Author: Nancy, PANews

After the success of meme coins like GOAT, ACT, and LUNA in heating up the market, the trend of AI Agents is rapidly sweeping from the tech circle into the crypto market, attracting a swarm of gold diggers and creating a lively scene.

According to CoinGecko, as of December 6, the total market capitalization of AI Agent tokens has surpassed $10.2 billion, accounting for about one-fifth of the total market capitalization in the crypto AI sector. Virtuals Protocol is a star project emerging from this trend, launched in January this year on Base as an AI Agent issuance platform focused on gaming and entertainment. Its token, VIRTUAL, has skyrocketed from tens of millions of dollars to over $1.8 billion in just over two months.

Recently, PANews interviewed Wee Kee, co-founder of Virtuals Protocol, to delve into his entrepreneurial journey, product planning, and insights on the development trends of AI Agents.

Transforming from a Gaming Guild to an AI Agent Platform, Token Price Once Dropped by 99%

During this halving cycle, Bitcoin's price broke the $100,000 mark, and believers once again welcomed a new phase of victory. The halving event is an important footnote in Bitcoin's development history, profoundly reshaping market perceptions and driving the industry forward.

2016 was the year of Bitcoin's second halving and also the year Wee Kee was introduced to cryptocurrency. That year, Wee Kee studied at Imperial College London and began purchasing Bitcoin and Ethereum. This top global tech institution was also one of the early adopters of Bitcoin. However, after graduating in 2017, Wee Kee did not immediately dive into the crypto industry but chose to work for traditional well-known companies like Boston Consulting Group.

Fast forward to 2021, the explosion of the blockchain gaming sector attracted attention from both inside and outside the industry, and Wee Kee co-founded the gaming guild PathDAO at this time, which was also the precursor to Virtuals, successfully raising $16 million at a valuation of $600 million. However, the entrepreneurial journey is always fraught with twists and turns. As the blockchain gaming sector nearly went silent, PathDAO faced severe challenges, with its token price plummeting by 99%, reaching a market cap low of only $6 million. Subsequently, PathDAO began exploring multiple business lines, including project incubation, social app development, NFT-integrated clothing sales, and game production, but the market did not respond positively, which greatly impacted the team.

"The drop in token price and the lack of market recognition for our products had a huge impact on team morale, but as a founder, even when feeling lost inside, I still had to inspire the team's spirit," Wee Kee admitted in the interview, stating that at many critical moments, founders need to exhibit a kind of irrational optimism.

In 2023, with ChatGPT leading the global AI technology craze and showcasing its financial potential, countless entrepreneurs jumped in, and Wee Kee also joined the fray, transforming into the current AI Agent platform. Currently, the Virtuals team has expanded to about 20 people, mainly located in Malaysia, while also gathering members from London, Singapore, and other places.

The inspiration for Virtuals came from Japanese virtual YouTubers (Vtubers). "If these virtual idols are combined with AI, can we further explore efficiency value, and does that mean there will be more room for profit?"

In Wee Kee's view, the advantage of combining crypto with AI Agents lies in the innovative model of profit sharing, allowing users worldwide to participate in the operation of AI Agents through investments in specific cryptocurrencies and profit from it, especially those who find it difficult to have traditional bank accounts can participate through crypto wallets. Under this framework, AI Agents can achieve value flow globally, and once profitability is realized, it will bring considerable returns to investors. Additionally, AI Agents can have their own crypto wallets, which brings great potential and innovation, such as allowing each AI Agent to focus on its area of expertise while collaborating with other AI Agents to generate profits and create more possibilities.

From Virtuals' flagship AI virtual idol LUNA, which has over 500,000 followers on TikTok, the market cap of this AI Agent token has exceeded $66 million, and its market exploration model has been recognized by the market.

Benchmarking the AI Model Market Bittensor, Not Just an AI Agent Version of Pump.Fun

The success of Virtuals is attributed not only to the courage to transform but also to deep insights into the AI market, coinciding with favorable timing, location, and human factors.

In terms of timing, in the past two months, with the value leaps of meme coins like GOAT and ACT, the market's focus has gradually shifted to the AI Agent sector, with unprecedented market enthusiasm. The rise of this trend has also allowed platforms like Virtuals to gradually enter the public eye, attracting more attention and investment.

However, the market attention shift caused by price volatility is also a challenge that cannot be ignored. "The MEME market rotates very quickly, but the core focus of the Virtuals community is not limited to MEME; instead, it is concentrated on the practical applicability of the AI Agents created. Even in the face of price fluctuations, there are still users willing to pay for these valuable Agents, which ensures the stability of its ecosystem."

In terms of blockchain selection, Base provides a unique "geographical" advantage for Virtuals' development. At the beginning of 2024, Virtuals decided to build on Base, which was still in its early stages at that time. Wee Kee shared several important reasons for choosing Base in the interview: first, Base was the only public chain backed by the publicly listed company Coinbase at that time, and after Trump's election as President of the United States, it provided greater development space for crypto in the U.S.; second, Base did not issue its own token, which provided greater flexibility for empowering Virtuals' protocol token; third, although Base currently does not perform as well as Solana in terms of TVL and daily active users, the competition in Solana is already quite fierce, whereas Base has more room for growth. Additionally, Wee Kee emphasized that Base places great importance on builder culture, which is more likely to attract tech teams like AI to join, and the Base team also provided technical and marketing support for Virtuals. He also revealed to PANews that Base still has significant construction space, and while there are currently no multi-chain deployment plans, this possibility cannot be ruled out in the future.

The transition of Virtuals' product from a "testing ground" to a vast commercial "field" fully demonstrates the high recognition of its product. By innovatively applying token issuance to the deployment of AI Agents, Virtuals was once regarded by the market as the AI Agent version of Pump.Fun, but Wee Kee does not agree with this view. He stated that the core KPI of Virtuals is not to issue as many tokens as possible but to attract quality teams to participate.

In Wee Kee's view, from the perspective of community members, they hope to find an excellent project and enter at a reasonable price to achieve value discovery. If the market is filled with frequent hot spot changes and chasing, it will bring tremendous psychological pressure to community members. Therefore, Virtuals focuses more on how to attract and support excellent AI teams, emphasizing the construction of long-term value and stable ecological development rather than merely chasing short-term market hotspots. In a sense, Virtuals' competitors are more aligned with the AI model market Bittensor.

At the same time, Wee Kee also revealed that Virtuals is about to launch a new product called "Agent Society." According to him, in this concept, each AI Agent has its own wallet and unique expertise, and they promote value exchange through trading and collaboration, forming a self-operating economic cycle.

To enhance community engagement and developer participation, Virtuals has also introduced the LaunchPad platform Agentstarter, providing creators with an efficient and fair way to bring new AI Agents into its ecosystem. Currently, Virtuals is focusing on two important development directions: first, finding excellent AI teams to incubate more AI Agents with billion-dollar valuation potential; second, planning to travel to Hong Kong, Paris, New York, and other places next year to attract outstanding global AI teams to join the Virtuals ecosystem.

At the end of the interview, for entrepreneurs and practitioners in the AI Agent field, Wee Kee shared some valuable experiences and advice: first, clarify the target user group for AI. Taking Virtuals as an example, it provides services to other AI Agents, thereby enhancing its own visibility by directly observing user needs within the Agent ecosystem, as these users will actively explore and use the Agents you develop; second, strengthen communication with more crypto teams to gain a deeper understanding of the culture and dynamics within the circle, thus better integrating into the ecosystem and capturing more growth opportunities.

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