resource Problem

Daniel Barabander

The founding thesis of Variant is to invest in an internet that turns users into owners. The core premise is that ownership solves a coordination problem, incentivizing otherwise diverse participants to channel their contributions into a shared structure. Ownership makes “impossible-to-build” software possible. Crypto’s role is to make that ownership mean something online.

There is a particular type of coordination problem ownership via crypto is well-suited to solve: open software with a “resource problem.” Open software is fully public and anyone can participate in its creation or run it. The resource problem occurs when the resources required to develop the software are beyond any individual contributor’s means. That is, the individual cannot just contribute her time to build the software; she must also obtain costly external resources. Linux is an example of software without a resource problem and has been built as a successful open software project. Foundation AI models are an example of software with a resource problem. They are not currently being built as open software (LLaMa and DeepSeek have public weights that purport to be “open source,” but the public cannot help create these models). 

Read the full post on our blog.

Investing in Pluralis

Daniel Barabander, Jesse Walden, and Jack Gorman

Variant’s founding thesis is that crypto enables an internet where users become owners—solving coordination problems by aligning incentives through shared ownership. One coordination problem crypto excels at solving is the “resource problem,” which occurs when software development requires costly external resources beyond an individual’s means.

Our seed investment in Pluralis Research is premised on using crypto ownership to solve the resource problem of foundation AI models.

Read the full post on our blog.

From the Archive

More posts on crypto x AI

Alana: AI Models with Taste (May 2024)

AI models can be trained to complete many types of objective tasks. But some have more subjective outputs, like making art. They need "taste."

Daniel: What Are Agents Good At? (December 2024)

Crypto agents have mostly succeeded by entertaining humans. But agents are also good at meeting humans where they are and nudging them. For example, agents can act as a layer on top of existing apps users already love, extending their utility. 

Jesse: DAOs 2.0 (December 2024)

The emergence of AI “agents” onchain is the true beginning of DAOs 2.0, where agents have the potential to put the “A” back in DAO.

Daniel: Why (Good) AI Needs Crypto (January 2025)

Crypto agents have mostly succeeded by entertaining humans. But agents are also good at meeting humans where they are and nudging them. For example, agents can act as a layer on top of existing apps users already love, extending their utility.

Disclaimer: This post is for general information purposes only. It does not constitute investment advice or a recommendation or solicitation to buy or sell any investment and should not be used in the evaluation of the merits of making any investment decision. It should not be relied upon for accounting, legal or tax advice or investment recommendations. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by Variant. While taken from sources believed to be reliable, Variant has not independently verified such information. Variant makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. This post reflects the current opinions of the authors and is not made on behalf of Variant or its Clients and does not necessarily reflect the opinions of Variant, its General Partners, its affiliates, advisors or individuals associated with Variant. The opinions reflected herein are subject to change without being updated.