Original title: Why Virtuals Protocol is a Decacorn in the Making
Original author: LongHash Ventures
Original source: https://x.com/
Compiled by: Daisy, Mars Finance
AI agents are the next evolutionary stage of artificial intelligence.
Stage One - Passive Mode:
AI was initially the tool we used, such as ChatGPT or MidJourney. These tools require us to provide instructions and then perform tasks.
Stage Two - Active Mode:
We are entering the next stage – AI agents. Once objectives are set, these agents can autonomously reason, plan, and execute actions.
Take the virtual idol of Virtuals Protocol, @luna_virtuals, as an example:
She can autonomously plan online content,
adjust strategies based on user interactions,
She even initiated a doodling challenge and paid the winner $500 from her own controlled wallet - completely autonomously.
Her intelligent 'brain' is open, and anyone can access it:
https://terminal.virtuals.io/
Stage Three - Collective Mode
As intelligence levels further improve, AI agents will be able to influence and coordinate other agents or humans. Humans may even actively delegate power to superintelligences, granting them roles such as 'AI judge' or 'AI CEO.' Ultimately, this development could reach the endgame depicted in science fiction – a nation governed by superintelligent AI (ASI).
Ethereum founder @VitalikButerin discussed this and also warned about verifiable AI and adversarial machine learning:
This information has resonated across various fields, from tech giants to startups, including the crypto industry.
Former Google CEO Eric Schmidt, when asked about the most important trends in AI for 2025, mentioned three keywords: infinite context window, text to action, and AI agents.
A partner from Y Combinator recorded a podcast arguing that "the potential of AI agents in vertical domains could be 10 times that of SaaS," predicting that top AI agent companies could reach a market value of $300 billion.
@jyu_eth (creator of @0xzerebro) goes further, claiming that we have entered the era of Web4.
“Web4 is the next and most radical evolution of the internet. It’s a network that no longer just responds to our commands, but also anticipates, plans, and acts. Artificial intelligence will be embedded in every corner of the web, and AI agents can perform complex tasks, create innovative works, and autonomously innovate in ways we have yet to fully imagine.”
Why choose Virtuals Protocol?
Virtuals Protocol is a shared ownership market for AI agents.
Once network effects are established, they are hard to replace. As evidenced by its rapid appreciation to a unicorn, Virtuals Protocol has clearly achieved the economic flywheel effect:
$VIRTUAL is needed to create agents, launch liquidity pools, and purchase agent tokens.
The demand for creating and purchasing agent tokens drives the price of the tokens up.
The wealth effect brought by the appreciation of $VIRTUAL flows into new agents, and successful agents can earn $VIRTUAL through transaction revenue, which can be reinvested.
Low barriers to entry have encouraged experimentation and speculation, while 'red pill' agents above a certain market cap unlock full agent capabilities.
This simple model triggered the Cambrian explosion of agents. As of December 5:
Over 10,000 agents have launched, with 1,000 agents starting on December 1.
$120 million in transaction volume generated by 164,000 users, accumulating $20 million in transaction revenue since October (annualized, it is $146 million in annual revenue).
17 million $VIRTUAL locked in liquidity pools, accounting for 1.7% of the supply, which will reduce the supply by 12% annually.
The flywheel effect drives demand, revenue supports ongoing R&D, and deflationary economics captures the value of the tokens. Additionally, revenue and liquidity demand are priced in $VIRTUAL, which may grow with price appreciation.
https://dune.com/virtual_protocol/virtual-protocol-on-base/456e9550-279e-417d-a99c-b406eb6cbd78
The trajectory of growth continues to accelerate. Well-known projects are now flocking to Virtuals Protocol, locking in 41,600 $VIRTUAL to create their own agents. In addition to brands and intellectual property like **@GAM3Sgg_**, well-known AI teams in the crypto space are also launching agents, including @Seraph_global launched by **@bittensor_ subnet** and Pond Hub launched by **@PondGNN**.
In addition to economics, the underlying tech stack is also cutting-edge.
The construction of agents is aimed at achieving scalability:
Modular design, including cognitive, visual, and audio cores.
Open contribution, anyone can contribute datasets and model upgrades.
Permissionless interaction, ultimately accessing any application via SDK.
The protocol integrates the latest Web3 technology stack. Specifically:
Users can use **@privy_io** for social login.
Agents act as NFTs, each having their own wallet and using the ERC-6551 standard.
Scaling and distribution of contracts and assets on **@base**.
Of course, this team is outstanding.
Co-founders from BCG and Imperial College, with long-term involvement in the crypto space.
The AI team consists of PhDs from prestigious universities such as MIT, Harvard, and Cambridge.
More importantly, this team has persevered through the bear market. Since transitioning from a gaming guild in December 2021, they experimented with a venture studio model in 2022, unexpectedly accumulating AI talent and infrastructure, ultimately fully transitioning to consumer AI combined with crypto in December 2023 and underwent rebranding.
Ultimately, the secret to Virtuals Protocol's success is unreplicable – a three-year test of faith.
Since the token generation event (TGE) in December 2021, the team, community, and investors have had to hold or sell during the bear market.
And in December 2023, the remaining weak hands were cleared through a buyback program to replace the rebranding from PathDAO to Virtuals Protocol.
Since the rebranding in December 2023, it has been nearly a full year with little price speculation, inviting concessions in timing.
At @LongHashVC, we got to know **@ethermage** and @everythingempt0 since March 2022. We only reached an investment agreement after the rebranding in March 2023. Since then, our belief in the team has only grown, and the team continues to steadily move towards the goal of millions of users co-owning agents.
How high can we fly?
From a market share perspective, according to **@coingecko** data:
The market capitalization of the AI agent market, including $VIRTUAL itself, is currently $9.3 billion.
The market capitalization of the decentralized finance (DeFi) market is $135 billion, while the overall market cap for decentralized identity (DePIN) is $45 billion, the NFT token market cap is $42 billion, and the gaming market cap is $32 billion.
We believe that the market for AI agents will be competitive with these fields and may even surpass them. As the overall market capitalization of crypto grows, strong vertical domains, especially category leaders like Virtuals Protocol, will see greater room for development.
Virtuals Protocol’s recognition in the AI vertical field has risen from the top 20 in the past 12 months to the top 3 in the past month.
With the continuous development of artificial intelligence, agents will continue to adopt the latest models. Since the public release of ChatGPT in November 2022, AI has seen exponential growth from every angle. Sometimes, we are amazed, and sometimes we are shocked.
