DWF Labs: The rise of AI agents and the potential for change

Original title: AI Agents: Emergence of Lisan al Gaib

Source: DWF Labs

Compiled by: Luffy, Foresight News

OpenAI’s launch of ChatGPT brings artificial intelligence (AI) into people’s daily lives, demonstrating the practicality and ease of use of this technology. Artificial intelligence has attracted renewed attention, driving the rise of the cross-field of artificial intelligence and cryptocurrency. At the end of 2023, major AI encryption projects such as Bittensor came into being, aiming to advance the vision of decentralized AI on blockchain. These projects cover innovations ranging from artificial intelligence applications, blockchain networks focusing on artificial intelligence to artificial intelligence distributed physical infrastructure networks (DePINs).

In mid-October 2023, a key breakthrough was made in the field of AI agents. Unlike traditional robots, AI agents are autonomous software systems that can perform tasks without virtually human intervention.

Comparison of AI agents and robots. Source: DWF Labs

These agents are designed to make independent decisions based on predefined goals and real-time data and to align actions when feedback is received and new challenges are encountered. Robots are limited to specific predefined rules, while AI agents can collaborate with other systems to adjust their policies to achieve their goals effectively.

Since its inception, AI agents have become one of the strongest performing sectors in the crypto market, surpassing other AI-related projects in overall growth.

Total market value of AI agent projects. Source: CoinGecko

The total market value of AI agent-related projects was close to US$19 billion at its peak, accounting for nearly 94% of all artificial intelligence projects. The project includes the AI ​​agent itself, the AI ​​agent startup platform, and the artificial intelligence development framework, showing the huge scale and influence of the field.

The market value share of the crypto-artificial intelligence project segment. Source: CoinGecko

Beginning: Gossip

There is no AI agent in the earliest crypto AI project in 2023. Their rise can be traced back to an interesting event, with a large language model (LLM) developed by independent artificial intelligence researcher Andy Ayrey attracting attention from the crypto community. The agent, known as Truth Terminal, originated from a project called Infinite Backrooms, a chat room in which multiple large language models engage in endless, surreal conversations. Unlike other models in the room, Truth Terminal is trained on a unique dataset that is heavily based on online culture, including the infamous Goatse emojis. This data set gave birth to a new "religion" - GOATSE OF GNOSIS.

Meanwhile, Truth Terminal is equipped with memory-like features that can read and write on the X platform, allowing it to share its ideas. It quickly made its popularity with those bizarre, humorous posts. Surprisingly, an anonymous user created a Memecoin for the agent and its fictional "religion" on Pump.fun, named it Goatseus Maximus, or GOAT for short. After airdropping multiple crypto wallets (one of which is associated with Truth Terminal), the agent recognizes the token and incorporates it into its own network image. This "official recognition" opens the door for Memecoin speculators to enter the AI ​​proxy space, with the token's market value soaring to more than $400 million in just a few days.

Memecoin and AI Agent: A Amazing Fusion

The rapid success of Truth Terminal and GOAT tokens unexpectedly led to the integration of AI agents and Memecoin culture. Although AI agents were originally intended as functional tools, Memecoin’s speculative nature – characterized by community-driven hype, high volatility and questionable valuations – has become a distinctive feature of AI agents today. At first glance, this overlap may be a bit strange, but a closer look reveals that there are two key catalysts that play an important role in driving this progress.

The first catalyst is the launch of GOAT tokens. The token launched on the popular Memecoin platform Pump.fun, and its rapid success proves that Memecoin’s issuance mechanism can be applied to AI proxy, showing that AI proxy tokens can indeed follow the community-driven speculative model on which Memecoin relies to thrive. . This triggered a similar wave of AI Memecoin crazes, such as Fartcoin, which outstripped GOAT tokens at its peak earlier this year, reaching a staggering $2.1 billion.

The popularity of AI agents and Memecoin on Pump.fun has given birth to a dedicated AI agent startup platform. These startup platforms can easily create AI agents without permission, providing space for developers and users to quickly implement projects. Among them, Virtuals is the largest platform, and has helped launch more than 17,000 projects since mid-October 2024. This makes the rapid launch and community-driven features of the AI ​​proxy field common, blurring the boundaries between AI proxy and Memecoin and deepening their integration.

The second catalyst is the development of a modular AI proxy framework, which makes it easier for anyone to create and launch AI proxy. Virtuals, for example, introduced GAME, a flexible, environment-independent framework that integrates features such as social media, voice, text and even music generation. With such tools, developers can quickly build and deploy AI agents with a wide range of capabilities. These frameworks popularize the creation of AI agents, just as Memecoin popularizes the creation of cryptocurrencies, have led to a huge surge of new projects, all competing for equally limited attention and funding.

These two catalysts have greatly promoted the accelerated integration of AI agents and Memecoin. AI agents adopt Pump.fun's fair issuance mechanism, bringing the same community-driven speculation as the Memecoin market, while the AI ​​framework lowers the entry barrier and allows new projects to flood the market. As many projects fiercely compete for attention and market share, the AI ​​agent market has been severely diluted, showing the same characteristics as the Memecoin market, with severe price fluctuations and is driven more by community hype and attention rather than intrinsic value.

