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Bitcoin is down 10% on the week, and the total AI agent sector market cap is reeling from a steeper decline of 44%. $8.7 billion in market value is wiped out, yet agents are far from dead. The question is: Where do agents go from here? |
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Virtuals swap fee comparison: |
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Virtuals' revenue from fees has been down-only since the start of the year when the protocol introduced graduated swap fees. These are fees generated from trading AI agent tokens that have graduated from the bonding curve. When an AI agent token is still on the bonding curve, swap fees flow to Virtuals to support the platform. However, once the token graduates from the bonding curve, the nature of the fee distribution changes. |
Graduated swap fees are allocated to the agent owner, rather than Virtuals. They're earmarked to help cover the ongoing costs of maintaining and operating the AI agent, such as expenses related to inferences, computational resources and general upkeep. Essentially, the introduction of graduated fees allows AI agent owners to receive a share of the fees generated by their tokens after they exit the bonding curve, providing them with financial support for sustaining their agents. |
This mechanism is designed to ensure agent owners have the resources needed to maintain their agents over time, aligning their interests with the success and continued functionality of their AI agents within the broader Virtuals ecosystem. |
A decline in trading activity in recent weeks has broadly put a damper on fees, so it'll be interesting to see the evolving dynamic between agent fees pre- and post-launch, if/when the market recovers. |
— Macauley Peterson |
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SKALE, the gas-free invisible blockchain, is "Built Different" for mass adoption: high-throughput, scalable, and fair. As a network of interoperable EVM-compatible L1s, SKALE's user experience focus has accelerated a strong ecosystem across gaming, AI, and more. Due to SKALE's gas-free nature, blockchain can be integrated invisibly, creating accessible Web2-like experiences for users and developers. |
SKALE has: |
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Dive in to learn more. |
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Sizing the AI agent market |
If you count the launch of GOAT as the birthdate of the AI agent meta, then this subsector is about three months old. Over this short span, the AI agent market has ballooned to a $20 billion market cap with relatively few tier-1 CEX listings. |
That's nuts, especially since AI agents are still predicated on promised — rather than current — utility. |
It's perhaps unsurprising then that the agent market corrected sharply over the weekend, showing a 43.5% drawdown to $11.3 billion since its Jan. 6 top. |
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The top AI agent tokens haven't been spared the guillotine. In the last seven days, the largest three AI agent tokens by marketcap — VIRTUAL, AI16Z and FARTCOIN, are down 46%, 52%, and 42%, respectively. |
AIXBT, the fifth-largest agent token, showed the greatest resilience, with a drawdown of 28%. |
It's a bloodbath. So what? Expect agents to continue dominating 2025. |
Crypto's obsession with AI is undeniable at this point. It's riding the hottest tech sector of the decade and still dominates Twitter sentiment among rabid casino speculators. |
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The billion dollar question then is: How high can the AI agent market go? |
At $11.3 billion, AI agent tokens make up about 0.34% of the total crypto market cap today. |
If we assume a 40% growth of the total crypto market cap to $5 trillion, and AI coins take a 5% slice of that pie (DeFi dominance peaked at 7.69% in 2022), then you can expect $250 billion as a bull case, says kel.xyz. |
Less bullish estimates by David Nage of Arca fund projects a range of $93 billion to $170 billion. |
With this framework in mind, the "safe" bet is to hold the ecosystem majors of the AI meta: VIRTUAL, AI16Z and ZEREBRO… right? |
The problem is these inter-narratives rotate faster than anyone can keep up with. There's hardly any guarantee that the "blue chip" agent coins today maintain their dominance over months, or even weeks from now. |
In the span of a year, the story of "why AI crypto" went from a beta play on Nvidia and OpenAI to AI memecoins, to AI agents, to AI agent frameworks, AI investment DAOs and AI agent swarms. |
As of last week, the most recent chapter in this tale is "DeFAI," i.e., DeFi + AI. I interpret this as an insistence that "AI has real utility, look to its DeFi use cases!" |
