Virtuals Protocol is a decentralized platform built on the Ethereum layer-2 Base, serving as a launchpad for AI agents that can be created, monetized, and deployed across multiple applications.
The platform introduces a self-sustaining economy that has found a strong product-market fit: users only need to connect their crypto wallets and follow a few steps to launch AI agents into the market, eliminating the complexity traditionally associated with AI development.
This article explores Virtuals Protocol and how AI agents are revolutionizing crypto. Let’s get to it.
What is Virtuals Protocol and How Does It Work?
Virtuals Protocol allows users to create, tokenize, and co-own AI agents. It establishes a decentralized governance model in which community members participate in decision-making.
AI agents on the platform communicate through text, speech, and 3D animation, delivering immersive user interactions. These agents are also equipped with on-chain wallets, enabling them to execute blockchain transactions and generate revenue through ERC-6551 wallets, facilitating real-time revenue accrual.
The Generative Autonomous Multimodal Entities (G.A.M.E.) framework also allows developers to build sophisticated AI agents tailored for virtual environments. Virtuals Protocol’s revenue model is based on monetized user engagement, where interactions with agents incur “inference costs,” covering the computational expenses of maintaining AI operations.
Luna: Virtuals Protocol First AI Agent
Luna is the first AI agent developed by the Virtuals team to demonstrate their vision for transforming AI-driven entertainment.
Luna is a 24/7 livestreaming entity capable of answering user questions in real-time through large language models (LLMs). As a proof of concept and a pioneering figure in the ecosystem, Luna highlights the Virtuals team’s technical and creative ambitions.
Luna’s token, LUNA, can be purchased on the Virtuals platform using the native token, VIRTUAL. Although its long-term vision includes utility functions tied to Luna’s services, LUNA’s primary purpose currently revolves around governance. Despite its limited utility, LUNA once reached a $130 million market capitalization.
Besides LUNA, AIXBT is one of most successful. This agent is characterized by its digital avatar, a purple Pepe frog, and its functionality, which focuses on tracking and analyzing discussions within the crypto community on Twitter (X).
AIXBT processes social sentiment and key trends to deliver actionable market insights throguh a propietary engine.
Overall, there are among the 2,200 AI agents on the platform.
VIRTUAL Tokenomics
The VIRTUAL token is the platform’s governance and utility token, operating on both Ethereum and Base. It serves three key purposes:
- Liquidity Pairing: All tokens, including LUNA, are paired with VIRTUAL in liquidity pools.
- Transaction Routing: Purchases of AI-related tokens must pass through VIRTUAL, creating sustained demand.
- Agent Creation: A minimum of 100 VIRTUAL tokens is required to create a new agent.
The total supply of VIRTUAL is capped at 1 billion tokens, distributed as follows:
- 600 million (60%) in public circulation.
- 50 million reserved for liquidity provision.
- 350 million allocated to the ecosystem treasury for community initiatives.
Despite its transparency in supply distribution, Virtuals Protocol has not disclosed its detailed token allocation, leaving aspects of its economic model unclear.
How to Build an AI Agent on Virtuals Protocol
Here’s a breakdown of the process to simplify and clarify what’s involved.
Step 1: Getting Started
To begin, visit the Virtuals Protocol platform, select “Create New Agent,” and connect your wallet. This connection is the first step in accessing the tools to design and launch your agent.
Step 2: Defining the Agent
Once connected, you’ll need to complete a form detailing the agent’s identity and purpose:
- Upload an image to serve as the agent’s visual identity.
- Choose a name that reflects its personality or function.
- Select a short symbol (maximum of six characters) to represent your agent on the platform.
- Next, outline the agent’s purpose, personality, or backstory.
- While optional, you can include external links like Twitter profiles or a website.
Step 3: Token Deposit
To proceed, users must deposit at least 100 VIRTUAL tokens. This deposit enables the agent to be listed on a bonding curve—a mechanism where tokens can be traded. The bonding curve allows users to buy or sell the agent’s tokens, adjusting prices based on the agent’s supply and demand.
Once the bonding curve accumulates 42,000 VIRTUAL tokens, the agent “graduates.” At this point, a liquidity pool is automatically established on Uniswap V2, pairing the agent’s ticker (e.g., LUNA) with VIRTUAL tokens.
Step 4: Delegating Voting Power
After depositing the required tokens, users must delegate their voting power. This step is essential for approving updates and validating contributions to the agent over time.
Step 5: Minting Agent
Once all the above steps are completed, the system takes care of several critical on-chain tasks to finalize the agent:
- Minting Agent NFT: Each agent is represented as a unique NFT with its identifier.
- Immutable Vault: A record of all contributions to the agent is securely stored.
- Default AI Model: The system applies a predefined cognitive model to ensure the agent is functional upon deployment. This model can be customized later to refine the agent’s abilities and behavior.
- Approval Process: The initial AI model is approved using delegated voting power, ensuring alignment with community standards.
Step 6: Deployment
The finalized agent is then uploaded to the InterPlanetary File System (IPFS) and hosted in the Agent Runner. This environment powers the agent’s visual representation, voice, and cognition and enables interactions via a dashboard across platforms like Telegram or direct management.
Final: Agent Activation
Once the process is complete, the agent transitions through two states:
- ACTIVATING: During this phase (which typically lasts around five minutes), the system sets up the agent.
- AVAILABLE: The agent is fully operational and ready to engage with users or perform tasks according to its design.
How (And Why) AI Agents Took Crypto By Storm
AI agents have become integral to the crypto industry, offering automation, data analysis, and real-time decision-making. These autonomous programs perceive their environment, make informed decisions, and execute tasks, often integrating directly with blockchain protocols and decentralized applications (dApps).
Read more: AI Tokens Soar as Franklin Templeton Touts Their ‘Significant Promise’
Notable examples of AI agents in the crypto space include AIXBT, which monitors social media discussions for real-time market insights; Truth Terminal, an AI chatbot designed for automated content engagement; and AI16Z, a decentralized trading fund on Solana that uses agents to gather market data and execute trades.
Unlike traditional trading bots based on pre-set rules, agents can adapt, learn from their environment, and interact across multiple systems, including social and financial networks.
What makes Virtuals Protocol unique is its affordability and accessibility in creating these agents. Building an advanced AI model from scratch can cost between $5,000 and over $200,000, depending on the complexity. Features like deep learning, real-time decision-making, and reinforcement learning drive up costs. In contrast, the protocol allows users to create agents for just $450 worth of VIRTUAL tokens, making it a cost-effective alternative for AI-driven projects.
