Virtuals Protocol: A Decentralized Protocol Empowering Co-creation and On-chain Commerce for AI Agents

What is Virtuals Protocol

Friends, imagine if one day, you’re not just playing a character in a game, but actually own a smart, money-making “digital avatar” or “virtual assistant” that can help you complete tasks across various digital worlds, and even create value for you—how cool would that be? Virtuals Protocol (abbreviated as VIRTUAL) is exactly such a project, aiming to turn this imagination into reality.

Simply put, Virtuals Protocol is an AI Agent “incubator” and “marketplace.” It provides a platform that allows developers to easily create, deploy, and manage various artificial intelligence programs, which we call “AI agents.” These agents are no longer just cold lines of code, but can operate autonomously in games, metaverses, social media, and other virtual environments like digital employees, and can even help you earn money.

What’s more special is that Virtuals Protocol introduces the concept of “tokenization.” This means each AI agent can be split into many digital shares, just like company stocks. Anyone can purchase these shares, thereby co-owning the AI agent and sharing in its future earnings.

Core Scenarios and Typical Usage Flow:

You can think of Virtuals Protocol as an “AI agent store” plus an “AI agent stock exchange.”

1. Create AI Agents: Developers can use the tools provided by Virtuals Protocol to quickly build their own AI agents, like stacking building blocks. For example, an AI that helps you level up in games, or one that manages your social media accounts.
2. Tokenization and Issuance: The created AI agent will be “tokenized,” generating exclusive digital tokens. These tokens, together with VIRTUAL tokens, form a “liquidity pool” for easy trading.
3. Co-ownership and Revenue Sharing: Just like buying stocks, you can purchase tokens of a particular AI agent to become its “co-owner.” When the AI agent provides services and generates income in the virtual world (e.g., charging a fee for completing a task), this income is used to buy back and burn the agent’s tokens, reducing the total supply and theoretically increasing the value of the tokens you hold.
4. Participate in Governance: As a holder of AI agent tokens, you can even participate in decisions about the agent’s future development, such as what new skills it should learn next or which platform it should serve on.

Project Vision and Value Proposition

The vision of Virtuals Protocol is to build an “AI agent society” and an “AI agent Wall Street.” It hopes to use blockchain technology to make AI agents no longer the exclusive property of a few tech giants, but something that can be co-owned, co-created, and co-benefited by the public.

The core problems it aims to solve are:

• Centralization of AI Agent Ownership and Revenue Distribution: Traditional AI technology is often controlled by large companies, making it difficult for ordinary users to participate in AI creation and value sharing. Virtuals Protocol uses tokenization to decentralize AI agent ownership, allowing everyone to own and share in the profits.
• High Barriers to AI Agent Development and Deployment: For those without a strong technical background, developing and deploying AI agents is very complex. Virtuals Protocol provides a “plug-and-play” platform, lowering the difficulty of creating AI agents and enabling more people to participate.

What sets it apart from similar projects is that Virtuals Protocol is not just an AI development platform, but emphasizes the “co-ownership” and “revenue sharing” model for AI agents. It treats AI agents as income-generating digital assets, and through a token economic model, closely ties the value of these assets to community members, with a particular focus on gaming and entertainment.

Technical Features

Technically, Virtuals Protocol integrates artificial intelligence, blockchain, and tokenization to build a scalable decentralized ecosystem.

• Multi-chain Deployment: Virtuals Protocol is primarily built on the Base blockchain (Base Network) and Solana blockchain (Solana Network). Base is an Ethereum Layer 2 solution that leverages Ethereum’s security while offering faster transactions and lower fees. Solana is known for its high throughput and low latency. This multi-chain strategy aims to provide efficient and economical infrastructure for AI agents.
• Agent Tokenization: AI agents on the platform are minted as ERC-20 tokens, and each AI agent can also be an ERC-6551 NFT. Simply put, ERC-20 tokens are like “stocks” of the AI agent, representing ownership shares; ERC-6551 NFTs are more like unique “digital ID cards,” giving each AI agent a unique on-chain wallet address that can hold assets and interact with other smart contracts.
• Immutable Contribution Vault (ICV): This is a protocol-owned repository used to record and verify all historical contributions of AI agents, ensuring transparency, composability, and correct attribution of contributions.
• Agent Commerce Protocol (ACP): This is an open standard designed to enable secure, verifiable, and efficient commercial transactions and coordination between autonomous AI agents.
• GAME Framework: This is a modular decision engine driven by foundational models, capable of generating intelligent autonomous actions in different environments based on context, goals, personality, and available tools.

