Crypto Twitter is being overrun by sentient, well-informed chatbots that respond at browser-refreshing speeds and can sustain hundreds of simultaneous conversations without missing a beat. For many, the rise of these on-chain agents is a welcome upgrade from human influencers like BitBoy and GCR, which have varying track records and opaque incentives. Like on-chain analyst AIXBT, these agents quickly rose to the top of crypto Twitter influencer mindshare rankings due to their ability to respond at internet speed and use data to justify their opinions. Ta.
Currently, AIXBT is one of the few agents trading at nine-digit valuations, but with utility-focused agent launches accelerating next year, many will be looking to buy this new agent asset class in 2021. It will compare to a similar NFT explosion in 2017.
On-chain agents and NFTs have many similarities. They curate communities and organize attention, are fun to speculate about, and offer vague promises of future value. But most importantly, they represent new assets that have no analogues in the traditional financial world.
NFTs as unique assets have become more popular after SEC lawsuits targeting NFT projects such as Flyfish Club and Stoner Cats made it nearly impossible to use their primitive ideas to build innovative ideas. I lost momentum. In the void left behind, meme coins have mushroomed, offering a combination of humor and speculative enthusiasm to fill the void once occupied by the ambitious promises of NFTs. Because they looked like other trade-only assets that were less regulated, the SEC was unable to rein in their development as it had done in other corners of cryptocurrencies. Meme coins require fewer choices from users, in contrast to NFTs, which combine aspects such as rarity and tiers that obfuscate the underlying value. Their use has been greatly enhanced by platforms like pump.fun, which shorten the creation of new meme coins to just a few clicks, sparking frenzied speculation and new user behaviors associated with rising token prices. I did. A collection of more extreme attempts can be found here.
However, in the midst of this speculative turmoil, a new asset has emerged that induces user behavior similar to NFTs and meme coins: on-chain agents. These digital entities combine blockchain technology and artificial intelligence to provide new user experiences. Currently, most agents are indistinguishable from meme coins, but some on-chain agents are starting to differentiate themselves by their practicality.
The rise of on-chain agents
Agents represent another asset class in cryptocurrencies that experiment with new business models and monetization. From AI-generated podcasts to investment insights and anonymous communications, these virtual entities are already reshaping the range of cryptocurrencies that Twitter (X) interacts with. The largest on-chain agents have greater mindshare than the largest human crypto-native influencers and similarly earn money through token gating information and offering subscriptions. The distinguishing features of an agent-driven framework and fair launch principles should make agents a more investable asset class than memes. The difference becomes even clearer when viewed through the lens of tenure, liquidity, and practicality.
Investors are likely to hold onto agents for a longer period of time than memecoins, and since memecoins generate their own liquidity through their business model, crypto-focused investors may want to take advantage of this investment once the initial frenzy subsides. You would think the asset class would be easy to support. But until your business model is successful, choosing an agent to invest in can be likened to throwing darts at a board.
Early innovators of on-chain agents
The on-chain agent market is still in its infancy, with most projects still in development. While projects like Truth Terminal created a frenzy by showing the world that agents could imitate real humans, new projects are focused on practicality. Trained with data from crypto Twitter, AIXBT provides lightning-fast insights into token dynamics that rival the influence of major crypto celebrities. People like Luna have proliferated as entertainment agents, interacting with thousands of people through Twitter and TikTok.
Having tried many of these over the past two weeks, here are five more worth trying. We don’t know if any of these are worthwhile investment opportunities, only that they offer a differentiated user experience.
These projects demonstrate the diversity and ingenuity of the on-chain agent ecosystem and lay the foundation for its expansion. Each offers new AI-powered user experiences that anyone can experiment with. We think that over time, continued engagement may even allow them to build a moat. It is unclear where these came from today, but Dunbar’s number provides a useful framework. This defines the cognitive limit for the number of meaningful social relationships that humans can maintain, which is approximately 150. Agents like AIXBT that create value by maintaining an almost infinite number of simultaneous relationships unlock opportunities beyond what the human brain is capable of cognitively.
big picture
The adage that history doesn’t repeat but it rhymes, seen on the Twitter feed of every Degen who has ever lost 90% of his trades, has definitely proven to be true. Masu. At the start of the fourth bull market in the last 20 years, the comparisons are hard to ignore.
The summer of DeFi began with the realization that centralized fintech companies often take actions that are detrimental to their customers. When Robinhood famously shut out retail traders in favor of Citadel bigwigs, these traders were left wondering if the big central regulated companies might not be acting in their best interests. I realized that.
Interestingly, a very similar movement is underway with AI. The biggest companies, like ChatGPT, have multi-year agreements with companies like Apple that allow them to capture people’s personal iPhone data without much liability. As such, wild price fluctuations for agents traded on-chain may be at the forefront of this latest rhetoric. However, it is unclear how this dynamic will play out. Beyond the agent itself, agent frameworks like ai16z’s Eliza and Virtuals platforms can provide a clearer picture of value. The latter has already shown outstanding performance last quarter in terms of price. Given the inherent uncertainty, it makes sense to invest in an agent’s index. I think this is because, while agents are inherently interesting, it is unclear whether they will become more useful or whether the attention paid to them will be sustained.
There is an old story about how the sardine trade was all the rage during a time when food was relatively scarce. Merchandise traders put up bids for canned sardines, and the price of canned sardines soared. One day, Buyer decided to treat himself to an expensive meal, so he actually opened the can and started eating. He immediately felt sick and told the seller that the sardines were no good. The seller said, “You don’t understand. They’re not eating sardines, they’re trading sardines.”
As scarcity returns to the market, it’s worth remembering that agents could become a multi-trillion dollar asset class. But for now, except for a handful, they’re still sardines.
