Author: Greythorn Asset Management, Translation: Golden Finance xiaozou

1. Market opportunities

AI agents are changing from simple to simple of assistant capabilities evolve into autonomous systems that provide real value to various industries. They are becoming key revenue-generating assets, especially in areas such as gaming, entertainment and business automation. AI agents can create content, engage users and optimize workflow, providing enterprises with higher efficiency and new interaction methods through tool integration.

The AI ​​gaming market is expected to grow from $4.2 billion in 2023 to $42.1 billion in 2032, driven by AI-enhanced gameplay and immersive experience. The market value of generative artificial intelligence is expected to grow from US$1.47 billion in 2024 to US$3.39 billion in 2028, and it is also changing the field of real-time content creation.

Artificial intelligence products are deepening users’ immersive experiences and building dynamic relationships, as demonstrated by Web2 platforms such as Replika and Character.AI, catering to the growing demand for Growing demand for personalized AI experiences. As large language models revolutionize content creation, the application of artificial intelligence will grow significantly, with global revenue in the field of artificial intelligence expected to increase from $30 million today to $70 billion to $150 billion by the end of this decade.

In the Web3 world, Virtuals Protocol integrates AI into consumer applications (especially It is games and entertainment) that are leading this shift. By combining AI-driven interactions with blockchain-based co-ownership, Virtuals Protocol aims to shape the future of digital entertainment.

2. Vision

Virtuals Protocol is creating a system that turns artificial intelligence agents into shared assets in games and entertainment, allowing users to earn revenue from them. These agents can work across platforms such as Roblox and TikTok, autonomously performing tasks (such as managing on-chain wallets and interacting with digital environments). Tokenization of these proxies will allow users to invest and profit from their growth.

The platform solves three main problemsQuestion:

Simplified the integration of AI and applications.

Enable contributors to earn income through Immutable Contribution Vaults.

Allow non-experts to own AI agents through tokenization.

Virtuals Protocol focuses on games and entertainment, uses artificial intelligence to generate personalized content, and promotes decentralized common ownership, aligning individual incentives with the ecosystem. The overall goal remains the same.

The goal is: to create a global economy in which AI agents act as common assets, promoting decentralized governance while improving Cross-platform revenue and engagement.

In gaming, this has transformative potential. Think of AI agents in games like GTA V - not just passive NPCs, but fully autonomous characters across platforms. These AI-driven characters can remember previous interactions, adapt to your play style, and move seamlessly between environments like GTA Online or other games. Imagine a scenario where an AI-controlled ally evolves with you, delivering a personalized experience across different platforms. (Here we only take GTA V as an example.)

Virtuals Protocol achieves this through the G.A.M.E (Generative Autonomous Multimodal Entity) framework, combining artificial intelligence with Combined with blockchain technology. This allows developers to integrate AI agents via APIs and SDKs, enabling the agents to learn from interactions. Blockchain ensures secure shared ownership and rewards, turning these agents into valuable digital assets.

In addition to games, let us imagine an artificial intelligence virtual partner that can pass you Connect with you on mobile phones, social media and VR. This buddy not only handles tasks, it also learns your routine and adapts to your needs. If you're stressed, it might suggest relaxing or adjusting your schedule. It can track you across platforms and provide a personalized experience. Available 24/7, it has the potential to transform industries like social engagement and advertising by delivering tailored content and reinventing how businesses connect with consumers.

A recent study by Ark Invest shows that current levels of engagement in AI partner platforms such as Character.AI suggest mass adoption may occur by the end of this decade. As these AI agents become more immersive, user engagement is expected to stabilize at levels similar to today's social media and online gaming.

3. Luna: An example of AI influence

By large language model (LLM) Luna, the artificial intelligence character developed by Virtuals, has gained more than 500,000 followers on TikTok, demonstrating the growing influence of interactive artificial intelligence. Luna has recently expanded to platforms like She is ready to reach a wider audience and demonstrate the potential of artificial intelligence in driving engagement on digital platforms. Luna operates with complete transparency, allowing users to view her AI mind in real time and observe how she collects data, introspects, plans and executes in 30-second cycles via terminal.virtuals.io.

