How AI Agent Tokens on Virtuals Protocol Are Deflationary and Increasing in Value

As AI Agents become a trending narrative and launchpads for AI Agent tokens reach saturation, KyberSwap and Virtuals Protocol have joined forces to reduce token supply and enhance their value.

Aiden

Published Dec 02 2024

Updated Dec 03 2024

2 min read

On November 28, 2024, KyberSwap (a decentralized exchange based in Vietnam) announced its partnership with Virtuals Protocol, a pioneering launchpad for AI Agent tokens.

The centerpiece of this collaboration is the “positive slippage burn” mechanism, where the positive slippage from automated trades is burned.

This mechanism operates as follows: whenever users trade AI Agent tokens on KyberSwap, Virtuals Protocol, or platforms integrated with Kyber’s Aggregator (such as DefiLlama), the positive slippage is burned. This process reduces token supply, creates a deflationary effect and boosts the intrinsic value of the tokens.

The effectiveness of this mechanism is evidenced by concrete figures: $AIRENE burned 1.5% of its total token supply, $AIXBT burned tokens worth over $500,000 and other tokens on Virtuals Protocol have also successfully implemented similar mechanisms.

Additionally, the integration of KyberSwap’s Aggregator enables users on Virtuals Protocol to trade at better prices and lower fees by optimizing trade routes across multiple DEXs and blockchains.

ai agent token trading — *AI Agent Token Trading Interface on KyberSwap. Source: KyberSwap*

Since the beginning of Q4 2024, AI Agents have gained significant attention from the crypto community due to their ability to automate tasks and mimic human behavior.

AI Agent applications are diverse, ranging from hosting livestreams and interacting in games to executing on-chain transactions.

Notable tokens such as $GAME, $CONVO and $VIRTU have achieved staggering growth of over 500% in just 7 days, pushing their market capitalizations into the tens of millions USD.

Recently, Cookie.Fun - a tracking tool for AI Agents was launched, providing detailed insights into various AI Agents and their related tokens.

According to statistics, the platform currently tracks: 191 AI Agents, $6 billion total market capitalization and over 46.7 million social media interactions in the past 7 days.

cookie fun interface — *Source: Cookie.fun*

However, the rapid proliferation of AI Agent projects has led to market saturation. Many tokens have lost value due to a lack of sustainable tokenomics strategies. For instance, tokens like $GWX and $AIG experienced losses of more than 50% within just 24 hours.

In this context, the partnership between KyberSwap and Virtuals Protocol has introduced an innovative model that addresses these challenges while adding real value to AI Agent tokens.

Virtuals Protocol, launched in January 2024, provides a platform for users to create and manage AI Agents while earning revenue from their activities.

According to CoinGecko, AI Agent tokens within the Virtuals Protocol ecosystem have grown by 43% in the past 24 hours, reaching a total market capitalization of approximately $2.13 billion.

Notably, the ecosystem’s native token $VIRTUAL has seen exceptional growth, surging 346% within just one month, fueled by the growing demand for AI Agents.

coingecko interface — *Source: Coingecko*

These figures demonstrate that Virtuals Protocol is not only a promising platform but also a game-changer in how AI Agent tokens are created and utilized within the crypto market.