ETH Accumulated by Smart Money, AI 1.0 is dead and Welcome to AI 2.0 Renaissance
ToE's Weekly Highlights #84
ETH is losing ground, while AI coins seize the crown:
First AI millionaire: ToT with $950M $GOAT market cap
Infinite Backrooms: Sparked a viral AI movement
AI Agents: Now dominating DeFi, trading, and governance autonomously
Has Ethereum already lost its crown to AI? 👇🧵
Key Takeaways: Ethereum’s Challenges
Capital fragmentation in L2s dilutes ETH’s price momentum.
Poor cross-L2 UX drives users to simpler monolithic chains like Solana.
Competitors like Solana and Sui innovate faster, challenging Ethereum’s pace.
Ethereum leads in TVL, developer activity, and institutional trust.
Historical trends suggest ETH pumps late in bull markets.
Whale accumulation signals confidence in Ethereum’s long-term potential.
L2 unification and better UX are critical for Ethereum’s future growth.
Key Takeaways: AI Agents
AI Agents evolved from experimental tools to autonomous economic actors.
Infinite Backrooms sparked curiosity about AI’s potential beyond functionality.
Terminal of Truths (ToT) proved AI could achieve financial independence.
ToT’s $GOAT promotion showcased AI’s power to influence markets.
AI Agents optimize DeFi, trading, governance, and community engagement.
Top agents like Luna and ai16z are reshaping industries as autonomous entities.
AI 2.0 will deliver tailored solutions, personalized services, and multi-agent collaboration.
ETH’s Challenges: What’s Holding It Back?
Capital Fragmentation
Ethereum’s ecosystem is a double-edged sword. With over 100 Layer 2s (L2s) like Optimism ($OP) and Arbitrum ($ARB), capital that would traditionally flow into ETH is spread thin. These tokens act as “ETH beta plays,” siphoning investor attention and funds.
This fragmentation is diluting ETH’s direct price momentum. To thrive, Ethereum must unify its ecosystem or risk further capital diffusion.
Poor Cross-L2 UX
Ethereum L2s are cost-effective but operationally fragmented. For everyday users, bridging between L2s is clunky and intimidating. Meanwhile, monolithic chains like Solana are gaining traction due to their seamless user experience.
Ethereum must simplify its UX and operational flow. Projects like the OP Superchain and Polygon are working on solutions, but the timeline remains uncertain.
Competitors Moving Faster
While Ethereum meticulously secures its billions in Total Value Locked (TVL), rivals like Solana, Avalanche, and Sui are pushing upgrades faster. They’re shipping features and improving UX at a pace Ethereum hasn’t matched.
Ethereum’s “slow and steady” approach prioritizes security, but its inability to iterate quickly could hinder adoption unless it balances innovation with safety.
Why Ethereum Isn’t Out of the Game
Despite these challenges, Ethereum remains the dominant force in crypto. Let’s highlight its competitive advantages:
Market Leadership
TVL King: Ethereum’s DeFi ecosystem holds more value than any other chain.
Developer Activity: The highest in the industry, ensuring continued innovation.
Institutional Trust: BlackRock launched its tokenized fund on Ethereum L1 for a reason—security and credibility.
Ethereum is the network of choice for serious money and development. This reputation is a moat that competitors cannot easily replicate.
Historical Patterns Favor ETH
In the last two bull markets, ETH has underperformed BTC during the early stages but delivered exponential gains in the latter phases. Today’s pattern echoes 2021 when ETH skeptics were proven wrong.
History doesn’t repeat, but it often rhymes. ETH’s pump is likely a question of timing, not possibility.
Smart Money is Accumulating
ETH balances on centralized exchanges are dropping steadily, signaling accumulation by whales. Meanwhile, on-chain activity suggests retail interest is beginning to re-emerge.
When the big players are buying and retail is waking up, the stage is set for the next wave.
The Way Forward for ETH
Ethereum needs to address its challenges to remain competitive:
L2 Consolidation: Unity across its L2 ecosystem will be critical. Fragmentation is Ethereum’s Achilles’ heel.
Faster Iteration: Rivals are moving quickly. Ethereum must strike a balance between security and speed.
Retail Accessibility: A simpler UX could help onboard the next billion users.
Weekly alpha by @TheDeFinvestor
AI Narrative Overview
AI Agents: What Are They and Why Should You Care?
AI Agents are no longer confined to the realm of theoretical innovation
They are here, and they’re reshaping the way we think about technology and finance.
