Token Economy (Part.2) — Maximizing AI Network Value through Funnel Optimization

In the rapidly evolving world of AI networks, understanding and optimizing the user acquisition funnel is crucial for driving network and token value, whether it be for the private consumer, developer, business or node markets.

By identifying the relevant funnel stages and analyzing each of them, from initial consumer need, awareness, interest, purchase and beyond, we can unlock the full potential of the AI network and forecast its growth. In this article we’ll explore how to maximize the value of the AI network (AIN) by focusing on the funnel, the various parts of the ecosystem we can apply it to and the $AIN token economy.

The AI Network Funnel

The funnel is essential to capture users for the different inflows of the ecosystem, and consists of five key stages:

1. Awareness: Users become aware of the AI service through various marketing channels.

2. Interest: Users show interest by clicking links and exploring various AI services.

3. Sign-up: Users create an account to access AI services.

4. Purchase: Users make a payment to unlock premium features or continue using the service.

5. AIN Token Economy: Users actively participate in the token economy, driving network value.

These stages whittle a large cohort of potential users down to purchasers and active users within the AI Network ecosystem and $AIN token economy, essential for driving network and token value.

The AI Network Economy

Before elaborating on the different stages of the funnel, it is first important to understand the targeted users towards whom the funnel will be implemented. Here we specifically identify the different types of users who would interact with AI Network, which will give us our target markets, and therefore a better understanding of the bigger picture and the inflows into the AI Network ecosystem.

Firstly we have AI users, who would be anyone looking to use an AI service or agent to fulfill some sort of need (for example an individual looking for cooking tips or a business person requiring research assistance, both of whom search for an AI service to assist them). Secondly we have GPU providers, those who contribute GPU resources in exchange for token rewards, resources which are then utilized by various AI agents to run their AI models. Thirdly we have API users, who are essentially developers who utilize AI Network resources for their AI models.

The AI Network Workflow

Similarly, in order to properly understand the significance of the funnel, we must understand the ways in which various user inputs are implemented and how users will interact with different parts of the ecosystem.

GPU resources coming from GPU providers (Runo NFT holders) are utilized to power Large Language Models (LLMs), on top of which AI agents are built, known as AINFTs (AI agents & services recorded on the blockchain as unique tokens).

AI users interact with AI agents to fulfill some specific need, as mentioned in the previous section.

Optimizing the Funnel for AIN Value Growth

To maximize the value of the AI network, it’s essential to optimize each stage of the funnel. Let’s examine how this can be achieved.

1. Awareness Stage

In the first stage user needs are to be identified, as well as target audiences. As we have ascertained, AI Network has three target audiences; AI service users, GPU providers and API users. After identifying these, compelling marketing messages that highlight the unique value proposition of the AI service need to be developed and disseminated, utilizing a mix of marketing channels, such as search ads, social media, content marketing and other channels to reach potential users. At AI Network we are creating a product page which will detail all the various AI agents for use.

In this stage, we may identify our first audience as AI users, and in order to target them effectively we must create marketing materials to capture their attention. We do this by offering the fulfillment of their needs. Say a user, we’ll call him Chris, is a coder and requires assistance debugging his code. Chris will be searching for a solution to his problem, and he may come across targeted adverts or marketing content (twitter posts or blog articles, for example) for AI agents with the capability of assisting him. This is the beginning of the funnel, and the funnel continues when Chris, as the potential AI agent user, clicks.

2. Interest Stage

When the user clicks a link on an ad or marketing material they will be taken to a page where the solution to their needs is communicated as simply and obviously as possible. They will see how their needs can be fulfilled by the service, and will be provided with short free demos or tutorials that showcase the capabilities of the AI agent.

Our potential user, Chris, clicks the link for the AI agent which can solve his coding needs. In order for him to actually make use of the service though, he will need to enter the third phase of the funnel.

3. Sign-up Stage

For the user to proceed to interacting with the AI agent to fulfill their need, they will need to sign-up to the service. This phase does not require payment, but rather the capturing of an email address or other information in exchange for the user creating an account. The sign-up process will be as simplified as possible to reduce friction and increase conversion rates, and time-sensitive bonuses or exclusive features can also be offered in order to speed up the process. The user can also be encouraged to share the service with their friends or colleagues via referral programmes which incentivize them with rewards in exchange for sign-ups. On sign-up the user can enjoy either limited access to the service or full access for a short amount of time.

So, after Chris has seen marketing material for the AI agent, clicked the link and wishes to explore the service further, he signs up and creates an account with his email address and is given limited access to the service in exchange. This allows him to test out the AI agent in order to conclude it can assist in meeting his needs. Once he is satisfied the AI agent can solve his initial problem, he ascertains that he requires full access to the service, and proceeds to the purchase stage.

4. Purchase Stage

A user will be provided with flexible pricing options for full access to the AI agent’s service in order to cater to different user needs and budgets, based on differing levels of access and lengths of subscription. The value the user will derive from the service will be clearly communicated, and they will also be made aware they can expect exceptional customer support to address any concerns or questions they may have.

Different payment plans and pricing options are important here in order to capture the largest number of users. Some users will require full, unlimited access to an AI service for a significant duration, while others may only require access to a certain feature of the service or the full service for a limited amount of time. For users who require the full service for a longer amount of time, certain strategies can be implemented to incentivize them to sign-up for a longer period. Such strategies could include offering a number of free months in exchange for a longer purchase period, for example 3 months free for 12 months full access. This could be contrasted with other payment plans, where paying month to month would be more expensive than signing up for a year, for example.

