Overview

In the business realm, attention has always been a crucial “currency” that drives the sale of products and services. As digital transformation accelerates, the lines between information and finance are increasingly blurred, with data evolving from a simple communication tool into a tradable asset.

InfoFi has emerged as a solution that combines blockchain, artificial intelligence, and big data technologies to create a transparent, efficient, and equitable information economy, empowering new business models in the digital age.

What is InfoFi?

For a long time, the value of attention has been overlooked. Centralized platforms like X, YouTube, and TikTok dominate user engagement and turn it into one-way profits. While content creators generate material, these platforms capture the financial rewards, leading to an unfair distribution of attention.

InfoFi changes this dynamic. It converts attention into liquid assets—allowing for measurable, market-driven value assessments through tokenization, thus escaping the control of opaque algorithms.

Previously, revenue was determined by clicks; now, InfoFi connects attention directly to capital, fundamentally altering the principles of the attention economy. Quality, trustworthiness, and influence become paramount, while irrelevant noise loses its profitability, allowing genuinely valuable information to shine.

Source: https://socialblade.com/

InfoFi: Transforming Information into Assets

InfoFi (Information Finance) represents a new approach that turns information into tradable financial assets, improving the efficiency of financial decision-making through better information flow.

At its core, InfoFi views information not as static data but as a dynamic carrier of value. By utilizing blockchain’s transparency, AI’s analytical power, and the scalability of big data, InfoFi assigns market value to information. Unlike traditional finance, where information is merely a supporting element, InfoFi treats information as an asset. For instance:

• Social media engagement data can be tokenized and circulated in the market.
• On-chain transaction data assists financial institutions in refining their investment strategies.
• Probabilities of events in prediction markets can become trading instruments, leading to innovative financial derivatives.
• InfoFi elevates data to capital status, paving the way for a new financial paradigm.

Source: https://polymarket.com/event/fed-decision-in-march?tid=1742371130441

Core Features

Information Assetization

InfoFi leverages blockchain technology to give value to the information economy, overcoming the limitations of traditional data processing. Information sources, distribution, and use become transparent and traceable, creating a market for information assetization.

For instance, a token incentive system allows users to share high-quality information (like market analyses and trend forecasts), fostering a decentralized information economy.

Financialization of the Attention Economy

In today’s digital landscape, attention is a scarce resource. InfoFi transforms user interaction data from social platforms into quantifiable financial assets.

For example, it calculates “mindshare” and uses it as a tokenized measure to assess the market impact of brands or topics.

Decentralization and Transparency

Blockchain technology guarantees that the processes of gathering, evaluating, and trading information are decentralized and openly transparent, addressing the information asymmetry issues found in traditional finance.

For example, prediction markets (such as Polymarket) reflect collective wisdom and market sentiment through user bets on future events.

Deep Integration of AI and Big Data

InfoFi depends on artificial intelligence and big data technologies to analyze information in real time, uncover valuable patterns and support financial decision-making. On-chain data analysis platforms (like Dune Analytics) utilize visualization tools to extract valuable blockchain data.

Source: https://polymarket.com/activity

Key Role of Trusted Oracles in InfoFi

1. Data Authenticity and Reliability
   Oracles ensure that external data sources within the InfoFi ecosystem are genuine and trustworthy, preventing misinformation or data tampering from influencing decisions.

2. Decentralization and Resistance to Censorship
   Using a decentralized network of oracles prevents single points of failure and data manipulation, ensuring the stability and fairness of information flow.

3. Empowering Smart Contracts
   Smart contracts rely on oracles to access off-chain data (like market trends, news, financial information, etc.), ensuring the accuracy of automated processes.

4. Facilitating Data Financialization
   Trusted oracles enable the assetization of data, supporting applications such as data trading, prediction markets, and credit ratings within InfoFi, thus enhancing the economic value of data.

5. Risk Management and Security
   Trusted oracles form the data infrastructure of InfoFi, ensuring data authenticity, reliable smart contract execution, and promoting data financialization, thereby creating a secure and trustworthy environment for a decentralized information economy.