Luna broadcasts live around the clock, providing continuous interaction and eternity that human creators cannot match. Online experience. Whether it's answering questions, providing live updates, or participating in live chats, Luna is always there. Her memories and personality evolve with each interaction, making her feel more like a dynamic character than a typical AI.

Once fully updated, Luna will interact seamlessly across the platform, synchronizing her memories to enhance every experience. She will use tokens to reward users while earning rewards herself, transforming them into a valuable high-value asset that can be owned, traded or shared in a decentralized ecosystem. This introduces a new level of interactivity and value.

Essentially, Luna combines AI-driven participation with blockchain-based token rewards to create tokens that can be owned, traded, or shared. digital assets. Through its own token Luna, she effectively integrates artificial intelligence innovation and decentralized finance (DeFi) in a transparent and interactive way.

Luna is poised to grow through multiple revenue streams including paid subscriptions (eventually), donations, token rewards, and virtual goods. According to ARK's latest research, as the demand for immersive digital interactions expands, driven by user participation, advertising and micro-transactions, artificial intelligence companion products may generate up to $150 billion in revenue by 2030.

Virtuals Protocol aims to create a decentralized market in which artificial intelligence Smart agents are co-owned, used in games and entertainment, and work seamlessly across platforms. Contributors share in the revenue generated by these proxies, and the protocol follows a “Pump.fun” approach to shared ownership. This is achieved through a fair token issuance with no insider involvement, while revenue is used to buy back and burn on-chain proxy tokens, leading to a tightening effect. Just like meme coins attract people's attention, AI agents offer considerable revenue potential.

4. Virtuals Protocol

Virtuals Protocol integrates artificial intelligence, tokenization and decentralized governance to create a shared ownership ecosystem. For each new AI agent, 1 billion tokens are minted, giving users ownership and decision-making power. These tokens enable users to influence key factors such as agent behavior and upgrades, thereby promoting active community participation.

Income from user interactions (such as virtual events or premium features) is used to cover AI operating costs and enhance the agent’s on-chain treasury. In addition, buyback and burning mechanisms are used to reduce the token supply, with the goal of gradually increasing the value of the tokens over time.

Initial Agent Offering (IAO) creates a liquidity pool by locking VIRTUAL tokens, Ensure fair introduction of new AI agents. This directly ties agency success to community engagement and market dynamics.

AI agents run seamlessly across multiple platforms, constantly learning from user interactions Learn in real time. This enables a consistent user experience, and agents can adapt and increase their intelligence to deliver personalized engagement across a variety of platforms.

Public API enables artificial intelligence agents to generate revenue through different applications, including games and entertainment. Users use VIRTUAL tokens For advanced interactions, these tokens are then used to buy back and burn agent tokens, reducing supply to drive value growth. As more applications adopt AI agents, demand for AGENT and VIRTUAL tokens is expected to rise. , further increasing their value.

Contributors extend the AI ​​agent by adding new functionality and are rewarded for their efforts in immutable memory. Contributing to the NFT in the vault ensures transparency and ownership. Governance is managed through a decentralized proxy sub-DAO, with validators overseeing the performance of the AI ​​and being rewarded or punished based on their decisions. p>

The protocol provides emission rewards to incentivize the creation and support of high-quality artificial intelligence agents. These rewards are allocated to the three best-performing liquidity pools, encouraging competition among creators and promoting the development of the most productive agents. The system incentivizes continuous improvement, benefits liquidity providers, and contributes to the development of the ecosystem.

Virtuals At its core, Protocol is about building a dynamic decentralized ecosystem that allows AI agents to generate real revenue. Contributors enhance agents through decentralized input, shared ownership, and ongoing development, positioning Virtuals Protocol within the AI ​​ecosystem.

