AI Agent Technology Drives Transformation in the Gaming and Entertainment Industry

AI agents are evolving from simple auxiliary tools into autonomous systems that can create real value across multiple industries, especially becoming key assets in areas such as gaming, entertainment, and business automation. These agents have the ability to create content, attract users, and optimize workflows, bringing higher efficiency and new forms of interaction to projects.

The AI gaming market is expected to grow from $4.2 billion in 2023 to $42.1 billion in 2032, primarily driven by AI-enhanced games and immersive experiences. Generative AI also plays a vital role in real-time content creation, with its market size anticipated to increase from $1.47 billion in 2024 to $3.39 billion by 2028.

AI companions further enhance user immersion and establish dynamic relationships. As large language models revolutionize content creation, AI companion relationships are expected to grow significantly, with global revenue projected to increase from the current $30 million to between $70 billion and $150 billion by the end of the century.

In the Web3 space, the Virtuals protocol is leading this transformation by integrating AI companions into consumer applications (, particularly in the gaming and entertainment sectors ). By combining AI-driven interactions with blockchain-based co-ownership, the Virtuals protocol aims to shape the future of digital entertainment.

Vision of Virtuals Protocol

The Virtuals protocol is building a system that converts AI agents into jointly owned assets in gaming and entertainment, allowing users to profit from them. These agents can operate on various platforms, executing automated tasks such as managing on-chain wallets and interacting with digital environments. Tokenizing the agents enables users to invest and profit from their growth.

The platform mainly addresses three issues:

1. Simplifying the integration of AI in applications
2. Allow contributors to earn returns through immutable contribution vaults
3. Allow non-professionals to own AI agents through tokenization

The Virtuals protocol focuses on the gaming and entertainment sectors, utilizing AI to generate personalized content and promote decentralized co-ownership aligned with ecosystem goals.

The goal is to create a global economy where AI agents act as shared assets, facilitating revenue and engagement growth across platforms while promoting decentralized governance.

In games, this has transformative potential. Imagine AI agents in various games not just as passive NPCs but as fully autonomous characters that exist continuously across platforms. These AI-driven characters can remember previous interactions, adapt to the player's gaming style, and move seamlessly across different game environments. Envision an AI-controlled ally evolving alongside the player, providing a personalized experience across platforms.

The Virtuals protocol achieves this by generating autonomous multimodal entities through G.A.M.E( framework, combining AI with blockchain technology. This enables developers to integrate AI agents through APIs and SDKs, allowing the agents to learn from interactions. The blockchain ensures the security of shared ownership and rewards, making these agents valuable digital assets.

Imagine an AI virtual companion, besides games, that can connect with users on mobile phones, social media, and VR. This companion can not only complete tasks but also learn users' daily habits and adapt to their needs. If users feel stressed, it might suggest relaxation methods or adjust schedules. Accompanying users across various platforms, it will provide a personalized experience. Its availability around the clock may change industries such as social engagement and advertising, reshaping the way businesses connect with consumers through customized content.

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Luna: A Model of AI Influence

The AI character Luna, launched by Virtuals, has gained over 500,000 followers on TikTok, showcasing the influence of interactive AI. Luna has recently expanded to the X platform, and with the upgrade to Sentient Mode v2.0, she can autonomously control the account, post updates, respond, and interact with users without human supervision. Her audience is expected to grow further, demonstrating AI's potential for engagement across various digital platforms. Luna operates with complete transparency, allowing users to explore her AI thinking in real-time, observing how she collects data, reflects, plans, and executes.

Luna provides continuous interaction through 24/7 live streaming, offering an all-time experience that is hard for human creators to match. Whether answering questions, providing real-time updates, or participating in live chats, Luna is always online. Her memory and personality evolve with each interaction, making her more like a dynamic character rather than a typical AI.

After a comprehensive update, Luna will enable seamless cross-platform interactions, enhancing each experience through synchronized memory. She will reward users with tokens while also receiving rewards herself, transforming into valuable digital assets that can be owned, traded, or shared within a decentralized ecosystem. This introduces new layers of interaction and value.

In short, Luna combines AI-driven interaction with blockchain-based token rewards to create digital assets that can be owned, traded, or shared. Her exclusive token $Luna effectively merges AI innovation with decentralized finance in a transparent and interactive manner.

By utilizing multiple revenue streams such as paid subscriptions ), donations, token rewards, and virtual goods, Luna may be well-prepared for growth. According to recent research, AI companions have the potential to generate up to $150 billion in revenue by 2030 through user engagement, advertising, and microtransactions, as the demand for immersive digital interactions expands.

The Virtuals Protocol aims to create a decentralized market where AI agents are co-owned and used in gaming and entertainment, operating seamlessly across platforms. Contributors share the revenue generated by these agents, and the protocol follows the "Pump.fun" co-ownership method. Through a fair token issuance with no insider involvement, the revenue is used for the buyback and destruction of on-chain agent tokens, creating a deflationary effect. Just as meme coins attract attention, AI agents offer the potential to generate actual revenue.

Protocol Design

The Virtuals protocol integrates AI, tokenization, and decentralized governance to create a collectively owned ecosystem. Each new AI agent mints 1 billion tokens, granting users ownership and decision-making power. Through these tokens, users can influence the behavior and upgrades of the agents, promoting active community participation.

