Crypto Update | AI Exposure On-Chain: Breaking Down Helix's AI Index

Summary

Markets Daily Crypto Roundup: In-Depth Summary

Episode Title: Crypto Update | AI Exposure On-Chain: Breaking Down Helix's AI Index
Host: Jen Sanasi
Guest: Eric Chen, CEO and Co-founder of Injective Lab
Release Date: January 30, 2025

In this engaging episode of Markets Daily Crypto Roundup, host Jen Sanasi sits down with Eric Chen, CEO and co-founder of Injective Lab, to discuss the groundbreaking launch of Helix’s AI Index Perpetual Market. The conversation delves into the intersection of AI and blockchain, the tokenization of traditional finance assets, and the future integration of DeFi with mainstream financial systems.

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1. Launch of Helix’s AI Index Perpetual Market

The episode kicks off with the exciting news of Helix, a decentralized exchange built on Injective, launching an AI Index Perpetual Market. This innovative product offers investors exposure to both stock and crypto AI-related assets, all seamlessly integrated on-chain.

Eric Chen explains the significance of this launch:
“This is really the first showcase for this type of innovation where we have uniquely combined the largest Web2AI companies today, such as Nvidia and Palantir, alongside with some of the most prominent Web3AI tokens like BitTensor, INJ, et cetera, into one very intuitive and balanced structured product.” [01:34]

2. Tokenization of Traditional Assets

The discussion moves to the broader trend of tokenizing traditional financial assets, highlighted by Larry Fink of BlackRock advocating for the SEC to approve the tokenization of bonds and stocks. Chen contextualizes this within the current financial landscape, emphasizing the alignment between traditional finance goals and blockchain capabilities.

“Our goal is kind of the same. It's to enhance this concept within traditional finance with onchain crypto rails to really reach a globalized and democratized scale.” [02:59]

3. Enhancing Accessibility for Investors

A key advantage of the Helix AI Index is its ability to simplify access for investors. Unlike traditional platforms that require navigating brokers and extensive onboarding processes, Helix offers a streamlined, one-click purchase experience on a premier decentralized exchange.

Chen highlights:
“This truly removes the barrier of access and of entry for the global audience. Because in the US it might be very easy via Robinhood, but kind of like in the greater world, it's been very, very difficult.” [03:39]

4. Overcoming Mainstream Adoption Challenges

While the product targets both retail and institutional investors, Chen acknowledges the challenges in educating a broader audience unfamiliar with decentralized exchanges. Efforts are focused on creating a user experience that mirrors traditional platforms to minimize the intimidation factor associated with blockchain technology.

“It might just look like or feel like a centralized exchange or like a centralized application when in reality everything is on chain.” [05:04]

5. Differentiating Helix’s AI Index from Existing Products

Jen Sanasi probes into how the Helix AI Index stands out from other AI investment vehicles. Chen explains that traditional AI indices often include diversified tech giants with multiple business lines, diluting pure AI exposure. In contrast, Helix’s index focuses exclusively on AI-centric projects, enhancing potential financial upside and volatility.

Chen:
“Adding that marriage between crypto and also AI adds that level of projects are exclusively focused on this AI vertical and also adds more interesting financial upside or volatility behind these basket of assets.” [06:09]

6. Vision for the Future of Finance: Integrating Traditional and DeFi

Looking ahead, Chen envisions a unified financial platform where users can access a diverse array of crypto and traditional assets seamlessly. This integration aims to provide self-custody and decentralized control while maintaining the accessibility and user-friendliness of traditional financial applications.

“There's going to be certainly an application that can power all that while being fully on chain or being fully decentralized where users can self custody and don't need to trust anyone.” [07:16]

7. Navigating AI Hype vs. Fundamental Value

Amidst the current hype surrounding AI, Chen advises investors to approach the market with a diversification strategy to mitigate risks associated with overhyped projects. He emphasizes the importance of spreading investments across a broad range of assets to achieve balanced exposure and reduce the impact of volatility.

Chen:
“It's about accessing a basket of products that are perhaps pre constructed or accessing as many assets as possible over various financial profile or asset profile and make sure that you get a very diversified exposure rather than a concentrated exposure.” [08:52]

8. Institutional and Retail Interest in AI Index Products

The conversation also touches on the growing interest from institutional investors in products like the Helix AI Index. Chen notes that many top institutions are actively engaging with Injective’s blockchain for trading and investment purposes, highlighting the platform’s appeal to both institutional and retail users.

