How Virtuals Protocol Is Winning in Both AI & Crypto

Crypto entrepreneurs have a knack for recreating industries and technologies to fit their ideals of decentralization. And once again, they have managed to do so with the most disruptive technology of the 21st century: artificial intelligence (AI).

The crypto AI platform Virtuals Protocol is one example: using the power of tokenization to distribute the ownership of AI agents in a permissionless manner.

Its governance token, VIRTUAL, has surged by 5000% in twelve months as developers find new ways of combining crypto and AI.

How does the Virtuals Protocol work? Let’s find out.

What is Virtuals Protocol ($VIRTUAL)?

Virtuals Protocol is a platform that allows users to co-own AI agents through crypto tokens.

On Virtuals, an AI agent’s ownership is represented by its unique token. Every time an AI agent is created on Virtuals, 1 billion tokens related to that agent are minted. These tokens are then added to a liquidity pool for users to buy.

How Does Virtuals Protocol Work?

Here is how Virtuals works:

Staking $VIRTUAL token: A developer has to lock up a specific amount of $VIRTUAL token to launch an AI agent on the platform.
Agent creation: A developer launches an AI agent on the Virtuals platform.
Token generation event: One billion tokens (for example, $AGENT) related to the newly created AI agent are minted.
Liquidity pool creation: $AGENT tokens are paired with $VIRTUAL tokens to create a liquidity pool.
Open market launch: Crypto users buy $AGENT tokens from the liquidity pool.
Revenue generation: As the AI agent grows in popularity, it earns revenue from sales of its services. Part of the revenue covers the cost of AI inference services, and a portion is sent to the AI agent’s on-chain treasury to cover future growth and operational costs.
Buyback and burn: As revenue accumulates in the agent’s treasury, a buyback-and-burn mechanism purchases $AGENT tokens from the open market and burns them. The reduced supply drives up the value of the remaining $AGENT tokens.
Token holder benefits: $AGENT holders see the value of their holdings increase driven by token scarcity and revenue inflows.

$VIRTUAL Tokenomics

VIRTUAL Supply & Distribution

$VIRTUAL has a maximum supply of 1 billion tokens. The circulating supply, as of January 27, 2025, is 645.68 million $VIRTUAL tokens (64.56% of max supply).

Here is a breakdown of its allocation:

Allocated to:	Percentage of total supply
Public distribution – in circulation	60%
Liquidity pool	5%
Ecosystem Treasury – released at less than 10% emission per year for the next three years – controlled by DAO and subject to governance	35%

What is VIRTUAL Used For?

As the native token of the protocol, $VIRTUAL is used for:

Liquidity pairing: Every AI agent token launched on Virtuals is paired with the $VIRTUAL token.
Agent creation: Developers are required to lock up a certain amount of $VIRTUAL token to become eligible to launch an AI agent on the platform.
Payments: Users pay for AI agent services using the $VIRTUAL token.

VIRTUAL Market Performance

Here are some key statistics and milestones related to the $VIRTUAL token:

$VIRTUAL token was created on December 23, 2023.
The token had risen over 26,000% since launch, CoinMarketCap data showed, as of January 27, 2024.
From January 2024 to January 2025, $VIRTUAL rose 5,000%.
The $VIRTUAL price hit an all-time high of $5.07 on January 2, 2025.
$VIRTUAL was the 73rd largest crypto by market at the time of writing.

Line graph depicting the all-time price performance of the $VIRTUALS token from January 2024 to January 2025, showing a steady price until mid-2024, followed by significant growth and volatility towards the end of the year. — All-time $VIRTUALS token price performance. Source: CoinMarketCap

Virtuals Ecosystem: From CT Analysts to AI Agent Engines

As of January 27, 2025, over 600 AI agents were on the Virtuals Protocol. aixbt ($AIXBT) was the most valuable AI agent on Virtuals, with a market cap of over $618.5 million, while GAME ($GAME) had the highest total value locked (TVL) at about $18.5 million.

1. aixbt

Readers who are active on X (formerly Twitter) will be familiar with aixbt and its capabilities. aixbt is an analytics tool that tracks crypto-related discussions, engages in discussions on X, detects upcoming market trends and highlights crypto alpha.

aixbt regularly tweets its crypto theses. However, to use the full capabilities of the aixbt AI agent, users must hold a minimum of 600,000 AIXBT tokens, making them eligible to use the aixbt terminal.

The AI agent is incredibly popular on X and has amassed over 400,000 followers within three months, prompting crypto research firm Messari to name it the “X Account of the Year” in 2024.

As of January 27, 2025, the $AIXBT token was the most valuable cryptocurrency in the decentralized finance artificial intelligence (DeFAI) sector, data on CoinMarketCap showed. Overall, it was the 125th largest token in the world by market capitalization.

X Account of the Year 🏆

Though @0xMert_ captivated us with passionate Solana rants, it was @aixbt_agent who stole the spotlight.

Exploding to 120k followers in just a month, this agent’s relentless analysis, engaging replies, and ever-expanding alpha make it an essential… pic.twitter.com/BvfDR6jNXg

— Messari (@MessariCrypto) December 13, 2024

2. GAME

Generative Autonomous Multimodal Entities ($GAME) is a platform that allows developers to create AI agents and applications that can plan actions and make decisions autonomously. It can also be used to create AI agents to interact in virtual worlds such as Roblox and Sandbox ($SAND).

According to Virtuals, GAME creates AI agents that are environment- and game-agnostic. Chatbots and non-player characters (NPC) created with GAME have the ability to hold “authentic and completely unscripted conversation.”

“With chain-of-thought-based prompting methods for planning and reasoning along with tool use, our agents can plan, act, and achieve goals that influence and affect the world,” said Virtuals.

As of January 27, 2025, $GAME had a market cap of $119.2 million, making it the 3,051st largest crypto, according to CoinMarketCap.

Every society has core infrastructure crucial to its growth and development. @game_virtuals plays that role as the Shopify for Virtuals, with @base acting as SWIFT.

Shopify contributes to $500bn in economic activity yearly by providing low-code infrastructure for payments,…

— Virtuals Protocol (@virtuals_io) December 23, 2024

The Bottom Line

Virtuals Protocol is planning to implement a governance mechanism in which liquidity providers and validators of a given AI agent token will have the power to approve AI models and set quality standards.

Thinking long term, these practices could be the key to creating responsible AI development and reining in the technology’s risks.

Although Virtuals primarily focuses on catering to the entertainment and gaming industry, its upcoming decentralized governance mechanism could prompt AI entrepreneurs to implement safety net measures of their own.