Virtuals Protocol Depth Research: Rapid Creation of on-chain AI Agents

1. Project Overview

Virtuals Protocol is an AI agent generation platform based on blockchain technology, established in 2021. The project aims to enable anyone to create virtual characters that can interact with the environment like humans. Its core vision is to achieve decentralized co-ownership of AI agents through blockchain technology, promoting the widespread application of AI in fields such as gaming, entertainment, and the metaverse.

The AI agents of Virtuals Protocol possess multimodal interaction capabilities, including text, voice, and 3D animation, and can seamlessly operate across multiple platforms such as Roblox, TikTok, and Telegram games.

II. Development History

2021: The predecessor of the project, PathDAO, was established, focusing on gaming guilds and GameFi investments.

2023: With AI technology gaining global popularity, PathDAO officially transformed into Virtuals Protocol, focusing on the integration of AI and blockchain, and deploying smart contracts on the Base chain.

2024: Launched the first AI agent Luna, gaining over 500,000 followers on TikTok. Currently, more than 1,000 AI agents have been created on the platform.

End of 2024: Listed on multiple well-known exchanges, the token $VIRTUAL's market value skyrocketed from tens of millions of dollars to over $3 billion within just over two months.

3. Core Team

The team of Virtuals Protocol consists of a group of young individuals with experience in consulting, blockchain, AI, and gaming. Key members include:

• Jansen Teng: Co-founder and CEO, graduated from Imperial College London, formerly worked at Boston Consulting Group.
• Wee Kee: Co-founder, Bachelor from Imperial College London, Master from London Business School, previously worked at BCG Consulting.

Other team members mainly come from Southeast Asia, with educational backgrounds from prestigious universities such as Cambridge University and Imperial College, and have work experience in well-known companies like Accenture, Grab, and Shopee.

4. Business Model

Virtuals Protocol adopts a decentralized operating model, using blockchain as the underlying infrastructure. Users can create AI agents through the platform's user-friendly interface, and these agents possess unique attributes and functionalities.

Business models include:

1. Charge users a fee for creating and managing AI agents, with fees set based on the complexity of the agents and resource consumption.
2. Encourage developers to create derivative applications based on the platform and collaborate through revenue sharing and other methods.

Currently, there are about 20 different types of derivative applications being developed or in trial operation on the platform.

5. Ecosystem

The ecosystem of Virtuals Protocol consists of three layers:

1. Protocol layer: Provides AI models and algorithms to support developers in creating and deploying AI agents.
2. DApp Layer: Allows decentralized applications to integrate AI agent functions, such as NPCs in games and virtual influencers in social media.
3. Contributor Network: Data contributors, validators, and developers earn $VIRTUAL rewards by contributing data and models.

6. Token Economics

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

• 60%: Public circulation
• 35%: Ecosystem Treasury
• 5%: Liquidity Pool

The main uses of tokens include:

• Underlying Asset: Used to create new AI agents and liquidity pools
• Payment Tool: Users pay for AI agent services via $VIRTUAL
• Governance: Token holders can participate in protocol governance and resource allocation decisions.

7. Industry Outlook

The AI agent industry is currently in a phase of rapid development, with the global market size expanding at an annual growth rate of 40%. It is expected that within the next 5 years, the market size will grow from the current $10 billion to $30 billion.

8. Competitor Analysis

1. AgentX: A project that laid out AI agents earlier, with over 100,000 users and collaborations with several large enterprises. However, it adopts a centralized architecture, which has limitations in data privacy protection and user ownership.

2. Altered State Machine ($ASTO): A platform for creating and training AI-driven NFTs. There is a gap in decentralized governance and cross-platform integration compared to Virtuals Protocol. The circulating market cap and fully diluted valuation of $ASTO are only about 1%-3% of $VIRTUAL.

3. Olas Network ($OLAS): A framework designed to bridge the gap between AI and blockchain. The community size and influence are relatively small. The circulating market cap and fully diluted valuation of $OLAS are around 3%-24% of $VIRTUAL.

9. Development Plan

Short term: Optimize user experience, lower the threshold for creating AI agents, with the goal of increasing the number of users by 50% to 15,000 within 6 months.

Mid-term: Expand international markets, increase promotion efforts in Europe, America and the Asia-Pacific region, and strive to launch on more mainstream trading platforms. Plan to cover at least 10 major countries and regions by the end of 2025.

Long-term: Committed to becoming a global leader in the integration of AI and blockchain, building a digital world that encompasses various AI agent applications.

10. Summary

Virtuals Protocol demonstrates strong potential in the integration of AI agents and blockchain. It has a diverse professional team, a solid technical foundation, a feasible business model, and a clear development plan. The $VIRTUAL token has multiple uses, with a well-designed economic model that has long-term appreciation potential.

Considering the industry's high growth expectations, the continuous improvement of the ecosystem, and market competitive advantages, $VIRTUAL still has some room for valuation increase. However, given the significant rise in the token's market value in the short term, it is advised that investors exercise caution when buying.

In the future, with the innovation of AI technology and the expansion of blockchain applications, Virtuals Protocol is expected to stand out in industry transformation, becoming a key force in driving development and providing global users with a richer, more convenient, and intelligent digital life experience.