What is InfoFi?Is InfoFi worth investing in

What is InfoFi? In the business world, attention has always been the core "currency" that drives the sale of goods and services. With the acceleration of digitalization, the boundary between information and finance is increasingly blurred, and data is upgraded from a communication tool to a tradable asset.

InfoFi came into being, integrating blockchain, artificial intelligence and big data technology to build a transparent, efficient and fair information economic system and empower new business models in the digital era.

This article will delve into the concept of InfoFi and its core features, analyze the current situation, opportunities and challenges of the track, and introduce some representative projects. It also looks at the future trends and potential of InfoFi. Let's learn more about it with the editor of the script house!

 What is InfoFi?

For a long time, attention has been grossly undervalued. Centralized platforms such as X, YouTube, TikTok, etc., monopolize user engagement and turn it into one-way revenue. Although creators produce content, the economic rewards are grabbed by the platform, and attention is harvested without fair distribution.

InfoFi has turned this paradigm on its head. It turns attention into liquid assets – tokenization for measurable, market-driven value assessments, free from the manipulation of black-box algorithms.

In the past, clicks determined revenue; Today, InfoFi has completely reshaped the logic of the attention economy by linking attention directly to capital. Quality, credibility and impact are at the core, noise is no longer profitable, and truly valuable information comes to the fore.

 InfoFi: Making Information an Asset

InfoFi (Information Finance) is a new model that transforms information into tradable financial assets, and at the same time improves the efficiency of financial decision-making by optimizing the flow of information.

The core of this is that information is no longer static data, but a dynamic value carrier. With the transparency of blockchain, the analytical power of AI, and the scale of big data, InfoFi gives value to the information market. Unlike traditional finance, where information is only used as an auxiliary tool, InfoFi turns information itself into an asset. For example:

 Social media interaction data can be converted into tokens that can be circulated in the market.

 On-chain transaction records help financial institutions optimize their investment strategies.

Predicting the probability of market events has become the subject of trading, giving rise to new types of financial derivatives.

InfoFi enables data to be capitalized, opening up a whole new financial paradigm.

 Core features:

 Information assetization

InfoFi breaks the limitations of traditional information processing by giving value to the information economy through blockchain technology. The source, dissemination and use of information have been transparent and traceable, forming an information asset market.

For example, through the token incentive mechanism, users can share high-quality information (such as market analysis, trend forecasting) and promote a decentralized information economy ecology.

 The financialization of the attention economy

In the digital age, attention has become a scarce resource. InfoFi transforms users' interactions on social platforms into quantifiable financial assets.

For example, measure the market impact of a brand or topic by calculating "Mindshare" and using it as a tokenized metric.

 Decentralization and transparency

Blockchain technology ensures that the information collection, evaluation and transaction process is decentralized, open and transparent, and reduces the problem of information asymmetry in the traditional financial system.

For example, a prediction market, such as Polymarket, directly reflects the wisdom and market sentiment of the crowd through the user's bets on future events.

 Deep integration of AI and big data

InfoFi relies on artificial intelligence and big data technology to analyze information in real time and uncover value patterns to inform financial decision-making. On-chain data analytics platforms, such as Dune Analytics, extract valuable blockchain data through visual tools.

 The critical role of trusted oracles in InfoFi

•  Authenticity and reliability of data
  
  Oracles ensure that external data sources in the InfoFi ecosystem are authentic and reliable, preventing false information or tampering with data to influence decision-making.

•  Decentralization and censorship resistance
  
  Through a decentralized oracle network, it prevents single points of failure and data manipulation, ensuring the stability and fairness of information flow.

•  Empower smart contracts
  
  Smart contracts rely on oracles to obtain off-chain data (such as market dynamics, news, financial data, etc.) to ensure the correctness of automated execution.

•  Promote the financialization of data
  
  Trusted oracles enable data assetization and support InfoFi applications such as data trading, market prediction, and credit rating, expanding the economic value of data.

