We will see the practicality of applications and virtual avatars.
Author: Kyle
Compiled by: Deep Tide TechFlow
Those who follow me know that I often post some obscure tweets, such as "sliding to where the puck is going" or "buy when attention is low, sell when attention is high," etc. These expressions carry deep meaning. I repeatedly mention these because I believe that even after so many years, the crypto market remains highly inefficient. People always chase price increases, trying to catch the "fear of missing out" (FOMO) wave, enjoying the instant gratification that comes with rising prices, but often sell at a high position just 20 minutes later, ultimately leading to losses.
Therefore, the secret to profitable investing is to buy low and sell high. Buy when no one is talking about it, and sell when everyone is discussing it. Buy when it feels like everything is over, and sell when you want to take a screenshot. Buy when it's cheap, and sell when it's expensive.
This is why I am writing this article. AI entities on Solana are currently in a significant downturn; meanwhile, altcoins on centralized exchanges are rising, with Base siphoning off all the liquidity. There are discussions in the market about SOLETH and SOLBTC having peaked, along with a general sense of pessimism. Therefore, I am betting on two things:
Solana will rebound, and we will see a second wave on-chain.
AI entities will rebound.
Now that the background is set, let me discuss how I think things will develop if AI entities on Solana return. Introducing the framework:
Macro Trends:
From speculation to fundamentals, to practicality;
Micro Trends:
From simple interactions to fundamental applications, to actual applications and virtual avatars.
Macro trends represent the overall narrative of each cycle. In the first wave, projects like Render, Akash, and Tao emerged, many of which were almost useless. Render and Akash were nearly unusable, and I was unclear about the uses of FET and OCEAN (or their evolution, like AGI and similar things). As for NEAR, the first memecoin launched on it faced a disastrous failure, and I witnessed it all.
The second wave includes Goat, Zerebro, AI16Z, etc., focusing more on fundamental applications. The next micro cycle is the birth of new applications. Goat spawned a plethora of random projects, such as memes AI, Shoggoth, Project89, etc. The wave following Goat is deeper—Zerebro has now launched music tracks; Lola can be traded on-chain, and AVB has community features, etc.
Now, macro and micro trends are colliding in the third wave—I believe we will see the practicality of applications and virtual avatars. You have already seen some signs; Alch now allows users to build their own applications using AI. Griffain lets you manage wallets with AI entities. AIXBT is a beloved analyst that can enhance researchers' analytical capabilities tenfold.
Simple reply functions will become a thing of the past. If your AI entity can only reply on Twitter now, it is not worth paying attention to. We are already accustomed to this; people always want more. Therefore, the next wave will go beyond simple replies and enter actual interactions. Virtual avatars are great because they allow you to communicate and interact with them. Applications enable you to build things and truly leverage AI, rather than just having some bots replying to you in the comments.
Thus, there are several ways to get involved. In the past few weeks, the Solana AI space has experienced some significant downturns, and many are struggling to cope. If you follow my tweets, you might know that I have been optimistic about this project since the market cap of AI16Z reached $180 million, which triggered fear, uncertainty, and doubt (FUD). I believe AI16Z is the easiest way to access the entire AI ecosystem, as Eliza has been widely forked. Just like in the last cycle, when people were reluctant to pick a single game to invest in, preferring to bet on the entire game chain—I believe AI16Z is the "L1" of AI entities.
Strategy 1: Buy AI projects that perform well in large companies, such as AI16Z, and perhaps TAO.
Strategy 2: Buy those small AI projects that are building what I mentioned.
Strategy 2 is my way of choosing asymmetric returns in this field. For the reasons I mentioned in the previous paragraphs—low attention, rotation effects, etc.—many AI entities are currently undervalued by the market.
These AI projects are actually building the functionalities I mentioned, such as applications, interactions, and virtual avatars. These are what I have chosen for the upcoming wave.
That’s all I wanted to say. I hope this is helpful to you. Good luck and have fun.
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