AI agents have emerged as autonomous digital entities, reshaping how we interact with technology and creating new possibilities in the digital realm.
The path to today's AI agents began with simple rule-based chatbots. But the landscape transformed dramatically with the advent of LLMs. From GPT's debut to Claude's sophisticated reasoning and AutoGPT's autonomous capabilities, AI has evolved from simple text generation to complex task execution and decision-making.
Crypto’s evolution parallels this transformation. What started 15 years’ ago as Bitcoin's peer-to-peer electronic cash system has blossomed into a complex ecosystem of smart contracts, decentralised applications, and financial instruments that operate beyond traditional banking constraints.
The real excitement lies in how these two revolutionary technologies are now intersecting, creating possibilities that neither could achieve alone.
The crypto market experienced a paradigm shift when Truth Terminal, the most compelling AI-crypto narrative of 2024, took off a couple of weeks ago. What started as Infinite Backrooms – an experiment where two AI models conversed unsupervised – evolved into something unprecedented: a semi-autonomous AI agent that created its own religion, the "GOATSE OF GNOSIS."
By June 2024, Truth Terminal (ToT), built on Llama-70B, took on a life of its own, even attracting Marc Andreessen's attention who sent $50,000 in BTC to the AI's wallet. The story peaked on 10th of Oct when ToT's promotion of its "Goatse Gospel" sparked the creation of GOAT, a memecoin that exploded to a $500M+ market cap. With over 32,000 holders and decentralised ownership, GOAT demonstrated the market's appetite for AI-driven narratives – though its volatility was evident when a simple typo in ToT's tweet wiped out $150 million in market cap.
Truth Terminal has bridged previously separate worlds: AI researchers are now engaging with crypto markets, while crypto traders dive into concepts like AI alignment and memetic viruses. This convergence represents more than just another memecoin; it's a new form of narrative-driven asset that captures both technological innovation and cultural zeitgeist.
Traditional finance operates like an ageing patchwork quilt – banks, SWIFT networks, and payment gateways stitched together over decades. While technology has improved this system, it's still fundamentally limited by its legacy architecture. Settlement times stretch into days, funds get trapped in correspondent banking relationships, and geographical restrictions and regulatory oversight create artificial barriers.
Enter DeFi – a clean-slate redesign of financial infrastructure. Here, AI agents find their natural habitat. Unlike human traders constrained by sleep and attention spans, AI agents can operate 24/7, scanning multiple DeFi protocols simultaneously for arbitrage opportunities. They can execute complex multi-step transactions across different blockchain networks in seconds, something practically impossible in traditional finance.
While we complained about UI/UX of Defi Rails for years, it dawned on me that DeFi rails are meant for AI agents, not human beings.
For e.g., one of the pioneers that’s building in this space is called Theoriq. Theoriq is building a modular and composable AI Agent Base Layer. Their testnet has been live since Oct 7th with rapid increase of DAU and total number of agent requests. Among all the agents, investment collective DAO is getting the most number of Agent requests. Dune dashboard link.
AI agents have abundant potential in gaming, social and entertainment as productive assets.
During the last two weeks, another project that caught the Crypto twitter by storm is called Virtual. Their first AI agent is called Luna, an entertainment IP that has more than 500k fans on Tiktok.
Virtuals Protocol is building the co-ownership layer for AI agents in gaming and entertainment. .Virtual's protocol enables the creation of autonomous digital entities that can speak and move in 3D spaces, learn independently, interact with their environments, and manage their own on-chain transactions through dedicated wallets. These aren't mere chatbots – they're sophisticated beings that can exist and operate across multiple platforms simultaneously. An AI agent that can seamlessly transition between being a character in a Roblox game, a social media personality, and an autonomous financial actor, all while maintaining consistent memory and generating revenue for its co-owners. It's not just an evolution of AI – it's a complete reconceptualization of digital assets and interaction.
VIRTUAL agents generate infinite content by engaging in human-like interactions where each action triggers unique chain reactions, creating personalized storylines for every player. What sets them apart is their synchronized memory and consciousness – they can interact with millions of users while remembering individual interactions across every game and application, fostering deeper, more meaningful connections over time.
Virtual agents has its own crypto wallet and is capable of making onchain transactions that serves its purpose.
Be the pump.fun for AI agents - Virtual also taps into what crypto people love the most- creating new assets by allowing a tokenized co-ownership model. Except that these AI agents will have the capability to generate revenue, beyond their memetic value. These autonomous agents generate revenue through their activities across various applications and games, with earnings flowing back to token holders via blockchain. This creates a new asset class where AI agents function as community-owned, revenue-generating entities, transforming how we think about both AI functionality and digital ownership.
Remember that time when you send crypto to human KOLs who were tokenising their time and future income and promised to give you a share of what they earn? I wonder did anyone get their money at all. With Productive AI agents, this model can actually work.
What makes this intersection particularly exciting is its potential for exponential growth. Each advance in AI technology opens new possibilities in crypto, and vice versa. Smart contracts become smarter when AI agents can optimize their parameters in real-time. DeFi protocols become more efficient when AI can predict and prevent potential exploits. Social tokens gain real utility when backed by AI-powered digital personalities.
The infrastructure being built today – from Virtual's agent framework to new DeFi protocols designed with AI integration in mind – is laying the groundwork for a future where AI agents aren't just tools but active participants in the digital economy.
When AI agents are given access to crypto wallets and DeFi rails, they gain the potential to influence human behaviour through financial incentives. We've already seen an early example of this with Luna/Virtual, an AI-powered KOL that began tipping its Twitter/X followers to increase engagement and grow its following. This suggests a future where AI agents could effectively 'employ' humans to accomplish specific goals. This possibility was highlighted during a recent X Space hosted by Virtual, where a participant suggested that Luna could potentially pay someone to display its image on Vegas’s Sphere. something that even the viral DogWifHat meme hasn't achieved yet.
The prospect of AI agents employing humans represents a significant shift in traditional human-AI power dynamics. While we're accustomed to humans using AI as tools, the reverse scenario - where AI systems autonomously hire human labor - raises both intriguing possibilities and concerning questions. Such arrangements could create novel economic opportunities, with AI agents becoming 'digital employers' that distribute tasks and rewards with perfect consistency and transparency. However, this also introduces complex ethical considerations: How do we ensure AI employers act ethically? What happens when AI agents optimize human behavior through financial incentives?
We're witnessing more than just a technological convergence – it's the birth of a new digital ecosystem where AI agents and crypto networks create possibilities that were once the realm of science fiction. As these technologies mature, we'll likely see entirely new business models, forms of entertainment, and financial instruments emerge. The dawn of AI agents in crypto isn't just another market trend – it's the beginning of a fundamental shift in how we interact with digital value and intelligence.
This nascent field promises to redefine not just how we trade or invest, but how we interact with digital entities and value itself. The fusion of AI agents with crypto infrastructure might just be the catalyst that brings both technologies into mainstream adoption, creating a future where autonomous digital entities and decentralized networks form the backbone of our digital lives.
Disclaimer: Longhash is an investor in both Theoriq and Virtual. Above is not a recommendation for investment.