The Rise of AI Agents

CoinVoiceDec 09, 2024
The Rise of AI Agents

There are now 300K wallets holding at least one AI Agent token.Is this trend here to stay? What's the best playbook for AI agents now? What are the future outlook and industry challenges?Here's my point of view

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Before we start...

For a deeper dive into the AI agent market, I recommend reading my Substack article. It provides more context on:

  • The capabilities and challenges of AI agents
  • In-depth exploration of the most notable players
  • Additional insights on @virtuals_io

Read it here and don't forget to subscribe.

The Rise of AI Agents

AI Agents have attracted significant attention in November, shifting focus away from memecoins.In fact, early versions of AI Agents date back to 2020, but the real hype began this year following the success of $VIRTUAL, which achieved a 3,000% increase in just one year.Several factors contributed to Virtuals' success:

  • Implementation of the @pumpdotfun model despite losing market share and increasing criticism
  • Integration of AI capabilities with the viral appeal of memecoins
  • The success of Luna, an AI influencer with over 500,000 followers on TikTok, managed by Virtuals
  • Launch on Base, a platform with a high percentage of memecoin traders


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In Web3, when a protocol in a new category takes off and becomes a success story, investor interest surges, creating a snowball effect—or bubble, if you prefer. This leads to a long line of people chasing the next similar success. We've seen it many times in the past with memecoins and Telegram trading bots. Is this time any different?

AI is here to stay

In 2024, the AI agent industry experienced unprecedented growth. Venture capital funding in the sector soared to $1 billion within a year, reflecting an 81.4% increase in deal volume compared to 2023. Total venture investments in AI peaked at $18.9 billion in Q3 2024, with AI agents contributing 28%.Highlighting investor confidence, OpenAI's $6.6 billion funding round set a record as the largest venture deal ever.

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AI Agents in Web3 have numerous use cases and are expected to become more robust as technology progresses. Although this narrative is timely, its full potential is still evolving. In today's market, when everything surges and you must stay 100% in stable assets to maintain your portfolio's value, AI Agents designed for trading excel. We lack historical data to suggest otherwise.Furthermore, AI trading bots aren't new; they've existed for years, yet none have gained mainstream adoption. If they're so profitable, why is that the case?

Will AI Agents be at the forefront of the hype?

I’m always skeptical, so I have to say no.Crypto is 90% speculation and 10% tech, and the narrative shifts quickly. Remember when protocols leveraging EigenLayer’s restaking were at the forefront of attention? That wasn't so long ago, yet their prominence has now diminished.There’s tech behind AI agents and innovative use cases, but novelty becomes "normal" quickly. As more teams rush to develop their AI agents and competition intensifies, we'll inevitably see more failures and a cooling of the hype.Every trending meta in Web3 offers a great opportunity and an exciting ride. The key is to take profits in a timely manner and move on.Even on the tech side, there are still many issues yet to be addressed; most AI Agents have nothing to do with Web3 apart from the economy part.But…The market capitalization of AI agents is expected to double from $7 billion to $14 billion within two years. This sector will inevitably grow with new protocols and new use cases grabbing user’s attention.In other words:The industry's potential is immense, but the AI agents currently at the forefront of hype are unlikely to maintain their dominance in the coming months.That’s a long-term vision.

Short-term vision

Let’s talk about the current opportunity: AI agents on Solana are at a significant low. The theses here mostly rely on @0xkyle__’s article on X which I agree with, but make sure to DYOR, as always.Liquidity has been flowing into CEX alts and Base, while sentiment around Solana is notably bearish, with concerns about SOL/ETH and SOL/BTC topping out. Amidst this doom-and-gloom, there’re two key bets on CT:

  1. Solana will make a comeback, sparking a second on-chain wave.
  2. AI agents will rebound alongside it.

So there’re two possible strategic approach types:

  • Large-cap AI: Invest in established players like AI16Z and possibly TAO, which have proven their value.
  • Small-cap AI: Seek out underappreciated projects focusing on interactivity, apps, and avatars. This is where the asymmetric returns lie.



Source:stacy_muur
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This article is for informational purposes only. It is not offered or intended to be used as investment or other advice.

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