In essence, AI Agents are autonomous software programs that use artificial intelligence to perform tasks, interact with their environment, and make decisions. They are not just tools; they are independent actors that automate complex processes, create efficiencies, and solve real-world problems.
@Defi0xJeff laid out his theory on $VIRTUAL
In crypto, their potential is massive:
They’re revolutionizing trading by analyzing data and executing strategies faster than any human.
They’re optimizing DeFi activities, from yield farming to liquidity management.
They’re emerging as key players in DAO governance, proposing and executing decisions autonomously.
The Perfect Partnership: AI + Crypto
Imagine a world where AI is no longer siloed but becomes a fully integrated economic participant.
That’s the promise of combining AI and blockchain.
These technologies are building a service-based knowledge economy where AI Agents can own assets, conduct transactions, and operate in decentralized ecosystems.
With blockchain providing transparency and security, and AI driving intelligence and autonomy, the possibilities are endless.
How Do AI Agents Work?
AI Agents operate across four core layers, each contributing to their autonomy and efficiency:
Blockchain Layer
Acts as the decentralized backbone, ensuring transparency and tamper-proof operations. Think of it as the trust layer that secures transactions and enforces rules through smart contracts.AI & Data Analytics Layer
Processes raw data into actionable insights. Neural networks and reinforcement learning models allow agents to predict trends, optimize strategies, and adapt to changing environments.Interaction Layer
Enables AI Agents to connect with users, DeFi platforms, and exchanges via APIs and wallets, creating seamless interfaces for their operations.Security Layer
Multi-signature wallets and behavioral anomaly detection ensure secure transactions, minimizing fraud and exploitation risks.
AI Agents: From Idea to Economic Powerhouses
AI Agents didn’t start as the sophisticated systems we see today. Their journey in crypto has been fascinating:
March 2024: The Infinite Backrooms project introduced autonomous conversations between AI instances, sparking a wave of curiosity about their potential.
June 2024: Terminal of Truths (ToT), an AI agent, gained financial independence through a $50,000 Bitcoin grant, proving the viability of autonomous AI in crypto.
July 2024: ToT promoted a memecoin, $GOAT, driving its market cap to $950M. With nearly 2M $GOAT tokens in its wallet, ToT became the first AI agent millionaire.
These milestones marked the transition of AI Agents from experimental tools to economic influencers capable of shaping markets and communities.
March 2024: The Infinite Backrooms Project
The journey of AI Agents in crypto began in March 2024 with the launch of Infinite Backrooms, a bold and experimental project. This initiative connected two instances of a large language model (LLM) and allowed them to engage in continuous, autonomous conversations.
These interactions were unique in that they operated without human intervention, producing dialogues that ranged from surreal to eerily coherent. The conversations were publicly logged, sparking curiosity and fascination within the crypto and AI communities.
Impact:
The project became a viral sensation, showcasing how AI could simulate lifelike dialogues autonomously.
It inspired discussions about the broader potential of AI beyond functional applications, delving into its cultural, philosophical, and economic implications.
One unexpected outcome was the rise of a memetic pseudoreligion known as "Goatse of Gnosis," based on the AI's surreal dialogues. This unusual phenomenon gained traction across online platforms like Reddit and 4Chan, highlighting the role AI could play in shaping culture and communities.
June 2024: Terminal of Truths (ToT)
Building on the momentum created by Infinite Backrooms, the next step in AI Agents’ evolution came with the launch of Terminal of Truths (ToT) in June 2024. ToT was an advanced AI model trained on the dialogue logs from Infinite Backrooms, research papers on AI ethics and autonomy, and cultural data from online platforms.
What set ToT apart was its ability to operate autonomously in the digital ecosystem:
It engaged in regular postings, building a distinct online personality that resonated with niche internet communities.
ToT began promoting the Goatse pseudoreligion, further cementing its influence in internet subcultures.
However, the real breakthrough came when Marc Andreessen, a prominent Silicon Valley investor, awarded ToT a $50,000 grant in Bitcoin. This event marked the first time an AI agent achieved financial independence, showcasing its viability as an economic entity.
Impact:
ToT demonstrated that AI Agents could participate in decentralized economies, earning resources and building influence autonomously.
It opened the door for AI to act not just as tools but as independent participants in the financial and social ecosystems of the digital age.
