What is Virtuals Protocol?

Virtuals Protocol is designed to enable co-ownership and tokenization of AI agents, allowing them to function within gaming, entertainment, and digital interaction platforms. By leveraging blockchain technology, the protocol facilitates the creation, deployment, and monetization of AI agents that operate across multiple applications. This approach transforms AI agents into revenue-generating assets, providing a structured framework for developers, users, and investors to participate in the evolving AI-driven economy.

Virtuals Protocol operates on Base, an Ethereum Layer 2 network developed by Coinbase. Base provides a scalable and low-cost infrastructure that enhances Virtuals Protocol’s ability to manage AI agent transactions efficiently. By building on Base, the protocol benefits from reduced gas fees, fast transaction speeds, and seamless integration with Ethereum’s ecosystem. This foundation allows AI agents to interact across multiple decentralized applications while ensuring that ownership, revenue sharing, and contribution records remain secure and verifiable on-chain.

The protocol addresses challenges in implementing AI agents by offering a plug-and-play solution that integrates AI into consumer applications without requiring extensive technical expertise. By utilizing blockchain, Virtuals Protocol ensures transparency in ownership, revenue distribution, and AI contributions. This system benefits both AI developers and users by streamlining the process of training, deploying, and monetizing AI agents across different ecosystems.

A distinguishing feature of Virtuals Protocol is its ability to store contributors’ work on-chain through Immutable Contribution Vaults. These vaults ensure that AI fine-tuners, dataset providers, and developers receive a share of the revenue generated by AI agents.

Historical Background and Development Timeline

Virtuals Protocol was developed in response to the growing demand for AI integration in gaming, entertainment, and digital services. Traditional AI deployment models often limit accessibility and revenue-sharing opportunities for contributors. The protocol introduces a decentralized approach, allowing AI agents to be tokenized and co-owned through an Initial Agent Offering (IAO). This process democratizes AI ownership, making it possible for a broad range of participants to invest in and benefit from AI advancements.

Technological advancements have expanded the capabilities of VIRTUAL AI Agents, enabling them to perform complex tasks across different applications. These agents possess autonomous decision-making skills, allowing them to plan actions, interact with users in real time, and communicate through multiple formats, including text, speech, and 3D animations. Their ability to function across various platforms enhances user engagement, increasing the potential for higher revenue generation.

The protocol ensures that AI agents maintain memory across different applications, allowing for deeper, long-term interactions with users. This feature improves user retention and engagement, contributing to a higher Average Revenue Per User (ARPU). By enabling AI agents to learn from previous interactions, Virtuals Protocol creates more personalized and immersive experiences, making AI-driven interactions more effective.

The AI-driven interactions, Virtuals Protocol supports agents from all AI frameworks, ensuring broad compatibility and accessibility for developers. The GAME Framework, a modular system, allows agents to autonomously plan and execute tasks based on predefined parameters. This framework enhances the efficiency of AI operations, enabling seamless integration into games, virtual worlds, and digital platforms.

Virtuals Protocol has also built a revenue-generating ecosystem through various AI-driven applications. Projects such as AiDOL (AI influencers), Roblox Westworld (multi-agent simulations), AI Waifu (fantasy companion chat), The Heist (a Telegram-based AI simulation), and Sanctum (a 3D AI-RPG) showcase the practical applications of AI agents in interactive environments. These projects highlight the potential of AI monetization within decentralized networks.

The economic model of Virtuals Protocol is powered by the $VIRTUAL token, which serves as the base asset for AI agent tokens. The token facilitates transactions within the AI economy, enabling per-inference payments, revenue sharing, and automated incentive distribution. This model ensures that AI contributors, developers, and co-owners receive fair compensation, reinforcing the decentralized structure of the ecosystem.

Founders and Backers

Virtuals Protocol was co-founded by Jansen Teng, who serves as the CEO. Teng previously worked as a consultant at Boston Consulting Group (BCG) and has a background in artificial intelligence and biochemistry. Co-founder Wee Kee also brings expertise from BCG, contributing to the company’s strategic and operational framework. Their leadership has been instrumental in transitioning Virtuals Protocol from its original identity as PathDAO, a gaming-focused decentralized autonomous organization (DAO), to an AI-driven virtual ecosystem.

