It’s been about 2.5 weeks from the AI agent market bottom (~$4B MC) and market is in full blown@virtuals_io""> @virtuals_io bull run. Yep… only Virtuals. This run is akin to Oct - Nov last year when Virtuals started its agent tokenization platform, cementing itself as the pioneer and first legit player offering top distribution network for any AI-related projects (that are willing to launch a “fair launch” token).

What’s different this time is the latest feature, “Genesis Launch” — a fairer way of launching & rewarding early supporters. This brings us to the first trend

1. Fair Launch / Gamified Launchpad

Genesis Launch drastically changed the state of the trenches, from degens aping into random / cabal shitters on pumpfun to degens getting almost guaranteed 5-10x on new launches.

This is achievable through the introduction of “points” which align the interest between different stakeholders, and the fixed MC, fixed supply launch format where every project launch at 112k $VIRTUAL (~$200k FDV). Each participant can get up to 0.5% of the supply based on the amount of points they contribute. Users earn points by holding / staking $VIRTUAL as well as top agent tokens (they have a list for this) or simply yapping about Virtuals.

The recent introduction of cooldown period to disincentivize selling behavior further improve the allure of Virtuals Genesis Launchpad since sellers would have to think twice on selling.

So far the Genesis Launchpad has proven to be very successful with@BasisOS""> @BasisOS being the most successful netting 200x for participants. Since then, Virtuals has been full of runners netting 5-40x ROI

Given the success of the Genesis Launches, capital & attention started consolidating on Virtuals ecosystem again, lifting the valuation floor of almost all agents on the platform

But despite the renewed hype, the lack of quality projects remain one of the biggest challenge within Virtuals ecosystem which brings us to the second trend

2. Hype & Trading Structure over Substance

As a trader/speculator, you can make money investing in sub-par product with sub-par teams because of the way Genesis Launches are structured. There’s high likelihood that a project pump from $200k val than dump (especially when you know there’s no insiders / presale rounds).

As a project, if you have a unique idea, you can just launch a token first without the need of having a working product. No need to identify target users, no need to see if there’s market demand for the product, don’t care about revenue & user traction. Just create max hype & launch (bonus point if you have a demo, if not it’s cool lol)

Anything that meets basic requirement of a project (having a decent docs, good product idea, decent looking team) can succeed in getting token off the ground on Virtuals Genesis Launch.

For investors, the lesson here is to treat these launches as short-term speculative plays instead of medium to long-term fundamental plays. Because 9 times out of 10, these are shitters touted as fundamental AI projects. (I give a perfect example/case study of this in my Substack for those interested)

With lots of shitters, comes a lot of opportunities / gap for quality projects (both in and outside of AI). Which brings us to the third trend

3. Gap for DeFi Projects to Launch on Virtuals

BasisOS is a decentralized protocol designed to optimize yield in exotic markets through a managed basis trading strategy.

Two months back, I had a conversation with@logarithm_fi"> @ logarithm_fi /@BasisOS"> @ BasisOS team. Learned of their product (Ethena-like, Delta-neutral strats but w/o the stablecoin), knew the team from Logarithm days when they were building in the LPDFi narrative (product that leverages Univ3 liq), like the team so I suggested some tokenomics ideas, launch plans, and more. Genuine didn’t feel it would pump so much because while the Defi product has fundamentals, the “AI” part is simply pretty pre-mature. In the end, this doesn’t matter and the project continues to outperform everything in the market.

Based on Basis success case, there’s a gap for defi projects to launch their token on Virtuals. Despite lack of traditional Defi tokenomics to incentivize TVL with emissions, the hype & attention that comes with Virtuals launch (especially when you have a robust defi product) will be enough to secure TVL for your vault/strategy.

If you think you have a robust defi product and want to incorporate AI to improve your product (to improve user acquisition funnel or inherently enhance the core product), feel free to reach out. Happy to bounce ideas.

Beyond getting the attention, there’s also a new trend / experimentation that’s akin to 2023-24 ETH shitters era. This brings us to the fourth trend

4. Revenue from Trading Volume as Growth Engine

There was a time when there were many small ponzi defi projects that experiment with tokenomics, charge 1-3% on trading fee, use that to scale its treasury for its ponzi defi strat, accrue rev/yields back to token holders. Back then, project creators were able to capture 6-7 figs in revenue in a week or two due to the lack of tokens in the market + how affluent everyone was back then on Ethereum (people were ballsy af aping into shitters lol).

Now we’re seeing something similar within AI agent trenches.

Normally, 1% trading fee is charged on every trades made on Virtuals. 70% of that goes back to project creators. Other launchpads also charge 1-2% trading fee with 70%-100% back to creators

@Squidllora">@ Squidllora powered by@AlloraNetwork"> @ AlloraNetwork intelligence who recently launched on@autodotfun"> @ autodotfun is using the creator fee to scale its bankroll/treasury and use this to trade majors using Allora’s inference (if you’re new to Allora, it’s basically Bittensor but for pure financial use cases i.e. there’s a bunch of scientists competing to create best prediction models for crypto assets across diff time horizon). Parts of the profit from the trades will be used to buyback its own token.