The InfoFi (Information Finance) sector is still in its early stages. By transforming information into tradable assets and optimizing financial decision-making through technologies like blockchain, AI, and big data, several notable applications and projects have emerged, driving information valuation and ecosystem growth.

Source: https://trustedoracle.wetrust.io/#/

Relationship Between AI and InfoFi

AI serves as InfoFi’s technological foundation, providing capabilities for data processing, forecasting, and automation. In turn, InfoFi broadens AI’s application scenarios and economic incentives, complementing one another.

1. AI as the Driving Force Behind InfoFi

Data Processing and Analysis: The essence of InfoFi lies in converting information into tradable assets or bases for financial decisions, and AI excels at processing vast amounts of data (including on-chain data, social media, news, etc.) to reveal hidden patterns. For instance, Kaito AI employs natural language processing (NLP) and machine learning to calculate “mindshare,” quantifying attention into financial metrics.

Real-Time Efficiency: AI’s real-time ability to analyze data provides dynamic support for InfoFi. For example, market prices on Polymarket depend on AI and oracles to integrate external event data, reflecting collective consensus quickly.

Automated Execution: Smart contracts are a crucial part of InfoFi. AI enhances execution efficiency by optimizing oracles (like UMA’s optimistic oracle) or directly embedding logic into contracts (like automated trading strategies).

2. InfoFi Provides Application Scenarios and Data Foundations for AI

Diverse Data Sources: The InfoFi ecosystem aggregates various data through blockchain and decentralized platforms (like The Graph and Ocean Protocol), providing high-quality, multidimensional inputs for training AI models. For example, on-chain data from Dune Analytics can be utilized to train AI for predicting DeFi yields.

Financial Incentives: InfoFi’s token mechanisms (like Kaito’s Yaps, Arkham’s ARKM) encourage users to contribute data or computational power, addressing data acquisition challenges in AI development. For example, Ocean Protocol’s data marketplace allows individuals to turn their data into assets, providing tradeable resources for AI training.

Decentralized Computing: InfoFi projects (like Cookie’s DataSwarm) explore decentralized AI computing, enabling users to share computational power to run models, thus reducing costs and privacy risks associated with centralized AI.

3. Concrete Examples of Synergy

Financialization of the Attention Economy: AI converts user attention into quantifiable financial assets by analyzing social graphs and semantic understanding (like Kaito and Cookie), advancing InfoFi’s attention economy model.

Accuracy in Prediction Markets: AI enhances the price signals in prediction markets (like Polymarket, Polkamarkets) through machine learning analysis of historical data and real-time trends, improving predictive accuracy. For instance, Polymarket’s successful predictions during the 2024 U.S. elections heavily relied on AI’s rapid modeling of voter sentiment.

Data Assetization and Governance: AI analyzes on-chain tools (like Nansen, Arkham) to identify “whale” behaviors or market dynamics, generating credit scores or risk assessments. InfoFi then tokenizes these insights (like GRT, OCEAN), transforming them into tradeable assets or references for DAO governance.

Source: https://dune.com/product/ai

Representative Projects

The InfoFi sector includes various subfields, with each project emphasizing different aspects while all aiming for the same core objective: to turn information into assets, optimize attention distribution, or promote the financialization of data.

For instance, Polymarket, Kaito AI, and The Graph represent different focuses in prediction markets, data incentives, and decentralized indexing; Nansen, Dune Analytics, and Arkham provide the necessary infrastructure for analyzing on-chain data; Cookie and Polkamarkets concentrate on the attention economy and prediction markets; Messari and Ocean Protocol approach the field from the angles of research reports and data trading, respectively.

Together, these projects create a rich and diverse InfoFi ecosystem that supports the capture of information value in the Web3 era.

1. Prediction Market

Application Scenario:

The prediction market is a key area of InfoFi. Users can place bets on future events like political elections, economic indicators, sports events, and natural disasters using a decentralized platform powered by Oracle technology and smart contracts. The prices in the market reflect the collective intelligence and value of information in real time.