“There's been a lot of institutional partners are very much interested in and I think, I believe has already been market making and providing liquidity for these type of index products.” [10:05]

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Conclusion

Jen Sanasi wraps up the episode by congratulating Eric Chen on the successful launch of the Helix AI Index Perpetual Market. The discussion underscores the transformative potential of integrating AI with blockchain technology and the promising future of decentralized finance in reshaping traditional financial systems.

“It's very slowly and then very quickly.” [08:10]

For listeners eager to stay informed about the latest in crypto markets and industry developments, subscribing to the CoinDesk podcast network is highly recommended.

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This episode offers a comprehensive exploration of the innovative strides being made at the intersection of AI and blockchain, providing valuable insights for both seasoned investors and newcomers navigating the evolving crypto landscape.

Transcript

[Eric Chen]

I think one of the most interesting thing about like the existing AI index is that it oftentimes includes like a well, diversified tech giants like Microsoft, et cetera, that has, you know, multiple lines of business and they're not necessarily getting as much exposure or as much of the upside or volatility behind, you know, like something that's exclusively AI.

[Jen Sanasi]

We all want to believe in something. In Chinese, belief also means trust. We want to trust our systems and each other so we can build a future beyond what we know. Join us at Consensus Hong Kong, where belief becomes real.

Hello and welcome to Markets Daily, hosted by me, Jen Sanasi. On this show, we navigate the crypto waters, providing insights against the broader financial landscape. So whether you're actively investing or simply watching the crypto markets because they are insane sometimes, this show is your compass to understanding what's happened, where we are, and where we're going. On today's show we have Injective Lab CEO and co founder Eric Chen. Eric, it's wonderful to see you again.

[Eric Chen]

Thanks so much for having me.

[Jen Sanasi]

Of course. Well, you have some news this morning. Helix, a decentralized exchange built on Injective, launched an AI index perpetual market. This is giving investors exposure to stock and crypto AI related assets, all on chain. I know that's a little bit of a mouthful. Just lay the foundation for us. Talk to us a little bit about what this is and who the ideal investor is.

[Eric Chen]

Yeah, I mean, this is under the backdrop of BlackRock, Larry Fink saying that he wants to see the SEC proving tokenization of bonds and stocks. And recently the very, very bullish statement from Jerome Powell on seeing the future for banks and traditional institutions to, you know, do more within the crypto space. So I think it all comes very much in time for Injective to launch this Helix AI index product in collaboration with Stork. It's really the first showcase for this type of innovation where we have uniquely combined the largest Web2AI companies today, such as Nvidia and Palantir, alongside with some of the most prominent Web3AI tokens like BitTensor, INJ, et cetera, into one very intuitive and balanced structure product.

[Jen Sanasi]

I want to talk a little bit about Larry Fink's comments there. Like he mentioned, he said he wants to see the SEC approving the tokenization of bonds and stocks. Talk to me a little bit about what's driving the desire for bringing traditional assets on chain, because now we're hearing it from these traditional finance giants like Larry Fink and of course, the folks like you who have been building in this industry for a long time are starting to bring products like this to more of a mainstream audience. So talk to me a little bit about the drivers.

[Eric Chen]

I mean, surprisingly, our goal is kind of the same. It's to enhance this concept within traditional finance with onchain crypto rails to really reach a globalized and democratized scale. So AIX is obviously a major step towards that. That creates a seismic shift for the financial industry at large. And of course folks at blackrock are going to do more to bring their products out to more audience, to globalize audience as well and to bring it into the younger folks who are more interested in crypto rails rather than traffic rails.

[Jen Sanasi]

Talk to me a little bit about the benefit to investors here. What's the benefit to bringing products like this? Onshade.

[Eric Chen]

Yeah, so basically for the AIX index, it's very interesting because it combines both the crypto world and also the traffi world. And it's accessible easier than ever for any person who's onboarded via the crypto world and being able to access it on the premier decentralized exchange as Helix within one click to purchase product, instead of going through the brokers, who has to call up different types of issuers, who has to go through a whole onboarding process for you to engage with them. And I think this is truly what really removes the barrier of access and of entry for the global audience. Because in the US it might be very easy via Robinhood, but kind of like in the greater world, it's been very, very difficult.

[Jen Sanasi]

You mentioned some of the challenges there with investing in traditional financial products. And I think for you and I, folks who operate in this world, it's really easy to understand how this makes investing more accessible to a broader audience. But there's still that challenge of bringing that audience to this ecosystem, helping them understand what a decentralized exchange is, what a centralized one is like, just helping them understand how to interact with these products. Are you thinking about that or is this product really for the web3 native for now and you're maybe thinking about that broader audience later?