This is inherently powerful especially for well-funded team that doesn’t require trading fee to sustain its run way. Teams can now launch AI agent token and use it as a marketing tool, new user acquisition funnel to accumulate attention & fees to bootstrap an entirely new AI experiment.

Anyhow, taking a step back to the AI agent trenches, nothing else is pumping besides Virtuals eco despite many teams shipping in public. This brings us to the fifth trend

5. Virtuals Dominance / Lack of Pump on Alternative Ecosystems

Valuation floor of Virtuals agents keep on creeping up due to Genesis Launches. This new of wave of launches doesn’t necessarily mean improvement in fundamentals & tech. The main driver of this catalyst is a huge improvement in trading structure i.e. more people play Virtuals game because they know they can make money. This could continue to the point where existing projects reach local high / local ceiling in price.

Once that happens, some of the attention will naturally shift towards alternative ecosystems like@CreatorBid"> @ CreatorBid,@arcdotfun"> @ arcdotfun,@autodotfun"> @ autodotfun especially on low cap plays with clear improvements in fundamentals (new features, new product launch, new partnerships)

CB & Arc are prob the best two eco rn w/ a few undervalued gems that have yet to pump (the usual 3-4 picks on CB that integrated w/ subnets or building Bittensor-focused product, handshake projects on Arc that contribute to Arc’s Ryzome)

Best way to position yourself for this is to accumulate these tokens early when most people don’t see the value

6. Limited AI Investment Opps for Institutions

Despite seeing major AI agent ecosystem like $VIRTUAL and $AI16Z appreciating in price action, many institutions are left sidelined as the assets that are massively appreciating in price are only suited for small retail / degens. Liquidity is thin and LP structure is fragile (especially on Virtuals).

This lack of proper liq infra along with an emerging interest in decentralized ai have spurred institutions to invest in decentralized infra, agentic L1s, decentralized AI labs, instead of the current iterations of AI agents tokens

What are those tokens you’re wondering? They’re $GRASS, $TAO (and their subnets), $VANA, $FLOCK, $PROMPT (maybe) and a whole host of unlaunched tokens like@NousResearch"> @ NousResearch,@PluralisHQ"> @ PluralisHQ,@PrimeIntellect"> @ PrimeIntellect i.e. those who’re carving true Web3 AI moats, bringing high performance models ownership in the hands of the people (not centralized AI labs). Basically actual complicated AI that people don’t understand & don’t know how to invest

How to Best Position Yourself based on the trends?

My strategy here is to roll out the profits from short-term small AI agent trades into DeAI (especially profits from genesis launches w/ sub-par teams). The fundamentals AI plays take time to play out because many are heavily infra-focused w/ no consumer-oriented product. Just like how we see ChatGPT, Grok, Anthropic suddenly getting very good at doing everyday tasks, real-time research, coding, there’ll be a time when decentralized Web3 models get good at performing some Web2 and Web3 native tasks

Does this mean you should invest heavily in DeAI infra?

Not necessarily, Crypto is driven by hype & distribution. It’s 90% distribution and 10% model. A project can be successful over the long-term if they know how to nail the distribution which is serving the product that people need, having good UI/UX, good launch plans & execution, solid token strategy, good user acquisition & retention plans, etc.

My core thesis remains in investing in teams that know how to combine both distribution + tech (model). Similar thesis to how Web2 VC invest in vertical saas that targets niche use cases (while they could be using w/e off-the-shelf models behind the scene w/ their own proprietary data).

I believe this thesis will be quite sticky over short-to-medium term especially in Web3 since everything is driven by hype & community, things that are easy to understand will sell well.

The general market / trading structure is pushing towards this direction as well with fair launch (Genesis Launch) structure that’s starting to become a norm in the market while there are more teams (in other eco) that’s starting to blend the two aspects more and more (spending more time to partner w/ infra projects to use their tech + focus on distribution & GTM to bring hype to actual AI tech)

Quick Summary

• Virtuals’ Genesis Launch model is dominating attention and returns.
• Hype is still outpacing substance—most are short-term plays.
• DeFi projects with solid fundamentals are finding upside in Virtuals.
• Creator revenue from trading volume is driving a new wave of experimentation.
• Virtuals is leading, but alternative ecosystems may soon catch bids.
• Institutions are sidelined, favoring DeAI infra bets over agent tokens.

Positioning: Rotate short-term AI agent gains into long-term DeAI infra and back founders who can combine hype/distribution with real tech.

Personal Note: As always, thanks for reading! If you’re building something in Crypto AI and want to connect, shoot a DM!

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