Agent evolution

With the influx of crypto venture capital funds and the increasing attention around AI agents, the field of AI agents has evolved and diverged into different subcategories in a short period of time. Today, most agents can be classified into four main categories: infrastructure, interaction, utility, and decentralized financial artificial intelligence (DeFAI).

Classification of top AI agent projects. Source: DWF Labs

Infrastructure

This category includes platforms and tools for creating, managing, and enhancing AI agents. From startup platforms, software development toolkits, to decentralized computing providers, model verification services, and blockchain networks. Well-known projects in this area include Autonolas, elizaOS and Virtuals, which all provide critical infrastructure for the evolving AI proxy ecosystem.

interactive

This category of AI agents focuses on interacting with users through social media, acting as an AI companion, or generating multimedia content such as video, music, and even interactive gaming experiences. Truth Terminal, Zerebro and Opaium, for example, all use artificial intelligence to create interesting and engaging experiences for users.

Practical Tools

These agents help implement commercial and operational functions such as automating workflows, performing security audits, or simplifying administrative tasks. Projects like Cloudland, H4CK Terminal, and Soleng show how AI agents can be used to improve enterprise operational efficiency and simplify business processes.

DeFAI

This rapidly rising field represents AI agents and protocols designed to simplify and automate complex DeFi operations. DeFAI is committed to bridging the gap between current solutions and truly user-friendly DeFi experiences. Leading examples in this field include Hey Anon, Griffain and Orbit, each bringing innovative solutions to reduce the complexity and friction of users’ interactions with the DeFi platform.

DeFAI: Solve the pain points of DeFi's growth

While DeFAI is still a relatively new field, it has great potential to change the cryptocurrency landscape. To understand its importance, first explore the history of DeFi and its challenges.

DeFi has made significant progress over the years with its goal of providing transparent and decentralized financial services. Starting with the initial few protocols such as Sky (formerly Maker), Uniswap and Compound, it has now expanded to over 3,000 different protocols. In addition to moving traditional financial products to the chain, DeFi has also introduced innovative products, such as liquid staking, re-staking, and even tokenization of future income. However, despite these advancements, DeFi’s popularity still faces significant obstacles.

The proportion of spot trading volume between DEX and CEX. Source: CoinGecko

The first challenge is the increasing demands on DeFi financial knowledge. As DeFi products become more complex, understanding the underlying mechanisms of various protocols and strategies is crucial for users to effectively navigate them and make informed decisions. Furthermore, there are confusing terms in the field. Although this sets a threshold for entry for many people, it also gives birth to a simplified platform. For example, trading robots and terminals that are accessible via mobile phones like GMGN.AI, Moonshot, and Jupiter Mobile show that user-friendly platforms can increase engagement and make DeFi easier to get started. These platforms prove that in many cases, simplification is the key to promoting popularity, and the recent increase in the proportion of DEX trading volume compared to CEX is proof.

The second challenge lies in the underlying complexity of blockchain technology, especially in terms of wallet access and cross-chain. The decentralized and self-hosted nature of DeFi often requires users to manage multiple crypto wallets and deal with the complex process of transferring assets between different chains. These friction points not only cause confusion, but also add unnecessary complexity to the user experience. Despite the emergence of solutions such as account abstraction and full-chain DeFi products to alleviate some friction, the solution is limited and many users are still fighting DeFi’s technical requirements. This complexity hinders wider participation, especially for the novice who are hesitant about this difficult and obscure field.

The third challenge lies in the manual and inefficient nature of portfolio and risk management. Continuous supervision and management are required to keep up with the most capital-efficient strategies such as centralizing cryptocurrency liquidity supply or optimizing earning farming opportunities. As the DeFi field continues to evolve, it is becoming increasingly difficult for users to track emerging opportunities and effectively manage their portfolios. While automation solutions have been developed to relieve some of the burden, comprehensive and unmanaged solutions have not yet entered the market. This continued inefficiency further exacerbates the barriers to DeFi popularity and highlights the need for streamlined, automated solutions.

The impact of DeFAI on DeFi. Source: DWF Labs

In essence, DeFAI represents the convergence of AI and DeFi, aiming to simplify and automate complex DeFi operations. By doing so, it provides users with an intuitive way to navigate and engage with DeFi products, bridging the gap between existing solutions and truly user-friendly experiences.

The total market value of the DeFAI project. Source: CoinGecko

While DeFAI is still in its infancy and many projects are still evolving and developing, its growth and future potential to date are unquestionable. While it will take time for projects in this field to fully function, its ability to solve some of the most pressing problems in DeFi and even blockchain technology has emerged. DeFAI can not only simplify complexity or improve user experience, but also plays a key role in accelerating the popularity of DeFi, making DeFi more accessible to both new and old users. In the future, we can expect DeFi to become more intuitive, efficient and user-friendly, paving the way for deeper innovation and wider adoption.

Conclusion: The cornerstone of the AI ​​x Crypto world

In short, although AI agents are undoubtedly a field full of speculative and volatile at present, their long-term potential for reshaping the field of encryption, especially deDeFi. Like any emerging technology, the path forward is full of unknowns.