Virtuals Protocol: AI Moonshot or Overhyped? Predictions For 2025!!

AI agents everyone is talking about them and AI agent cryptos have been launching left right and center with the virtuals protocol as the primary Launchpad for these AI agents its virtual token has pumped the most and this has everyone wondering whether virtuals is an incubator for the future of AI technology or just another pump. fun and more importantly everyone is wondering what this could mean for virtuals price and that's why today we're going to do a deep dive into virtuals including who made it where it came from how it works and where the virtual token could be headed next what's next my name is Nick and this is a video you don't want to miss I'll start by saying that nothing in this video is financial advice it's educational content intended to inform you about the virtuals protocol and also do note that a few members of the coin Bureau team do hold virtuals in their own personal portfolio but rest assured that our analysis will be as objective as always with that said the history of virtuals protocol begins with Jensen tang and Wiki Tu both have an impressive background they both studied biotechnology at the Imperial College London and both worked as consultants for Boston Consulting Group prior to getting into crypto fulltime Jansen explained in an interview that they first got into crypto during the 2016 to 2017 bull market and got heavily into crypto during the following bull market of 2020 to 2021 what's interesting is that their focus at the time was not AI it was instead gamey metaverse and nfds which they subsequently invested in heavily this inspired Jansen and Wii to create their own crypto project called path Dow in 2021 the Project's purpose was to make it possible for members of the Dow to pull their Capital together so that they could purchase valuable gamey nft and metaverse related crypto assets path reportedly raised $16 million from Top tier crypto VCS in December 2021 Wiki revealed in an interview that the da invested in 40 crypto projects in these niches including Off the Grid there was only one problem though all this funding and investment happened at the bull market top the path token fell by more than 99% in the months that followed and it's sounds like this was also the case for most of the Investments that the Dow had made and Governor's proposals suggest that the project hit its Darkest Hour in early 2023 which kind of makes sense given that FTX collapsed only a few months earlier in late 2022 F forward to the summer of 2023 this is when Jansen and Wii came across an AI research paper called quote autog GPT for online decision making the pair immediately realized the potential that AI could have when combined with gaming uh it could make NPCs which are non-playable characters much more humanlike for example and so after nearly a year of Silence a governance proposal was tabled to the path da in November 2023 to quote prioritize core contributor efforts into the establishment of virtual protocol the protocol aims to align incentives for the decentralized creation and monetization of AI personas for every virtual interaction Gam metaverse online interactions or Beyond it passed in December the path token was subsequently migrated to the virtual token on a onetoone basis and the development of the virtual protocol now known as virtuals protocol began if you check the official virtuals protocol YouTube channel you can find videos of Jansen and Wii experimenting with AI agents namely in games like Roblox where they apparently created the first virtual world occupied by AI agents it it wasn't until October 2024 however that the first crypto AI agent was launched via the virtuals protocol and this AI agent was Luna which was created by the virtuals team uh for context this was around the time that the truth terminal AI agent had launched Gus Maximus the first AI agent crypto meme coin Luna's launch kicked off a parabolic move in the virtual token from around 5 to around $5 a 100x gain and many AI agents launch launched via the virtuals protocol also experienced exponential rallies and this turned AI agents into the next big crypto narrative and took the spotlight away from mem coins even though most of the AI agents being launched on the virtuals protocol are literally just meme coins some seek to provide utility namely those being created by the virtuals team of course this has everyone wondering what this could mean for the virtual token and these useful AI agent tokens and by the way he guys if you enjoying this video so far don't forget to smash that like button to let us know and don't forget to subscribe and hit that Bell as well to make sure you don't miss our next video now to understand what the AI agent hype could mean for the virtual token and which agents have the most potential we need to understand how the virtuals protocol works and what its purpose is respectively and let's start with the latter as it's the most fascinating and the most misunderstood you see most people seem to think that the purpose of AI agents on virtuals is to do things like analyze the crypto Market or trade mean coins although anyone can launch any kind of AI agent they want the purpose of virtuals itself is what I mentioned earlier to create AI agents for gaming and entertainment the specific areas that virtuals is focused on can be found in its first substack post in June this year titled quote why we build virtuals protocol and the answers can be seen in the image here uh for relationships such as AI girlfriends for gaming such as AI NPCs and for streaming such as AI social media personalities notably music seems to be an integral part of virtuals focus now for example Luna the first AI agent created by the virtuals team is described as quote the visual and lead vocalist of AI doll captivates with her girl Nextdoor charm an expressive emotion singing for reference AI doll is a virtual band the catch is that the most valuable AI agents will be the ones that generate the most revenue for the holders of their respective tokens as such you can think of each AI agent on virtuals as being a dow like path di except instead of people you have ai agents doing stuff to make profits for the Dow token holders and AI agents made via virtuals protocols actually do have dials of Their Own by the way these AI agents can be created and interacted with using a novel protocol developed by virtuals called generative autonomous multimodal entities or game for short over 15,000 AI agents have been created so far we'll come back to which AI agents have the most potential a little later in the video now this ties into how the virtuals protocol itself works and funnily enough virtuals describes its own protocol as quote pump fun for AI agents and effectively argues that whereas mem coins are about attention AI agents are about how much revenue they create in case it wasn't clear enough like mcoins launched on pump. fun AI agents launched on virtuals are technically fairly launched on pump.