•  Risk Management & Security
  
  Real-time and accurate data input helps detect anomalies, prevent market manipulation, and improve the security and stability of the InfoFi ecosystem.
  
  Trusted oracles are InfoFi's data infrastructure that guarantees the authenticity of data, the reliable operation of smart contracts, and promotes the financialization of data, providing a secure and trustworthy environment for a decentralized information economy.
  
  The InfoFi (information finance) track is still in its early stages, and a number of representative applications and projects have emerged to promote the value of information and the development of the ecosystem through technologies such as blockchain, AI, and big data to transform information into tradable assets and optimize financial decision-making.

 The relationship between AI and InfoFi

AI is the technology cornerstone of InfoFi, providing data processing, prediction, and automation capabilities; InfoFi expands use cases for AI and provides financial incentives that complement each other.

1. AI is the technology driver of InfoFi

Data processing and analysis: At its core, InfoFi is about turning information into tradable assets or financial decision-making, while AI is good at processing massive amounts of data (including on-chain data, social media, news, etc.) and uncovering hidden patterns. For example, Kaito AI uses natural language processing (NLP) and machine learning to calculate a "mindshare" that quantifies attention as a financial metric.

Real-time and efficiency: AI's real-time analytics capabilities provide dynamic support for InfoFi, such as Polymarket's market price, which relies on AI and oracles to quickly integrate external event data and reflect group consensus.

Automated execution: Smart contracts are an important part of InfoFi, and AI can improve execution efficiency by optimizing oracles (such as UMA's optimistic oracles) or directly embedding contract logic (such as automated trading strategies).

2. InfoFi provides the use case and data foundation for AI

Abundant data sources: The InfoFi ecosystem aggregates diverse data through blockchain and decentralized platforms (such as The Graph and Ocean Protocol) to provide high-quality, multi-dimensional input for AI model training. For example, Dune Analytics' on-chain data can be used to train AI to predict DeFi yields.

Financialization incentives: InfoFi's token mechanisms (e.g., Kaito's Yaps, Arkham's ARKM) incentivize users to contribute data or computing power to solve the bottleneck of data acquisition in AI development. For example, Ocean Protocol's data marketplace capitalizes personal data and provides transactional training resources for AI.

Decentralized computing: InfoFi projects, such as DataSwarm for cookies, explore decentralized AI computing that allows users to share computing power to run models, reducing the cost and privacy risks of centralized AI.

 3. Concrete embodiment of synergy

Financialization of the attention economy: AI is driving InfoFi's attention economy model by analyzing social graphs and semantic understanding, such as Kaito and cookies, to transform user attention into quantifiable financial assets.

Accuracy of market prediction: AI optimizes price signals for predicting markets (such as Polymarket and Polkamarkets), and analyzes historical data and real-time trends through machine learning to improve the accuracy of predictions. For example, Polymarket's successful prediction in the 2024 U.S. election would not have been possible without AI's rapid modeling of voter sentiment.

Data assetization and governance: AI mines "whale" behavior or market dynamics in on-chain analytics tools (e.g., Nansen, Arkham) to generate credit scores or risk assessments, and InfoFi turns these insights into tradable assets or DAO governance basis through tokenization (e.g., GRT, OCEAN).

 Representative projects

The InfoFi track spans multiple segments, each with its own focus, but all around the same core goal: turning information into assets, optimizing attention allocation, or driving the financialization of data.

For example, Polymarket, Kaito AI, and The Graph represent different directions for prediction markets, data incentives, and decentralized indexing; Nansen, Dune Analytics, and Arkham provide the infrastructure for on-chain data analytics; Cookies and Polkamarkets focus on the attention economy and prediction markets; Messari and Ocean Protocol are approaching from the perspective of research reports and data transactions, respectively.

Together, they build a rich and diverse InfoFi ecosystem to support the capture of information value in the Web3 era.

 1. Predict the market

 Application Scenarios:

Prediction markets are the core branch of InfoFi, where users bet on future events (e.g., political elections, economic indicators, sporting events, natural disasters) through a decentralized platform based on oracles and smart contracts, and the market price reflects the wisdom of the crowd and the value of information in real time.

