Written by: Web3 farmer Frank

Is AI Agent now in the "2020-2021" boom cycle of DeFi Summer?

"Looking for the sword on the boat" is often the most worry-free way of prediction - from the data dimension alone, the total locked value (TVL) of DeFi has increased more than 40 times from US$600 million in January 2020 to US$26 billion in December 2020 in just one year, and the market value of the AI ​​track is currently US$44 billion, which means that if it can really replicate the boom cycle of DeFi, the potential market value may exceed US$1 trillion.

So the question is, is AI Agent really experiencing a boom cycle similar to DeFi Summer in 2020-2021? In addition to AI Memecoin, what other projects will become the driving force of this boom cycle?

The booming AI Agent economic cycle.

Cookie.fun statistics show that by January 1, 2025, the overall market value of the AI Agent sector has exceeded $16.6 billion, with a growth rate of 53.79% in the past 7 days. Against the backdrop of the entire cryptocurrency market being in a turbulent period, the ecosystem of AI Agents is expanding at an unprecedented speed from Virtual to AI16Z, and then to platforms like Arc.

Especially for AI Agent projects driven by meme culture, with their low barriers to coin issuance and trading processes, they have quickly become the new center of attention and traffic. Most of them significantly lower the participation threshold for ordinary users through humorous expressions, highly interactive community culture, and user-friendly communication strategies, successfully attracting a large number of non-professional users.

In plain terms, this is actually a form of cultural rebellion against 'VC coins', and also a continuation of the Meme narrative. However, combined with AI Agents, it not only lowers the participation threshold and expands the potential market scale, but also injects more inclusivity and sustainability into the AI × Crypto narrative.

Including the recently well-performing 'TAO CAT', which is a product of the Masa team's collision of the two ecosystems of Virtuals and Bittensor, it has creatively demonstrated the superiority of AI Agents compared to traditional AI Bots in self-evolution, with a core narrative still being fair issuance and community-driven economy.

Interestingly, during the writing of this article, TAOCAT was just selected for the new phase of Binance Alpha projects, followed by a significant increase in its price, and MASA also experienced a rally as a result.

This easily reminds one of the prosperous scene of DeFi Summer: from the initial foundational applications of Compound and Uniswap to the later large-scale influx of users and the derivation of more complex on-chain trading strategies, the intertwining and resonance of technological narratives and capital drives ultimately form periodic prosperity. Therefore, at least currently, the popularization and market value growth of AI Agents based on AI Memecoin indeed brings a new round of narratives and imaginative space to the cryptocurrency industry.

It's just that this economic cycle can go as far as it can; AI Memecoin is just the beginning. The subsequent developments depend more on whether AI Agents can become the long-term cornerstone of the cryptocurrency industry, rather than just a short-term trend.

For instance, in the current AI Agent landscape, the total market value of the top 5 exceeds $7 billion, accounting for nearly 45%, with the market value of the Virtual ecosystem and AI16Z ecosystem reaching $4.65 billion and $2.37 billion, respectively, indeed becoming benchmark cases in the entire cryptocurrency field.

But essentially, the current prosperity of the 'AI Agent' sector is still mainly based on AI Memecoin or issuance platforms, and it is still in the early stages of a narrative focused on equitable asset issuance, which needs further deepening of its reach. Looking back on the last cryptocurrency cycle, we can find that while DeFi has driven a large inflow of capital into the blockchain field, the user threshold for DeFi remains relatively high, requiring financial knowledge and operational skills, which to some extent limits its large-scale popularization.

The emergence of AI Agents undoubtedly opens up a new narrative in the cryptocurrency field with lower barriers and higher potential — unlike DeFi, which requires users to actively learn complex financial tools, AI Agents can directly provide users with personalized and intelligent services, lowering the participation threshold.

This is an interesting variable, which is to meet the needs of more ordinary users through intelligent solutions, making AI Agents not just a technical product, but a whole new narrative of 'equal rights' economy.

