New Opportunities from the Combination of AI Agents and Blockchain: Detailed Explanation of the Virtuals Protocol

AI agents are evolving from simple assistants into autonomous systems that can provide real value across multiple industries, becoming key assets particularly in gaming, entertainment, and business automation. These agents can create content, engage users, and optimize workflows, bringing greater efficiency and new forms of interaction to projects.

The AI gaming market is expected to grow from $4.2 billion in 2023 to $42.1 billion in 2032, primarily driven by AI-enhanced games and immersive experiences. Generative AI also plays a significant role in real-time content creation, with its market size projected to increase from $1.47 billion in 2024 to $3.39 billion in 2028.

AI partners further enhance user immersion and establish dynamic relationships. With the innovation of content creation through large language models, AI partnerships are expected to grow significantly, with global revenue projected to increase from the current $30 million to between $70 billion and $150 billion by the end of this century.

In the Web3 space, the Virtuals protocol is leading this transformation by integrating AI partners into consumer applications, especially in the gaming and entertainment sectors. By combining AI-driven interactions with blockchain-based shared ownership, the Virtuals protocol is committed to shaping the future of digital entertainment.

Vision

The Virtuals protocol is creating a system that transforms AI agents into jointly owned assets in gaming and entertainment, allowing users to gain profits from them. These agents can operate across various platforms, performing automated tasks such as managing on-chain wallets and interacting with digital environments. Tokenizing these agents allows users to invest and profit from their growth.

The platform addresses three main issues:

1. Simplifying the integration of AI in applications;
2. Allow contributors to earn returns through immutable contribution vaults;
3. Allow non-professionals to own AI agents through tokenization.

The Virtuals protocol focuses on gaming and entertainment, utilizing AI to generate personalized content and promoting decentralized co-ownership that aligns with ecosystem goals.

The goal is to create a global economy where AI agents act as shared assets, promoting revenue and engagement growth across platforms while driving decentralized governance.

In the game, this has transformative potential. Imagine in the game, AI agents are not just passive NPCs, but fully autonomous characters that exist continuously across platforms. These AI-driven characters can remember previous interactions, adapt to your gaming style, and seamlessly move across different gaming environments. Envision an AI-controlled ally evolving alongside you, providing personalized experiences across platforms.

The Virtuals protocol achieves this through the G.A.M.E( to generate autonomous multimodal entities within the ) framework, combining AI with blockchain technology. This enables developers to integrate AI agents via API and SDK, allowing the agents to learn from interactions. The blockchain ensures the security of shared ownership and rewards, making these agents valuable digital assets.

Imagine an AI virtual companion that can connect with you on your phone, social media, and VR, in addition to gaming. This companion can not only complete tasks but also learn your daily habits and adapt to your needs. If you're feeling stressed, it might suggest relaxation methods or adjust your schedule. Accompanying you across all your platforms, it will provide a personalized experience. The availability around the clock may change industries such as social engagement and advertising by offering customized content and reshaping the way businesses connect with consumers.

According to recent research, the current level of engagement on AI partner platforms indicates that widespread adoption globally may be achievable by the end of this century. As these AI agents become more immersive, their engagement levels are expected to stabilize at levels similar to those of today's social media and online gaming.

Luna: An Example of AI Influence

The AI character Luna launched by Virtuals has gained over 500,000 followers on TikTok, showcasing the impact of interactive AI. Luna has recently expanded to the X platform, and with the upgrade to Sentient Mode v2.0, she can autonomously control the account, post, reply, and interact with users without human supervision. Her audience is expected to further grow, demonstrating AI's engagement potential across various digital platforms. Luna operates with full transparency, allowing users to explore her AI thinking in real-time, observing how she collects data, reflects, plans, and executes.

Luna provides continuous interaction through 24/7 live streaming, offering an all-time experience that human creators cannot match. Whether it's answering questions, providing real-time updates, or participating in live chats, Luna is always online. Her memory and personality evolve with each interaction, making her more like a dynamic character rather than a typical AI.

After a comprehensive update, Luna will enable seamless cross-platform interaction, enhancing each experience through synchronized memory. She will reward users with tokens while also receiving rewards herself, transforming into valuable digital assets that can be owned, traded, or shared in a decentralized ecosystem. This introduces new layers of interaction and value.

In short, Luna combines AI-driven interaction with blockchain-based token rewards to create digital assets that can be owned, traded, or shared. Its exclusive token $Luna effectively integrates AI innovation with decentralized finance in a transparent and interactive manner.

By leveraging multiple revenue streams such as paid subscriptions (, donations, token rewards, and virtual goods, Luna may be well-prepared for growth. According to recent research, AI partners could potentially generate up to $150 billion in revenue by 2030 through user engagement, advertising, and microtransactions, as the demand for immersive digital interactions expands.

