The balance of narratives shifted at the end of 2024, putting the AI agent theme above all others for short-term earnings. AI surpassed even meme tokens as the most actively appreciating token class.
The AI narrative achieved the highest returns of 2024, based on a year-end data collection by CoinGecko. AI-themed tokens achieved average returns of 2,940% for the past 12 months, even surpassing the net achievements of meme tokens. The real AI rally happened from the end of November onward, even though the sector grew by only 77% until the end of Q3.
Virtuals Protocol led the AI agent rally
The AI narrative started expanding in the last three months of the year, rising mostly due to the influence of AI agent tokens. Previously, the AI narrative included older projects, such as FET and RNDR, which only had minor rallies.
The last months of 2024 tapped the growth from both individual AI agents and the emergence of launch platforms. One of the biggest drivers of growth in December turned out to be Virtuals Protocol (VIRTUAL). The token traded at an all-time high of $3.79, gaining more than 300% in the past weeks.
Virtuals Protocol (VIRTUAL) kept posting rapid gains in December, reaching a new all-time high at $3.79. | Source: CoinGecko
Some of the recently launched AI agent tokens had the characteristics of meme tokens, hence their immediate price appreciation. GOAT and FARTCOIN were in fact launched as memes, while also riding the AI narrative.
In just a few days, the AI token collection expanded its total market capitalization from around $8.7B to over $13B, with no signs of stopping. Since most AI agents are relatively new, they lack the influence of meme tokens, which still grew by 2,185% on average.
As an adjacent narrative, DePIN tokens rose by 135% in 2024. DePIN was actually the category to take up former AI tokens that also built infrastructure and shared GPU pools. DePIN may benefit from the market for AI agents, which will also need GPU power to produce content.
L2 was the only losing narrative
The worst performer in 2024 was the L2 narrative, despite the increased usage of actual L2 platforms. Both new launches and the existing tokens in this narrative underperformed. One reason is the legacy of token unlocks, which put downward pressure on the price. The other was an attempt to raise funds for launching new L2s, even when there was no need to create an additional chain.
L2 was the only losing narrative in 2024, with an average loss of 20.7%. Another reason for the struggle is the additional scrutiny on the performance of L2s. Once their airdrop mining periods passes, previously busy chains see an immediate outflow of traffic.
Even speed and innovation were not enough to convince investors. Previous stars like Scroll were among the biggest losers for the past year. The entire L2 sector ends the year at a total market capitalization of $29B, with most tokens in the red for the past week.
Most of the L2 activity in 2024 concentrated on a handful of leading networks, including Arbitrum, Optimism, Base, Taiko, Linea, ZKSync, Starknet, and Blast. All of those chains shift positions depending on the activity of their apps. Arbitrum retains its leading position by attracting liquidity from Ethereum and hosting top DEX apps.
Older Web3 narratives underperform
Web3 is no longer enjoying the same level of hype, as most of the features work in the background and are integrated into newer tokens. DeFi tokens gained on average 101% in 2024, joined by growth in RWA projects by 820%.
Layer 1 chains, led by SUI and Aptos, rallied by 142% in the past year. The weakest gains came from GameFi, which underperformed the market, growing just 15% on average.
In the past year, the Web3 gaming and NFT narratives also underperformed, despite the occasional rally for top collections. The only return to NFT happened ahead of the Pudgy Penguins PENGU airdrop. NFT failed to have a year-end rally, despite the Magic Eden (ME) airdrop. The OpenSea platform also faced delays in launching its new version, while attention shifted to the other active narratives.
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