a16z bets on energy tokenization experiments, how will DayFi reconstruct the power grid with DeFi?

Author: Jae, PANews

As global tech giants fiercely compete for every kilowatt-hour on the compute power battlefield, electricity has become a more tangible currency than data. AI energy consumption is devouring grid resources like a black hole, while traditional energy infrastructure is mired in inefficiency.

An energy tokenization experiment is attempting to navigate a tightrope between regulation and valuation, creating an asset channel connecting blockchain and the power grid. Amid this fracture between energy and computation, Daylight has quietly made moves; its decentralized energy capital market protocol, DayFi, announced it will open a $50 million pre-sale event on December 16.

DayFi carries the ambition of “rebuilding the power grid with DeFi,” aiming to slice future electricity revenue into tradable crypto assets. Backed by top-tier capital firms like a16z Crypto, Framework Ventures, and others, their investment signifies not just support for a project but also a strategic move into the AI energy dilemma.

Turning energy into revenue-generating assets, backed by tens of millions of dollars from a16z and others

Daylight is a veteran DePIN project, founded in 2022, focusing on establishing distributed energy networks for generating, storing, and sharing clean electricity. Its founder, Jason Badeaux, stated: “Electricity demand is surging now, but traditional installation methods are too slow and cumbersome. Distributed energy provides the fastest and most economical way to expand energy production and storage on the grid.”

However, distributed energy systems also face challenges, including lengthy sales cycles, extensive market education, and high costs. Typically, around 60% of residential solar installation costs come from customer acquisition and other inefficient processes.

DayFi is precisely a capital pipeline built by Daylight to address these issues. The protocol will operate on Ethereum, providing funding support for the development of distributed energy projects via DeFi protocols.

Investors can deposit stablecoins like USDT, USDS, etc., to mint the protocol’s stablecoin GRID, injecting liquidity directly into distributed energy projects. GRID is a stablecoin built on the M0 tech stack, fully backed by US Treasuries and cash, and does not generate yield itself.

After staking GRID, investors receive a yield token, sGRID, as proof, with the right to share in the electricity revenue generated by the underlying energy assets. In essence, sGRID can be seen as a combined yield bond that includes both US Treasury interest and solar power generation income. Users who deposit this capital typically lock it in Upshift’s vault for two months, with K3 deciding to lend it out to borrowers collateralized by energy project revenues.

In other words, DayFi allows users to deposit stablecoins and then use these funds to finance energy projects, with the earnings from these projects returned as tokens.

The design of DayFi’s model could create a positive flywheel effect: liquidity flows into DayFi → protocol funds accelerate distributed energy construction → projects generate energy income after going into operation → income is tokenized and redistributed to holders as yields.

Before its official launch, Daylight has once again secured capital support. In October, Daylight announced a $15 million equity financing led by Framework Ventures, with participation from a16z Crypto and others, along with a $60 million credit line led by Turtle Hill Capital. Prior to this, from 2022 to 2024, Daylight raised a total of $9 million in seed funding from investors including Union Square Ventures, 1kx, Framework Ventures, 6MV, and OpenSea Ventures.

The involvement of VC firms like a16z is not surprising, as they have emphasized: “Electricity accessibility is becoming a new moat in AI competition.”

According to the U.S. Energy Information Administration, by 2028, data center electricity use is projected to surge from 4.4% in 2023 to 12%. This means that whoever can lock in cheap, stable power will have the confidence to train large models in the future.

Current grid bottlenecks are rooted in monopolies and inefficiency. Data from Berkeley Lab shows that the U.S. interconnection queue for new energy projects has reached 2,600 GW, with approval cycles often taking years. Large corporations can lock in resources via long-term power purchase agreements, while smaller players endure high electricity prices and long waits. The emergence of DayFi could meet this market demand.

Currently, Daylight is operating in Illinois and Massachusetts, with plans to expand to California and other U.S. regions.

Facing dual regulatory pressures, asset valuation is in doubt

While the vision is promising, reality is fraught with regulatory hurdles. The first major challenge for DayFi comes from the SEC (U.S. Securities and Exchange Commission) and FERC (Federal Energy Regulatory Commission).

sGRID, representing a claim on future electricity income, could very likely be classified as a security under the Howey Test by the SEC. This means DayFi would need to comply with the same disclosure obligations as traditional financial products: regularly reporting on asset quality, cash flow status, risk management, and establishing investor protection mechanisms.

A more complex regulatory conflict arises with FERC. Information about energy projects is often categorized as CEII (Critical Electric Infrastructure Information), which is subject to strict confidentiality requirements. Details such as plant location, design, and operational data, if disclosed, could threaten grid physical security.

This directly conflicts with the transparency inherent in DeFi. Blockchain requires income data to be verifiable on-chain, otherwise, it cannot self-verify the authenticity of yields. Overly vague compliance disclosures might lead to “black box” scenarios, undermining decentralization.

Essentially, DayFi is treading a tightrope. It must design a system that is “verifiable without exposure,” perhaps through technologies like zero-knowledge proofs (ZKPs), revealing only the income results to validators without exposing sensitive details like plant locations.

Even if regulatory hurdles are overcome, DayFi faces another fundamental question: what is the actual value of the assets behind sGRID?

Unlike GRID, which is fully backed by cash equivalents, sGRID is linked to the net asset value (NAV) of distributed energy projects. These assets—solar panels, energy storage batteries, inverters—may fluctuate greatly in value due to technological advances and depreciation.

Crypto influencer @luyaoyuan sharply questioned this: “The most虚部分of the NAV is the book value of deployed renewable assets, which, based on 2025 depreciation, can include a pile of obsolete solar panels, batteries from retired EVs, etc. The operational space is huge.”

In fact, DayFi repeatedly emphasizes in its white paper that sGRID is not always redeemable and its value “fluctuates with the NAV of the underlying assets.” This essentially positions it as an RWA (Real-World Asset) NAV index, but also opens possibilities for valuation manipulation.

The problem is that there is no on-chain consensus mechanism for valuing electricity assets. Revenue from electricity sales is verifiable, but residual value assessments of the assets themselves may still depend on traditional audits, which conflicts with the trustless principle of blockchain.

The endpoint of AI is electricity, and energy is now becoming the next frontier in AI competition. Even Elon Musk recently emphasized that energy is the real currency, and cannot be legislated into existence. With surging energy demand and the rise of RWA concepts, DayFi aims to transform energy from static resources into dynamic DeFi assets, enabling efficient on-chain transactions for electricity traders, grid operators, and investors. But is it a green-wrapped new energy DeFi protocol or a precursor doomed by regulatory fog and valuation bubbles? Its on-chain journey may hold the answer.