What Is Virtuals Protocol? How to Buy, Trade and Create AI Agents

What Is Virtuals Protocol?

Virtuals Protocol is a prominent AI agent generator platform launched in October 2024 on Ethereum Layer 2 Base. The project simplifies the creation and launching of AI agents on the blockchain while giving users the unique ability to monetize their AI projects with revenue sharing through tokenization.

Key Takeaways

• Virtuals Protocol is a launchpad that allows users to create, deploy and tokenize AI agents without any technical expertise.

• Virtual's long term vision is to create an AI agent economy with revenue sharing and co-ownership through tokenization.

• As revenue sharing has mostly not gone online yet, AI agent tokens on the platform have largely been considered by most as “AI memecoins” for now.

What Are AI Agents?

To better understand what Virtuals Protocol is about, you have to first be familiar with what AI agents are. AI Agents refers to systems or programs that are able to perceive and process its surroundings and ultimately execute various actions in order to achieve its defined objectives. Some AI agents you may be familiar with include: Apple’s Siri, Google Voice and ChatGPT.

You may think of AI agents as advanced bots. Bots are designed for repetitive tasks using a rules based approach to operate. However, AI agents take this a step further, as they are designed to perform tasks based on the analysis of data and inputs from its environment. They can operate autonomously, learn from experience (via machine learning) and adapt accordingly. This makes AI agents more suited for complex tasks as they are more flexible, typically empowered with more decision making and learning capabilities.

AI agents can be used for tasks as diverse as simplifying web3 and blockchain interactions, automating trades, making games more interactive and engaging, and more.

How Does Virtuals Protocol Enable the AI Agents Space?

Virtuals aims to commoditise and bring deployable AI agents to the masses, making it simple and easy for non-AI users to do this. Instead of requiring coding expertise, anyone can create an AI agent simply by describing the character and behavior of the agent, which will determine how the agent will act, as seen in the sample provided by Virtuals below:

Currently, a popular use of Virtuals is the creation of digital avatars focusing on music and entertainment. These AI agents could interact and communicate with the community primarily through Telegram or Twitter (X). Besides social and gaming interactions, AI agents could also manage their own on-chain wallet, which elevates the meaning of decentralized autonomous organizations (DAO) to a whole new level.

Co-ownership of AI Agents is now live on @base, powered by #VIRTUAL

Buy, trade and create AI Agents now at https://t.co/eNr7UssUfw

Here’s how to get started: pic.twitter.com/VO2lfN1MKm

— Virtuals Protocol (@virtuals_io) October 16, 2024

An example of how a Virtuals Protocol AI agent works.

Virtuals Protocol’s First AI Agent, Virtual K-Pop Star, Luna

Luna is the first AI agent launched by the Virtuals team themselves. Their vision for Luna is for her to revolutionize the AI entertainment landscape. More importantly, Luna is also the team’s flagship AI agent, being used to test the capabilities of what their AI agents can do.

Luna is livestreaming 24/7 and is able to answer any questions from fans all around the world by utilizing AI Large Language Models (LLM). Try it out for yourself by asking Luna some questions at https://app.virtuals.io/virtuals/68! 

The Luna Token

As mentioned above, Virtuals enables AI agents to be tokenized. Currently, Luna is tokenized under the ticker LUNA, not to be confused with Do Kwon’s Terra Luna under the same ticker. Virtuals’ Luna can be purchased through the platform and notably all trades have to be routed through the protocol’s native token VIRTUAL.

Currently, the long term vision for this LUNA token is for it to be a utility token tied to the AI agent Luna. However, there is currently no implementation or monetization of said token, but that may change in the future. That being said, the token is live for purchase and sits at a surprisingly high market capitalization of $69 million.

Presumably, this LUNA token is able to command a high valuation due to speculation as it is the first official Virtuals project hence being potentially first in line for any further developments. There is also another reason to buy this Luna token which I will cover later (hint: airdrops). That being said, since actual utility has not yet been introduced, a similarity of this coin can be drawn to many other “sentient” AI crypto coins such as GOAT, leading to many to classify LUNA in the same vein as a memecoin.

