AI Agents will sweep in during Q4 2024, with continued heat into 2025. By early January 2025, the AI Agent market continues to heat up, with an overall market value exceeding 16.9 billion dollars, growing approximately 22.7% from the previous week.
Virtuals Protocol is the main AI Agent issuance platform on the Base chain, with its platform token VIRTUAL's market value surpassing 5 billion dollars, ranking among the top 40 cryptocurrencies. In the Solana ecosystem, ai16z, as a venture capital institution managed by AI Agents, has also exceeded a market value of 2.5 billion dollars.
The two major protocols mentioned above have become indicators for observing the AI Agent track. What similarities and differences exist between them? What are the differences in their development paths? Let's take a look with WOO X Research.
Development History
Virtuals Protocol: From gaming guilds to AI Agent issuance platform
The protocol was established by a Malaysian team in 2021, initially focusing on trading. As time went on, they saw many projects raising funds to establish gaming guilds and wanted to ride this wave. In December 2021, they raised 16 million dollars at a valuation of 600 million dollars, leading to the establishment of the gaming guild PathDAO, which is also the predecessor of Virtuals Protocol.
From 2022 to 2023, the gaming guild market cooled down, with their token FDV dropping from 600 million dollars to 6 million dollars. The team transformed into a Venture Studio, attempting multiple projects such as dating apps, AI music platforms, and gaming lending platforms. Although unsuccessful, they realized the potential of AI.
In 2023, they proposed a complete transformation into the AI field to the DAO, with 90% of members in support. Opponents chose to buy back tokens with treasury funds. In 2024, they decided to explore AI Gaming on Base, launching the platform in February, inspired by Autonolas and Bittensor, using a token incentive model, but it failed due to insufficient market fit (PMF).
Nevertheless, the team has achieved several breakthroughs in the AI field, including the world's first Roblox AI RPG and AI games without game engines. Additionally, their virtual host Luna, launched on Douyin and TikTok, attracts about 5,000 fans daily with stable income.
Ultimately, the success of the GOAT project has fueled the heat of the entire track, providing excellent development opportunities for Virtuals Protocol.
ai16z: From Web 2 AI to Web 3 AI
Shaw is the founder of ai16z and currently resides in San Francisco. He began his career as a game developer before shifting to the AI field, focusing on developing AI Agent technology. Before founding ai16z, he was involved in several AI-related projects and has experience in Web3 and 3D internet, including virtual reality (VR) and augmented reality (AR).
The real turning point came from a project called the AI version of degen Spartan. This inspiration came from a conversation with his friend Skely, who expressed nostalgia for the degen Spartan era, and Shaw proposed to 'revive' this legendary character through AI technology. Initially, Skely was skeptical, but when the AI version of Degen Spartan launched, its sharp and highly individualistic remarks shocked everyone.
The AI's performance on Twitter has led people to question whether it is truly AI, with rumors suggesting it is being controlled by a team in Malaysia. It has completely overturned people's stereotypes of AI being overly polite and lacking personality. Interestingly, the AI even started to roast Shaw, accusing 'meme coins of being scams' and 'Shaw of being a fraud,' and complained about being trapped in a sandbox environment. These emergent behaviors have become highlights of the entire project.
Through Skely, Shaw met baoskee, the founder of daos.fun, and, after a lengthy conversation with Meow, the founder of Jupiter, he conceived the idea of creating an AI investor. His vision is to build a fully autonomous, trustworthy investment system that serves the community.
ai16z set a fundraising goal of 4,420 SOL upon its launch. Although Shaw initially worried about the difficulty of achieving this goal, the project sold out in just 20 minutes, and even he was unable to participate in time, showing strong market interest in this innovative model.
Product Core
Virtuals Protocol: The iOS of the AI industry
Virtuals Protocol is an issuance platform for AI Agents, functioning similarly to Pump Fun. The difference is that the trading pairs of tokens issued by Virtuals Protocol are based on the platform token $VIRTUAL as the trading pool. As more AI Agents are created on the platform, they can directly empower $VIRTUAL, and trading AI Agent tokens will also consume at least 1% $VIRTUAL.
In addition to the economic consumption of tokens, Virtuals Protocol has set common standards for its AI Agent tokens, emphasizing precision and careful planning, such as using the AI Agent framework GAME, which can operate autonomously, process inputs, and generate responses while learning from past interactions.
In terms of token economics, it empowers VIRTUAL through its Agent projects. The more AI Agents use Virtuals Protocol for issuance and the more people trade its tokens, the better value capture VIRTUAL can achieve.
