Interpreting the current situation of ai16z and Virtuals: occupying over half of the AI Agent market share, both facing the challenge of ecosystem centralization.

Author: Nancy, PANews

With the gradual improvement of infrastructure and the gradual landing of application scenarios, the encrypted AI Agent ecosystem is becoming increasingly prosperous, presenting a new market development trajectory, and liquidity and user participation are also constantly rising. In this AI Agent boom, ai16z and Virtuals Protocol are undoubtedly the two most dominant representative projects, and their ecosystems have attracted active capital from all walks of life.

ai16z and Virtuals dominate the AI Agent market, contributing over half of the market share

Despite the rapid rise of the AI Agent ecosystem in the cryptocurrency market, which has attracted a lot of attention and capital, its market structure still appears to be single and mainly relies on the promotion of a few leading projects.

According to the latest data from Cookie.fun, as of December 30th, the overall market value of AI Agent has reached $11.68 billion, with a growth of nearly 39.1% in the past 7 days. This growth trend indicates the rapid growth of the AI Agent ecosystem in the crypto market.

In terms of ecosystem size, the entire encrypted AI Agent shows a clear head effect, mainly dominated by Virtuals and ai16z. Specifically, Virtuals' ecosystem market value reached $50.1 billion, ai16z reached $16.3 billion, accounting for 56.8% of the market share of the AI Agent, while the combined market value of other projects is about $170 million. This also means that the current growth and development of AI Agent rely more on the construction of these two leading projects.

Meanwhile, in terms of type, the market value of Virtuals exceeds that of custom AI Agents, which is $4.67 billion, and the cumulative market value of other categories is $1.8 billion.

From the perspective of distribution on the chain, Base and Solana are the two main battlefields for AI Agent. Among them, the market value of AI Agent on Base is about 5.76 billion US dollars, while the market value on Solana is 5.47 billion US dollars. The two together contribute 96.1% of the overall market, and the cumulative market value of other projects on the chain is only 920 million US dollars, further indicating that the AI Agent ecosystem is still in its infancy.

Although Base and Solana are equally competitive in the market size of AI Agent, the ecological composition of the two differs significantly. The main project in the Base ecosystem is Virtuals, with 86.9% of projects coming from this ecosystem. In contrast, ai16z only occupies nearly one-third of the market share on Solana, indicating that the AI Agent ecosystem on Solana is richer and more diverse compared to Base.

Presenting different ecological development paths, but the market concentration is obvious

With the popularity of Virtuals and ai16z, their ecosystem projects have also become the focus of market investors' attention and bets.

According to data from daos.fun, as of December 30th, the net asset value (NAV) of ai16z is approximately $23.55 million, covering over 1400 tokens. Among these tokens, only 3 tokens have a market capitalization of over one million dollars, namely ELIZA, fxn, and degenai, with their combined market value accounting for 84.3% of the total; there are 6 tokens with asset sizes ranging from $10,000 to $100,000, and the market value of the remaining tokens is less than $100,000. This distribution indicates that ai16z's token portfolio exhibits a relatively concentrated characteristic, with a few high-value tokens dominating the overall asset size, while the market value of most tokens is relatively dispersed, demonstrating that the ecosystem is still in a highly differentiated state.

Compared with ai16z, the quality of the Virtuals ecosystem project is relatively high, and it has recently sparked heated discussions due to its market value surpassing the star AI project Bittensor (TAO). Nevertheless, there is also a certain structural imbalance in the Virtuals ecosystem.

According to the Virtuals official website, as of December 30th, there are currently about 510 ecological projects in Virtuals. Among them, there are four projects with a market value of over 100 million, namely AIXBT, G.A.M.E, Luna, and VaderAI, accounting for 19.2% of the overall ecology. There are 99 projects with a value between 1 million and 100 million US dollars, and about 60% of the remaining projects have a market value of less than 100,000 US dollars. The overall ecological project of Virtuals has gained more market recognition, but there is a certain degree of concentration problem in its ecological development.