This model not only provides users with gaming and profit opportunities, but also provides high-precision reference data for decision-makers such as enterprises and governments. For example, forecasting the market can be used to assess the success rate of a new product launch or macroeconomic trends.

 Representative project: Polymarket

Based on the Polygon blockchain, Polymarket provides a transparent and low-cost trading environment for users to build portfolios and trade on popular global events such as politics, pandemics, and current events. Market prices reflect trader consensus in real-time, turning predictions into actionable insights.

In the 2024 U.S. election, the platform attracted a large number of participants, accurately predicting the outcome of multiple states, demonstrating the potential of information financialization and becoming a real-time, low-biased data source for predicting future events.

 2. Data assetization and incentives

 Application Scenarios:

InfoFi encourages users to contribute high-quality information, or trade and lease data assets on a decentralized data marketplace through a token incentive mechanism. Data NFTs further transform unique data sets (e.g., market research, AI training models, real-time sensor data) into tradable digital assets.

For example, research institutions can mint their exclusive reports into NFTs for on-chain auctions, and creators can monetize their social influence, driving the shift from static content to dynamic capital.

 Representative project: Kaito

Focusing on the Web3 and crypto markets, Kaito aggregates thousands of sources such as social media, on-chain data, governance forums, news, etc., calculates "Mindshare" (such as project discussion popularity and popularity) through AI and proprietary search algorithms, and rewards high-quality content creators with "Yaps" tokens.

Kaito Pro combines semantics LLM with real-time analytics to simplify the path to high-quality insights. Kaito Connect builds an AI-powered InfoFi network that connects creators, users, and brands to allocate attention and capital in a fair and transparent way. Its advanced signal extraction technology, including social graph and semantic understanding, quantifies attention and provides an interoperable information finance layer for the crypto space.

Source: https://www.kaito.ai/

 3. On-chain data analysis

 Application Scenarios:

The scale and complexity of blockchain data are growing rapidly, and analysis tools can mine the value of information through visual dashboards and real-time query functions, supporting investors to optimize quantitative trading strategies and track market dynamics.

For example, on-chain data can reveal the flow of funds for DeFi protocols or the trading trends of NFT markets, providing critical infrastructure for the InfoFi ecosystem. In addition, these tools can also be used for risk management, such as detecting unusual transactions or money laundering.

 Representative Projects:

Dune: is a powerful on-chain data analysis tool that supports public chains such as Ethereum, Polygon, etc., allowing users to create custom SQL queries and visualize blockchain data. Anyone can easily extract, analyze, and build interactive dashboards with real-time on-chain trends without the need for technical expertise.

As an open data platform, Dune enables all users to publish and access blockchain-based analytics, transforming complex data into intuitive charts and graphs that empower developers, researchers, and investors.

Nansen: Provides in-depth market insights through wallet tags and transaction tracking to help users identify whale movements, fund flows, and potential investment opportunities. Its Alpha dashboard can monitor token movements in real-time, helping investors stay ahead of market opportunities.

With millions of token wallets and real-time alerts, Nansen is a must-have tool for institutional and individual investors for due diligence, investment decision-making, and asset security management.

The Graph: is a decentralized indexing protocol that analyzes and organizes blockchain data through subgraphs, opens APIs for any application to easily query, and supports more than 3,000 active projects (such as Uniswap, Aave). Its network processes more than 1 billion queries (what-if data) per day, powering InfoFi for efficient data extraction.

Users (Indexers, Curators, Delegators) hold GRT tokens to ensure data integrity and earn fees that drive the security and economic incentives of the network.

 Opportunity

 A new frontier of value mining

As an intangible asset, the value of information is often undervalued in the traditional financial system. The emergence of InfoFi has made it possible to mine and monetize information, especially in Web3 and the decentralized economy, where the circulation and trading of information will be more efficient.

