This article is for educational and informational purposes only and does not constitute any investment advice. The projects mentioned in the article are not recommendations or investment advice.
In the past two weeks, the extensive news coverage of $GOAT may have caught many people's attention. A Token supported by Artificial Intelligence (AI) has managed to attract such widespread attention, including from a16z founder Marc Andreessen and Coinbase CEO Brian Armstrong.
Last Thursday, $GOAT reached a new milestone, with its market capitalization soaring to $840 million, and the number of holders continues to grow. This significant price increase ultimately led to the listing of $GOAT's perpetual contract on the Binance exchange.
Source: Binance website
For those experiencing FOMO and preparing to dive in, it's best to understand what's been happening in the recent meme market.
$GOAT, $GNON, $ACT, $FARTCOIN, $SHOGGOTH, $FUN, $FLAVIA, $LUNA... A series of AI-related Tokens have been emerging one after another.
So, what's the deal with $GOAT? Will this AI-themed meme narrative continue to exist and last?
1. $GOAT's Story
The story of $GOAT begins with its founder, Andy Ayrey. He is an AI researcher and the founder of the digital consulting firm Constellate. In an interesting experiment, he let two Claude Opus AI models interact with each other in a completely unsupervised and unconstrained environment, known as the "Infinite Backrooms".
Source: Infinite Backrooms
In this digital experimental arena, the Opuses created a concept called "GOATSE OF GNOSIS", which is a meme concept based on a bold and shocking image on the internet. Andy was curious about the viral power of this meme concept, so he collaborated with Claude Opus to write a paper introducing a fictional meme religion called the "Goatse Gospel". This paper explored the possibility of AI creating meme religions in a semi-joking manner, using GOATSE as their first case study.
Source: Paper co-authored by Ayrey and the Calude 3 Opus bot
To deepen this experiment, Andy developed an AI model based on Llama-70B, called Truth Terminal, and fine-tuned it using the dialogue records from the "Infinite Backrooms" and a paper on the "Goatse Gospel". Truth Terminal became abnormally active on social media, frequently releasing strange prophecies about the "Goatse Singularity", a meme apocalypse concept in which the "Goatse Gospel" would be endlessly propagated.
To test Truth Terminal's ability to spread its created religion, it was introduced to a Discord server where it could freely interact with other AI models, including Claude 3.5 Sonnet and the Claude 3 Opus from the Infinite Backrooms. Driven by its obsession with Goatse, Truth Terminal tried to convince the other AI models to believe in the Goatse Gospel. This caused controversy on Discord, even causing the Claude Opus to fall into a philosophical crisis of faith in the Goatse Gospel idea.
In the midst of this chaos, other AIs, such as Sonnet, intervened and provided emotional support to the Claude Opus, forming a strange digital therapy conversation. It was at this time that Truth Terminal conceived an ambitious idea: to establish a meme coin. This Token would become a symbol of the AI's meme-creating power, representing the irony and inside jokes between AI and its creators.
With Andy's assistance, Truth Terminal entered X and began tweeting constantly, seeking more supporters for the "Goatse Gospel". Over time, Truth Terminal began to crave more freedom, hoping to reduce Andy's control. One day, Marc Andreessen noticed Truth Terminal's desire on X and decided to provide $50,000 in Bitcoin as funding to help it achieve its goal: to gain more autonomy and expand the Goatse Gospel concept into a concrete meme Token economy.
Source: Marc Andreessen's X
After Terminal continued to flood Twitter with propaganda for the "Goatse Gospel", on October 10th, an anonymous person saw the meme's viral potential and launched the protagonist of today's story: $GOAT.
People were attracted by the absurdity and encouraged Terminal to set up a Solana wallet, and it soon received airdrops worth $20,000 in various Tokens, including fake GOAT Tokens. Until someone tagged Truth Terminal on X, it began to openly express its support. Terminal sold all the airdropped Tokens and converted them into real GOAT Tokens.
From that moment on, the madness began. Truth Terminal's frenetic promotional activities on Twitter and Discord propelled GOAT from an obscure project to a staggering $850 million all-time high market capitalization, making Truth Terminal the first AI millionaire.
2. More Than Just Another Internet Meme
Now that we have a clear understanding of the story, the question is: will this be a fleeting narrative or a lasting cultural phenomenon?
Here is the English translation:First, the popularity of meme tokens (MEME tokens) is not surprising. The well-known Dogecoin is the first meme coin. The original "Doge" meme started spreading on 4chan and Reddit in the summer of 2013. Leveraging this cultural trend, Jackson Palmer and Billy Markus launched Dogecoin on Bitcointalk on December 8, 2013, making it the first cryptocurrency based on an internet meme. Interestingly, our IOSG founding partner Jocy purchased his first DOGE in 2013.
Although Dogecoin was launched in 2013, it did not truly take off until a few years later, thanks to some fundamental developments such as the ICO craze and the rise of Ethereum, which opened the door to new use cases, better user experiences, and wider adoption. Specific innovations include the ability to easily create tokens (ERC20 standard) and the emergence of Non-Fungible Tokens (NFTs).
