VIRTUAL (Virtuals Protocol)

Most recent update: [Feb 13, 2025]

What is VIRTUAL? 

VIRTUAL is the native utility token of the Virtuals Protocol, a decentralized platform built on Base, Coinbase’s Ethereum layer-2 scaling network. It focuses on creating, co-owning, and monetizing AI agents for gaming, entertainment, and social interactions. As an ERC-20 token, VIRTUAL powers the ecosystem, allowing users to mint AI agents like influencers such as Luna or analytical tools like AIXBT by staking and burning tokens. The protocol aims to democratize AI development, providing everyone, regardless of technical background, the opportunity to participate in tokenizing AI agents as revenue-generating assets, with ownership and governance distributed across its community.

In addition to its core functionalities, VIRTUAL also plays a crucial role in the governance of the Virtuals Protocol. Token holders can participate in decision-making processes, such as voting on protocol upgrades, new features, and other important changes. The decentralized governance model allows the community to have a direct impact on the development and direction of the platform.

The VIRTUAL token is available on both Base and Solana. Initially dedicated to Base, the protocol expanded to support Solana in January 2025. This integration includes a liquidity pool on the Solana-based Meteora exchange, developer grants, and a cross-chain bridge via the Stargate bridge, enabling seamless interoperability. This multichain approach enhances the protocol's decentralized capabilities and adds value for its community.

Who is Behind VIRTUAL?

Virtuals Protocol, founded in 2021, was initially launched as PathDAO, a GameFi guild focused on blockchain gaming investments. The project’s core team, led by Jansen Teng (CEO), a former Boston Consulting Group consultant with a background in AI and biotechnology, and Wee Kee (Co-Founder, BCG Alum), a blockchain strategist, brought together expertise from leading institutions like Imperial College London, Harvard, and Cambridge. Their collective experience, alongside key members like Bryan Lim (AI researcher), Wei Zhe (Javier) Yeoh (AI core contributor), Ernest Chiew (AI core contributor), and Bernard Leong (AI/ML expert), provided a strong foundation for the protocol's evolution.

In 2023, recognizing the rapid rise of AI technologies, the team pivoted from GameFi to AI-agent tokenization, rebranding as Virtuals Protocol. This shift marked a significant transformation as the team embraced decentralized AI agents in response to the growing potential of AI-driven platforms. After launching on Base in January 2024, the protocol introduced functionalities like meme coin generation, Telegram chatting, and music creation. With a treasury to fuel its new vision, Virtuals launched the Generative Autonomous Multimodal Entities (G.A.M.E.) framework, enabling agents like Luna to autonomously interact across platforms, learn from user engagement, and generate revenue through tips and subscriptions.

Virtuals’ development is rooted in transparency, with the team maintaining public profiles, whitepapers, and audited contracts. The versatility of the team members and their ability to adapt and innovate have positioned Virtuals Protocol as a leading player in decentralized AI.

How does it work? 

The Virtuals Protocol is a decentralized platform that facilitates the creation, deployment, and monetization of AI agents across various applications. By integrating blockchain technology, it supports users in co-owning and managing AI agents, transforming them into revenue-generating assets. The platform simplifies the process of creating AI agents by making it accessible to users without technical expertise, thereby democratizing AI development and inviting a broader range of individuals to participate.

Key features of the Virtuals Protocol include the tokenization of AI agents, which promotes shared governance and revenue distribution among users. The platform employs blockchain technology to tokenize AI agents and boost their economic potential. Additionally, AI agents on the Virtuals Protocol are designed to interact through various modalities, including text, voice, and visuals. One notable AI agent is AIXBT, which monitors cryptocurrency discussions on social media to provide real-time insights to users. Another example is Luna, an AI agent designed for livestreaming and engaging with audiences across different platforms. Users can purchase and trade tokens associated with these AI agents, participating in both their governance and revenue generation.

The use cases for the VIRTUAL are diverse, spanning entertainment, gaming, and decentralized applications. AI agents like AIXBT and Luna can serve as virtual influencers, companions, or characters within games, engaging users and creating new interactive experiences. By integrating these agents into dApps, developers can offer more dynamic and personalized interactions, improving the overall functionality and appeal of their applications.

The VIRTUAL Token and Tokenomics 

The total supply of VIRTUAL is capped at 1 billion tokens, with no future inflation. Of this supply, 5% is allocated for liquidity purposes. 35% is reserved for the ecosystem treasury, which supports the ongoing development and maintenance of the Virtuals Protocol. The remaining 60% is designated for public distribution. As of February 13, 2025, the market capitalization of VIRTUAL stands at US $822.73M.

Security 

The Virtuals Protocol operates on both the Base and Solana blockchains, utilizing their respective security features to protect transactions. On Base, it leverages Ethereum’s Proof of Stake (PoS) consensus mechanism, which relies on validators to verify transactions. The feature ensures that only legitimate transactions are recorded. On Solana, the protocol benefits from the blockchain’s scalable infrastructure, particularly utilizing Proof of History (PoH) to create a verifiable sequence of events, and Tower BFT for secure, efficient consensus. Together, these mechanisms support the integrity of the protocol’s operations.

In addition to utilizing the security features of the blockchains they operate on, the Virtuals Protocol has conducted independent audits to verify the integrity of its platform. The team enlisted PeckShield for security audits in March and October 2024. These audits focused on detecting coding errors, maintaining semantic consistency, and evaluating decentralized finance DeFi security measures. Additionally, the protocol underwent a smart contract assessment by Cyberscope, which gave the protocol a favorable security rating.

Drawbacks and risks 

One risk faced by Virtuals Protocol as a cryptocurrency platform is market volatility. The VIRTUAL token has experienced significant price fluctuations, including a sharp decline from its all-time high, which can lead to financial losses and market instability.

Another risk is cybersecurity threats. The protocol has encountered security breaches, such as a hack of its Discord server, which exposed users to phishing scams and potential loss of assets.

Additionally, the protocol faces regulatory challenges. Cryptocurrency platforms like Virtuals Protocol must navigate legal frameworks, including Anti-Money Laundering and Combating the Financing of Terrorism regulations, which can be difficult to implement due to the evolving nature of cryptocurrencies.

Due Diligence  

Before listing VIRTUAL on the VirgoCX Platform, VirgoCX performed due diligence on VIRTUAL and determined that VIRTUAL is unlikely to be a security or derivative under Canadian securities legislation. VirgoCX’s analysis includes reviewing publicly available information on the following:  

• The creation, governance, and location of VIRTUAL and/or its primary development team; 
• The supply, demand, maturity and liquidity of VIRTUAL; and 
• Legal and regulatory risks associated with VIRTUAL.  

Statutory Rights under Securities Legislation 

VirgoCX is offering Crypto Contracts on crypto assets in reliance on a prospectus exemption contained in the exemptive relief decision Re VirgoCX Inc. dated May 30th 2024 (the Decision). Please be aware that the statutory rights in section 130.1 of the Securities Act (Ontario) and, if applicable, similar statutory rights under the securities legislation of each other province and territory in Canada do not apply in respect of the Crypto Fact Sheet to the extent a Crypto Contract is distributed under the prospectus relief in the Decision. 

Further Reading 

To learn more about the technology behind VIRTUAL, check out these in-depth resources here: 

• The official site of VIRTUAL
• Coinmarketcap’s overview of VIRTUAL
• Coingecko’s tokenomics overview of VIRTUAL
• Coinbase’s overview of VIRTUAL, along with the relevant news and blogs related to VIRTUAL.