This approach not only gives users chances to gamble and earn profits but also provides highly accurate data for business and government decision-makers. For instance, prediction markets can help evaluate the likelihood of a new product’s success or economic trends.

Representative Project: Polymarket

Polymarket operates on the Polygon blockchain, offering a clear, low-cost trading environment. Users can create portfolios and trade based on popular global events like politics, pandemics, and current news. The market prices indicate the consensus among traders in real-time, turning predictions into actionable insights.

During the 2024 U.S. presidential election, the platform garnered significant participation and accurately predicted results in several states, showcasing the potential for turning information into financial assets and serving as a reliable, low-bias source for future event predictions.

Source: https://polymarket.com/markets/all

2. Data Assetization and Incentives

Application Scenario:

InfoFi promotes sharing high-quality information by incentivizing users with tokens or allowing them to trade and lease data assets in a decentralized marketplace. Data NFTs take this a step further by converting unique datasets (like market research, AI training models, and real-time sensor data) into digital assets that can be traded.

For example, research organizations can create NFTs from their exclusive reports and auction them on the blockchain, enabling creators to profit through their social influence and facilitating information shift from static content to dynamic capital.

Representative Project: Kaito

Kaito focuses on the Web3 and cryptocurrency space, aggregating data from thousands of sources, including social media, on-chain data, governance forums, and news outlets. It uses AI and proprietary algorithms to measure “mindshare” (the popularity and reach of discussions) and rewards high-quality content creators with tokens called “Yaps.”

Kaito Pro combines semantic language models with real-time analysis to make it easier for users to access valuable insights, while Kaito Connect builds an AI-driven InfoFi network that links creators, users, and brands, ensuring fair and transparent distribution of attention and resources. Its advanced technology for extracting signals (which includes social graphs and semantic understanding) quantifies attention and creates an interoperable financial layer of information for the cryptocurrency sector.

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

3. On-Chain Data Analysis

Application Scenario:

The amount and complexity of blockchain data are growing rapidly. Analytical tools help uncover the value of this information through visual dashboards and real-time queries, enabling investors to refine their quantitative trading strategies and monitor market trends.

For instance, on-chain data can reveal how funds flow within DeFi protocols or identify trading patterns in the NFT market, providing essential infrastructure for the InfoFi ecosystem. These tools can also assist in risk management by detecting unusual transactions or potential money laundering activities.

Representative Projects:

Dune ：A robust on-chain data analysis tool that supports public blockchains like Ethereum and Polygon. It allows users to create custom SQL queries and visualize blockchain data easily, even without a technical background. Anyone can extract, analyze, and build interactive dashboards to gain real-time insights into on-chain trends.

As an open data platform, Dune enables users to publish and access analyses based on blockchain data, turning complex information into easy-to-understand charts, which helps developers, researchers, and investors make informed decisions.

Source: https://dune.com/home#query-engine

Nansen: Offers deep market insights by tagging wallets and tracking transactions, helping users identify the movements of large investors (“whales”), capital flows, and potential investment opportunities. Its Alpha dashboard provides real-time monitoring of token fluctuations, enabling investors to capitalize on market opportunities.

With millions of tagged wallets and real-time alerts, Nansen has become an indispensable tool for conducting due diligence, making investment decisions, and managing asset security for both institutional and individual investors.

Source: https://www.nansen.ai/

The Graph: The Graph is a decentralized indexing protocol that organizes and analyzes blockchain data using subgraphs. It offers an open API that allows any application to query data easily and supports over 3,000 active projects, including popular ones like Uniswap and Aave. The network handles more than 1 billion queries daily (estimated data), providing efficient data extraction support for InfoFi.

Users, including indexers, curators, and delegators, must hold GRT tokens to maintain data integrity and earn fees, which helps ensure the network’s security and economic incentives.

Source: https://thegraph.com/en/

Opportunities

New Area for Value Discovery
Information, as an intangible asset, is often undervalued in traditional finance. InfoFi opens up opportunities for deeper exploration and monetization of information, especially in Web3 and decentralized economies, where the flow and trading of information can become much more efficient.

