AI agents are one of the hottest topics in crypto and meme tokens. Just a few weeks ago, AI agents were hardly a topic, but they are gaining mindshare.
Data from Kaito shows searches for ‘AI agent’ or ‘AI agents’ in crypto have been rising in the past days. The trend is new and adds to the meme token bull market with another hot narrative. Kaito noted that AI agents were virtually unknown just a month ago, but are now seen as a new way to engage an audience.
https://twitter.com/_kaitoai/status/1858812982240682129
AI agents go above and beyond trading bots. They are both equipped with an Ai language model, and are capable of building trading decisions based on on-chain and off-chain data.
AI agents appeared after a wave of AI-inspired tokens, which however did not have the tools to build trades. AI tokens such as GOAT, GNON, and more lately ACT had their days outperforming the rest of the market, before once again giving way to other memes and cults.
AI agent ecosystem grows in crypto space
AI agents are one of the new additions to DEX activity. They work as a cross-over of trading bots and LLM models, though most are still in the testing stage. AI agents can automate trading by adding new complexity to decisions, even choosing trades independent of the user.
AI agents also build upon existing Web3 tools, including efficient routing and trades through DEX, which are not easily accessible even to experienced users. AI agents emerged independently of social media AI bots, which were seen more as experimental and related to memes. Truth Terminal and Numogram (GNON) did not make trading decisions, though they had wallets and helped boost their native tokens.
The tokens of AI agents are already getting a boost. The sector is still almost experimental and tiny compared to meme tokens. However, AI agents have the potential to change the face of meme trading, by adding a layer of automated analysis and decision-making to trades that were so far driven by human emotions.
The AI agent space includes not only specific agents, but projects that try to sell the tools to build agents. The actual AI agents do not guarantee profits, and still depend on human users deciding to assign their capital.
One of the strengths of AI agents is that they are capable of tapping liquidity by creating hype around themselves. This led to the creation of multiple projects and tokens. The AI token sector expanded to $4.8B in market capitalization. So far, AI agents do not overlap with other AI token narratives. Only Artificial Superintelligence (FET) has crossed over from old AI tokens into AI agent tokens.
The most prominent new launch in that space is the Ai16z (AI16Z), which started trading on November 18. The AI agent, controlled by Andreessen Horowitz, immediately attracted investments and built a portfolio. The fund, headed by automated decision-making, will continue operating until October 25, 2025.
AI16Z crashes after initial rush to AI agents
AI16Z is one of the most complete AI agents, tapping a mix of social media, Discord chat, as well as trading tools. The agent uses a DAOS Fun wallet, though it may have Pump.fun added as well. With relatively limited trading capabilities, the fund started building a portfolio of SOL, memes, and other assets.
Soon after the AI agent launch, the native token AI16Z rallied to a peak of $0.52. However, the initial hype wore out quickly, leading to a crash as low as $0.28.
The goal of AI16Z is to track on-chain and price data, in addition to chats and user recommendations for tickers. The AI agent was limited to a DAOS Fun wallet, but there is already code for applying Solana wallets.
The AI model of AI16Z will not have a singular personality. Instead, the fund will build several AI models, including an investor, a degen risk trader, as well as the more complex ELIZA framework.
It was precisely ELIZA which led to the market crash of AI16Z by nearly 50%. The fund’s team was preparing to launch its own ELIZA token, when another team front-ran the AI agent. Instead of starting a war, AI16Z decided to cooperate with that team, but retain ownership of the ELIZA technology.
In the short term, the scandal around ELIZA hurt the fund, in the crucial early days of trading. The space will also need to deal with unreliable models, copycat tokens and the inherent risk of token selections and trading.
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