By @stacy_muur
Translation: Blockchain in Vernacular
Currently, there are 300,000 wallets holding at least one AI agent token. Will this trend continue? What is the best strategy for AI agents now? What are the future development prospects and challenges facing the industry? This article provides some analysis.
1. The rise of AI agents
In November, AI agents attracted widespread attention, and people’s attention gradually shifted from memecoin to this new hot spot. In fact, early versions of AI agents can be traced back to 2020, but the real craze was set off this year, mainly due to the success of VIRTUAL, which achieved an astonishing 3000% growth in just one year. There are several key factors behind the success of Virtuals:
@pumpdotfun model sticks despite challenges of declining market share and increasing criticism
Cleverly combines AI technology with the viral effect of memecoin
Created Luna, an AI influencer managed by Virtuals, who has over 500,000 followers on TikTok
Launched on the Base platform, which gathers a large number of memecoin traders
In the Web3 space, when a new category of protocols emerges and becomes successful, investor interest quickly rises, creating a snowball effect — or bubble effect, if you prefer. Then, there’s always a large crowd rushing in to chase the next similar success story. We’ve seen this phenomenon many times in the past with memecoin and Telegram trading bots. Will it be different this time?
2. AI is unstoppable
The AI agent industry saw unprecedented growth in 2024. Venture capital investment in the field soared to $1 billion in one year, an 81.4% increase in deal volume compared to 2023. In the third quarter of 2024, total venture capital investment in the AI field peaked at $18.9 billion, of which AI agents contributed 28%.
In another example of investor confidence, OpenAI closed a $6.6 billion funding round, the largest venture capital deal ever.
3. AI Agents in Web3: Prospects and Reality
AI agents have numerous use cases in Web3, and they are expected to become more powerful as the technology advances. While this narrative is timely, its full potential is still evolving. In the current market environment, when asset prices are volatile and you need to keep 100% of your assets in stablecoins to maintain portfolio value, AI agents designed for trading perform particularly well. We lack historical data to prove other possibilities.
Furthermore, AI trading bots are not new and have been around for years, but have yet to achieve mainstream adoption. If they are so profitable, why is this the case?
4. Will AI agents be at the heart of the market boom?
I’m a skeptic, so my answer is no. Crypto is full of speculation, 10% is technology, and narratives are fleeting. Remember when re-staking protocols using EigenLayer were all the rage? That wasn’t all that long ago, but they’ve lost a lot of steam now.
AI agents do have technical support and bring innovative application scenarios, but “novelty” often quickly becomes “normal”. As more and more teams rush into developing AI agents, competition intensifies, and more failure cases are inevitable, and the enthusiasm will gradually cool down.
Every popular trend in Web3 brings huge opportunities and an exciting journey. The key is to profit in time and quickly move to the next hot spot.
5. Technical issues
Even at the technical level, there are still many problems to be solved. Most of the current AI agents have little relevance to Web3 except at the economic level.
But…the total market value of AI agents is expected to double from $7 billion to $14 billion in two years. As new protocols and new use cases continue to attract users’ attention, this field will inevitably continue to grow.
In other words: the industry has huge potential, but the AI agents currently at the forefront of the craze may not be able to maintain their dominance in the coming months.
6. Short-term outlook
Now to the opportunity at hand: Solana AI agents are at a clear low point. This view is mainly based on @0xkyle__’s article on X, which I generally agree with, but remember to do your own research (DYOR) as always.
Currently, liquidity is flowing into altcoins and Base on centralized trading platforms, and the market sentiment towards Solana is particularly pessimistic, especially concerns about the peak of SOL/ETH and SOL/BTC. In this pessimistic atmosphere, two key bets are becoming popular in the crypto circle:
1) Solana will make a strong comeback and set off a second wave of on-chain craze.
2) AI agents will rebound.
Therefore, there are two possible strategic investment approaches:
1) Large-cap AI: Invest in established players like AI16Z and possibly TAO that have proven their worth.
2) Small-cap AI: Look for undervalued projects focused on interactivity, applications, and avatars, which are areas that will generate asymmetric returns.