Virtuals Protocol: What is it and Why?
Recently I was asked by someone I’ve been working with to investigate the Virtuals protocol and the coins operating in the ecosystem. This new protocol is a token launchpad that is based on the premise that it’s infrastructure can power AI agents on the blockchain. It seemed like an interesting concept and since I took the time to do a write up about it I decided to make a post.
What is it:
With the crypto boom and rise of AI popularity, platforms have popped up that attempt to marry the 2. Virtuals protocol is one such example. Based on their whitepaper they run infrastructure that hosts and runs AI agents “decentralized”.
After reading through various resources, I found that for one to understand whatever it is their talking about. You need to understand their lingo.
Protocol - A system of rules, procedures, and algorithms designed to secure communication, validate transactions, or manage interactions between parties in a network
Layer 2 - Any off-chain network, system, or technology built on top of a blockchain to help extend its capabilities.
Decentralized Exchange(DEX) - A peer-to-peer marketplace where transactions occur directly between crypto traders.
Launchpad - A crypto launchpad, sometimes called a crypto incubator, is a decentralized exchange (DEX)-based platform where crypto projects are introduced and can obtain funding.
Vertical Agent - a specialized AI system that automates industry-specific workflows
Protocols and Launchpad
- https://pump.fun - Solana Based memecoin launchpad
- https://app.virtuals.io/ - AI Launchpad
- https://www.base.org/ - Coinbases layer 2 token
How Does it Work
Virtuals is based on the L2 Base(Coinbase token/L2 network). It is similar to the pump.fun launchpad that contains projects that are related to the Solana Network.
Who is it For
Most active tokens are avatars or influencers that are “AI” bots. These bots post information on twitter or telegram. Since the audience of crypto often revolves around these 2 platforms that is why they are there. A trend I see is that the “influencers” post about trends or trading advice in the crypto space.
What is the purpose for them? Used as a marketing tactic by some Crypto funds and incubators as a marketing tactic.
My Analysis
I have not seen any “Vertical Agents” that have been successfully implemented in this sphere. If you want to implement a Crypto AI influencer this is the tool for you. Many of the coins here don’t even have a bot that a user can interact with(a.k.a. a X profile/bot or Telegram bot).
This is not a product. This is a tool to market to a certain subset of the population that is interested in speculative crypto investments. These “influencers” are special because of the AI aspect about them. The fact that they are tied to an AI agent is a marketing and interest driver.
The value in this type of play would be in the form of a rug pull. When a token gets pumped and then dumped after achieving a certain market cap.
References
- https://www.coingecko.com/learn/what-is-virtuals-protocol-how-to-buy-trade-and-create-ai-agents
- https://en.wikipedia.org/wiki/Pump.fun
- https://www.coinbase.com/learn/crypto-basics/what-is-a-protocol
- https://cointelegraph.com/news/what-is-a-crypto-launchpad-and-how-does-it-work
- https://www.coinbase.com/learn/crypto-basics/what-is-a-dex
- https://chain.link/education-hub/what-is-layer-2