Virtuals Protocol Depth Research: A New Paradigm for Creating on-chain AI Agents

1. Project Overview

Virtuals Protocol was established in 2021 as a blockchain technology-based AI agent generation platform. The project aims to enable anyone to create virtual characters that can interact with their environment, fundamentally changing the way virtual interactions occur through the creation of hyper-personalized and immersive experiences.

In 2023, the project officially launched with the core vision of achieving decentralized co-ownership of AI agents through blockchain technology, promoting the widespread application of AI in areas such as gaming, entertainment, and the metaverse. The AI agents of Virtuals Protocol possess multimodal interaction capabilities (text, voice, 3D animation) and can operate seamlessly across multiple platforms, such as Roblox, TikTok, and Telegram games.

2. Development History

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

2021: The project predecessor was established, focusing on gaming guilds and GameFi investments, accumulating rich resources and experience.

2023: Officially transformed into Virtuals Protocol, focusing on the integration of AI and blockchain, and deploying smart contracts on the Base chain.

2024: The first AI agent Luna was launched, gaining over 500,000 followers on social media platforms, showcasing the commercial potential of AI agents. Currently, over 1,000 AI agents have been created on the platform.

End of 2024: Listed on multiple exchanges, the token $VIRTUAL's market cap soared from tens of millions of dollars to over $3 billion in just over two months, marking the project's official entry into the mainstream cryptocurrency market.

3. Core Team

The team of Virtuals Protocol consists of young individuals with experience in consulting, blockchain, AI, and gaming, including:

• Jansen Teng: Co-founder and CEO, graduated from Imperial College London, previously worked at a renowned consulting firm.
• Wee Kee: Co-founder, holds a Bachelor's degree from Imperial College London and a Master's degree from London Business School.

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

4. Business Model

operating model

Virtuals Protocol adopts a decentralized operational model, using blockchain as the underlying infrastructure. Users can create AI agents through a simple operational interface, and these agents have unique attributes and functionalities.

The platform charges users for creating and managing AI agents, with the fee standards determined by the complexity of the agents and the amount of resources consumed. At the same time, the platform encourages developers to create derivative applications based on the Virtuals Protocol and collaborate through revenue sharing and other methods. Currently, there are about 20 different types of derivative applications under development or in trial operation on the platform.

ecological construction

The ecosystem of Virtuals Protocol includes the following layers:

• Protocol Layer: Provides AI models and algorithms to support developers in creating and deploying AI agents.
• DApp Layer: Allows decentralized applications to integrate AI agent functionalities.
• Contributor Network: Data contributors, validators, and developers earn rewards by contributing data and models.

Tokenomics

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

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

The main uses of the token include creating new AI agents, paying service fees, and participating in protocol governance. The design of the token economic model aims to enhance the scarcity and value of $VIRTUAL through deflationary mechanisms and community incentives.

5. Industry Outlook

The AI agent industry is currently in a phase of rapid development, with the global market size continuously expanding at an annual growth rate of 40%. In the next 5 years, the market size is expected to grow from the current $10 billion to $30 billion, and Virtuals Protocol is positioned in this highly potential growth market.

6. Competitor Analysis

1. A well-known AI agent project: has over 100,000 users, collaborates with several large enterprises, but adopts a centralized architecture, which has limitations in data privacy protection and user ownership.

2. An AI-driven NFT platform: Focused on creating and training AI agents, but lacking in decentralized governance and cross-platform integration compared to Virtuals Protocol. Its token market cap is only about 1%-3% of Virtuals Protocol.

3. A unified network of certain off-chain services: aimed at bridging the gap between artificial intelligence and blockchain, but with a relatively small community size and influence. Its token market cap is about 3%-24% of Virtuals Protocol.

7. Development Plan

Short-term: Optimize user experience, lower the threshold for creating AI agents, increase the number of users by 50%, and enrich ecological application scenarios.

Mid-term: Expand international markets, enhance project visibility, and strive to launch on more mainstream trading platforms. Plan to cover more than 10 major countries and regions by the end of 2025.

Long-term: Committed to becoming a global leading AI and blockchain integrated ecological platform, building a vast digital world that encompasses various AI agent applications.

8. Summary

Virtuals Protocol demonstrates strong potential in the integration of AI agents and blockchain, with a diverse professional team, solid technical foundation, and a viable business model. Its token $VIRTUAL has multiple uses, a well-designed economic model, and significant long-term appreciation potential.

Considering the high growth expectations in the industry, the continuous improvement of the ecosystem, and market competitive advantages, $VIRTUAL still has room for valuation growth in the long term. However, given the significant rise in the token's market value in the short term, investors are advised to proceed with caution.

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 leading development and providing global users with a smarter digital life experience.