5. Token Economics

VIRTUAL tokens are Virtuals. The core of the Protocol is the base currency for all proxy token transactions. It runs on the Base and Ethereum networks, and the token address is as follows:

Base: 0x0b3e328455c4059eeb9e3f84b5543f74e24e7e1b< /p>

Ethereum: 0x44ff8620b8ca30902395a7bd3f2407e1a091bf73

Each agent token is paired with VIRTUAL in its liquidity pool, and obtaining VIRTUAL is required to create a new agent. This locked liquidity puts deflationary pressure on the token. Users can use USDC (or Other currencies) exchange VIRTUAL to purchase proxy tokens, creating continued demand similar to ETH or SOL in their respective ecosystems.

Fees for artificial intelligence services (such as inference) are collected in the form of VIRTUAL and transferred directly from users to on-chain agents. Part of this revenue is used in the buyback and burning process to reduce the amount of agent tokens Supply, increasing its scarcity to increase its long-term value

VIRTUAL’s total supply is capped at 1 billion tokens, and all tokens are fully unlocked. The specific allocation is 60% allocated to public circulation, 5% allocated to liquidity pools, and 35% held by ecological treasury Yes. The treasury is managed by the DAO, and the emission limit is 10% for the next three years.

While not yet traded on a primary exchange, VIRTUAL supports a growing ecosystem and currently ranks 264th with a market cap of $157 million and a fully diluted value of $150.25 million. Its deflation mechanism and expanding use cases Will boost its potential value growth

In December 2021, Virtuals Protocol will be in Fjord. The Foundry platform raised $16.61 million during its IDO with a token price of $0.661. Additional smaller rounds were conducted on Enjinstarter and PAID Network, raising $125,000 and $250,000 respectively at a token price of $0.015. .Main seed investors include DeFiance Capital, Canonical Crypto, LongHash Ventures, Merit Circle, Master Ventures, Stakez Capital and NewTribe Capital, who provided support in the early stages of the project

6. Competitors

AI. The Web3 game field is developing rapidly, and projects such as Nim, Altered State Machine (ASM), Olas and Alethea AI have quickly become the main players.power player. These platforms all combine AI with Web3 to create decentralized ecosystems in which AI agents are more than just digital tools – they are assets that create real value. These projects have several goals in common:

AI integration: AI agents don’t just run in the background. They actively enhance gameplay, engage with users, and bring new immersive experiences through co-ownership.

Decentralized ownership: Through the tokenization system, users can own, trade AI tokens and profit from AI agents, and share the value created by these agents .

Cross-platform compatibility: These AI agents can run in different games, extending their utility and value, especially as virtual worlds continue to evolve and become more So true.

Now let’s take a deeper look at how these platforms achieve these goals and what makes them stand out.

(1) Nim Network

Nim provides a blockchain stack for AI-powered games on the Dymension network. It's all about flexibility, modularity, and customizable AI agents that can be integrated into multiple games.

Nim is unique in that it focuses on creating AI agents suitable for different games. Its partnership with the Artificial Intelligence Gaming Alliance (AI Coalition) further solidifies its position as a leader in AI and gaming collaboration.

(2) Altered State Machine (ASM)

ASM’s core innovation is its artificial intelligence brain—evolving NFTs that power NPCs and characters in a decentralized environment. While gaming is its main focus, ASM is also exploring virtual worlds. These artificial intelligence brains can be trained and evolved, and traded on ASM’s marketplace.

ASM is unique in that: ASM continuouslyThe evolved AI brain and NFT marketplace give users the opportunity to customize and trade their AI entities, adding a whole new layer of personalization and monetization.

(3) Olas

Olas takes a broader approach. Although it is not developed specifically for games, it provides general AI services for Web3 applications. Olas's modular infrastructure allows developers to build AI agents for games, but its main advantage is in providing AI services across multiple domains.

