Virtuals Protocol in-depth research report: Create on-chain AI Agent in three minutes

1. Project Introduction

1. Basic project information

Founded in 2021, Virtuals Protocol is an AI Agent generation platform based on blockchain technology, designed to allow anyone to create an AI agent, a virtual character that can interact and participate in the environment like a human. Virtuals Protocol's vision is to completely change the way virtual interactions occur by creating hyper-personalized and immersive experiences.

The project was officially launched in 2023. The core vision is to achieve decentralized joint ownership of AI agents through blockchain technology and promote the widespread application of AI in fields such as games, entertainment, and the metaverse. Virtuals Protocol's AI agent has multi-modal interaction capabilities (text, voice, 3D animation) and can run seamlessly on multiple platforms, such as Roblox, TikTok and Telegram games.

2. Project development history

The development history of Virtuals Protocol can be divided into the following important stages:

2021: The project’s predecessor, PathDAO, was established, focusing on game guilds and GameFi investments. PathDAO has accumulated rich resources and experience in the GameFi field, laying the foundation for subsequent transformation.

2023: As ChatGPT leads AI technology to take the world by storm, PathDAO officially transforms into Virtuals Protocol, focusing on the combination of AI and blockchain, and deploying smart contracts on the Base chain. This transformation marks the project’s transition from traditional GameFi to an AI-driven blockchain protocol.

2024: Virtuals Protocol launches Luna, the first AI agent, gaining more than 500,000 fans on TikTok, demonstrating the business potential of AI agents. Luna's success not only verified the technical feasibility of the project, but also provided valuable experience for subsequent AI agent development. Currently, more than 1,000 AI Agents have been created on Virtuals Protocol.

End of 2024: Virtuals Protocol is listed on multiple well-known exchanges, and the market value of the token $VIRTUAL soars from tens of millions of US dollars to 3 billion+ US dollars in more than two months, marking the project's official entry into the mainstream cryptocurrency market and its success received widespread attention and recognition.

3. Core team background

The team of Virtuals Protocol is composed of a group of young people with certain experience in the consulting industry, blockchain, AI and gaming fields. Core members include:

Jansen Teng: Co-founder and CEO, graduated from Imperial College in 2018. He participated in the founding of ThinAir Water, DIAM Digital Marketing, Aidaro and other companies, and worked at the Boston Consulting Group (BCG).

Wee Kee: Co-founder, received a bachelor's degree from Imperial College in 2017 and a master's degree from London Business School in 2018. He participated in the founding of Aidaro and also worked at BCG Consulting.

Other members: including Matthew Tang, Josh Wang Khang Hwu, Hardeep Meghera, Armielyn Obinguar, Weixiong Tay, Charan Rao, Joshua Moh, etc. Many of the other team members are from Malaysia and other Southeast Asian regions. Their educational backgrounds include prestigious universities such as Cambridge University and Imperial College London, and they have work experience in well-known companies such as Accenture, Grab, and Shopee. The team’s technical strength and industry resources provide a strong guarantee for the success of the project.

2. Business model

1. Operation mode ****

Virtuals Protocol adopts a decentralized operating model, uses blockchain as the underlying infrastructure, and uses smart contracts to ensure the transparency, fairness and non-tamperability of various interactions in the ecosystem. Users can easily create their own AI agents through the simple operation interface provided by the platform. These AI agents have unique attributes and functions. For example, some agents are good at creating articles, while others are excellent in image design.

In terms of business model, on the one hand, the platform charges users a certain fee to create and manage AI agents. The fee standards are differentiated based on the complexity of the agent and the amount of resources it occupies. For example, creating an agent with basic functions may only cost 10 VIRTUAL, while creating an agent with advanced functions and capable of handling complex tasks requires paying 100 VIRTUAL. On the other hand, the platform encourages developers to develop various derivative applications based on Virtuals Protocol. For high-quality applications, the platform will cooperate with them through revenue sharing and other methods to jointly promote the prosperity and development of the entire ecosystem. At present, there are about 20 different types of derivative applications on the platform being developed or in the trial operation stage.

2. Ecological construction

Virtuals Protocol’s ecosystem includes the following levels:

Ø Protocol layer: Provides AI models and algorithms to support developers in creating and deploying AI agents. The protocol layer is the technical core of Virtuals Protocol and determines the performance and functionality of the AI ​​agent.

Ø DApp layer: Allows decentralized applications (DApps) to integrate AI agent functions, such as NPCs in games and virtual influencers in social media. The DApp layer is the application scenario of Virtuals Protocol, which determines the market potential and user scale of AI agents.

Ø Contributor network: Data contributors, verifiers and developers receive $VIRTUAL rewards by contributing data and models. The contributor network is the community foundation of Virtuals Protocol and determines the sustainability and development momentum of the project.

3. Token Economics

$VIRTUAL is the core token of Virtuals Protocol, with a total supply of 1 billion, distributed as follows:

Ø 60%: Public Distribution

Ø 35%: Ecosystem Treasures

Ø 5%: Liquidity Pool

The main uses of the token include:

Ø Basic assets: used to create new AI agents and liquidity pools

Ø Payment tool: Users pay the AI ​​agent’s service fees through $VIRTUAL

Ø Governance: Token holders can participate in protocol governance and resource allocation decisions

The token economic model is designed to increase the scarcity and value of $VIRTUAL through deflationary mechanisms and community incentives. For example, part of the revenue of the AI ​​agent is used to buy back and destroy tokens, thereby reducing the circulating supply and driving up token prices.