Chris, our prospect, entered the AI Network funnel through the awareness stage when searching for a solution to his coding problem. He saw a targeted YouTube ad for an AI service that could assist in debugging code, clicked the link and was taken to the interest stage where he explored the possibilities of the service. After ascertaining it may be suitable to fulfill his needs, he signed up with his email address in order to obtain demo access and test the service out. Once he was satisfied it could solve his problem, he entered the purchase stage of the funnel and decided which payment option suits him best. He had the choice of paying monthly on a rolling basis, or paying for 12 months with the first 3 months free. As he works as a coder and will likely require the service again, he concludes it makes sense to save money in the long run and purchases 12 months with 3 months free. As such, Chris has come through the AI Network funnel, from a prospect to a purchaser, and his initial need has been solved. Next he goes to the last stage of the funnel.

5. AIN Token Economy Stage

AI Network’s $AIN token provides the backbone for the AIN ecosystem. The token mediates payments, GPU resources and other features within the ecosystem. Users are encouraged to actively participate in the token economy by being rewarded with $AIn tokens for their contributions and interactions with the network. GPU resource providers are rewarded with $AIN token, users have payment options in $AIN and tokens can be used as incentives. AI Network work to ensure balanced token supply and demand through the balance of services and users within the network. This is to maintain a healthy token value and drive the value and use of the ecosystem. AI Network continuously develop new use cases and partnerships to increase the utility and adoption of the ecosystem, and therefore of $AIN token.

At the token economy stage it’s important to ascertain the value of a token and its use within the ecosystem. In our last article we looked at the value a single sentence chat from an LLM within AI Network holds within the token economy, and how this value changes over time. To comprehend how much something is worth within an ecosystem, we must compare it to similar things in similar services, much like if you were ascertaining how much to sell a cup of coffee for, you would have to compare the prices of cups of coffee being sold in your area. Based on ChatGPT’s $60/million tokens, the value of ten words per sentence and 10 sentences per person in an LLM is $0.006. This gives the daily value of one user, should the user average 10 sentences per day. If 1 $AIN is worth $0.10, it would generate just under 20 sentences per token (16.67).

By optimizing each stage of the funnel, including the AIN token economy stage, the AI network can effectively attract, retain and engage users, leading to significant growth in network value.

Calculating AIN Value Growth and Token Economy Impact

The funnel starts with a large cohort of potential users and narrows them down to interactors, sign-ups and purchasers. To precisely calculate the growth of the AI network and the impact of the token economy, we can use the following metrics:

- Conversion rates between each stage of the funnel

- Average revenue per user (ARPU)

- Customer lifetime value (CLV)

- Token velocity and circulation

For example, let’s assume the following:

- 300,000 users become aware of the AI service (Awareness)

- One third of users click the link (Interest)

- 10% of interested users sign up for the service (Sign-up)

- 5% of signed-up users make a purchase (Purchase)

Now we have whittled 300,000 people aware of AI Network services down to 500 purchasers. Let’s say that 1 $AIN token is worth $0.10, and 1 $AIN generates approximately 16.67 sentences in the LLM (as we have mentioned above), and customers generate an average of 20 sentences per day. This means customers spend slightly more than 1 $AIN per day. Assuming the average revenue per user is $100/year (ARPU), and that customers will stay for an average of 3 years (CLV). From this information we can calculate the AI network’s value growth and token economy impact.

- Paying users: 300,000 x 33.33% × 10% × 5% = 500 users

- Annual revenue: 500 × $100 = $50,000

- Total CLV: 500 × $300 = $150,000

- Daily token consumption: 500 users × 1 $AIN = 500 $AIN

- Monthly token consumption: 500 $AIN × 30 days = 15,000 $AIN

The number of paying users would depend on how many AI agents we have in the AI Network ecosystem. If we would want to capture paying 10,000 users, for example, with an average of 100 users per AI agent each activating about 100 $AIN tokens, we would need 100 AI agents, which means increasing use-cases for AI agents along with marketing efforts.

These calculations demonstrate that by optimizing the funnel, improving conversion rates, and fostering a vibrant token economy, the AI network can significantly increase its value over time. The token economy’s health and growth are directly linked to user participation and token circulation.

The 3 AI Networks Funnels

As AI Network is a multi-pronged ecosystem, marketing isn’t done toward simply one target audience. The ecosystem supports AI agents via developers and AI companies using the AI Network LLM and APIs, who are a B2B target audience. The ecosystem captures GPU resources from providers and pays $AIN tokens in reward, who are a node/mining target audience. Finally, the ecosystem offers consumers the use of AI agents, who are a B2C audience. With three focuses we have three funnels, all geared toward driving growth of the AI Network ecosystem and token.

In Conclusion

The success of an AI network relies heavily on the effectiveness of its user acquisition funnel and the strength of its token economy. By optimizing each stage of the funnel, from awareness to purchase and beyond, and ensuring a healthy token circulation, the AI network can maximize its value growth. Through precise calculations based on funnel metrics and token economy factors, we can predict and measure the network’s growth potential and set realistic goals for market cap and user acquisition. As the AI industry continues to evolve, mastering funnel optimization and token economy management will be key differentiators for successful AI networks.

AI Network is a decentralized AI development ecosystem based on blockchain technology. Within its ecosystem, resource providers can earn $AIN tokens for their GPUs, developers can gain access to GPUs for open source AI programs, and creators can transform their AI creations into AINFTs. The ultimate goal of AI Network is to bring AI to Web3, where everyone can easily develop and utilize artificial intelligence.

If you want to know more about us,

• Homepage: https://www.ainetwork.ai/
• AI Network DAO Discord: https://discord.com/invite/aindao/
• AI Network YouTube: https://www.youtube.com/@ainetwork_ai/
• AI Network Telegram: https://t.me/ainetwork_en
• AI Network Twitter: https://twitter.com/ainetwork_ai