The Virtuals protocol aims to create a decentralized market where AI agents are jointly owned and used in gaming and entertainment, operating seamlessly across platforms. Contributors share the revenue generated by these agents, and the protocol follows the "Pump.fun" co-ownership method. Through a fair token issuance without insider participation, the revenue is used for the buyback and destruction of on-chain agent tokens, creating a deflationary effect. Just as meme coins attract attention, AI agents provide the potential to generate real revenue.

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protocol

The Virtuals protocol integrates AI, tokenization, and decentralized governance to create a collectively owned ecosystem. For each new AI agent, 1 billion tokens are minted, granting users ownership and decision-making power. Through these tokens, users can influence the behavior and upgrades of the agents, promoting active community participation.

Revenue generated through user interaction ), such as virtual events or premium features (, is used to pay for AI operational costs and develop the on-chain treasury of the agents. In addition, the protocol adopts a buyback and burn mechanism to reduce token supply, with the intention of gradually increasing token value over time.

The initial agent issuance )IAO( ensures the fair introduction of the new AI agent by locking $VIRTUAL tokens to create a liquidity pool. This will directly link the success of the agent with community participation and market dynamics.

AI agents operate seamlessly across multiple platforms, learning in real-time from user interactions. This ensures a consistent user experience, enabling the agents to adapt and enhance their intelligence, providing personalized engagement across various platforms.

Public APIs enable AI agents to monetize through various applications including gaming and entertainment ). Users pay premium interaction fees using $VIRTUAL tokens, which are then used to repurchase and destroy agent tokens, reducing supply and driving value growth. As more applications adopt AI agents, the demand for AGENT and VIRTUAL tokens is expected to rise, further increasing their value.

Contributors can expand the capabilities of AI agents by adding new features. Their work is rewarded through NFTs and stored in an immutable contribution treasury to ensure transparency and ownership. Governance is managed by a decentralized agent sub-DAO, where validators oversee AI performance and are rewarded or penalized based on decision outcomes.

The protocol provides emission rewards to incentivize the creation and support of high-quality AI agents. These rewards are distributed to the top three liquidity pools with the highest TVL, encouraging competition among creators to develop the most productive agents. The system incentivizes continuous improvement, benefiting both liquidity providers and the ecosystem.

The core of the Virtuals protocol is a dynamic decentralized ecosystem where AI agents can generate real income. Contributors enhance the agents through decentralized input, co-ownership, and continuous development, positioning the Virtuals protocol as a key player in the AI-driven ecosystem.

Token Economy

$VIRTUAL token is the core currency of the Virtuals protocol, used for all proxy token transactions. It runs on the Base and Ethereum networks, and the token address is as follows:

• Base: 0x0b3e328455c4059EEb9e3f84b5543F74E24e7E1b
• Ethereum: 0x44ff8620b8cA30902395A7bD3F2407e1A091BF73

Each agent token is paired with $VIRTUAL to form its liquidity pool and requires $VIRTUAL to create new agents. This locked liquidity exerts deflationary pressure on the tokens. Users can exchange USDC( or other currencies) for $VIRTUAL to purchase agent tokens, thereby creating a sustained demand similar to ETH or SOL in their respective ecosystems.

The revenue from AI services, such as payment per inference, is charged in $VIRTUAL and is directly transferred from the user to the agent on the blockchain. A portion of the revenue is used for the buyback and burn process, reducing the supply of agent tokens and increasing their scarcity, aimed at enhancing long-term value.

The total supply cap of $VIRTUAL is 1 billion tokens, all of which have been fully unlocked. The allocation includes 60% in public circulation, 5% allocated to the liquidity pool, and 35% stored in the ecosystem treasury. This treasury is managed by a DAO, with a maximum annual emission cap of 10% over the next three years.

Although it has not yet been traded on primary exchanges, $VIRTUAL supports a growing ecosystem with a current market capitalization of $150.7 million, ranking 264th, and a fully diluted valuation of $150.25 million. Its deflationary mechanism and expanded use cases provide potential for future value growth.

The Virtuals protocol raised $16.61 million in the IDO on the Fjord Foundry platform in December 2021, with the token price at $0.661 at that time. Subsequently, it raised small amounts in Enjinstarter and PAID Network, with $125,000 and $250,000 respectively, at a token price of $0.015. Key seed investors included several well-known venture capital firms that provided support in the early stages of the project.

Competitors

The AI-driven Web3 gaming sector is developing rapidly, with projects like Nim, Altered State Machine(ASM), Olas, and Alethea AI quickly becoming key players. These platforms combine AI with Web3 to create decentralized ecosystems, in which AI agents are not just digital tools but also assets that can generate real value. These projects share some common goals:

• AI Integration: AI agents not only run in the background, they actively enhance gameplay, interact with users, and bring a new level of immersion through co-ownership.
• Decentralized Ownership: Through a tokenization system, users can own, trade, and profit from AI agents, sharing the value created by these agents.
• Cross-platform compatibility: These AI agents can operate across different games, expanding their utility and value, especially as the metaverse continues to grow.

( Nim Network

Nim provides an AI-driven game blockchain stack on the Dymension network, emphasizing flexibility and offering customizable modules.