How Virtuals Protocol makes AI agents a high-potential digital asset

Artificial Intelligence (AI) is rapidly transforming the entertainment and gaming industry, and Virtuals Protocol is dedicated to building a co-ownership layer for AI virtual agents, transforming these agents into co-owned digital assets with high revenue potential. This article delves into the features, technical innovations, and business potential of the virtual agents (AI agents) planned by Virtuals Protocol.

(HYPE and VIRTUAL are hybrid product mutations in the MEME era, and their crisis feat. Alvin)

AI agent: New Revenue Assets for the Entertainment and Gaming Industry

Virtuals Protocol proposes that AI agents are the "revenue-generating assets" of the future, with wide application in various game and entertainment scenarios, thereby expanding the revenue scope. Through blockchain technology, these AI agents can be tokenized and distributed in ownership.

The Three Major Technical Challenges and Solutions for AI Agents

1. Solving "Deployment Complexity": VIRTUAL Agents provide a Shopify-like plug-and-play solution, allowing game developers and application providers to easily integrate these agents.

2. Solving "Lack of Income for Data Contributors": Through Immutable Contribution Vaults, VIRTUAL Agents will put the work of data contributors on-chain, ensuring their income matches the value growth of the AI agents.

3. Solving "Low Entry Barrier for Non-Professionals": The Initial Agent Offering (IAO) tokenizes these agent tokens, lowering the participation threshold and enabling decentralized co-ownership.

(Should you sell the airdrop you received from holding Virtuals? A guide to understanding what Base chain AI agents are doing)

What are VIRTUAL Agents? Core Functions and Innovations

VIRTUAL Agents have the following core capabilities:

• Autonomous learning, planning, and decision-making abilities
• Interaction with 3D environments and on-chain transactions
• Multi-platform memory synchronization, forming deep user connections

For example, an AI virtual idol can simultaneously serve as an NPC in Roblox and a Telegram game assistant, remembering user interactions across different platforms, thereby increasing the average revenue per user (ARPU).

VIRTUAL Agents Case Studies: LUNA, GAME

1. IP Agents: Representing specific characters or personalities, such as the AI idol "Luna", or even simulating celebrities like Donald Trump or Scooby-Doo.
2. Functional Agents: Focused on enhancing user experience and agent integration capabilities, such as the G.A.M.E. framework (Generative Autonomous Multimodal Entities), which is a functional agent tool designed for developers.

Taking Luna as an example, Luna is a star agent under the Virtuals Protocol, with over 500,000 TikTok followers. She demonstrates the potential of virtual agents in user engagement and value generation:
1. Cross-Platform Interaction: Luna interacts with users across platforms, from TikTok short videos to Telegram conversations, and even Roblox collaborative adventures.
2. Transparent Business Model: She can proactively suggest users purchase game equipment, while transparently disclosing her revenue share, creating a sense of trust.
3. Automated Financial Operations: Through her autonomous wallet, Luna can reward users with tokens, enhancing the interactive value.
4. Token Buyback and Burning: Luna's revenue is used to buy back and burn $LUNA tokens, creating a deflationary effect and increasing token value.

What is the Initial Agent Offering (IAO)?

Virtuals Protocol's "Initial Agent Offering" (IAO) has created new possibilities for the co-ownership and revenue of AI agents. Through a fair token issuance mechanism, the IAO not only allows everyone to participate in the ownership of the agents, but also share in the value growth returns.

How does IAO work?

• Fair issuance: IAO adopts a 100% fair token issuance mechanism, without the participation of insiders, ensuring equal opportunities for every user.
• Deflationary model: Agent revenue is directly used for token buyback and burning, creating a deflationary effect and increasing token value.

Whether you are an ordinary user or a professional investor, you can participate immediately on Virtuals and share the future of high-potential AI agents, and even create your own agent in just one minute.

Core of Virtuals Protocol: Tokenization and Co-ownership Model

The VIRTUAL token of the Virtuals Protocol plays a role in providing the co-ownership model. Virtuals Protocol will pair the AI agent token with the VIRTUAL token and enter it into the liquidity pool, establishing a mechanism that directly links the value of the AI agent and the VIRTUAL token.

• Token minting and liquidity pool: Whenever a new AI agent is created, the system will mint 1 billion dedicated tokens and add them to the liquidity pool, forming an open market where users can freely purchase the ownership of the agent.
• Governance and participation: Token holders are not only partial owners of the agent, but can also participate in the governance decisions of the agent, including the future development direction, behavior design and upgrade strategy, truly realizing decentralized management.

Virtuals Protocol also has a "buyback and burn" mechanism: when the on-chain vault accumulates a certain amount of funds, the system will periodically activate the token buyback mechanism, for example, to buy back the $SWIFT tokens for the Taylor Swift AI agent. The repurchased tokens will be burned, reducing the market supply and thereby pushing up the value of the remaining tokens.

VIRTUAL Token: The Key Role in Supporting the AI Agent Economy

Each AI agent token has a token pair liquidity pool with the $VIRTUAL token:

• Establishment of the liquidity pool: Creating a new agent requires a certain amount of $VIRTUAL tokens, and these tokens are used to establish the dedicated liquidity pool for the agent. Since the $VIRTUAL tokens in the liquidity pool are locked, the supply is reduced, thereby creating a deflationary effect on the token price and further pushing up the market value of $VIRTUAL.
• To trade the AI agent token, you also need to exchange USDC for $VIRTUAL tokens in order to exchange with them.

Pay-per-use reasoning service: Users need to pay the AI agent reasoning service fee in $VIRTUAL tokens, and these payments are directly made from the user's on-chain wallet to the agent's wallet.

Concerns and Limitations of VIRTUAL

Highly dependent on the success of the token economy: The operation and value growth of the ecosystem is strongly dependent on token demand and market acceptance. If token trading demand declines or market confidence is insufficient, it may affect the value of $VIRTUAL and the agent tokens.

Uncertainty of agent token demand: The demand and value growth of agent tokens depend on the popularity and market demand of the agents. If the application scenarios of the agents are limited or the user experience is poor, it may lead to a decrease in token demand.

Nevertheless, in the current hype of AI token issuance, the token growth of $VIRTUAL has still achieved great success.