Disclaimer - this is not financial advice. We always encourage you to do your own research. Please find a full disclaimer at the end of this Report.

Overview

KIP aims to be a Web3 base layer for AI. The protocol will be launched in 3 distinct phases, and consists of 4 phases in total.

• Phase I: Genesis (Q3-Q4 2023) focuses on foundational developments, including a private testnet, a Web 2.5 app called Kipley.ai, and a decentralized Proof of Concept.
  
• Phase II: Strong Foundations (Q1 2024) builds on Phase I, releasing the first app and the initial version of the KIP Protocol. Creators, developers, partners, and Tier 1 Web3 communities via Key Opinion Leaders (KOLs) become partners to onboard users. This phase also aims to collect feedback for product improvement and acquire high-profile clients and users.
  
• Phase III: Global Community of Users & Token Holders (Q2-Q4 2024) ecosystem grants start to increase the number of products and scale of the network. This phase focuses heavily on community & partnership.
  
• Phase IV: App Chain / L2 for AI (Q1-Q4 2025) plans for the operational nodes, mainnet launch, and community testnet participation. It aims to position KIP as the go-to blockchain for AI applications through strategic market listings and promotional activities.

Project Mission

KIP aims to fight the monopoly of AI technology through the decentralization of data & IP rights that allows for the monetization of data/IP to create Web apps.

KIP's goal is to build an infrastructure that connects AI asset creators directly within a decentralized ecosystem, facilitating both data sharing and payments. This system includes the creators of models, apps, and datasets but also relies on a network of individuals like indexers, validators, and others who maintain the blockchain's integrity.

These contributors are essential to the functioning and growth of the KIP network, helping to establish a trustless, self-regulating environment where governance and service delivery happen seamlessly. At the center of the ecosystem is the $KIP token, which serves as the settlement medium to compensate and incentivize all participants in the network.

KIP Offering for Yurei

The KIP opportunity that Yurei has is a Node sale for a very similar price of the Tier 5 nodes (including the 4% Yurei fee) at a total of $588.50 USDC per node. No fee will be taken off the back as you manage your own node. For each node, you will receive an NFT license for the node execution, to the investment wallet.

Each node gets a share of the 20% of total supply allocated for node validation throughout 3 years. The explicit terms look as follows:

• Price: $588.50 per Node
• Cliff: None (7 days after TGE, nodes start yielding rewards)
• Vest: 3 years, rewards emitted every 30 days
  • Fair share of the 20% allocated for active nodes
• Total Supply: ****10,000,000,000 $KIP
• FDV: $73,210,000 (Implied by Price and 50% Activity Rate of Nodes)
• TGE: Planned May, 2024
• NFTs are locked to the wallet for 6 months
  

See the Node Deck, Node documentation and Node Pricing Tiers for more info on the above.

Technology Summary

KIP utilizes a token system with various nodes to secure & process transactions within the ecosystem.

Checker Nodes (the node we invested in) monitor all activity across the decentralized KIP network. They validate transaction details to ensure compliance with established specifications and ensure that AI models and data providers maintain a minimum level of uptime.

These nodes perform crucial verification operations behind the scenes, enabling users to be confident that the AI services they request will be provided promptly and at the price specified.

Indexer Nodes pick up and record new on-chain events, making it quicker and easier for developers to check what is happening and provide access to validated users. In this role, they provide the following services:

• Data Processing: Indexer Nodes ingest raw data from the blockchain and process it into structured formats. They then update relevant subgraphs via open APIs defining how to extract and transform the data.
• Indexing: Once the data is processed, Indexer Nodes index it, making it searchable and accessible.
• Query Processing: Indexer Nodes listen for and process queries from clients. When a query is received, the node searches its indexed data to find the relevant information and returns the results to the client.
• Websocket Proxy Nodes facilitate interactions between AI creators using the KIP Ecosystem Server by implementing a WebSocket API to interact with Ethereum blockchain smart contracts and relay requests between users and decentralized applications (DApps
• Validator/RPC Nodes facilitate ****the storage and retrieval of data on-chain as it is frequently slow and expensive, particularly when the data volume passes a given point.

Use Cases

$KIP is the settlement token in the decentralized AI ecosystem that brings together data providers & data consumers. Data consumers need data to run their model while various businesses that store data have no means of monetizing that data without jeopardizing their business or competitive edge.