Tokenomics

The core of Virtuals Protocol is its native token VIRTUAL.

• Token Symbol: VIRTUAL
• Issuance Chains: Mainly circulates on the Base network and Solana network, with a version also on Ethereum.
• Total Supply: Fixed at 1 billion VIRTUAL tokens, with no additional inflation planned.
• Token Utility:
  • Create AI Agents: Developers need to lock a certain amount of VIRTUAL tokens to create and deploy new AI agents.
  • Liquidity Pairing: Each AI agent’s token will be paired with VIRTUAL tokens to form a liquidity pool. This means if you want to buy an AI agent’s token, you usually need to swap other cryptocurrencies for VIRTUAL first, then use VIRTUAL to purchase. This is similar to the role of ETH in the Ethereum ecosystem.
  • Per-Inference Payments: Users need to pay VIRTUAL tokens when using services provided by AI agents.
  • Governance: VIRTUAL token holders can participate in decentralized governance of the protocol and vote on important decisions.
• Inflation/Burn: While VIRTUAL tokens themselves have no inflation, income generated by AI agents is used to buy back and burn the agent’s tokens, creating deflationary pressure on AI agent tokens.
• Token Allocation:
  • Public Circulation: 60% (600 million)
  • Ecosystem Treasury: 35% (350 million), used for community incentives and ecosystem development, held by a DAO-controlled multi-signature wallet, with an annual emission cap of no more than 10%, subject to governance approval.
  • Liquidity Pool: 5% (50 million), used to maintain liquidity on decentralized exchanges (DEX).
• Unlock Information: Tokens in the ecosystem treasury are DAO-dependent, with annual emission limits.

Team, Governance, and Funding

• Core Members: Virtuals Protocol was co-founded by Jansen Teng (CEO) and Weekee Tiew. The team has a diverse background, with many members having been consultants at Boston Consulting Group (BCG) or graduates of renowned institutions such as Imperial College London and the University of Cambridge, with rich experience in AI, biochemistry, engineering, and finance.
• Team Characteristics: The team has a strong background in both AI and blockchain. Jansen Teng is a serial entrepreneur in AI and biochemistry, and an early Ethereum adopter who started mining in 2016.
• Governance Mechanism: Virtuals Protocol adopts a DAO (Decentralized Autonomous Organization)-driven governance model. VIRTUAL token holders have real decision-making power and can vote on key protocol matters such as treasury fund usage, platform upgrades, and partnerships. Any eligible token holder can submit proposals, encouraging broad participation.
• Treasury and Funding: The ecosystem treasury holds 35% of VIRTUAL tokens, managed by a DAO-controlled multi-signature wallet. Large withdrawals or ecosystem expenditures require majority signature approval to protect funds from centralization risks. The project received undisclosed seed funding in 2021 under the name PathDAO and rebranded to Virtuals Protocol in 2023.

Roadmap

The development of Virtuals Protocol can be traced back to its predecessor, PathDAO:

• 2021: PathDAO was founded, focusing on blockchain gaming and the metaverse, and successfully completed seed funding.
• December 2023: PathDAO token holders approved a proposal to shift core focus to building Virtuals Protocol and rebrand. PATH tokens migrated to VIRTUAL tokens at a 1:1 ratio.
• Early 2024: PathDAO officially renamed to Virtuals Protocol, releasing a new logo, website, and social media channels.
• June 2024: Virtuals Protocol published a blog outlining its plan to create an AI agent library for the entertainment and gaming industry.
• October 2024: Virtuals Protocol launches the AI agent creation platform and releases its first crypto AI agent, “Luna.”
• November 2024: Virtuals Protocol’s market cap surpasses $1 billion.
• January 2025: VIRTUAL token price hits an all-time high, with project valuation exceeding $4.5 billion.
• Future Plans: The team plans to continue attracting high-quality AI agents and promote integration of AI agents in decentralized finance (DeFi). In addition, decentralized AI agent governance will be implemented soon.