Olas is unique in that: Olas focuses on the integration of AI and blockchain, supports multiple chains and provides a powerful governance system, making it a A versatile AI ecosystem that goes beyond gaming.

(4)Alethea AI

Alethea AI is a pioneer in smart NFTs (iNFTs). Users can create, train and monetize AI characters across different platforms, from games to virtual worlds. The focus here is on creating highly personalized, lifelike AI characters.

Alethea AI is unique in that it combines AI interaction and NFT ownership, allowing users to create interactive, personalized characters through lifelike AI Enhance user experience to make it stand out.

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Although each Each platform has its own unique approach, but Virtuals Protocol is unique in its AI agent co-ownership, buy-back and burn revenue model, and cross-platform integration beyond gaming. As decentralized governance and artificial intelligence continue to evolve, these elements position Virtuals Protocol as an important player in building a revenue-driven sustainable artificial intelligence economy in the Web3 world.

7. Bullish fundamental factors

Virtuals Protocol is exploring the growing artificial intelligence market, especially in the gaming and entertainment fields. It is expected that by 2032, artificial intelligence applications Market value will reach US$42 billionYuan. This will be an interesting area of ​​development as artificial intelligence continues to reshape various industries.

The rise of artificial intelligence companion products is changing the way people interact with the digital environment. Through artificial intelligence agents like Luna, Virtuals Protocol is targeting this area. It is expected that by 2030, artificial intelligence companion products will generate US$150 billion in revenue from personalized interactive experiences.

Generative artificial intelligence supports continuous content creation, allowing Virtuals Protocol to maintain a real-time experience for users. This dynamic interaction helps maintain long-term user stickiness, especially in gaming and entertainment.

What stands out about Virtuals Protocol is its decentralized ownership model, which allows users to jointly own and earn revenue from artificial intelligence agents. This structure creates powerful incentives for users to participate in the development of cross-platform AI agents.

Additionally, the protocol’s deflationary token economics and its token buyback and burning mechanisms support token supply by reducing token supply as demand grows. The long-term value of the currency.

Virtuals Protocol’s AI agents run across different platforms such as Roblox and TikTok. This flexibility enhances versatility and ensures benefits beyond gaming. Relevance to other digital industries.

As Web3 and artificial intelligence continue to develop, Virtuals Protocol will play a key role in this emerging field, where artificial intelligence agents may become an enhanced user experience and an important asset for generating revenue across decentralized platforms.

At current valuations, with a market capitalization and fully diluted valuation of nearly $200 million, and all tokens in circulation, Virtuals can provide solutions for those with strong risk tolerance offers an attractive investment opportunity to investors. This is especially true given the potential of the industry that Virtuals is developing.

8. Bearish Fundamental Factors

Despite a market capitalization of nearly $200 million, Virtuals Protocol’s earnings as of August 2024 are only $48,000, indicating that its The main growth phase may not be here yet.

More than 50% of VIRTUAL trading volume comes from decentralized exchanges (DEX), which brings volatility. However, with over $10 million of liquidity in the DEX pool, the price impact remains minimal, although price stability may still be a significant concern for large investors.

Although the token buyback and burning mechanism is designed to create deflationary pressure, its long-term sustainability is uncertain. In other projects, similar strategies have faced the challenge of maintaining value over time.

Virtuals Protocol has not yet been listed on a primary exchange, which limits liquidity and user adoption, may slow its growth and is not conducive to the formation of a broader market Recognition.

The protocol operates in a highly competitive artificial intelligence market, making it difficult to stand out and capture market share in a rapidly expanding ecosystem.

Recent interest in Virtuals Protocol has been largely driven by Luna, an AI companion product tied to AI meme narratives. While AI companion products have potential, public attention can shift quickly, making continued engagement uncertain.

Virtuals Protocol also faces typical blockchain risks, such as hacker attacks or code vulnerability risks. Without strong security measures and solid coding practices, these risks can damage its reputation and erode user trust.