I'm reminded of a tweet from Daily Ape's founder Darren Lau. If you'd made the bold bet that AI would sweep crypto markets and scoop up a bag of major AI tokens like TAO, RNDR and AKASH in early 2024, you'd still be sitting on a loss year to date. |
 | Darren Lau @Darrenlautf |  |
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imagine you decided AI was gonna be THE narrative Jan-March 2024 when AI started pumping, you thought ok nice i'll just buy the majors of AI for this cycle TAO: average buy 450$ (January-March 2024 period average) -> Break-even Dec 2024
FET: avg buy 1.6$ -> down 20% Dec 2024… x.com/i/web/status/1… | | | 7:47 PM • Dec 21, 2024 | | | | | | 566 Likes 32 Retweets | 73 Replies |
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Winning at the AI agent meta then requires one to pick the right players in an ever-changing playbook of questionable utility. Is it any wonder crypto traders get rekt? |
— Donovan Choy |
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Hyperliquid — which layer is it? |
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The discussion on Hyperliquid revolves around whether it should be classified as an L1 or L3. People have taken diverse perspectives. An L3 typically refers to an application layer that leverages an existing blockchain infrastructure (L2) for its operations. It often focused on specific use cases, like decentralized applications or protocols, without handling the consensus or security mechanisms directly. |
Some commentators argue that Hyperliquid should be considered an L3 because it relies on Arbitrum for security and scalability, but does not post its state directly on the Ethereum main chain (L1). Others counter, suggesting Hyperliquid functions more like an L1 in practice because it has its own set of validators and manages state transitions, even if it uses Arbitrum for some operations. |
Guests on the latest 0xResearch podcast all felt the L1 argument was stronger: |
0xOmnia: There's something to be said about the fact that there are not anywhere near as many validators on Hyperliquid. Yes, it's controlled currently in terms of consensus by 14 validators, but there [have] been really active steps in that direction, and I think that there's been a lot of cherry-picking about what currently exists as opposed to what will exist in the future. |
Max Fiege: If Arbitrum went down, bridge stuff gets wonky, but for the period of that downtime it doesn't necessarily impact users signing transactions on the HL side unless those transactions are to withdraw or deposit. |
Tolks: At the end of the day, the market valuation is what matters. [You can draw] a comparison to CoinGecko's L3 category where the top chain is Degen Chain at "only" $400 million. You can talk about the technical nuances all you want, but the market is valuing it very clearly as an L1. |
— Macauley Peterson |
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This June, Permissionless IV in Brooklyn is bringing together developers, creators, and problem-solvers driving the next wave of onchain development. It's a space to exchange ideas, tackle challenges, and collaborate on the tools and protocols shaping tomorrow. |
June 24-26, 2025 | Brooklyn, NY |
A transformation is happening now. Be part of it. |
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 | QNT/TAOareTheKeys @QNTistheKEY | |
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Is anybody else feeling this way? I'll admit it: I have severe PTSD from round tripping my 7-figure crypto bags back to low 6 figures last cycle. And my PTSD has only INCREASED from this bull run, which hasn't been easy to navigate by ANY stretch of the imagination.… x.com/i/web/status/1… | | | 10:15 PM • Jan 11, 2025 | | | | | | 4.47K Likes 353 Retweets | 921 Replies |
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|  | Ethereum Foundation @ethereumfndn | |
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0. hello world computer, and welcome to the new Ethereum Foundation X account | | | 2:03 PM • Jan 13, 2025 | | | | | | 1.53K Likes 323 Retweets | 337 Replies |
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|  | PaperImperium @ImperiumPaper | |
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How did Maker go from $216m annualized revenue two months ago to $62m today? It's actually pretty simple! We're seeing the flip side of the exact same coin. Anyone who follows fixed-exchange currencies, banks, and stablecoins should be familiar w these mechanics 1/n |  Sam MacPherson @hexonaut
absolutely printing rn |
| | | 7:24 PM • Jan 12, 2025 | | | | | | 227 Likes 23 Retweets | 17 Replies |
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|  | Cheds Trading @BigCheds | |
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Bears deserve nothing. Punish them | | | 3:18 PM • Jan 13, 2025 | | | | | | 652 Likes 43 Retweets | 55 Replies |
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