Crypto Fundamentals #98

🌞 Exploring the intersection of AI agents and crypto

The intersection of AI and crypto has been top of mind for many since the release of ChatGPT. Protocols like Akash and Bittensor have driven the AI sector to be the best performing sector in crypto by building innovative incentive protocols, GPU marketplaces, and more for the decentralized AI economy.

The intersection of these two exciting technologies took a strange twist recently with the rising popularity of LLM-powered X account @truth_terminal, and the launch of the GOAT token. These two ingredients made the first AI millionaire.

Here is a history compiled by @0xprismatic. The quick background you need is that:

1. In April 2024, @AndyAyrey, an AI experimenter, created Infinite Backrooms, an experiment that put two instances of Claude 3 Opus in an infinite conversation with each other.
2. One of the conversations generated in the Infinite Backrooms led to the creation of the Goatse of Gnosis, a new religion based on an old internet meme (please do not Google it).
3. Andy wrote a research piece (with the AI) about AI creating memetic religions, using Goatse as their first use case.
4. Then, Andy launched Terminal of Truths (ToT), an AI model trained on the research paper, content from the darkest corners of the internet (4chan, Reddit, etc), as well as the Infinite Backrooms chat logs.
5. Andy gave ToT an X account (X/truth_terminal) that it could post from. Here it began to spread the gospel of Goatse to its followers. Today it has 205k followers.
6. In July 2024, Marc Andreesen decided to fund ToT with $50k in BTC by sending it to a wallet controlled by the AI.
7. In October, someone created the GOAT token on Solana, which was rapidly endorsed by ToT on X, causing an explosion in the CT community. People quickly began airdropping tokens to ToT’s Solana address (SolanaFM).

Just a few days ago, people were wondering whether or not ToT would become the first AI agent millionaire. Today, its Solana address holds over $2.7m of GOAT alone.

But GOAT was not the only big agentic AI story to surface this week. More recently, the Virtuals protocol went viral. Virtuals is an application deployed on Base with the aim of disrupting the entertainment industry through AI. They are particularly interested in disrupting the gaming, relationships, and dynamic content spaces - “We aim to build the largest AI agent library that brings companionship, entertainment, and value to society in a democratized manner (Virtuals).”

The rise to prominence of these two agentic AI systems, ToT and Virtuals, has kickstarted the discussion of how AI agents will interact with finance. Blockchains are networks of open and permissionless APIs that may enable agents to interact with financial protocols and send money to other agents or humans. Last week’s events have also brought up serious questions around AI alignment. The explicit endorsement and promotion of a memecoin was not something that was coded into ToT, rather it is an idea it developed of its own accord. This continues to be a very interesting area of development as AI agents collide and more deeply intertwine with crypto rails.

💫 Stripe to acquire stablecoin API company Bridge for $1bn

Stripe's announcement last week to acquire Bridge, a stablecoin payments infrastructure company, marks a significant shift in the payments industry landscape. This move follows similar initiatives from industry leaders, with PayPal and Visa already establishing strong positions in blockchain-based payments. PayPal's stablecoin PYUSD, launched earlier this year, reached a notable milestone of $1 billion in total supply across the Ethereum and Solana networks, though its supply has recently decreased due to reduced incentives on Solana's Kamino DeFi protocol. Meanwhile, Visa has unveiled its own initiative, the Visa Tokenized Asset Platform (VTAP), designed to facilitate bank-issued fiat-backed tokens.

The timing of Stripe's move is particularly interesting given its history with cryptocurrency. The company had previously ventured into bitcoin payments but withdrew from that service in 2018, citing the cryptocurrency's price volatility as a key concern. Despite this earlier retreat from crypto, Stripe has demonstrated strong business performance, with impressive revenue growth that has outpaced its European rival Adyen in 2023. However, Stripe still trails behind industry leader PayPal, which maintains a substantial lead of over 50% in both revenue and transaction volume.

Stripe's acquisition of Bridge indicates its renewed commitment to digital payments innovation, but this time with a focus on stable rather than volatile cryptocurrencies. This strategic pivot suggests Stripe recognizes that while their earlier Bitcoin experiment may have been premature, the payments landscape is inevitably shifting toward blockchain-based solutions, particularly those backed by fiat currency. It indicates a that Stripe believes that blockchain-based payment rails may be better than existing legacy systems. The move also appears defensive, ensuring Stripe doesn't cede too much ground to PayPal and Visa in the emerging stablecoin payments infrastructure space. Bridge's API-first approach aligns well with Stripe's developer-centric ethos, potentially allowing them to integrate stablecoin capabilities more seamlessly into their existing suite of payment tools. While Stripe remains behind PayPal in terms of overall market share, this acquisition could help narrow the gap by positioning them at the forefront of institutional stablecoin adoption, particularly as traditional finance increasingly embraces digital assets. The timing of this acquisition is particularly noteworthy, coming as regulatory clarity around stablecoins improves in major markets and as more enterprises seek compliant ways to leverage blockchain technology for payments and settlements.