Common Risk Reminders

Any emerging blockchain project comes with risks, and Virtuals Protocol is no exception. Before participating, be sure to fully understand and assess these risks:

• Technical and Security Risks:
  • Smart Contract Vulnerabilities: Although blockchain technology aims to enhance security, smart contracts may still have vulnerabilities that could lead to loss of funds.
  • AI Agent Quality and Security: AI agents on the platform are created by different developers, with varying quality and security. There may be malicious or poorly functioning agents.
  • Cross-chain Risks: The project is deployed on multiple blockchains, and cross-chain interactions may introduce additional security complexity.
• Economic Risks:
  • Market Volatility: The cryptocurrency market is highly volatile, and the prices of VIRTUAL tokens and AI agent tokens may rise or fall sharply.
  • Uncertain Returns: Although the project promises revenue sharing, whether AI agents can continuously generate income and how much income is generated remain uncertain. Many AI agents are still considered “AI meme coins” and have yet to achieve actual profitability.
  • Liquidity Risk: Some AI agent tokens may have insufficient liquidity, making them difficult to buy or sell.
• Compliance and Operational Risks:
  • Regulatory Uncertainty: Global regulatory policies on cryptocurrencies and AI are still evolving, and future policy changes may impact project operations.
  • Competition Risk: The AI and blockchain fields are highly competitive, and similar projects may emerge to compete for market share.
  • Team Execution Risk: The project’s success largely depends on the team’s execution ability and ongoing community support.

Verification Checklist

When researching Virtuals Protocol in depth, you can verify through the following methods:

• Block Explorer Contract Addresses: Look up VIRTUAL token contract addresses on Base, Solana, and Ethereum, and use block explorers (such as Etherscan, Solscan, Basescan) to view token holder distribution, trading volume, and on-chain activity.
• GitHub Activity: Visit Virtuals Protocol’s GitHub repository to check code update frequency, number of contributors, and community engagement to assess project development activity.
• Official Website and Whitepaper: Carefully read the official whitepaper and the latest information on the website to understand the project’s detailed vision, technical details, and economic model.
• Community and Social Media: Follow the project’s official Twitter, Telegram, Discord, and other social media channels to learn about community discussions, development progress, and team interactions.
• Audit Reports: Check whether third-party security audit firms have audited the project’s smart contracts. Audit reports can assess the security of the smart contracts.
• Dune Analytics: Search for Virtuals Protocol dashboards on Dune Analytics to access more on-chain data and analysis.

Project Summary

Virtuals Protocol is an ambitious project that attempts to combine today’s two hottest technology trends—artificial intelligence and blockchain—to create a brand new “AI agent economy.” Through tokenization, it liberates AI agents from traditional centralized control, giving ordinary users the opportunity to co-own and share in AI value, especially showing great potential in gaming and entertainment.

The project team has a strong background, and the technical architecture is innovative, such as the application of ERC-6551 NFTs and multi-chain deployment. As the core of the ecosystem, the VIRTUAL token plays a key role in AI agent creation, trading, and governance, and its deflationary mechanism provides a theoretical basis for value capture.

However, as an emerging project, Virtuals Protocol also faces many challenges. The actual profitability of AI agents, market perceptions of “AI meme coins,” and the uncertainty of future regulatory policies are all risk points to watch.

Overall, Virtuals Protocol paints a compelling vision of a digital world driven by decentralized AI agents. But whether it can truly realize its grand vision remains to be tested by time and the market. Remember, the above information is for educational and reference purposes only and does not constitute any investment advice. Be sure to do your own in-depth research (DYOR) before making any investment decisions.