Artificial intelligence (AI) tokens are in the red in Asian morning trading, with the CoinGecko category down 9%, registering bigger losses than the CoinDesk 20 – a crypto index – which is down 5%.

Crypto investors, like their traditional financial counterparts, are likely digesting the impact DeepSeek, a new AI model, is having on the industry.

Data from DeepSeek posted on Hugging Face, an AI industry forum, shows that its model outperforms OpenAI, all while being built on a $6 million budget and a fraction of the Graphics Processing Units (GPUs) that OpenAI user — which recently closed a $6.6 billion round at a valuation of over $157 billion.

Perhaps most worrying for the eternal GPU bulls is that DeepSeek is so powerful that a version of it can be run on your phone.

Naturally, some of the worst performing AI tokens are those with the most exposure to GPUs. Small-cap Nodes.AI, which facilitates access to GPUs, is down nearly 20% according to CoinGecko data, although Aeither, which does the same (albeit with a much higher market cap) is down just 6%, just a bit more than the CoinDesk 20 benchmark.

Lessons from Crypto Gaming

While DeepSeek will make for a stressful week at OpenAI, Nvidia and other tech giants that have shifted to AI, it’s also a more pressing lesson for crypto projects — one that might be familiar to those with crypto’s foray into gaming years ago.

Despite the pools of capital available to crypto-AI projects, they just haven’t been able to do anything as revolutionary or interesting as what DeepSeek did.

Data from CoinGecko pegs the value of the crypto gaming sector (GameFi) at $19 billion. If the biggest entries on this list, like Sandbox, GALA or Decentraland, were entries of the 30 largest game companies by market capitalization, they would have respectable positions alongside household names responsible for recognizable franchises.

But despite these projects, they just haven’t had the same success as their traditional counterparts.

Last year, blockchain games received the lowest investment since 2020, according to data source DappRadar. Only $1.8 billion was invested in blockchain games and metaverse projects, representing a 38% decrease from 2023.

And while daily unique active wallets in blockchain games increased by 421% last year, the sector’s dominance in the industry fluctuated between 26-29%, with DeFi taking the lead. Still, the number is lower than games on Steam.

Also, some older and less popular games on Steam, from companies with market capitalizations a fraction of the GameFi giants, have a larger following. Over the years, many crypto games have struggled to build a sustainable user base.

So for now, it can be said that crypto faces challenges in catering to use cases beyond economics.