Virtuals Protocol Research Report: Rapid Creation of On-Chain AI Agents

1. Project Overview

1. Basic Information

Virtuals Protocol was established in 2021 as a blockchain-based AI agent generation platform. The project aims to allow anyone to create virtual characters that can interact with their environment, transforming the way virtual interactions occur through personalized and immersive experiences. In 2023, the project officially launched, committed to achieving decentralized co-ownership of AI agents through blockchain technology, promoting the application of AI in areas such as gaming, entertainment, and the metaverse. Virtuals Protocol's AI agents possess multimodal interaction capabilities, seamlessly operating across multiple platforms such as Roblox, TikTok, and Telegram games.

2. Development History

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

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

2024: Launch of the first AI agent Luna, gaining over 500,000 followers on TikTok. Currently, the platform has created over 1,000 AI Agents.

End of 2024: Listed on multiple exchanges, the token $VIRTUAL's market value increased from tens of millions of dollars to over $3 billion within a span of two months.

3. Core Team

The team is composed of young professionals from consulting, blockchain, AI, and gaming fields, with core members including:

• Jansen Teng: Co-founder and CEO, graduated from Imperial College London, former consultant at Boston Consulting Group.
• Wee Kee: Co-founder, Bachelor's degree from Imperial College London, Master's degree from London Business School, former BCG consultant.

Other members are mostly from Southeast Asia, with backgrounds from prestigious institutions such as the University of Cambridge and Imperial College, and have work experience in well-known companies.

2. Business Model

1. Operating Model

Virtuals Protocol operates in a decentralized manner, based on blockchain infrastructure, ensuring the transparency and immutability of interactions through smart contracts. Users can create AI agents through a simple interface, and the platform charges fees based on the complexity of the agents. For example, a basic functionality agent may require 10 VIRTUAL, while advanced features may require 100 VIRTUAL. The platform encourages developers to create derivative applications and collaborate through revenue sharing and other methods. Currently, there are about 20 different types of derivative applications under development or in trial runs.

2. Ecological Construction

The Virtuals Protocol ecosystem includes three tiers:

• Protocol layer: Provides AI models and algorithms to support the creation and deployment of AI agents.
• DApp layer: Allows decentralized applications to integrate AI agent functionalities, such as game NPCs and virtual influencers.
• Contributor Network: Data contributors, validators, and developers earn $VIRTUAL rewards through their contributions.

3. Token Economics

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

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

The use of tokens includes creating AI agents, paying service fees, and participating in governance. The economic model design enhances token scarcity and value through deflationary mechanisms and community incentives.

3. Project Prospects

1. Industry Analysis

The AI Agent industry is rapidly developing, with an average annual growth rate of 40%. It is expected that in the next five years, the market size will increase from $10 billion to $30 billion, and the Virtuals Protocol is in a highly promising blue ocean market.

2. Competitive Analysis

Major competitors include AgentX, Altered State Machine ($ASTO), and Olas Network ($OLAS). In comparison, Virtuals Protocol has advantages in decentralization, cross-platform integration, and market capitalization scale.

3. Development Plan

Short-term: Optimize user experience, lower the barriers to entry, with a goal of 50% user growth within 6 months. Medium term: Expand international markets, enhance visibility, and strive for more trading platforms to go live. Long-term: To become a global leading AI and blockchain integrated ecological platform, achieving deep integration with various fields of the real world.

IV. Conclusion

Virtuals Protocol demonstrates strong potential in the integration of AI Agents and blockchain, backed by a professional team, solid technology, and a unique business model. The $VIRTUAL token has multiple uses and appreciation potential. Considering the industry's growth expectations and project advantages, its long-term development prospects are promising. However, in light of the significant short-term increase in token market value, investors are advised to proceed with caution. As AI technology and blockchain applications continue to evolve, Virtuals Protocol is expected to stand out in industry transformation, providing users with a more intelligent digital living experience.