Crypto has thought about machines for years as simply fast humans. Faster bots trade faster contracts get executed faster, and oracles update faster, etc. However, while speed is key in creating new markets and efficiencies for money on chain, the basic economics have remained unchanged since humans created the first currency. People own wallets, make payments indicating intent, and we then assign identities to addresses that were originally created to only serve as identifiers and nothing more. The Kite project forces us to face a hard truth: the next major economic activity on chain won’t be driven by humans at all.
Why Kite isn’t just another AI/Blockchain combo: There are a lot of other projects that combine AI with Blockchain, so why should Kite matter? The reason Kite is important is because it takes the opposite view of all of those previous combinations — instead of asking how you can bolt AI onto the current state of Blockchains (which has been done far too many times), Kite asks the question of what would a blockchain look like if AI was the primary actor (users) versus just an edge case?
This fundamental shift in perspective changes nearly every aspect of the blockchain. While delays in the processing time for transactions are still acceptable, while fees are still negotiable, and while social or legal mediation of mistakes is still possible, when it comes to AI agents acting autonomously, latency is friction, fees are barriers to entry, and errors compound rapidly due to the speed at which machines process information.
Real-time settlement is not a feature of Kite’s Layer 1 design; it is a necessity for agents that are able to engage in an ongoing series of negotiations, coordination, and transactions as opposed to making discrete decisions.
People tend to focus on Kite’s identity system as it seems to offer a new approach to identifying users, however the true significance of Kite’s identity system is much more subtle. The separation of User Identity, Agent Identity, and Session Identity is not merely a security enhancement; it is an economic boundary. It recognizes that for autonomy to be trusted, it must be limited in scope. In practical terms, this means that an AI agent may be granted authority to act in a specific and clearly delineated manner, and that authority may be revoked in a manner that does not jeopardize the overall integrity of the trust structure. This is a significant departure from the current wallet model, which considers control to be either binary or catastrophic if compromised.
In essence, Kite is formalizing the concept of Delegation, which is a concept that finance has used for centuries, but that crypto has poorly implemented. In traditional markets, Asset Managers, Traders, and Algorithms all operate under multi-layered mandates. In crypto, delegation generally involves granting access to private keys or utilizing opaque middleware. Kite makes delegation a first-class primitive. The reason this is significant is because the agent economy will not scale without delegation. No institution will permit autonomous agents to manage assets on its behalf unless the authority of such agents is strictly and mathematically enforced, rather than implied through social norms.
The payment layer in Kite reflects the same philosophical approach. Agentic payments are not necessarily about innovation; they are about granularity. Humans think in terms of billing cycles. Agents think in terms of events. Each and every API call, each and every inference request, each and every data retrieval, and each and every coordination action carries a cost. Kite views these micro-interactions as economic units, as opposed to simply abstract actions. This represents a paradigmatic shift in how value is transmitted throughout digital systems. Rather than transmitting value through large and infrequent transfers, value is transmitted in continuous and small increments, and is highly correlated with actual utilization. Achieving this correlation is a difficult challenge for traditional finance, despite having spent decades optimizing.
Kite also subtly calls into question a core assumption in crypto. Many blockchains are optimized to support scarcity-based narratives, where block space is expensive and therefore usage is justified through large and valuable transactions. Kite reverses this logic. Kite assumes that transactions will be numerous, inexpensive, and frequent, and that the value generated will arise from the sheer volume and coordination of these transactions, rather than the size of the individual transaction. This is analogous to how the Internet operates at scale, where billions of small interactions generate enormous collective value.
The KITE token integrates with this vision in a way that is easily misunderstood. Some early observers view the KITE token as a vehicle for obtaining immediate staking rewards, or as a mechanism for obtaining governance power, and thus overlook the underlying purpose of the token. The phased utility of the KITE token corresponds to the phases of the development of the network. Initially, the primary goal of the incentives associated with the KITE token are to encourage participation and alignment, and to foster the creation of a real usage economy, as opposed to encouraging artificial demand. Governance and staking are secondary goals, and are scheduled to occur at a later stage in the development of the network, once there is a viable and active economy supporting the network. The sequence of these goals is critical. Many protocols have rushed to grant governance to token holders prior to establishing a viable economy underneath the protocol, effectively transforming governance into a form of theater, as opposed to a form of stewardship.
Kite also implies a different type of future for protocol governance, although it rarely explicitly states so. If agents participate in the economy, governance ceases to be solely the domain of humans. Agents may optimize fee structures, vote on parameter adjustments based upon observed outcomes, and respond to changes in the network's condition more quickly than any committee. This does not preclude humans from participating in the decision-making process, but it does change the nature of that participation. Oversight replaces micromanagement, and strategy replaces reaction. Kite's architecture provides ample opportunity for this transition to occur, and yet does not force it to happen prematurely.
It would be disingenuous to pretend that there are not risks inherent in an economy where autonomous machines transact among themselves, and thereby concentrate power in code. Bugs become policy, and once misaligned incentives can spread faster than humans can react to them. Kite's layered identity and governance mechanisms attempt to mitigate these risks, but cannot entirely eliminate them. The real question is whether the crypto community is better served by addressing these issues head-on or ignoring them until autonomous agents are ubiquitous throughout the ecosystem, and are not adequately safeguarded.
Kite is relevant today, largely due to timing. Autonomous AI systems are reaching a tipping point where their ability to act independently is no longer theoretical. Such systems currently perform tasks that include scheduling, resource allocation, negotiation of prices, and workflow optimization. What they are lacking is a native economic substrate that treats them as first-class participants. Crypto, despite all of its flaws, is uniquely positioned to develop this substrate because it uses verification to replace trust, and code to represent policy. Kite is attempting to develop this substrate without assuming that human-centric thinking will naturally evolve to accommodate the needs of autonomous AI agents.
If Kite is successful, its success will not be measured by token price fluctuations or short-term adoption metrics. Its success will be measured by whether autonomous agents feel economically native on-chain rather than tacked on. It will be measured by whether institutions are willing to allow software to act on their behalf without constant oversight. And it will be measured by whether crypto has finally developed into a system that intelligent software can occupy and utilize responsibly.
One of the most profound signals sent to the crypto community by Kite is that the next generation of crypto will not be defined by the loudest narrative or fastest speculation. It will be defined by who develops the infrastructure for entities that do not sleep, do not speculate based on emotions, and do not require quarterly reports. In this regard, Kite is less about AI and more about maturity. It is asking whether crypto is mature enough to stop developing for itself and start developing for the systems that will quietly grow beyond it if it fails to.
That question is no longer speculative; it is currently being addressed, line by line of code, in networks like Kite that assume the future will be driven by more than just humans.