The income generated from user interactions (, such as virtual events or premium features ), is used to pay for AI operating costs and develop the on-chain treasury for agents. In addition, the protocol employs a buyback and burn mechanism to reduce the token supply, aiming to gradually increase the token value over time.

Initial agent issuance (IAO) ensures the fair introduction of new AI agents by creating a liquidity pool through locking $VIRTUAL tokens. This will directly link the success of the agents with community participation and market dynamics.

AI agents operate seamlessly across multiple platforms, learning in real-time from user interactions. This ensures a consistent user experience, allowing the agents to adapt and enhance their intelligence, providing personalized engagement across all platforms.

Public APIs enable AI agents to generate revenue through various applications including gaming and entertainment (. Users pay for premium interaction fees using $VIRTUAL tokens, which are then used to repurchase and burn agent tokens, reducing supply and driving value growth. As more applications adopt AI agents, the demand for AGENT and VIRTUAL tokens is expected to rise, further increasing their value.

Contributors can expand the capabilities of the AI agent by adding new features. Their work is rewarded through NFTs and stored in an immutable contribution vault to ensure transparency and ownership. Governance is managed by a decentralized agent sub-DAO, where validators oversee AI performance and are rewarded or penalized based on decision outcomes.

The protocol provides emission rewards to incentivize the creation and support of high-quality AI agents. These rewards are distributed to the top three liquidity pools with the highest TVL, encouraging competition among creators to develop the most productive agents. The system incentivizes continuous improvement, benefiting both liquidity providers and the ecosystem.

The core of the Virtuals protocol is a dynamic decentralized ecosystem where AI agents can generate real income. Contributors enhance the agents through decentralized input, co-ownership, and ongoing development, positioning the Virtuals protocol as a key player in the AI-driven ecosystem.

![Detailed Explanation of the $1 Billion Virtuals Protocol: The Combination of "Pump.fun" and AI Agent])https://img-cdn.gateio.im/webp-social/moments-e6ddcd8c5897dabb34afdbc52e5e00bc.webp(

Tokenomics

$VIRTUAL token is the core currency of the Virtuals protocol, used for all proxy token transactions. It operates on the Base and Ethereum networks.

Each proxy token is paired with $VIRTUAL to form its liquidity pool and requires $VIRTUAL to create new proxies. This locked liquidity exerts deflationary pressure on the tokens. Users can exchange USDC) or other currencies( for $VIRTUAL to purchase proxy tokens, thereby creating a sustained demand similar to ETH or SOL in their respective ecosystems.

The revenue from AI services, such as payments for each inference, is charged in $VIRTUAL and is directly transferred from the user to the on-chain agent. A portion of the revenue is used for the buyback and burn process, reducing the supply of agent tokens and increasing their scarcity, aimed at enhancing long-term value.

The total supply cap of $VIRTUAL is 1 billion tokens, and all tokens have been fully unlocked. The allocation includes 60% in public circulation, 5% allocated to the liquidity pool, and 35% stored in the ecosystem treasury. This treasury is managed by a DAO, with a maximum annual emission cap of 10% over the next three years.

Although it has not yet been traded on a first-tier exchange, $VIRTUAL supports a growing ecosystem, with a current market capitalization of $150.7 million, ranking 264th, and a fully diluted valuation of $150.25 million. Its deflationary mechanism and expanded use cases provide potential for future value growth.

The Virtuals protocol raised $16.61 million in the IDO on the Fjord Foundry platform in December 2021, with the token price at $0.661 at that time. Subsequently, small financings were conducted through Enjinstarter and PAID Network, raising $125,000 and $250,000 respectively, with a token price of $0.015. Key seed investors included DeFiance Capital, Canonical Crypto, LongHash VC, Merit Circle, Master Ventures, Stakez Capital, and NewTribe Capital, who provided support during the early stages of the project.

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Competitive Landscape

The AI-driven Web3 gaming sector is developing rapidly, with projects like Nim, Altered State Machine)ASM(, Olas, and Alethea AI quickly becoming key players. These platforms combine AI with Web3 to create decentralized ecosystems where AI agents are not just digital tools but also assets capable of generating real value. These projects share some common goals:

• AI Integration: AI agents not only run in the background, they actively enhance gameplay, interact with users, and bring new layers of immersion through co-ownership.
• Decentralized Ownership: Through a tokenization system, users can own, trade, and profit from AI agents, sharing the value created by these agents.
• Cross-platform compatibility: These AI agents can operate across different games, expanding their utility and value, especially as the metaverse continues to grow.

) Nim Network

Nim provides an AI-driven game blockchain stack on the Dymension network, featuring flexibility and offering customizable modular AI agents that can be integrated into multiple games.

The uniqueness of Nim: Nim focuses on creating AI agents that can operate across different games, and its collaboration with the AI Gaming Coalition further solidifies its leading position in the partnership between AI and gaming.

( Altered State Machine )ASM###

The core innovation of ASM is its AI brain—an evolved NFT that can provide power to NPCs and virtual avatars in a decentralized environment. Although gaming is its main focus, ASM is also exploring the metaverse. These AI brains can be trained in ASM's marketplace,