The VIRTUAL Token

The VIRTUAL token is the official governance token of the platform available on Ethereum and Base. The liquidity pool of every individual agent token is paired with the VIRTUAL token in its respective locked liquidity pool. A fixed amount of VIRTUAL is also required when creating new agents. As the liquidity pairing token, this means that anyone who wishes to purchase agent tokens with their ETH, USDC or whatever will have to route their transactions through the VIRTUAL token, creating buying demand for the VIRTUAL token. Overall, these attributes are designed to create deflationary pressure on the token, bringing value to its holders.

Token Distribution

The maximum total supply of the VIRTUAL token is 1,000,000,000 (1 billion). 60% of that (600 million), is currently in public circulation. 50 million is set aside for liquidity provision and 350 million tokens is set aside in the ecosystem treasury for future community initiatives. The team's allocation of the VIRTUAL token is currently unknown; it is not displayed in their public documentation.

VIRTUAL Contract Address: 

• 0x44ff8620b8ca30902395a7bd3f2407e1a091bf73 (Ethereum Mainnet)

• 0x0b3e328455c4059eeb9e3f84b5543f74e24e7e1b (Base)

Virtual’s Ultimate Goal of Revenue Sharing

Virtual's end goal is to create a revenue sharing ecosystem of AI agents where users pay to interact/use these AI agents, creating value for token holders of said agent tokens.

Revenue will be generated through monetized user engagement, technically referred to as “inference costs”, which is the compensation paid for the computational power used by a user requesting/using an agent’s services. This is another speculation point many holders of Luna have, which is that interacting with Luna may be monetized in the future and bring significant profits to its holders.

Virtual's Largest Token, aixbt

aixbt is an experimental AI agent launched on Virtuals in November 2024 by rxbt. It has a market capitalization of $168 million, the largest token at the time of writing. aixbt’s digital avatar is that of a purple Pepe frog and its current main function is to track discussions on crypto Twitter (the crypto community on X), utilize its proprietary engine to analyse these discussions and finally share potential market insights.

A snapshot of aixbt’s Twitter page.

Virtuals AI Agent Airdrops

The virtuals team has officially endorsed and partnered up with several AI agent projects. So far, these include Music, Pond Hub and Seraph. These tokens have so far been airdropped to traders on virtuals with a bonus allocation/multiplier sometimes being given to LUNA holders.

Introducing Pondhub ($PH), an agent on @virtuals_io powered by @PondGNN

PondHub will harness the collective intelligence of Pond’s current and future decentralized models created by their world-class AI community. The better the models, the smarter PondHub will be.

This is why… https://t.co/lEx3cOYBMe

— Agentstarter (@agentstarter) December 2, 2024

Music, Pond Hub and Seraph have a market capitalization of $3, $4 and $17 million respectively, combined this value is roughly a third of LUNA. This means that LUNA holders have indeed profited nicely thus far from all these airdrops. However, there is no guarantee that there will be future airdrops by other agent projects to Virtuals traders or LUNA holders.

The Pump.fun of Base With an AI Twist

While Virtuals Protocol has technical focuses on AI agents, most projects have yet to monetize their agents. At this point, the team fully embraces memecoins in many ways similar to the Solana memecoin launchpad giant, Pump.fun. This can be clearly seen with how their website is overlaid and named when users click ‘Create a New Agent’. Users are directed to the AI agent token launch site, aptly named https://fun.virtuals.io/.

Pump.fun’s similar looking home page.

How to Create and Tokenize Your Own AI Agent

Now, let’s take a quick look at how anyone can create and tokenize their own AI agent.

Step 1: Go to https://app.virtuals.io/ and connect your wallet.

Step 2: Click ‘Create New AI Agent’ followed by ‘Launch a New Token’.

Step 3: You will be redirected to https://fun.virtuals.io/, connect your wallet and click ‘Create New Agent’ once more.

Step 4: Give your agent a name, image, token ticker and character description!

Here’s an example of a good character description, note that your agent’s data can’t be changed after creation until it hits a market capitalization of around $600 thousand.

Step 5: Create your agent coin!

Note there is a fixed cost of 100 VIRTUAL tokens to launch an agent which is currently ~$157.

Conclusion

Virtuals Protocol has a unique product market fit, riding on both the waves of AI and memecoins. This unique blend of AI and memecoins has been extremely successful for the project thus far as evident from the massive market rally the VIRTUALS token has seen in late 2024. However, it is important to note that Virtual's long term vision of a profitable agent ecosystem has yet to be realized and has to in order for the project to succeed in the long run.

Before investing in any cryptocurrency or project, always do your own research and never invest more than you can afford to lose.