For the different AI Agent development routes of ai16z and Virtuals, Haotian, an independent researcher in the Web3 field, pointed out in a previous article that ai16z is more open source, more like an 'Android-style' developer ecosystem alliance route. However, due to the extreme lack of token economics for ai16z tokens, there is no reasonable evaluation model for its ecosystem tokens, and it cannot form a concerted effort in the short term. However, all of this will be resolved after a systematic Tokenomics. At the same time, each member of the ai16z ecosystem has their own strengths, and the future lies in the power of the developer community. The first thing founder Shaw wants to do is to lead the scattered ecosystem onto a super open-source growth flywheel driven by the technology open-source community.

And in a recent interview with PANews, Shaw revealed that ai16z will announce a brand new token economics proposal around January 1, 2025, including LP pairing mechanism, DeFi function integration, and more.

Comparison between Virtuals and ai16z, source: @0xgangWhat

In contrast, Virtuals is more closed. Haotian pointed out that Virtuals follows an 'Apple-style' ecological expansion route and is more like an AI Agent 'Star-making Dream Factory.' Due to the complete token economics of Virtuals in the early stage, users need to stake the token VIRTUAL to create an AI Agent, and they need to consume VIRTUAL tokens to purchase new AI Agent tokens. Therefore, the more AI Agents issued on Virtuals, the greater the demand for Virtuals tokens, naturally generating a positive growth flywheel effect. However, because Virtuals focuses on asset issuance platforms and provides a standard AI Agent framework base, it will lead to relatively heavy homogenization of AI Agents on the platform. This asset issuance and light technical ecological breakthrough of Virtuals also inherently limits the closed ecological nature.

From pure MEME to on-chain applications, AI Agent innovates market operation models

Behind the hype of Virtuals and ai16z lies an increased focus on AI Agents and an important manifestation of MEME's development and evolution.

"AI is the biggest main theme of human technology and productivity improvement in the next 20 years, and it can be integrated into all Crypto categories, including DeFi, GameFi, NFT, and Desci. During the rapid improvement period, it will bring a large number of new applications and new technologies, all of which can be applied to Crypto." Crypto KOL 0xWizard believes that the combination of AI's new targets may recreate a market value of on-chain assets, and even recreate a total market value of cryptocurrencies.

"From the original pure MEME like GOAT, to chat AI Agents, to on-chain funds like ai16z, and then to new asset issuance platforms like Virtual and Spore, each step is getting closer to applications. The essence of this round of on-chain market is that new 'application projects' bypass exchanges and VCs, and directly realize the redistribution of benefits through the on-chain issuance of new assets. At the same time, project parties do not need to please VCs, compete for resources, and find exchanges to pay tolls, they can directly go on-chain to see if the market is interested." Cryptocurrency KOL @Michael_Liu93 pointed out.

Haotian also believes that the environment has changed, and the logic of capturing value in the market is also changing, which is mainly reflected in the following points: (1) from the previous infrastructure stacking that is detached from the actual needs of the market to the front-end application of AI Agent to verify market demand; (2) In the past, VC rounds of financing led to more and more narrow profit margins in the secondary market, but now building projects in the form of open source Public Good can directly raise funds in the secondary market, and allowing AI agents to independently manage assets can bring greater imagination to the project; (3) In the past, airdrop methods such as obtaining early users and traffic have brought follow-up operational pressure, and opening in the MEME-based two-level way can be suitable for the continuous growth of Tokenomics (LP fees, transaction taxes, reserved share release, etc.); (4) After breaking the endgame of CEX listing, it will gradually tend to be DEX-oriented, and high-quality projects have a greater probability of "grassroots counterattack"; (5) Realize new market operation rules, and it is basically difficult for the market and ecology of projects that do not mingle with the community and do not always pounce on the front line of products.