Thread by @jarrodWattsDev

AI Agents have now reached over $10 billion in market cap.

So, are AI agents the next big thing, or just another way to pump tokens?

To find out, I spent the past few weeks learning about how AI agents work under the hood.

Here’s what I learned:

Initially, I was very sceptical about AI “agents”.

“Sure bro, an AI decided to launch a token and start shitposting about it on Twitter…”

I dismissed it as another short-term narrative built to pump tokens.

However, the tokens & tweets are a small part of AI agents.

Let's start with the tokens since that's why most of you are here.

AI Agent tokens typically fall into two categories:

· Governance tokens that let holders influence the project's direction (ai16z)

· "Attention" tokens - essentially ways to speculate on an agent's popularity

Love it or hate it, Twitter is where the attention is and tokens are how you financially capitalize on that attention.

But Tweets & tokens are just modules from a massive pool of possibilities that AI agents can tap into.

So with tokens covered, let's cover tech.

What separates AI agents from simple chatbots is “actions”.

Actions are how the AI performs tasks on external systems.

The most common action we’ve seen so far is posting on X.

The developer defines specific actions that the AI agent can call.

The AI agent can then trigger these predefined actions whenever it thinks it should do so.

It’s up to the LLM to decide what actions to call (if any) when it gets prompted.

Actions can be on-chain or off-chain.

For example, ai16z's Eliza framework has on-chain actions for:
· EVM: bridging, swapping, transferring, etc.
· Solana: pumpfun, swap, transfer, etc.

Off-chain actions:
· Generating videos
· Posting Tweets
· Replying in Discord
etc...

The agent decides to call actions based on the given input.

For example. A user might directly send a message to the agent saying:
· “Deploy a token”.
· “Create an ERC20”.

The AI/LLM interprets the message and decides if it should call any of its known actions.

Actions can be anything you can write in code.

Some examples: submitting blockchain transactions, or replying in Discord.

For example, I made a 2-minute demo video of an AI agent calling onchain actions:

https://x.com/jarrodWattsDev/status/1864122544112193632

I also built an AI agent that you can talk to in a Discord voice channel.

These showcase how agents can express themselves in different forms.

(both of these are fully open-source if you want to build your own btw).

https://x.com/jarrodWattsDev/status/1864498573456625905

The agent interprets the input and decides what action to take, if any.

There is also a system prompt the agent accepts that defines its personality.

For example, I made 10 agents here that act like celebrities:

https://x.com/jarrodWattsDev/status/1863780171624722698

What makes these agents autonomous is how their input is provided.

For example, rather than a simple chat interface, it might:
· Respond to Tweets/Messages
· Listen for blockchain events
· Periodically run with a given prompt

More advanced agents like @aixbt_agent provide the agent with large databases that help them make better-informed decisions.

Using vector stores, agents can quickly search through large datasets across thousands of files, e.g. tweets, market data, etc.

These databases also enable agents to track new information, including their previous actions.

For example, ai16z's Eliza framework comes with built-in memory management.

This allows you to create, search through, and delete memories.

TLDR: “Onchain AI agents” are:

· Onchain: control a wallet + can read & react to blockchain-related events.

· AI: An LLM decides what actions to call based on the input.

· Agents: inputs can come from various sources and the AI remembers it’s previous actions.

Onchain parts:

AI agents - bullish or BS?

IMO, bullish.

AI controlling a wallet unlocks a lot of fun and interesting use cases.

It might even be an early look at how we interact with the internet in the future.

https://x.com/jarrodWattsDev/status/1865896422660604076