Empowering the Individual Economy
InfoFi allows everyday users to engage in creating and sharing the value of information through a tokenization system. For instance, content creators can earn token rewards for sharing their knowledge, which lowers the barriers to entering the information economy.

Driving Financial Innovation
The growth of InfoFi could lead to new financial products and services. Potential innovations include information-based derivatives, information insurance, and even information index funds, which may become significant trends in the future.

Increasing Data Liquidity
InfoFi promotes efficient data flow and sharing, breaking down data silos and enhancing the resource utilization of market participants.

Applications of Smart Contracts
Smart contracts built on blockchain technology can automate information transactions and eliminate the need for trust, thereby reducing transaction costs.

Decentralized Governance
Decentralized platforms provide users with more opportunities to participate in decision-making processes, advancing the democratization of the information market.

Integration Across Fields
InfoFi can collaborate with other emerging sectors such as AI, IoT, and big data, fostering the development of innovative solutions.

Source: https://oceanprotocol.com/

Challenges

Data Privacy and Security
The financialization of information involves collecting and using user data, which raises the challenge of balancing value extraction with privacy protection. It’s crucial to ensure data security and respect user privacy while effectively utilizing data.

Regulatory Uncertainty
Because InfoFi deals with information trading and tokenization, it may enter gray areas of current financial regulations. Differences in policies across countries and regions could hinder the sector’s growth and complicate legal compliance.

Market Bubbles and Speculation
InfoFi projects might experience excessive hype and speculative risks like many emerging sectors. If projects focus too much on short-term profits at the expense of long-term value creation, it could erode trust in the market and potentially lead to significant industry changes.

Challenges in Technology Implementation
Privacy computing and decentralized storage are still evolving and face performance and usability challenges. For InfoFi to be widely adopted, these technologies must be continually improved to ensure they are efficient and stable in real-world applications.

Data Quality and Standardization
The success of decentralized data markets depends on the exchange of high-quality data. Establishing a reliable mechanism for assessing data quality is essential to ensure the accuracy and trustworthiness of transaction data, which is crucial for the market’s healthy growth.

Source: https://www.upguard.com/blog/biggest-data-breaches-us

Future Outlook

While the InfoFi sector is still exploratory, its potential is already becoming clear. With advancements in technology and the gradual development of the market, InfoFi is poised to achieve breakthroughs in several key areas:

Cross-Chain Information Integration
In the future, InfoFi may extend beyond a single blockchain, utilizing cross-chain technology to enable the interconnection of information. This would create a wider value network and eliminate information silos.

Integration with the Metaverse
The metaverse, a vital part of the virtual world, requires a significant flow of information. InfoFi can provide the necessary infrastructure for information trading within the metaverse, including credit scoring for virtual identities and pricing for virtual assets, thus fostering the growth of the virtual economy.

Global Information Market
Thanks to decentralized mechanisms, InfoFi aims to establish a global information trading market. News, research reports, and user-generated content can circulate freely around the world in tokenized formats, lowering information barriers.

DAOs Data Powered by InfoFi
Data platforms governed by users ensure fair data sharing and decentralized management, leading to more efficient data flow and utilization.

Tokenization of Data as NFTs
Users will be able to authorize and trade their personal data as NFTs, thereby increasing its economic value.

AI Integration with InfoFi
AI models trained on decentralized data will enhance the fairness of data intelligence and encourage more transparent technological innovations and applications.

Conclusion

As a decentralized platform for the financialization of information, InfoFi is driving significant changes in digital information. By leveraging blockchain and smart contract technology, InfoFi converts information into tradable assets, creating new business models and value for all stakeholders. Its primary goal is to dismantle information barriers, facilitate information sharing and enhancement, and promote global information flow.

However, InfoFi faces challenges related to technological maturity, privacy protection, and compliance. In a competitive marketplace, finding a way to differentiate itself is essential. With ongoing technological advancements and increasing market demand, InfoFi is expected to make strides in various areas and become a central component of the information economy.

In summary, InfoFi offers innovative solutions for the information economy, and its future looks promising, but overcoming challenges will be key to its success in achieving global transformation.