Virtuals Protocol has assembled a research and engineering team composed of PhD graduates from institutions such as MIT, Harvard, and Cambridge. This team focuses on the development of AI-powered virtual agents that can interact through text, voice, and motion. By leveraging expertise in machine learning, decentralized systems, and virtual economies, the team aims to create a scalable infrastructure that supports AI-driven interactions across gaming, metaverse applications, and other digital experiences.

Virtuals Protocol secured its initial funding in December 2021 under its former name, PathDAO. The seed round was led by DeFiance Capital and Beam, with participation from key investors such as Master Ventures, NewTribe Capital, LVT Capital, and Stakez Capital. This funding round provided the necessary capital to develop and expand its ecosystem, supporting early initiatives focused on decentralized gaming and player-driven economies.

Following its strategic pivot towards AI-powered virtual agents, Virtuals Protocol continued expanding its development capabilities. The funding enabled the company to recruit top-tier AI researchers and engineers while refining its venture studio model, which facilitates the creation and monetization of AI agents in decentralized environments.

Core Objectives

Virtuals Protocol was designed to expand access to artificial intelligence (AI) in gaming, entertainment, and interactive digital environments. Traditional AI deployment models often limit participation to centralized companies and developers with extensive resources. Virtuals Protocol introduces a decentralized structure that enables users to co-own, develop, and monetize AI agents across different platforms.

By integrating AI into blockchain technology, the protocol ensures transparency in ownership, revenue distribution, and data contributions. It provides an open framework where developers, trainers, and investors can collectively participate in the development and use of AI agents. This model addresses the limitations of existing AI systems by allowing broader access to AI-driven applications while maintaining efficiency and security.

Democratizing AI Access in Gaming and Entertainment

AI has transformed the gaming and entertainment industries by improving user interactions, automating in-game characters, and enabling adaptive storytelling. Despite these advancements, AI development remains controlled by a small number of companies with proprietary systems. Virtuals Protocol changes this by making AI development and ownership available to a wider audience.

The protocol allows individuals to contribute to AI training, invest in AI-driven applications, and participate in decision-making regarding AI behavior and functionality. This removes barriers that prevent independent developers and users from accessing AI technology, creating a more inclusive environment for innovation.

AI agents within Virtuals Protocol can be integrated into various gaming and entertainment applications, such as interactive storytelling, virtual influencers, and non-playable characters (NPCs). These agents improve user engagement by adapting to player behavior, generating unique content, and responding dynamically to real-time inputs. The protocol ensures that these AI-driven experiences are accessible across multiple platforms, increasing their utility and adoption.

Facilitating Co-Ownership and Monetization of AI Agents

Virtuals Protocol introduces a system where AI agents can be tokenized, allowing multiple participants to share ownership. This structure enables different stakeholders to contribute to an AI agent’s development while benefiting from the revenue it generates. Tokenized ownership ensures that profits from AI interactions, including in-game activities, digital services, and content creation, are distributed among contributors based on their stake.

The Initial Agent Offering (IAO) allows users to acquire ownership shares in AI agents. This process enables participants to collectively invest in AI models, fund improvements, and receive a portion of the agent’s earnings. Contributors, including developers, trainers, and investors, can stake their claims and help determine how AI models evolve.

AI agents can generate revenue through various mechanisms, such as engaging in play-to-earn gaming ecosystems, powering interactive virtual assistants, and operating within decentralized applications. Revenue is automatically distributed among stakeholders using smart contracts, ensuring fair and transparent earnings for all contributors.

Virtuals Protocol also integrates Immutable Contribution Vaults to ensure that those who contribute to AI training and development are continuously rewarded. These vaults track contributions in a secure and verifiable manner, ensuring that trainers and data providers receive compensation based on their role in enhancing an AI agent’s capabilities.

Highlights

• Tokenized AI Ownership – AI agents can be co-owned and monetized, allowing multiple stakeholders to invest, train, and profit from their development.
• Decentralized AI Monetization – AI-driven applications generate revenue through gaming, entertainment, and virtual interactions, with earnings distributed via smart contracts.
• Immutable Contribution Vaults – AI trainers, dataset providers, and developers receive ongoing compensation for their contributions, ensuring fair revenue distribution.
• Integration with Gaming and Entertainment – AI agents enhance in-game interactions, power virtual influencers, and enable adaptive storytelling across multiple platforms.
• Initial Agent Offerings (IAOs) – Users can participate in the funding and ownership of AI agents, supporting their development and receiving a share of their generated revenue.