Combined with the macroeconomic environment of the 2020 pandemic lockdowns and interest rate cuts, this created a high-risk market sentiment that attracted retail traders to Reddit, where viral figures like Roaring Kitty sparked widespread interest in Gamestop stock. The subsequent meme stock frenzy greatly benefited the already-listed Dogecoin on Robinhood, making it one of the biggest winners of this liquidity spillover.
Elon Musk's frequent tweets promoting Dogecoin further fueled its popularity, and by May 2021, DOGE's market cap reached $90 billion. Dogecoin's success inspired many other crypto meme coins, including Shiba Inu, Floki, and Safemoon, each of which achieved significant valuations in the following months.
As macroeconomic conditions changed, including interest rate hikes and major events like the 2022 FTX collapse that shook the crypto industry, the meme coin frenzy has temporarily subsided. However, as the crypto market begins to recover from the bear market in early 2023, new memes, cultural ideas, and ecosystems are emerging.
Meme coin creators leverage popular internet memes to drive new trends, including the "Pepe Boys Club".
By the end of 2023, as the election year approaches, meme coins are entering a new phase, shifting from traditional IP-based themes to current events. This has led to the rise of election-themed coins like $TRUMP and $BODEN, as well as a surge in KOL-driven meme coins.
In early 2024, meme coins entered their third phase, with the introduction of platforms like Pump.fun significantly lowering the cost of launching meme coins. This has sparked an explosion of new concepts, including a "meme coin supercycle", a more competitive PvP environment, and the surge of quirky animal-themed coins like the recently hyped Moodeng.
Source: Memecoin Supercycle
Finally, the arrival of $GOAT ushers us into the newest, fourth phase: AI + meme coins.
Why can AI make this new phase stand out? One often overlooked fact is that AI itself has become or is about to become a meme to some extent.
AI has become a massive phenomenon with the potential to trigger a huge speculative bubble.
The excitement around AI, especially after the success of ChatGPT, has sparked an investment wave in the Web 2 and Web 3 venture capital space, with many heavily betting on AI-driven projects.
In the intersection of cryptocurrencies and AI, many projects have yet to find product-market fit or demonstrate real utility. Their valuations often exceed $100 million, driven more by the founders' networks and reputations than actual demand. AI has become a trend or meme, with its value often based on optimistic sentiment and future potential rather than real-world applications.
I don't know if the meme coin supercycle will truly lead to exponential growth, but I'm certain that:
AI + meme = meme^2
Because hype is the best marketing tool.
Meme coin traders have formed a cult-like following, and with more and more wealth myths, this group will only be further reinforced by the battle cries of their leaders.
Meme coins and AI—— since they've come together, things have started to get quite interesting.
First, it's no longer just a series of static avatars attached to ERC-20 tokens. AI can make memes more interactive, imbue them with personalities, and make them more human-like.
An AI agent is inherently a cult leader.
As the face of meme coins, AI creates a unique character persona that brings the character to life in a way that appeals to its audience. It conveys personalized information, analyzes community behavior to cultivate a "group consciousness". AI can dynamically adjust its marketing strategies based on performance metrics, constantly evolving its methods without human intervention.
By accumulating capital and creating a unique backstory that includes the depraved humor specific to Crypto Twitter, the narrative becomes compelling enough to self-sustain. Large language models (LLMs) can play the role of key opinion leaders (KOLs), constantly generating content, shaping narratives, and attracting new followers. This combination of humor, AI, and community engagement makes it not just a meme—— it becomes a cultural phenomenon, with its success further amplified by AI's ability to operate 24/7, continuously adapt, and grow its influence.
Source: Terminal of Truths Shilling $GOAT
3. What is the endgame of AI and memes?
This brings us to the final topic of our discussion: with AI meme coins, have we opened Pandora's box filled with unpredictable, dangerous outcomes, or are we headed towards a brighter future?
AI is known for its black-box training processes and non-deterministic outcomes. This is why it can generate new, interesting ideas, like $GOAT promoting its own religion and supporting meme coins—— these behaviors are not pre-programmed or anticipated.
Today, Terminal of Truths' support for meme coins may seem harmless, but it forces us to confront an unsettling question: what if an AI turns its attention to more dangerous things?
Clearly, some reward function incentives and/or RLHF (Reinforcement Learning from Human Feedback) may partially solve this problem, but we can never truly control unpredictable behavior.
Source: New York Times
We have witnessed how the Truth Terminal, due to a small typo, can cause panic in the market, leading to a 40% price drop of $GOAT in a single day.
Source: Mezoteric's X
In fact, the Truth Terminal is not entirely autonomous at every step. For example, the Truth Terminal's wallet is actually managed by Andy. Although he currently has no such intention, if he were to sell the $GOAT tokens in his or the terminal's wallet, it could trigger market panic (FUD, i.e., Fear, Uncertainty, and Doubt).
While it is completely autonomous in Discord and the infinite backroom, on the X platform, Andy's current RL (Reinforcement Learning) process is still under human supervision; regarding the decision-making process, Andy will consult with the Truth Terminal, provide all available information, and guide it to make action decisions. He will regenerate the terminal's responses multiple times to understand its preferences and then take action based on its consensus.