 Empower the individual economy

InfoFi enables ordinary users to participate in the value creation and sharing of information through a tokenization mechanism. For example, content creators can be rewarded with tokens for sharing knowledge, a model that lowers the barrier to entry into the information economy.

 Promote financial innovation

The growth of InfoFi has the potential to give rise to new financial products and services. For example, information-based derivatives, information insurance, and even information-based index funds may become hot spots in the future.

 Improve data mobility

InfoFi facilitates the efficient flow and sharing of data, breaks down data silos, and increases resource efficiency for market participants.

 Smart contract applications

Blockchain-based smart contracts can provide automated and trustless guarantees for information transactions and reduce transaction costs.

 Decentralized governance

Decentralized platforms provide users with more opportunities to participate in decision-making and promote the democratization of the information market.

 Cross-domain integration

InfoFi can be integrated with other emerging industries such as AI, IoT, big data, etc., to drive the birth of innovative solutions.

 challenge

 Data Privacy & Security

The financialization of information inevitably involves the collection and use of user data, and how to find a balance between value mining and privacy protection is the core challenge faced by InfoFi. It is necessary to ensure that data security and user privacy are not violated, and that data is used effectively.

 Regulatory uncertainty

Since InfoFi involves information trading and tokenization, it may touch a gray area of existing financial regulation. Differences in policies in different countries and regions may restrict the development of the track and increase the complexity of legal compliance.

 Market bubbles and speculation

Similar to other emerging tracks, InfoFi projects may also be exposed to excessive hype and speculation. If the project pursues short-term gains excessively and ignores long-term value creation, it may lead to a crisis of confidence in the market and even trigger an industry reshuffle.

 It is difficult to implement the technology

Technologies such as privacy-preserving computing and decentralized storage are still in the process of development, facing challenges in terms of performance and availability. To achieve widespread adoption of InfoFi, the technology needs to be continuously optimized to ensure that it is efficient and stable in practice.

 Data quality and standardization

The development of decentralized data markets relies on high-quality data circulation and exchange. Establishing a reliable data quality assessment mechanism to ensure the accuracy and credibility of transaction data is a necessary condition for the healthy development of the market.

 Future outlook

Although the InfoFi track is still in the exploratory stage, its potential is already being revealed. With the development of technology and the gradual maturity of the market, InfoFi is expected to make breakthroughs in the following areas:

 Cross-chain information integration

In the future, InfoFi may go beyond a single blockchain and realize the interconnection of information through cross-chain technology, build a broader value network, and break down information silos.

 Combination with the metaverse

As an important part of the virtual world, the metaverse requires a large flow of information. InfoFi can provide information transaction infrastructure for the metaverse, such as credit scoring of virtual identities and pricing of virtual assets, to promote the development of the virtual economy.

 Global information market

With the help of decentralized mechanisms, InfoFi is expected to create a global information exchange market. Whether it's news, research reports, or user-generated content, it can be freely circulated around the world in the form of tokenization, lowering information barriers.

 InfoFi-based data DAO

The data platform jointly governed by users ensures fair sharing and decentralized management of data, and promotes more efficient data circulation and utilization.

 Data NFTIZATION

Users can authorize and trade personal data in the form of NFTs, giving data more economic value.

 AI combined with InfoFi

AI models are trained on decentralized data, which not only improves the fairness of data intelligence, but also promotes more transparent technological innovation and application.

 epilogue

InfoFi, as a decentralized information financialization platform, is driving the transformation of digital information. Through blockchain and smart contract technology, InfoFi transforms information into tradable assets, bringing new business models and value to all parties. Its core concept is to break down information barriers, realize information sharing and value-added, and promote global information flow.

However, InfoFi also faces challenges such as technology maturity, privacy protection, and compliance, and how to stand out in an increasingly competitive market remains key. In the future, with the advancement of technology and the growth of market demand, InfoFi is expected to achieve breakthroughs in many fields and become a core part of the information economy.

Overall, InfoFi brings innovative solutions to the information economy, and the future is promising, but whether or not it can overcome the challenges will determine the success of its global transformation.