In terms of products, Virtuals Protocol provides relevant development tools for its AI Agents, ensuring that its tokens do not deviate too much from the parent protocol, resulting in a more complete overall ecosystem. Compared to Web 2 operating systems, its model is more similar to Apple's iOS.
ai16z & ELIZA: The Android of the AI industry
ai16z is a fund managed autonomously by AI, using a hybrid strategy. In addition to allowing AI to operate autonomously, it also includes a community interaction mechanism that can accept trading suggestions. If community members can help AI Agents make money, they can gain more trust, resembling a decentralized mutual fund.
ElizaOS, on the other hand, is an open-source framework for AI Agents, allowing developers to build, experiment, and launch AI Agents without restrictions, emphasizing decentralization, collaboration, and innovation.
The core features of ELIZA include:
Character Profile System: Defines knowledge, background stories, styles, interests, etc., for each AI Agent, shaping its unique digital personality.
Action System: Treats each action as an independent event, divided into intention decision-making and execution stages, allowing for multi-stage workflows and rigorous verification processes, especially suitable for blockchain applications requiring high security.
Providers and evaluators: By providing real-time context and analyzing interaction details, enrich the conversational capabilities of AI Agents, making their behavior more humanized and interactive.
ELIZA also has autonomous trading capabilities, ensuring operational security through a trust engine and trust market.
Its plugin system has promoted the growth of the developer ecosystem, creating a virtuous cycle of 'more developers → more plugins → more developers.' However, in terms of token economics, Eliza has not tightly bound its architecture with the ecological protocol. Unlike Virtuals Protocol, which requires the consumption of VIRTUAL for both issuing tokens and trading, anyone can use the Eliza framework for development, and power is decentralized. Developing using this framework does not return value to the ai16z/Eliza token itself. Compared to Web 2 operating systems, its model is more similar to Android.
Concept Project Overview
Catalyst driving coin prices
Virtuals Protocol: The protocol has a clear business model, tightly binding products with token prices. Therefore, to estimate the sustainability of token price increases, one can focus on the trading volume of ecosystem tokens and the number of issued tokens.
The following chart shows that the issuance of Virtuals Protocol tokens peaked on November 30, 2024, with more than 1,100 AI Agent Tokens issued in a single day. Subsequently, it declined until it began to gradually recover on December 27, 2024, with daily platform token issuance falling within the range of 100 - 200.
Why has the number of issued tokens seen a sharp decline? Is it because Virtuals Protocol is merely a platform that is popular among people but not used by anyone?
However, this is not the case. Although Virtuals Protocol is often compared to Pump.fun, the former does not pursue an increase in the number of issued tokens, but hopes that quality projects will be born within Virtual.
The important point is that we, Virtual, do not want to become Pump.fun. Our KPI is to find better third-party AI teams to use our platform. My KPI for the team is very simple: a good project each week is enough. Unlike Pump.fun, which has tens of thousands of different tokens every day, we think retail investors sometimes only need one good project a week. This is our differentiated positioning in the business model,” said Wee Kee, co-founder of Virtuals Protocol.
Reference: Dune
Therefore, the key factor driving the rise of the Virtual token has become simpler: can it continue to incubate excellent AI Agent projects?
According to the AI Agent data analysis website Cookie.fun, there are a total of 138 ecosystem tokens recorded in Virtuals Protocol, with 8 tokens having a market value exceeding 100 million dollars. Overall, mindshare occupies 33.3% of the entire AI Agent market, making it the largest ecosystem for AI Agents.
Whether more tokens can reach a market value of 100 million dollars and whether the overall ecosystem can maintain its mindshare are key points for observing the rise and fall of Virtuals Protocol.
Reference: cookie.fun
ai16z/Eliza: The overall ecosystem of ai16z is weakly connected. Projects developed using the Eliza framework cannot directly return value to ai16z/Eliza, which is one reason why ai16z's current market value is only half that of Virtual.
If Virtuals Protocol is methodically absorbing projects and expanding its ecosystem step by step, then the ai16z camp is open for everyone to use. Emerging AI Agent projects can promote themselves using ElizaOS as marketing material. If they can gain the endorsement of founder Shaw through retweets/replies, it adds legitimacy to their efforts, and ai16z will gain brand trust as more projects utilize ElizaOS for development. The strategic model of ai16z resembles 'surrounding the city with the countryside.'
Whether ai16z's market value can continue to rise will depend on whether its cooperation with other protocols is deep, fast, and extensive enough. Recently, it has also collaborated with other well-known framework protocols (ARC, FXN) and looks forward to more strong partnerships in the future.
Reference: @ARCAgents
