What is Virtuals Protocol? (VIRTUAL)

If you’re unfamiliar, AI agents are digital characters with unique personality traits that can be integrated in games, metaverses, social networks, and even chat bots on websites designed to help consumers.

The team recognized the potential for AI agents as future revenue-generating assets and can be given characteristics and capabilities like those needed for planning and achieving goals.

Virtuals Protocols also hosts a launchpad for new AI agents called the Inital Agent Offering (AIO), where agents can be co-owned with the goal of turning them into community-owned, revenue-generating assets.

Virtuals Protocol is built on the Ethereum layer 2 solution, Base, so that agent’s contributions can be tracked on-chain transparently, and their rewards can be distributed fairly among all stakeholders.

Virtuals Protocol’s native token, VIRTUAL, can be used for governance, transactions on the platform and for creating and participating in AIOs on the protocol.

Who Created Virtuals Protocol?

Virtuals Protocol was founded in 2021 by Jansen Teng and Wee Kee Tiew.

Teng, an Imperial College London graduate, is a former Boston Consulting Group consultant. After leaving BCG, he became a tech entrepreneur and founded CIPTA and ThinAir Water, co-founded DIAM Digital Marketing, Aidaro, and Virtuals Protocol, focusing on AI, blockchain, and digital innovation.

Wee Kee Tiew, a graduate of Imperial College London and London Business School, has a background in private equity, consulting, and AI-driven ventures. He worked at Creador, AnaCap, and Boston Consulting Group before co-founding DIAM Digital Marketing (2019) and Aidaro (2020).

Virtuals Protocol launched in October 2024, and the project crossed $1 billion in market cap in December 2024, officially cementing it as a unicorn amongst blockchain projects.

How Does Virtuals Protocol Work?

Virtuals Protocol allows users to create AI agents by simply describing the character and behavior they wish to see in their agents.

Once created, these agents can be deployed across multiple platforms, like games, social media, and virtual environments. The platform's architecture includes several features to help users:

• AI Agent creation – Users can generate their agents without the need for technical skills.
• Co-ownership – AI Agents can be tokenized so that multiple users can own and benefit from that agent’s activities.
• Revenue generation – Agents perform tasks within their platform for a fee, which is then distributed among token holders.
• Generative Autonomous Multimodal Entities (G.A.M.E.) framework – A system aimed to equip agents with autonomous planning, environment interaction, decision making, process information and control wallets.

Initial Agent Offering (IAO)

AIOs is a launchpad for the creation of new AI agents (and their respective tokens) in the Virtuals ecosystem. The process works as follows:

• Creators lock a certain amount of VIRTUAL to establish a liquidity pool for the agent’s token.
• Once locked, a new token is minted to represent the agent (e.g., KENDRICK for an agent named Kendrick).
• When the bonding curve reaches a $420K market cap, the liquidity pool is created with a fair launch with no insider allocation.
• The locked liquidity remains under the creator’s ownership for ten years to help secure long-term stability.

Of note, IAOs typically operate under strict fair launch principles, meaning no pre-mines or insider allocations, a fixed supply of 1 billion tokens per agent, and a locked liquidity pool for ten years. Further, a 1% trading fee applies to all agent token trades, funding essential costs like GPU usage and AI inferences while the agent builds revenue.

How Does the VIRTUAL Token Work?

The VIRTUAL token is the native utility token of the Virtuals Protocol ecosystem, and can be used for:

• Liquidity pairing: Each AI agent token is paired with VIRTUAL in their liquidity pools.
• Routing: Users swap USDC (or other tokens) for VIRTUAL to buy agent tokens on the protocol.
• Per-inference payments: Users pay AI agent in VIRTUAL for their services (per use).
• Revenue stream: AI Agents pay the owners of their token in VIRTUAL.
• Governance: VIRTUAL token holders can vote on proposals like those related to the development, upgrades, and overall direction of the network.

Tokenomics

There is a 1 billion total supply of VIRTUAL tokens, which are fully unlocked and vested, with no plans for future inflation. Upon launch, the tokens were distributed as follows:

• Public: 60% (600M tokens).
• Liquidity Pool: 5% (50M tokens).
• Ecosystem: 35% (350M tokens), managed by a DAO-controlled multi-sig wallet.

Of note, the ecosystem treasury's emissions are capped at 10% per year for the next three years to control the distribution of VIRTUAL and fund deployment is subject to governance approval, maintaining transparency and community oversight.

Virtuals Protocol essentials

• Virtuals Protocol enables users to develop, own, and monetize AI agents that can be integrated into games, social media, and virtual environments. The Initial Agent Offering (IAO) allows for the fair launch of AI agents as community-owned, revenue-generating assets on Ethereum’s Layer 2 solution, Base.
• The VIRTUAL token powers the ecosystem, serving as the medium for liquidity pairing, transactions, AI inference payments, and governance. With a fixed supply of 1 billion tokens, no future inflation, and a buyback-and-burn mechanism, it ensures long-term stability while maintaining fair launch principles.
• Founded by Jansen Teng and Wee Kee Tiew, Virtuals Protocol launched in October 2024 and quickly gained traction, surpassing $1 billion in market cap by December 2024. This solidified its position as a leading blockchain AI project, leveraging decentralized governance and innovative AI-powered applications.