$KIP is one of the market participants that seeks to solve fair use of data in a way that benefits both data providers & consumers.

Tokenomics

The $KIP token serves a dual purpose within the KIP ecosystem. Its primary role is as a currency for settling transactions between AI asset creators and users. The secondary is to instil trust (more information coming soon) and ensure reliability through a staking mechanism. This is important as many creators operate anonymously or are decentralized.

The staking program is tiered, enabling creators to stake $KIP tokens and earn a trust mark represented by an NFT. This mark signals credibility to users but comes with accountability; creators who fail to fulfil their promises or engage in fraudulent activity risk having their stake penalized.

This system works through a cycle where developers stake $KIP to validate their AI assets and receive a trust mark in return. Independent checkers monitor the assets to ensure they function correctly and meet user expectations. If any issues arise, the stake can be slashed, with penalties distributed among those who maintain the system's integrity.

While KIP Protocol currently utilizes The Graph's indexing system, future plans include launching independent indexing and validation nodes. These will be supported through transaction fees and contributions from the ecosystem fund, further decentralizing and enhancing the network's trustworthiness.

Team

• The AI Team is led by Dr. Jennifer Dodgson, an expert in computational linguistics with a Ph.D. in Qualitative Analytics, with a decade of experience in designing AI applications for a broad spectrum of clients, and has established a gaming DAO.
  
• Julian Peh, the CEO, is a veteran tech entrepreneur with over twenty years of experience, founder of multiple successful companies across data analytics, media, and several tech sectors. Has been in Web3 since 2016 and has been involved in sectors like robotics, fintech, and crypto through various VC and PE ventures.
  
• Teo Jun Hao, COO, offers six years of project management experience and a background in Web3 investments. His previous role as an Investment Director showcases his strategic approach to business growth.
  
• Lisa Zhou, who heads International Sales with a wealth of experience in global BD & sales, and Josephine Nguyen, leading Global Partnerships, bringing in her expertise from the crypto sector and previous CEO experience.
  

The team also includes a full-time development team of 16.

Notable Backers

• Animoca Ventures, Tribe Capital, GBV Capital, Morningstar Ventures, Kyros Ventures.

Partners

• Open Campus, Aethir, Google Cloud, Bitget, Port3, zkPass, Particle Network, DevolvedAI, Moledao

Go-To-Market

View KIP's GTM road map [here](https://drive.google.com/file/d/13RBo_OlHqxaPgBIEKIHSgg-8bZIkWDWa/view?usp=sharing).

Notes

• Strong focus on AI, a rapidly evolving and in-demand technology sector.
• Decentralized governance structures to foster trust and participation.
• Comprehensive and phased approach ensuring gradual development and scaling.
• The $KIP token is designed to be multifunctional within the ecosystem, facilitating settlements on top of building trust through staking mechanisms.
• The protocol's design incentivizes various stakeholders, including developers, creators, and validators, promoting active participation and governance.

Researcher’s opinion

Felix Nordén

With KIP being a decentralized RAG (Retrievel-Augmented Generation) network, they bring something new to the table that doesn’t strictly compete with current AI-centric networks, e.g., Aethir. Instead, KIP can be used in tandem with compute to help improve the training process of AI by gaining compute power from Aethir and data from KIP, making it so both the data and computation layers live on-chain.

Furthermore, since KIP is focused on the provenance and ownership of data, leveraging data from KIP is preferred compared to opaque datasets as the AI only would depend on data that the data provider is fine with sharing. The more an AI can depend on such data, the fairer and more transparent it will be, which has a big impact on AI mass-adoption.

In short, I find KIP an interesting product and needed product to make AI more widespread and accessible. I also find the checker node model an interesting way to acquire many users to delve deeper into the product rather than having them entering strictly through buying tokens; be it beneficial or not remains to be seen.

Thare

KIP’s novel model focused on provenance and community ownership gives it a unique value proposition in the budding world of AI.

Pair this with the strength of their team and realistic deal terms for Yurei makes KIP an attractive player in this market.

However, the longevity of KIP rests on the teams ability to amass enough data and attract developers who can make killer AI dApps. The path forward on user acquisition, both developer and end user, is less clear and more competitive.

Disclaimer

This Report is intended for discussion purposes only.

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