The AI Agent market continues to heat up, with Virtual and AI16Z becoming the industry leaders.

With the rapid rise of AI Agent technology in the fourth quarter of 2024, the popularity in this field continues into early 2025. As of early January 2025, the total market value of the AI Agent market has exceeded $16.9 billion, an increase of approximately 22.7% compared to the previous week.

In this rapidly evolving market, two platforms have emerged as industry leaders. The main AI Agent issuance platform on the Base chain, Virtuals Protocol, has a platform token VIRTUAL with a market capitalization exceeding $5 billion, ranking among the top 40 cryptocurrencies by market value. Meanwhile, the AI management venture capital firm ai16z within the Solana ecosystem has also surpassed a market value of $2.5 billion.

These two protocols have become important indicators for observing the development trends of the AI Agent industry. They each have their own characteristics in terms of development history, core products, and future prospects, making them worthy of in-depth discussion.

Development History

Virtuals Protocol: From Gaming Guilds to AI Agent Issuance Platform

The predecessor of Virtuals Protocol was the gaming guild PathDAO, established in 2021. In the face of the sluggish gaming guild market in 2022-2023, the team decisively transformed into a Venture Studio, exploring multiple project directions. Although they did not achieve success in the early stages, the team recognized the immense potential of AI technology.

In 2023, after receiving 90% member support, the team decided to fully transition to the AI field. In 2024, they explored AI Gaming on the Base chain and launched their own platform. Although the initial attempts did not gain market recognition, the team achieved several breakthroughs in the AI field, including the world's first Roblox AI RPG and innovative projects like AI games without game engines.

The team also launched a virtual host, Luna, on short video platforms, attracting about 5,000 fans daily with stable income. Ultimately, the success of the GOAT project provided excellent development opportunities for the Virtuals Protocol, boosting the popularity of the entire AI Agent sector.

AI16Z: From Web 2 AI to Web 3 AI

The founder of AI16Z, Shaw, was originally a game developer who later shifted to the field of AI, focusing on the development of AI Agent technology. Before founding AI16Z, he participated in multiple AI-related projects and accumulated rich experience in Web3 and 3D spatial networks.

The birth of AI16Z originated from a project called "AI version degen Spartan." This project "revived" a legendary figure in the cryptocurrency world through AI technology, whose performance subverted people's stereotypical impression of AI lacking personality, sparking widespread attention and discussion.

During conversations with other founders in the industry, Shaw came up with the idea of creating AI investors. His vision is to build a fully autonomous, trustworthy, and community-serving investment system. AI16Z set a fundraising goal of 4,420 SOL at launch, and the project sold out in just 20 minutes, demonstrating strong market interest in this innovative model.

Core Product

Virtuals Protocol: AI16Z

Virtuals Protocol serves as the issuance platform for AI Agents, with core functions similar to Pump Fun, but the trading pairs consist of the platform token $VIRTUAL. The more AI Agents created on the platform, the more it can directly empower $VIRTUAL, and at least 1% of $VIRTUAL will be consumed when buying and selling AI Agent tokens.

The platform has established a common standard for its AI Agent tokens, emphasizing precision and careful planning. For example, using the AI Agent framework GAME, it is capable of autonomous operation, processing inputs, and generating responses, while also learning from past interactions.

In terms of token economics, Virtuals Protocol empowers VIRTUAL through its Agent project. The greater the platform usage, the better the value capture of VIRTUAL. In terms of products, Virtuals Protocol provides relevant development tools for its AI Agent to ensure the integrity of the overall ecosystem. Its operating model is quite similar to Apple's iOS system.

AI16Z & ELIZA: The Android of the AI World

AI16Z is a fund managed autonomously by AI, using a hybrid strategy. In addition to the AI operating independently, it also includes a community interaction mechanism that can accept trading suggestions. If community members can help the AI Agent make a profit, they can gain more trust, similar to a decentralized mutual fund.

ElizaOS is an open-source AI Agent framework that allows developers to freely build, experiment with, and launch AI Agents, with a stronger emphasis on decentralization, collaboration, and innovation.

The core features of ELIZA include:

1. Character Profile System: Define a unique digital personality for each AI Agent.
2. Action System: Treat each action as an independent event, divided into two stages: intention decision and execution.
3. Providers and evaluators: Enrich the AI Agent's conversational ability by providing instant context and analyzing interactive details.

ELIZA also has autonomous trading capabilities, ensuring operational security through a trust engine and a trust market. Its external system promotes the growth of the developer ecosystem, creating a virtuous cycle.

However, Eliza is not strongly bound to the ecological protocol in terms of token economics; anyone can develop using the Eliza framework, and the power is decentralized. The value of projects developed using this framework does not directly return to the AI16Z/Eliza token itself, which is somewhat similar to the operating model of the Android system.

Concept Project Overview

| VIRTUALS Ecosystem | Type | Market Cap | AI16Z/Eliza Ecosystem | Type | Market Cap | |-------------|-------|------|----------------|------------|------| | VIRTUAL | Protocol Token | 4.34B | AI16Z | Fund | 2.29B | | AIXBT | Analyst | 594M | ELIZA | Framework | 120M | | GAME | Framework | 253M | DegenAI | Simulated KOL | 80M | | VADER | Fund | 113M | SPORE | Self-reproduction | 36M | | FREYA | Game | 21M | SNAI | Cloud Server | 83M | | TAOCAT | Self-Evolution | 50M | VAPOR | Launchpad | 91M |

Catalysts Driving Coin Prices

Virtuals Protocol

The business model of Virtuals Protocol is clear, with products closely linked to token prices. The continuity of estimated token price increases can focus on the trading volume of ecological tokens and the number of issued tokens. Data shows that the number of tokens issued by Virtuals Protocol will peak on November 30, 2024, and then decline somewhat, but will gradually rise again starting from December 27, 2024, with the daily platform issuance of tokens being in the range of 100-200.

It is worth noting that the Virtuals Protocol does not pursue the increase of the number of tokens, but hopes to incubate high-quality projects. Co-founder Wee Kee stated: "We don't want to become Pump.fun. Our goal is to find better third-party AI teams to use our platform. We believe that having one good project per week is enough, and this is our differentiated positioning in the business model."

The key factors driving the rise of Virtual tokens have become clearer: whether it can continue to incubate excellent AI Agent projects. According to the data, there are already 138 tokens in the Virtuals Protocol ecosystem, of which 8 tokens have a market capitalization exceeding 100 million USD. Overall, its market share accounts for 33.3% of the entire AI Agent market, making it the largest AI Agent ecosystem currently.

Whether more tokens can reach a market value of 100 million USD in the future, and whether the overall ecosystem can maintain its market share, will be important indicators to observe the development of the Virtuals Protocol.

AI16Z/Eliza

The overall ecosystem of AI16Z has weak connectivity, and projects developed using the Eliza architecture cannot directly feedback value to AI16Z/Eliza. This is also one of the reasons why the current market value of AI16Z is only half of that of Virtual.

Compared to Virtuals Protocol's orderly absorption of projects, AI16Z adopts a more open strategy. Emerging AI Agent projects can use the ElizaOS architecture as a promotional point, and if they can obtain a retweet or reply from founder Shaw, it will further enhance the project's credibility. AI16Z also gains brand trust as more and more projects utilize ElizaOS, and its strategic model resembles "surrounding the city from the countryside."

The future market value of AI16Z depends on whether its cooperation with other protocols is deep, rapid, and extensive enough. Recently, AI16Z has partnered with other well-known framework protocols (such as ARC and FXN), and the industry looks forward to seeing more examples of strong collaborations.