3. Project Prospects

1. Industry analysis

The AI ​​Agent industry is currently in a stage of rapid development. According to a research report by iResearch Consulting, the global AI Agent market has been expanding at an average annual growth rate of 40% in recent years. Behind this is the market's strong demand for intelligent services. Whether enterprises hope to use AI agents to improve office efficiency and optimize business processes, or individual users hope to use AI agents to assist creation and provide personalized life services, etc., all are promoted the rapid development of the industry.

In the future, with the continuous progress of AI technology, especially breakthroughs in key technical fields such as natural language processing and image recognition, the functions of AI Agent will become more powerful and the application scenarios will be further expanded. It is expected that the market size will increase again in the next five years. Tripled from the current US$10 billion to US$30 billion, Virtuals Protocol is in such a blue ocean market with great growth potential.

2. Competitor analysis

( 1 ) AgentX

agent It has a strong influence in the field of advanced AI services.

However, the disadvantage of AgentX is that it adopts a relatively traditional centralized architecture, which has certain limitations in data privacy protection and user ownership of AI agents. This is where the decentralized advantages of Virtuals Protocol stand out. For example, in a user survey related to data privacy, more than 70% of users expressed their preference to choose a data processing method with decentralized guarantees.

( 2 ) Altered State Machine ( $ASTO )

Altered State Machine is a platform for creating and training artificial intelligence agents, powering the creation and training of AI-driven NFTs that interoperate across the metaverse. The ASM protocol enables individuals and organizations to own, train and develop artificial intelligence through revolutionary genome mining and intelligence mining processes. The vision of Altered State Machine is to become the ownership and monetization protocol for AI using NFT technology.

Compared with ASM, Virtuals Protocol has advantages in decentralized governance and cross-platform integration, while ASM shows its uniqueness in the evolutionary NFT of AI brain, but its stability and stability in large-scale applications and complex scenarios Performance needs further verification. The huge gap between the two can also be seen from the token market value: the circulating market value of $ASTO is only US$20.36 million, and the fully diluted valuation (FDV) is US$85.34 million (data as of December 29, 2024). It is only about 1%-3% of the corresponding market value of $VIRTUAL.

( 3 ) Olas Network ( $OLAS )

Olas Network (aka Autonolas) is a framework that bridges the gap between artificial intelligence and blockchain. The project aims to use the token economy to coordinate ecological contributors and capital investors in the form of DAO, making Olas Network a unified network that includes off-chain services such as AI, oracles, and cross-chain communications. Although Olas Network is somewhat active on social media, its community size and influence are relatively small.

Currently, the circulating market value of $OLAS is US$115 million, and the fully diluted valuation (FDV) is US$848 million (data as of December 29, 2024). The two are about 3%-24% of the corresponding market value of $VIRTUAL.

3. Development plan

Virtuals Protocol has a clear development planning path. In the short term, it plans to continue to optimize the user experience of the platform and lower the technical threshold for creating AI agents in the next 6 months. The goal is to increase the number of users of the platform by another 50%. , reaching about 15,000 people, while enriching the application scenarios within the ecosystem and introducing high-quality partners in different fields.

The mid-term goal is to expand the international market, especially in key regions such as Europe, the United States and Asia-Pacific, and increase marketing efforts. Through holding developer conferences, online and offline technical seminars, etc., we will enhance the international visibility of the project and strive to make $VIRTUAL more popular in the world. The mainstream cryptocurrency trading platform has been launched to enhance its liquidity and market value. It is planned to cover business in at least 10 major countries and regions by the end of 2025.

In the long term, we are committed to becoming the world's leading ecological platform for the integration of AI and blockchain, building a huge digital world covering all types of AI agent applications, achieving deep integration with the real world in multiple fields, and driving the development and transformation of the entire industry. .

4. Summary

Through a multi-dimensional in-depth analysis of Virtuals Protocol, we can see that the project has shown strong development potential in the field of integration of AI Agent and blockchain. It has a core team with diverse professional backgrounds, a solid technical foundation, a unique and feasible business model, and a clear development plan.

In terms of token valuation, its token $VIRTUAL has multiple uses, including payment, governance and liquidity provision. The token economic model is reasonably designed and has long-term value-added potential. Taking into account the high growth expectations of the industry in which it operates, the continuous improvement of its own ecology, and its dominant position in market competition, combined with the current valuation level of similar projects and other indicators, $VIRTUAL still has some room for valuation growth in the long term. However, based on the current market conditions and project development trends, especially the huge increase in the token market value in the short term, investors are advised to be cautious when buying.

Looking forward to the future, with the continuous innovation of AI technology and the continuous expansion of blockchain applications, the industry integrating AI Agent and blockchain to which Virtuals Protocol belongs is expected to usher in greater explosive growth, and Virtuals Protocol relies on its first-mover advantage With the accumulation of technology and ecology, it is expected to stand out in this industry transformation and become a key force leading the development of the industry, bringing a richer, more convenient and intelligent digital life experience to global users.