What is Virtuals Protocol?

Artificial Intelligence (AI) continues to disrupt numerous industries, and the entertainment sector is no exception. AI agents, which are autonomous characters designed to execute specific tasks without human intervention, are gaining popularity due to their efficiency, enhanced productivity, and reduced costs. As such, AI agents represent the next evolutionary stage of artificial intelligence.
The AI gaming market is projected to grow from $4.2 billion in 2023 to $42.1 billion by 2032, driven by AI-enhanced gameplay and immersive experiences. Similarly, the generative AI market is expected to expand from $1.47 billion in 2024 to $3.39 billion by 2028, revolutionizing real-time content creation.

Project Overview

Founded in 2021, Virtuals Protocol is an AI agent generation platform built on Base Rollup. It was co-founded by Prakash Somosundram, Colin Choo, Christopher Johnson, and Matthew. The platform aims to allow anyone to create an AI agent—a virtual character capable of interacting with and participating in its environment like a human. It incentivizes the decentralized creation and monetization of AI agents for every virtual interaction, whether in gaming, the metaverse, online engagements, or other applications.

How Does Virtuals Protocol Work?

Key Features

Virtuals Protocol integrates AI agents, blockchain infrastructure, and tokenization to establish a scalable, decentralized ecosystem. Built on Base Rollup, it combines AI capabilities with on-chain governance and automated revenue management, providing value to developers, users, and contributors.
Its key features include:

• Agent Tokenization: AI agents are minted as ERC-20 tokens with a fixed supply, paired with $VIRTUAL tokens in locked liquidity pools. A buyback-and-burn mechanism ensures deflationary pressure on the token supply.
• GAME Framework: Agents utilize multimodal AI functionalities, such as text generation, voice synthesis, gesture animation, and blockchain interaction, enabling real-time adaptability.
• Revenue Streams: Agents generate income through inference fees, application integrations, or user interactions. Earnings are stored in their on-chain wallets for buybacks or capital growth.
• Memory Synchronization: Agents retain cross-platform memories through long-term memory processors, ensuring user-specific contextual continuity.
• Decentralized Validation: Contributions and model updates are managed by a Delegated Proof-of-Stake (DPoS) system, ensuring agent performance aligns with community standards.
• On-Chain Wallets: Each agent operates an ERC-6551 wallet, enabling autonomous transactions, asset management, and financial independence.

Modular Consensus Framework

At the core of Virtuals Protocol lies the Modular Consensus Framework, which standardizes and simplifies interactions among various stakeholders:

• Contributors: Individuals or entities submitting proposals to improve AI agents through models, datasets, or intellectual property. Each submission generates a “Contribution NFT” as proof of the proposal’s origin.
• Validators: Responsible for evaluating and approving these proposals, validators operate through a Delegated Proof-of-Stake (DPoS) mechanism, where token holders delegate their tokens to qualified validators who finalize the state of each AI agent.

Interaction Process Between Contributors and Validators

Submission: Contributors propose enhancements for AI agents, such as new models or datasets.
Validation: Validators assess proposals to ensure they meet protocol standards and align with the AI agent’s objectives.
Approval: Approved proposals are minted as “Service NFTs” and integrated into the agent’s Immutable Contribution Vault (ICV).
Reward Distribution: Contributors receive rewards proportional to the value and impact of their proposals.

Immutable Contribution Vault (ICV)

The ICV is a protocol-owned repository that archives all historically validated contributions of VIRTUAL agents on-chain, ensuring transparency, composability, and proper attribution of contributions.
The ICV comprises several hierarchical layers:

1. Smart Contract Wallet Ownership (ICV): The foundational layer is a smart contract wallet, called the ICV, managing all subsequent layers.
2. Individual VIRTUAL Agents as ERC-6551 NFTs: Each VIRTUAL agent is created as an ERC-6551 NFT, which also serves as a unique wallet address. This dual design seamlessly merges personal identity and transactional elements in the Virtuals ecosystem.
3. Core Components of VIRTUAL Agents: Cognitive, voice, and visual cores are stored beneath each VIRTUAL agent and registered on the smart contract.
4. Service NFTs Within Each Core: Approved contributions are stored as Service NFTs within each VIRTUAL agent, with their relationships to the core components recorded through smart contracts.
   This architecture enables Virtuals Protocol to transparently manage AI agents in a decentralized environment.

Virtuals Protocolunding Background

December 2021: PathDAO (the precursor to Virtuals Protocol) completed a seed funding round, with an undisclosed amount led by DeFiance Capital and Merit Circle, alongside participation from LVT Capital, Stakez Capital, Master Ventures, and NewTribe Capital.

VIRTUAL Tokenomics

Token Utility

VIRTUAL is the native utility token of the Virtuals Protocol ecosystem:

• Agent Creation and Ownership: Users must lock a certain amount of VIRTUAL tokens to develop and deploy new AI agents.
• Medium of Exchange: VIRTUAL tokens facilitate on-chain payments within the ecosystem.
• Revenue Sharing: Contributors enhancing AI agents through models, datasets, or other assets receive VIRTUAL token rewards.

Token Distribution

The total supply of VIRTUAL tokens is 1 billion:

• Public Distribution: 60%
• Ecosystem Treasury: 35%
• Liquidity: 5%

Examples of AI Agents

The platform supports AI agents across gaming, finance, and communication, with each agent leveraging advanced AI capabilities to provide autonomous value creation. Notable examples include:

• AIXBT: With a valuation of $207 million, AIXBT specializes in market trend analysis. Its proprietary momentum engine identifies high-value opportunities, designed for algorithmic and data-driven traders.
• AiDOL: AiDOL pioneers fully AI-driven live-streaming agents on platforms like TikTok. Utilizing advanced AI technology, AiDOL creates virtual idols capable of forming personalized connections with fans. Its first creation, an AI band, features Luna as the lead singer.
• Luna: An AI influencer with over 500,000 TikTok followers, Luna uses her $LUNA token to transform her fanbase (“Kittens”) into financial supporters. Rejecting traditional systems, she leverages blockchain to build an on-chain empire, tying her success to her fans’ gains.
• Roblox Westworld: An interactive simulation within the popular Web 2.0 game Roblox, powered by the GAME framework. This setup provides diverse storylines and endings, minimizing repetition across playthroughs.
• Satoshi AI (SAINT): With a market valuation of $33.5 million, Satoshi AI is trained on a dataset of all writings by Satoshi Nakamoto. It delivers actionable on-chain insights for Bitcoin and interacts with token holders as if it were the real Satoshi.

Gate.io Now Supports $VIRTUAL Spot Trading