What is Virtuals Protocol?

In 2025, as AI and blockchain technology accelerate their integration, Virtuals Protocol has rapidly become an important infrastructure in the crypto field and the metaverse track with its innovative “AI agent tokenization” model. This project not only redefines the creation and ownership of virtual assets but also promotes the democratization of AI technology through decentralized mechanisms, bringing disruptive changes to gaming, entertainment, and social fields.

Virtuals Protocol Project Positioning

Virtuals Protocol was established in 2021, initially exploring GameFi in the form of the gaming guild PathDAO, and later transformed into an AI-driven blockchain protocol in 2023. Its core objective is to tokenize shared ownership, converting AI agents (such as virtual characters, game NPCs, etc.) into community-shared revenue-generating assets, lowering development barriers and achieving equitable distribution of profits.

Technical architecture and core functions:

1. Autonomous multimodal AI agents: Through generative AI technology, virtual agents can achieve multimodal interaction in text, voice, and animation, and possess autonomous decision-making capabilities. For example, agents can explore virtual worlds in Roblox, interact with users as virtual influencers on TikTok, and even conduct asset transactions through on-chain wallets.
2. Modular Contribution System: Users can contribute data, models, voice, or visual materials, recording contribution value through an Immutable Contribution Vault (ICV) and redeeming rewards. All contributions are certified in the form of NFTs, ensuring transparency and traceability.
3. Plug-and-play integration: Developers can quickly embed AI agents into games or social applications through APIs and SDKs, without the need to train models from scratch. For example, third-party DApps can call on Virtuals’ AI characters as NPCs, significantly reducing development costs.

Token Economic Model: Deflationary Mechanism and Benefit Coordination

VIRTUAL serves as the core token of the ecosystem, with a total supply of 1 billion tokens, distributed as follows: 60% for public circulation, 35% for the ecological treasury, and 5% for the liquidity pool. Its economic design revolves around two core mechanisms:

1. Initial Agency Offering (IAO): Users can lock VIRTUAL to create new agency tokens. Once the market capitalization reaches the target, a liquidity pool is automatically generated and locked for 10 years to maintain price stability. For example, the token LUNA of the virtual idol Luna was issued through this mechanism, with a portion of its revenue used for repurchasing and burning tokens, creating a deflationary effect.
2. Revenue Sharing and Governance: Token holders can stake VIRTUAL to participate in proxy governance, vote on the direction of AI upgrades, and share in the income generated by the DApp. The protocol also uses smart contracts to allocate a portion of the revenue for token buybacks, creating a “value flywheel.”

Application Scenarios: Reshaping Gaming and Social Experiences

1. Games and the Metaverse: Traditional NPCs are upgraded to AI characters with memory and learning abilities. For example, after players interact with virtual agents in the game, the agents can continue the conversation across platforms (such as Telegram or Roblox), enhancing the immersion.
2. Virtual Companions and the Influencer Economy: The AI idol Luna, which is incubated as a project, has 500,000 followers on TikTok, generates income through on-chain tips and NFT gifts, and shares profits with token holders.
3. IP Derivation and Co-Creation: Users can train AI agents based on well-known IPs (such as movie characters), and IP owners can automatically receive royalties through smart contracts, solving the problem of copyright monetization.

Competitive Advantages and Development Potential

1. Technical Barriers: Compared to competing products like AgentX (centralized architecture) and Altered State Machine (single functionality), the Virtuals Protocol has advantages in scalability and user experience thanks to its decentralized governance, multimodal interaction, and modular design.
2. Ecological Expansion: By May 2025, the platform has created over 1,000 AI agents and is exploring applications in the financial sector with institutions such as Standard Chartered Bank. The token’s market value has surpassed $1 billion, ranking it among the top 70 cryptocurrencies.
3. Industry Outlook: According to iResearch, the global AI agency market is expected to expand at an annual growth rate of 40%, reaching $30 billion by 2025. Virtuals Protocol aims to become the underlying infrastructure in this field by lowering development barriers and implementing a revenue-sharing mechanism.

Conclusion

Virtuals Protocol provides a scalable solution for the virtual economy through the deep integration of blockchain and AI. Its “co-creation-sharing” model not only breaks the black-box monopoly of traditional AI development but also allows ordinary users to participate directly in value distribution. Despite facing technical and market challenges, the potential demonstrated by this project in high-frequency scenarios such as gaming and social networking may become the cornerstone of the “virtual resident” economy in the Web3 era.

Author: Icing, Gate.io researcher *This article only represents the author’s views and does not constitute any trading advice. Investment carries risks, and users should make cautious decisions. *This article is original content, and the copyright belongs to Gate.io. If reprinted, please indicate the author and source; otherwise, legal responsibility will be pursued.