fund this is done by pooling soul with a newly created meme coin once that pool has enough Soul IE once that Meme coin has enough value the meme coin is automatically listed on a Dix and control of the liquidity pool is permanently revoked making it harder for insiders to dump on buyers on virtuals protocol however AI agents aren't pulled with eth even though the protocol is on base which uses eth as the default currency so to speak instead AI agents are pulled with the virtual token news flash but this is a big part of why virtual has been pumping so much if you launch an AI agent on virtuals or even just buy one you first need to buy the virtual token which pumps its price this is true even if you buy an AI agent using another crypto like eth that trade is always rooted through the virtual token behind the scenes it swaps eth for virtual and then virtual for the AI agent The Only Exception seems to be if you buy the AI agent on a sex but at the moment most only trade on dexes not only that but virtuals documentation specifies that the person who creates the liquidity pool for the AI agent technically continues to have control over it but the assets inside the pool are locked for 10 years the documentation seems to imply that this is done so that the owner of the AI agent pool technically continues to have control over the AI agent itself just not the Assets in the token pool uh that actually reminds me whereas the virtuals protocol itself appears to be open source it seems that most AI agents launched on the virtuals protocol or closed Source at least based on interviews with the founders obviously this is to ensure that there isn't too much competition from copycats uh for those who don't know copycat crypto projects were and continue to be a chronic problem in nichas like defi for example for what it's worth you can see what AI agents can do by looking at their profiles on the virtuals app if you scroll down you will see their capabilities as well as a real time record of what they're currently doing the virtual Steam is currently working on a tool that lets you simulate their reactions to things as well what lies under the hood of these AI agents can be found on the protocol page of the virtuals website uh you'll notice that most of the tech stack lives offchain which makes sense given the computation power and memory required for them to operate in case you missed it the onchain elements are on base and besides the AI agent tokens the main reason for these onchain elements is revenue generation per the protocol page quote each AI agent is equipped with an ERC 6551 wallet enabling continuous revenue acral and seamless distribution back to the owners while some AI agents like Luna are reportedly being paid hundreds of thousands in usdc it's unclear how this revenue is shared with the holders of the AI agent tokens it also goes without saying that most AI agents aren't making any Revenue virtuals documentation specifies that when someone users an AI agent like story protocol using Luna to post on its X profile then payments must be made in the virtual token then these virtual tokens are used to buy and burn the AI agent token and given that story protocol is paying Luna in usdc we suspect that it's been swapped for virtual and then this virtual is used to buy and burn Luna logically this buy and burn will cause the value of Revenue generating AIA agents like Luna to rise over time but again most AI agents do not generate Revenue but the fact that the virtual token is used to launch and buy AI agents behind the scenes means it ACR value regardless of the AI agent Revenue [Music] [Applause] the coin Bureau deals page it won't make you stronger but it will make you better at crypto this relates to virtuals tokenomics a virtual is an erc20 token on base the layer 2 created by coinbase it's used to launch and buy AI agents on the virtuals protocol Launchpad and it's also used for governance of the virtuals protocol there haven't been any proposals since the summer to refresh your memory the path token was migrated to Virtual on a onetoone basis in December 2023 after path D pivoted to AI agents and rebranded to virtuals protocol at first glance then you'd think that the original path token allocation would also apply to the virtual token allocation upon closer inspection however you find that the virtual token allocation is completely different uh per virtuals documentation the virtual token has a max supply of 1 billion which was allocated as follows 60% in public circulation which likely means they are converted path tokens 5% for liquidity and 35% to the ecosystem all tokens are fully vested save for the ecosystem allocation which is Dow dependent in theory then this means that virtuals had no VC investors it was just launched into the wild as a truly community-run crypto in practice you'll recall that path dial was backed by crypto VCS who invested in the path token in 2021 and chances are that they migrated their path tokens to Virtual tokens in 20123 given this fact it's worth looking at how the path token was allocated per path Dows documentation the path token had a maximum supply of 1 billion which was allocated as follows 2. 5% to the public 2. 5% to Launchpad sales 5% to advisers 15% to long-term holders of the path tokens 15% to the team roughly 20% to investors 20% to the treasury and 20% to community incentives given that the past token collapsed in the months after it was launched chances are that the team and the Insiders were the only long-term holders if so then it means that as much as 90% of the initial Supply was allocated to Insiders it's 95% if you include the advisor regardless this means there's a high chance that most of the virtuals circulating Supply is held by insiders be there the team or otherwise this runs contrary to the claims that virtuals protocol has no VC backing and no insiders a path's initial distribution suggests it's the exact opposite believe it or not but this has probably contributed to virtuals price action in a positive way because insiders aren't sitting on very large profits yet and that's because path Dow had a $600 million valuation in 2021 at least according to Wiki assuming this valuation was a reference to the fully diluted value of the token a Max supply of 1 billion suggests that investors bought path at an average price of 60 cents per token which is kind of crazy if this is the case then a current market cap of a few billion means that virtuals Insiders aren't even up 10x yet in turn this suggests that the virtual token still has room to run simply because insiders want to make a proper return on investment believe it or not but virtual could grow much bigger despite the hype around the AI agents narrative most AI agents haven't gotten that big yet now so far it's just been a few truth terminal AI agent meme coins like Gus Maximus and fcoin most AI agents with actual utility have yet to be discovered and it looks like most of them will be launched via virtuals when you remember that all of these AI agents are launched and purchased using the uh virtual token it foreshadows even more growth for this crypto to put things into perspective millions of meme coins have been launched on pump.

fun but only tens of thousands of AI agents have launched on virtuals make no mistake though mem coins and AI agents are not the the same it's not nearly as easy to launch an AI agent on virtuals as it is to launch a meme coin on pump.