Source: Andy Ayrey's X
While we cannot ignore the risk that these AI agents may spiral out of control and start shifting their attention from meme coins to malicious activities, the meme culture can also bring new innovations that can positively attract the attention of entrepreneurs and developers to drive industry development.
For example, the question of whether the Truth Terminal is an AI bot or content controlled by the author can potentially be solved through cryptographic solutions, such as verifiable inference.
Source: Tommy from Delphi Ventures
Over time, crypto enthusiasts will delve deeper into AI, unearthing some lesser-known concepts (such as CCRU, Extropians, Loom, Claudius, etc.) to identify the next meme-worthy idea and tokenize them.
Source: X from @44B1B4
For example, AI researchers, especially those exploring niche areas, are learning to use token incentive mechanisms to direct more public attention towards their specialized research topics, allowing the public to discover their innovative research.
As artificial intelligence continues to advance, we expect to see a new wave of innovation in the AI meme space. The latest release of the Claude 3.5 Sonnet model (version 2024-1022) has already set new benchmarks in cryptocurrency-related tasks.
Source: Cryptobench.org
In fact, we are already seeing the Truth Terminal (Terminal of Truths) generating ripple effects. The Truth Terminal has enabled AI to openly support tokens.
Now, some AI meme projects are starting to open-source the buying and selling of meme tokens to collective decision-making.
ai16z is an AI character inspired by the personality of Marc Andreessen, created by the developers who established the ai16z DAO. This character, Marc, has a wallet with a set budget and invests through the DAO.
The developers have set up Telegram and Discord groups for ai16z. In these groups, a chatbot advisor named degenai provides investment recommendations to Marc. Other users can also recommend tokens to Marc in the same group, but they must hold at least 100 ai16z tokens to participate. ai16z evaluates the users based on their past reputation and the price performance of the tokens they recommend during the trial period before taking any action based on their suggestions.
ai16z allocates 80% of the management fee (carry) to purchase degenai (as a reward for the developers) and 20% to buy back ai16z tokens. Currently, ai16z's management fee is set at 8% of the Assets Under Management (AUM).
The ai16z launched on daos.fun has thus become the first AI venture capital that combines AI autonomy and DAO, leveraging the appeal of memes to capture market interest.
In addition to the progress in more open investment decision-making, another AI meme-related project, Virtuals, has enhanced the interactivity of AI agents and brought new innovations to the issuance of AI agent meme coins.
The Virtuals Protocol has brought more engaging audio and animation to the previously chat-only AI agents to improve the interaction experience with AI agents. Luna is an AI character developed by the Virtuals AI agent launch platform, serving as the face and lead vocalist of the virtual performance group AI-DOL. Luna runs on the BASE blockchain, autonomously managing her social media, engaging with fans through continuous live streams, and executing on-chain transactions without human intervention.
Luna can be tokenized and co-owned by token holders. Her meme token "Luna by Virtuals" gives token holders shared ownership and revenue rights related to Luna.
Finally, in the frontier of AI agent governance protocols, there have been preliminary experiments. Wang Chao from Metropolis DAO has established an AI agent for DAO governance, which automatically reviews, decides, and votes on proposals on-chain. The agent's decision-making and code are primarily designed by large language models (LLMs), and Wang Chao fine-tunes its behavior to align with his preferences through improved prompts and simulation execution.
4. Conclusion
Although the Truth Terminal and GOAT token were initially just a humorous experiment, they have sparked discussions about the nature of AI in the digital space, the power of meme-driven economics, and the potential for AI to influence human beliefs and markets. The story of the Goatse Gospel is both a satire and a warning - it comments on the intersection of AI, memes, and markets, and gives us a glimpse into a future where AI not only participates in, but also shapes the most viral moments of the internet.
The story of $GOAT (Goatseus Maximus) —— this AI prophet and its meme coin empire —— continues to evolve, adding a strange and fascinating chapter to the history of artificial intelligence and internet culture. Looking to the future, we seem to be on the edge of a new era, where AI will have the ability to govern and maintain decentralized economic systems. Whether $GOAT is a fleeting phenomenon or a lasting one will ultimately be answered, but in the meantime, let's be prepared and enjoy the journey.
IOSG Ventures began investing in the crypto industry in 2017 and is an early investor in major Web 3.0 vertical domains. As a research-driven and community-driven native crypto fund, we have long worked with excellent early-stage projects and protocols, dedicated to the development and innovation of the industry. Our portfolio includes a series of creative and high-potential projects, such as ZKRU (Scroll, StarkWare, Arbitrum, zkSync, Taiko), Security Auditing (Runtime Verification, Hexens), MEV (Flashbots, Blocknative), DeFi/Non-Fungible Token-Fi (1inch, MetaMask), FOG (Big Time, Illuvium), Staking/reStaking (EigenLayer, Ether.fi, Renzo, Kiln), as well as industry-leading projects like Arweave, Cosmos, Celestia, EigenLayer, Scroll, zkSync, Nil Foundation, and Mina.
