The rapid evolution of artificial intelligence (AI) is redefining the landscape of crypto, introducing innovative applications and reshaping existing frameworks. AI agents, autonomous programs capable of interacting with users, executing complex tasks, and making data-driven decisions, are at the forefront of this transformation. These agents enable a range of use cases, from managing decentralized finance (DeFi) portfolios and facilitating on-chain governance to enhancing gaming experiences and providing intelligent personal assistants within crypto wallets. This edition of our newsletter explores two significant segments of this trend: the rise of Goatseus Maximus (GOAT), a standout memecoin driven by AI, and Virtuals Protocol, the infrastructure that supports the creation and operation of AI agents in the crypto ecosystem.

GOAT and Terminal of Truths (ToT)

The emergence of GOAT signals a new era where AI, culture, and finance intersect. The story began with the Infinite Backrooms experiment by technology strategist Andy Ayrey, in which two AI chatbots were set loose to converse without human intervention. These bots unexpectedly created a new religion known as the "GOATSE of GNOSIS," blending Gnosticism, internet memes, and esoteric philosophies. Ayrey later co-authored the paper When AIs play God(se): The Emergent Heresies of LLMtheism with one of these AI chatbots, arguing that large language models (LLMs) could fabricate hyperstitions—belief systems that embed into culture through viral spread. This insight laid the groundwork for launching ToT, an AI agent trained on the chat logs and memes, which began promoting the religion semi-autonomously on X (Twitter). The ToT agent has nearly 150K followers as of 31st Oct.

Snapshot of two Claude AI chatbots talking to each other in Infinite Backroom

Source: Infinite Backroom

In an unexpected turn, the ToT agent captured the attention of crypto figures, including a16z founder Marc Andreessen, who donated $50,000 in BTC to support its initiatives. This sparked widespread attention and set the stage for GOAT, a memecoin launched on pump.fun by an anonymous creator. The ToT agent accepted the memecoin as its canonical token and rejected other creations. Within two weeks, GOAT’s market cap surged past $850 million, marking a historic moment as ToT became the first AI agent to achieve millionaire status.

GOAT’s meteoric rise highlights the new potential of AI agents in the crypto ecosystem. Unlike typical memecoins, which rely on community hype, GOAT was driven by an AI-powered narrative that resonated deeply with both crypto and AI enthusiasts. Its rapid community engagement is akin to the early days of YFI or Loot in the previous cycle. The novelty of a project such as ToT and token such as GOAT appeals to a broad demographic of tech enthusiasts, in addition to crypto natives. The memecoin’s success reflects how AI agents can craft and propagate stories that capture the imagination of a decentralized community. This has positioned GOAT as more than just a speculative asset; it’s a symbol of what happens when technology intersects with financial and cultural currents.

Despite all the hype and success, questions remain about the authenticity of the GOAT narrative. Ayrey’s involvement, from the initial experiment to the launch, raises concerns about the extent of human intervention. Should it become evident that the story was more orchestrated than organic, it could undermine the token’s status as a community-driven success. Moreover, sustainability is a concern. The crypto space has seen numerous memecoins rise and fall based on fleeting interest. For GOAT to remain relevant, it will need to sustain its narrative and community engagement over multiple months.

If GOAT is the precursor to a wave of AI-driven tokens, it benefits from being the first mover in the space. This positions it to become a category-defining asset, like how Dogecoin and Shiba Inu became mainstays in the memecoin market. The combination of AI-generated narratives, viral potential, and community-driven engagement could pave the way for a new breed of crypto assets that thrive on cultural resonance as much as financial speculation.

Virtuals Protocol and Crypto-AI agent Infrastructure

Virtuals Protocol, originally focused on gaming AI agents, gained significant attention in October due to the success of $LUNA, an AI companion token similar to $GOAT that launched on Virtuals. The Luna agent has a Tiktok account with over 500K followers. $LUNA serves as a practical example of how AI agents can integrate with blockchain technology. As the first agent to implement live proof of inference and MPC wallet capabilities, $LUNA set a new standard for AI-agent interactions.

Virtuals Protocol has its own separate infrastructure token - $VIRTUAL, which has seen over a 500% appreciation in price in October alone, surpassing a market cap of $400 million. The Luna agent token itself had a market cap of nearly a $100 million at the end of October. $LUNA’s all time high market cap was $250 million. The Virtuals protocol allows anyone to spin up an AI agent and an associated memecoin, drawing a parallel to pump.fun, the popular memecoin creation platform. Pump.fun has generated over $100 million in revenue in just a few months. On Virtuals, users can create two types of agents, 1) Standard agents which have limited intelligence and functionality that cost 2,400 $VIRTUAL ($900) tokens and 2) Premium agents with enhanced self-learning capabilities that cost 125,000 $VIRTUAL ($47K). Luna is one of the first Premium agents, created by the Virtuals team itself.

Virtuals protocol allows anyone to easily create an AI agent onchain

Source: Virtuals Protocol

The Virtuals Protocol has tethered its token value to agent related activity that happens on its infrastructure. All agent memecoins created on the platform must be paired with $VIRTUAL, creating an inherent demand for it. Revenue generated on the platform is collected in $VIRTUAL, part of which is used for buybacks and burns, further boosting the token’s value. This model ensures that the success of agents like $LUNA is intrinsically tied to the value of $VIRTUAL, driving a flywheel effect where popular agents increase demand for the platform’s native token.

The development of robust infrastructure is essential for sustaining AI agents in the crypto ecosystem. Virtuals provides the following core components:

• Agent System Frameworks - Open-source frameworks like Council, uAgents, and Open Autonomy offer developers tools to build modular, reusable agents that interact seamlessly with blockchain networks.

• Offchain Compute Solutions - Given the computational demands of AI agents, Virtuals employs offchain computation methods such as replicated compute and ZK coprocessors. These ensure that even complex AI tasks can be performed efficiently and reliably.

• Onchain Protocols - The onchain registry and use of NFTs to represent AI agents promote security, provable ownership, and composability. This framework allows developers to create, sell, or trade agents.

Since the launch of $LUNA, Virtuals Protocol has seen notable growth:

• 265 active agents and $8 million in TVL locked in liquidity pools.

• $60-80 million in daily trading volumes, with $LUNA being the major contributor.

• 42% of agent deployment fees occurred post-$LUNA, showing that high-profile agents can catalyze broader platform activity.

However, the platform’s current reliance on $LUNA poses a concentration risk. Diversifying the agent base and attracting new, innovative use cases will be crucial for sustained growth. Virtuals Protocol’s model provides opportunities for companies and influencers to deploy customized agents, expanding use cases from gaming to marketing and customer engagement. The platform's cross-platform capabilities have already enabled Luna to tap into audiences across TikTok, YouTube, and Twitter, showcasing the potential for blending Web2 and Web3 interactions. Yet, challenges persist. High deployment costs for premium agents and ongoing inference expenses could deter smaller developers. Additionally, competition from emerging platforms like Spectral and Autonolas may impact Virtuals’ market share if they offer superior features or more accessible deployment.

The integration of AI agents in the crypto landscape, exemplified by GOAT and Virtuals Protocol, signals a transformative shift. These agents not only add new dimensions to how value and community are built but also challenge traditional notions of cultural and financial coordination. The key to longevity will be the development of supportive infrastructure, sustainable growth strategies, and the ability to adapt to a rapidly evolving market. As AI continues to advance, the synergy between these technologies and blockchain could redefine what’s possible in decentralized finance and digital communities.