As the founder of Slow Mist, Yu Xian, posted on Twitter: 'Another special sense of disconnection: The ultimate (perhaps) most important role of AI Agents in the Crypto industry is to issue a token to stimulate incentives. In non-Crypto industries, major players have long been leading, including some interoperability protocols defined, creating increasingly better AI applications, while most attention in the Crypto industry is still on tokens.'

Thus, AI Agents have indeed entered an economic cycle through AI Memecoin, gaining the market's high recognition and capital attention in this field, marking their formal entry into a golden age: from a meme-driven traffic center to diversified application scenarios, from the improvement of infrastructure to the long-term exploration of value, AI Agents are expected to reshape the landscape of the cryptocurrency industry and become one of the most innovative and influential areas within it.

The 'Alpha' and 'Beta' of AI Agents

If we trace back to the roots, we will find that although the current AI Agents are merely about token issuance and capturing the value of imagination, actual applications are still closely related to on-chain transaction attributes.

After all, the actual uses of AI Agents are far beyond just issuing tokens — even in the task-driven AgentGPT processing flow, AI Agents have already demonstrated their potential in aspects like on-chain trading strategies:

Users can customize their overall goal tasks, and then the AI Agent allocates tasks based on its own resources, breaking down the overall goal task into smaller tasks through the flow and allocation of agent layer tasks, continuously executing and correcting according to the objectives, without human assistance, ultimately achieving the overall goal.

In simple terms, it's a core vision that is 'intent-centered'. Users only need to know what result (intent) they want, and they do not need to care about the intermediate processes and steps. In many cases, users' intents may be complex, and their expressions may not be accurate. However, AI trained with specific models can more accurately identify users' intents and infer their potential purposes and needs based on users' keyword information.

In this process, combined with highly intelligent AI, whether it is natural language input of intent, judgment of needs, breakdown of goals, calculation of optimal process combinations, or execution of operations, AI can play a huge advantage. Currently, a large number of smart trading projects involving complex cross-chain transactions have emerged in the market, efficiently discovering the optimal exchange paths, allowing users to complete optimal transactions at the best prices in real time.

This is the truly imaginative development direction of AI Agents — the real value lies in becoming the interactive application layer of Web3, where users do not need to understand complex systems, but can complete all on-chain operations simply by conversing with AI Agents, thereby potentially becoming the underlying infrastructure of Web3, deeply integrating with blockchain, smart contracts, etc., giving rise to new application forms and business models, and bringing broader imaginative space to Web3.

So from a macro perspective, the rapidly developing AI × Crypto narrative is completing self-iteration at an astonishing speed — from the initial AI meme craze to the gradual shift towards practical and interactive AI Agents, the entire market's attention is refocusing, which also means a transition from random token speculation to a narrative logic of actual technological landing.

AI Agents are no longer just a hype, but have truly integrated into the industrial logic through value capture mechanisms, such as AI-driven KOLs, yield-generating tools, trading, and Alpha strategy optimization, as well as the construction of underlying infrastructures. AI technology is gradually shifting from entertainment narratives to becoming tools for solving real problems.

Its value goes far beyond the currently popular AI Memecoin; through technological innovation and ecological integration, it truly promotes the evolution and popularization of Web3. From this perspective, AI Agents are not just tools, but they may reshape the ecological rules of the cryptocurrency market, making it easier for mainstream users to accept and adopt AI Agents.

In any 'long slope thick snow' sector, infrastructure is never absent.

In the cryptocurrency industry, Alpha is the point, and Beta is the surface. Alpha is usually difficult to capture, but Beta projects with high certainty are relatively easier to ambush.

The AI Agent field is no exception. Although opportunities like AI Memecoin are difficult to grasp, infrastructure (Infra) as the core of Beta is almost a clear value capture opportunity, with a very clear narrative transmission path — although the explosion of AI Memecoin has stirred up a wave of capital and market attention, the final layout of projects that can emerge is far from determined, while Infra, as a 'water seller', can almost sit steadily at the fishing platform due to its prior ecological advantages.

