Author: @stacy_muur
Translation: Blockchain in Plain Language
Currently, there are 300,000 wallets holding at least one AI Agent Token. Will this trend continue? What is the best strategy for AI Agents now? What are the future prospects and challenges facing the industry? This article provides some analysis.
1. The Rise of AI Agents
In November, AI Agents attracted widespread attention, with people's focus shifting from Altcoins to this new hot spot. In fact, early versions of AI Agents can be traced back to 2020, but the real craze was sparked this year, mainly thanks to the success of VIRTUAL - it achieved an astonishing 3000% growth in just one year. There are several key factors behind the success of Virtuals:
Persisting with the @pumpdotfun model despite facing challenges of market share decline and increasing criticism
Cleverly combining AI technology with the viral spread effect of Altcoins
Creating the AI internet celebrity Luna, who is managed by Virtuals and has over 500,000 followers on TikTok
Launching on the Base platform, which has gathered a large number of Altcoin traders
In the Web3 space, when a new category of protocol emerges and succeeds, investor interest quickly rises, forming a snowball effect - or a bubble effect (if you prefer to describe it that way). Subsequently, a large number of people will flock to chase the next similar success story. In the past, we have witnessed this phenomenon in Altcoins and Telegram trading bots. Will it be any different this time?
2. AI Unstoppable
In 2024, the AI Agent industry experienced unprecedented growth. Venture capital in this field soared to $1 billion in a year, an 81.4% increase in trading volume compared to 2023. In the third quarter of 2024, the total venture capital in the AI field reached a peak of $18.9 billion, with AI Agents contributing 28%.
Another example that demonstrates investor confidence is that OpenAI completed a $6.6 billion financing, setting a record for the largest venture capital transaction ever.
3. AI Agents in Web3: Prospects and Realities
AI Agents have many use cases in Web3, and with technological progress, they are expected to become even more powerful. Although this narrative is timely, its full potential is still evolving. In the current market environment, where asset prices are highly volatile, and you need to keep 100% of your assets in stablecoins to maintain the value of your portfolio, AI Agents designed for trading perform particularly well. We lack historical data to prove other possibilities.
Furthermore, AI trading bots are not a new phenomenon, as they have existed for many years, but they have not yet achieved mainstream adoption. If they are so profitable, why is this the case?
4. Will AI Agents Become the Core of Market Hype?
I have always been skeptical, so my answer is no. The crypto market is full of speculation, with 10% being technology and narratives being fleeting. Remember the EigenLayer re-staking protocol that was once widely discussed? That was not so long ago, but its popularity has now significantly diminished.
AI Agents do have technological support and bring innovative use cases, but "novelty" often quickly becomes "normal". As more and more teams enter the development of AI Agents, competition will intensify, and inevitably, there will be more failure cases, and the hype will gradually cool down.
Each trend in Web3 brings great opportunities and an exciting journey. The key is to profit in a timely manner and quickly move on to the next hot spot.
5. Technical Issues
Even at the technical level, there are still many problems that need to be solved. Most of the current AI Agents have little connection to Web3 beyond the economic aspect.
However... The total market value of AI Agents is expected to double from $7 billion to $14 billion within two years. As new protocols and new use cases continue to attract user attention, this field will inevitably continue to grow.
In other words: the industry has huge potential, but the AI Agents at the forefront of the current hype may not be able to maintain their dominant position in the coming months.
6. Short-term Outlook
Now let's talk about the opportunities at hand: AI Agents on Solana are currently in a clear downturn. This view is mainly based on the article by @0xkyle__ on X, and I largely agree with it, but remember to always do your own research (DYOR).
Currently, liquidity is flowing into Altcoins and Base on centralized exchanges, and the market sentiment towards Solana is particularly pessimistic, especially the concerns about the topping of SOL/ETH and SOL/BTC. In this pessimistic atmosphere, two key bets are gaining popularity in the crypto circle:
1) Solana will make a strong comeback and trigger a second wave of on-chain hype.
2) AI Agents will rebound accordingly.
Therefore, there are two possible strategic investment approaches:
1) Large-cap AI: Invest in mature players like AI16Z and the potential TAO, which have already proven their worth.
2) Small-cap AI: Look for undervalued projects that focus on interactivity, applications, and virtual avatars, as this is the area where asymmetric returns can be generated.