[Eric Chen]

We're always thinking about kind of blurring the line between the broader non crypto audience and also the crypto native audience. And for our case, it's about making sure the UX and onboarding process is as web2as possible to prevent the users from getting too distracted or getting scared by all the on chain wallet management, all the on chain transactions and stuff like that, and also all the complexity behind gas payments. And Helix is a Product really to build for that to ensure there's gases payment. The onboarding rail is as seamless as possible. And for those untrained eyes it might just look like or feel like a centralized exchange or like a centralized application when in reality everything is on chain. That's always been the goal for Helix and for Injective as the infrastructure that powers it.

[Jen Sanasi]

Talk to me a little bit about how this index compares to some of the other AI investment vehicles out there. You already mentioned it is a mixed bag of Web2AI companies and some Web3 tokens. But tell me a little bit more about it and how it compares.

[Eric Chen]

Yeah, I think one of the most interesting thing about like the existing AI index is that it oftentimes includes you know like a well diversified tech giants like Microsoft, et cetera that has multiple lines of business and they're not necessarily getting as much exposure or as much of the upside or volatility behind something that's exclusively AI. And adding that marriage between crypto and also AI adds that level of projects are exclusively focused on this AI vertical and also adds more interesting financial upside or volatility behind these basket of assets.

[Jen Sanasi]

You know, just, just having this conversation with you, I think about the future of traditional finance merging with, with Defi and I think this is a product that kind of really takes us in a step in that I guess a step towards that direction. Talk to me about how you are envisioning the future. What do you think the future of traditional finance integrated with DEFI looks like?

[Eric Chen]

Yeah, I think it's about this unified platform where you can access any type of crypto asset alongside with any type of traditional real world assets or different types of equity, different types of bonds, notes, commodities and futures, et cetera, all unified under one platform via the same type of onboarding rail and payment rail, et cetera. And there's going to be certainly an application that can power all that while being fully on chain or being fully decentralized where users can self custody and don't need to trust anyone.

[Jen Sanasi]

When do we get to that future.

[Eric Chen]

We'Re building towards it? Maybe it's a lot sooner than we thought.

[Jen Sanasi]

I mean I look at how quickly regulation has shifted to allow products like this to exist and to allow more access. And I think you're right, things are happening a lot quicker than one would have thought even just a year ago.

[Eric Chen]

Yeah, it's almost very much of a dream come true for all of us. It's very slowly and then very quickly.

[Jen Sanasi]

Yeah, you know, there's a lot of hype around AI right now. You obviously know this. There have been a bunch of AI stories that have come out this week. There's a lot of hype around AI focused tokens in web 3. Just yesterday on this show we talked about one of them, the VVV token that's attached to Eric Voorhees Project Venice. If we just broaden the conversation out here, I mean, you operate very deeply in this space. How should folks who are looking to invest in this space, you know, navigate hype versus determining real value? Do you have any thoughts around that?

[Eric Chen]

I think it's very tough as an average investor or those who have a lot on their plate in their day to day lives to like really truly, you know, unearth what is the hype and what is like a true fundamental value. Typically, you know, it requires a lot of research. It requires you to discern, you know, like overhyped projects from like projects that are delivering fundamental value. So general, like, like the trick around that for a lot of the institutional investors, et cetera, that faces similar problem at a different scale is diversify, diversify, diversify. It's about accessing a basket of products that are perhaps pre constructed or accessing as many assets as possible over various financial profile or asset profile and make sure that you get a very diversified exposure rather than a concentrated exposure where the volatility of it or the lack of research might create, you know, significant risk.

[Jen Sanasi]

You know, we talked a little bit about one of your target investors being retail. Are you seeing an interest from institutions in a product like this all the time?

[Eric Chen]

There's been a lot of institutional partners are very much interested in and I think, I believe has already been market making and providing liquidity for these type of index products. And a lot of them are also looking into allocating for these type of index products. And obviously injective is very much institution forward. It already has some of the top institutions that are crypto enabled to be engaging in trading and also investing on top of the injected blockchain. So I think it's about taking care of both roles of the user base, both the institutional side and also the retail user side.

[Jen Sanasi]

Eric, we're going to have to wrap it there. Thank you very much for joining Markets Daily. Congratulations on the launch today and I'm sure that we will chat again soon.

[Eric Chen]

Thank you so much. Have a good day and thank you.

[Jen Sanasi]

To our audience for watching Markets Daily, for listening to Markets Daily. If you don't already do it, subscribe to the Coindesk podcast network that is available on all podcast platforms. If you prefer watching our shows, we are on YouTube. Subscribe there. Give us a thumbs up and we'll see you tomorrow.