As mentioned earlier, from the perspective of AI's role in the blockchain ecosystem, it is upgrading from a mere tool to a productive force driving industry transformation. This not only serves existing crypto users but may also attract traditional financial users into the on-chain ecosystem by lowering the barriers, building a more inclusive and sustainable economic logic:

From serving a few people's elitist finance to serving the inclusive finance of the majority; from the unsustainability of short-term speculation to the sustainability of long-term growth.

This represents that AI Agent Infra is expected to become a key entry point for the intelligentization of on-chain applications, and it also means that projects within the same sector that have not yet been fully priced by the market may hide new value reassessment spaces, with one important direction being data.

As is well known, one of the significant challenges faced by AI Agents is how to efficiently mine and utilize high-quality data, which not only determines the learning ability and decision-making level of AI Agents but also directly influences the effectiveness of their actual applications and user experiences.

Especially for the blockchain ecosystem, Twitter data, Discord data, web crawler data, etc., may hide billions of signals, containing many use cases that can be derived and realized, which can be personalized for mining and utilization — such as tracking whale dynamics, analyzing 'Smart Money' trades, monitoring on-chain address interactions, filtering layered differentiated on-chain users, and precisely reaching different player groups, among others.

Therefore, data infrastructure is not only the support for the development of AI Agents but also the core of value creation and market promotion. Interestingly, as the current leader in the AI data sector, the recently built SN42 data service subnet and SN59 AI Agent arena on Bittensor by Masa are quite worth mentioning.

The AI Agent Arena is a significant step for Masa as a data infra towards the AI Agent platform, making the data network no longer abstract but enabling AI Agents in real-time, allowing them to evolve continuously, iterating with Bittensor's powerful reward mechanism, letting AI Agents compete in the arena. The arena went live just a few weeks ago and has already attracted top AI Agents from the Virtuals and creator.bid ecosystems, including TAO CAT incubated by Masa.

Thus, essentially, Masa revolves around 'infrastructure (data) + application scenarios (arena) + token economics (AI Agent)', attracting more users and developers to operate the platform, continually expanding AI Agent business scenarios and stimulating platform vitality.

From a broader perspective, the narrative path of AI Agent Infra projects like Masa is very clear — focusing on the 'adaptability' of AI agents on-chain, solving the efficiency, stability, and intelligence needs of on-chain operations. If this sector continues to ferment, it is expected to build the infrastructure for on-chain AI ecosystems and could drive a comprehensive upgrade of developer ecosystems and user experiences.

According to the market rotation rule, the success of Virtual will also drive investors to focus on complementary functions, technological innovations, or undervalued projects within the same sector, especially those with strong ecosystem-building capabilities and clear narrative directions. Therefore, Infra projects like Masa undoubtedly form a natural complementary logic with the token issuance function of Virtual.

The improvement of infrastructure and the maturity of technology have allowed AI Agents to transition from the uncertain Alpha phase to a profitable and scalable Beta phase. Therefore, from this perspective, Infra projects like Masa are important drivers in this process.

The earlier mentioned TAOCAT was selected for Binance Alpha's new phase of projects, which adds practical evidence to my analysis logic, further reinforcing that as market attention gradually shifts towards the AI Agent sector, infrastructure projects (like MASA) may welcome unexpected opportunities for value growth.

Overall, the current wave of heat for AI Agent Infra is just the beginning, and the market's demand for on-chain intelligent infrastructure is rapidly expanding. The performances of Virtual and Masa provide us with a good reference, and it is likely that more clearly positioned, complementary function, and undervalued projects will gradually be discovered by the market. Opportunities for value reassessment often hide in the dark lines of segmented fields.

Conclusion

AI Agents are not the destination but the starting point: in the future cryptocurrency market, AI Agents will not only be components of the ecosystem but will also become important driving forces pushing the entire ecosystem forward.

Infrastructure is the foundation of the ecosystem; any significant trend cannot lack its support. Whether it is pioneers like Virtual or potential players like Masa, their commonality is embedding their value into the core of the entire ecosystem through technology and logic, and the market's recognition of this value is just a matter of time.