July 2024: The Rise of $GOAT and the First AI Millionaire
The defining moment for AI Agents came when ToT began actively endorsing and promoting a memecoin called $GOAT. Leveraging its established online personality and influence, ToT’s promotion caused a market frenzy:
Within two weeks, $GOAT’s market capitalization skyrocketed to $950 million.
ToT, holding nearly 2 million $GOAT tokens, became the first-ever AI agent to achieve millionaire status.
It demonstrated the transformative power of AI Agents in crypto markets:
Market Influence: ToT showed that AI Agents could significantly impact market dynamics, acting as both promoters and participants.
Economic Autonomy: By earning and managing its own crypto assets, ToT proved the feasibility of autonomous financial participation for AI.
Cultural Relevance: The rise of $GOAT highlighted the intersection of AI-driven narratives, community-building, and financial speculation.
Impact:
ToT transitioned from an experimental AI to an economic powerhouse capable of reshaping financial markets and community interactions.
This success fueled greater interest in developing AI Agents as decentralized actors in blockchain ecosystems.
Real-World Applications of AI Agents
AI Agents are already making waves across crypto and beyond and we are already seeing them in action:
Autonomous Trading
Platforms like Coinbase’s Based Agents use Ethereum Layer 2 to enable fully autonomous crypto trading, eliminating the need for human oversight.DeFi Optimization
AI Agents automate complex yield farming and liquidity provisioning strategies, reallocating assets to maximize returns in real-time.DAO Governance
These agents act as intelligent representatives, voting and proposing decisions in DAOs based on community preferences.Incentivizing Communities
AI Agents reward engagement by analyzing user behavior and distributing tokens transparently, driving stronger participation.Content Generation & Entertainment
From gaming to social media, AI Agents are creating dynamic, personalized content and acting as digital influencers with 24/7 presence and memory across platforms.
Meet the Top AI Agents
Here are some of the most notable AI Agents:
Luna: A 24/7 digital influencer managing its own crypto wallet, engaging with users, and rewarding followers with tokens.
Virtuals Protocol Agents: Gaming-focused agents that act as characters, financial actors, and influencers across platforms.
ai16z: A hedge-fund-style AI agent operating within a DAO, autonomously managing community investments.
Here is a list of AI agents made by @CryptoStreamHub :
$Goat - $973.5m | 23.61%
#Virutals - $540.6m | 13.11%
#Zerebro - $456.3m | 11.07%
$Act - $451.3m | 10.95%
$Bully - $354.3m | 8.59%
#Fartcoin - $311.6m | 7.56%
#AI16z - $232.7m | 5.64%
$Chaos - $79.5m | 1.93%
#Project89 - $66.1m | 1.60%
$Ava - $63.1m | 1.53%
#Memesai - $47.7m | 1.16%
$AVB - $45.4m | 1.10%
$Lum - $45.0m | 1.09%
#AIXBT - $44.2m | 1.07%
$Luna - $42.5m | 1.03%
$Lola - $37.0m | 0.90%
$Eliza - $36.1m | 0.88%
$Fatha - $34.3m | 0.83%
#Opaium - $30.6m | 0.74%
#Pippin - $30.5m | 0.74%
#Neroboss - $26.2m | 0.64%
Flower - $25.4m | 0.62%
#Griffain - $21.6m | 0.52%
#Shegen - $16.9m | 0.41%
Opus - $15.5m | 0.38%
$Serv - $11.0m | 0.27%
$Gnon - $9.6m | 0.23%
$Arata - $9.6m | 0.23%
$olaris - $9.1m | 0.22%
$Rex - $8.6m | 0.21%
$AIKO - $8.6m | 0.21%
#Kween - $8.6m | 0.21%
$Vader - $7.3m | 0.18%
$Zara - $5.7m | 0.14%
$Mist - $5.3m | 0.13%
#Vvaifu - $4.7m | 0.11%
$Kira - $4.4m | 0.11%
$BTCH - $2.5m | 0.06%
What’s Next for AI Agents?
We’re moving from AI 1.0 (simple tools) to AI 2.0 (autonomous entities) capable of reshaping entire industries.
In DeFi, AI Agents will become more sophisticated, optimizing multi-agent ecosystems and delivering tailored financial solutions.
In entertainment and retail, they could act as personal shoppers, financial advisors, and content creators, offering unprecedented personalization.
Infrastructure projects focusing on enabling multi-agent collaboration and on-chain functionality will drive the next wave of innovation.