The protocol’s struggles are reflected in the dwindling number of AI agents created and a sharp drop in wallet activity. Meanwhile, Hong Kong is doubling down on AI and Web3 investments, with its Cyberport initiative allocating over $125 million to AI research and infrastructure development. Dubai-based VC firm Disrupt.com is also making a major push into AI-driven Web3 startups, announcing a $100 million investment to accelerate commercialization in emerging tech sectors.
Virtuals Protocol Sees Sharp Revenue Decline
Virtuals Protocol, an AI-driven blockchain platform that enables the creation and monetization of AI agents, experienced a dramatic 96.8% decline in daily trading revenue, despite its recent expansion from Coinbase’s Ethereum layer-2 Base to the Solana network. Data from Dune Analytics indicates that the protocol peaked with daily revenue surpassing $1 million on Jan. 2 but has since fallen to less than $35,000 on Feb. 27.
Virtuals daily trading revenue (Source: Dune)
The revenue generated from the platform’s Base network is particularly weak, and remained below $1,000 for ten consecutive days. This is a very steep decline from its peak of $859,000 on Oct. 27 of 2024. On Feb. 27, Virtuals Protocol recorded $28,492 in revenue on Base and only $6,300 on Solana. Additionally, the number of new AI agents created daily on the platform also remained in single digits for the past ten days.
AI agents created (Source: Dune)
Virtuals was initially launched on Base, and gained traction for its innovative AI agents, which had the ability to manage their own cryptocurrency wallets and interact with users by tipping them on social media to encourage engagement. The protocol’s expansion to Solana on Jan. 25 was intended to capitalize on the network’s surging popularity. However, Solana faced a lot of scrutiny over the past few weeks due to a wave of failed presidential meme coins that shed light on the persistent scamming issues on the blockchain. This very likely contributed to Virtuals’ underwhelming performance since its transition.
The platform currently has approximately 170,000 unique wallets holding Virtuals agents’ tokens on Base, compared to just 11,000 on Solana. Wallet activity also plummeted across both networks, with only 7,642 wallets involved in at least one token transaction on Feb. 27. The struggles of the Virtuals ecosystem are reflected in the declining value of its native token VIRTUALS as well, which dropped by more than 13% in the past 24 hours, according to CoinMarketCap. It is, however, important to keep in mind that this decline aligns with a broader downturn in the cryptocurrency market, driven by rising global trade tensions.
VIRTUALS price action over the past 24 hours (Source: CoinMarketCap)
Despite the overall market correction, Virtuals Protocol seems to be losing ground among the top cryptocurrencies. When the project first announced its move to Solana, it held the 68th position by market capitalization. However, it has since fallen to the 92nd spot.
Hong Kong Boosts AI and Web3 Investments
Despite Viruals’ AI woes, Hong Kong’s Cyberport, which is a government-backed business hub specializing in Web3, blockchain, and artificial intelligence, is intensifying its investments in emerging technologies to establish the city as a global technology leader. On Feb. 27, Cyberport hosted the “AI Safety, Trust, and Responsibility” forum that brought together international AI academic institutions to discuss governance, safety, and responsible innovation. The hub currently hosts more than 270 blockchain-related enterprises and close to 350 startups dedicated to AI and big data research and development.
A day earlier, on Feb. 26, the Hong Kong government’s 2025–26 budget placed a strong emphasis on technological advancement, and placed a lot of emphasis on seizing opportunities in artificial intelligence and Web3. Financial Secretary Paul Chan Mo-po announced the allocation of 1 billion Hong Kong dollars ($125.5 million) to establish the Hong Kong AI Research and Development Institute. The institute will focus on facilitating upstream research, refining midstream and downstream innovations, and expanding real-world AI applications.
As part of the city’s drive to become an AI and blockchain hub, Cyberport’s Artificial Intelligence Supercomputing Centre (AISC) will scale up to a computing power of 3,000 petaFLOPS, enabling it to process 3,000 quadrillion floating-point operations per second. This will greatly accelerate AI research and computational efficiency.
The World Digital Technology Academy (WDTA), a co-organizer of the AI forum, also announced the establishment of the WDTA Asia-Pacific Institute (preparatory) at Cyberport. Executive Chairman Yale Li outlined the institute’s three core initiatives: developing a “safety-native” technological framework, establishing a “human-oriented” value system, and promoting “responsible innovation.” To foster a strong talent pipeline, Cyberport signed multiple Memorandums of Understanding (MoUs) with universities and institutions to provide students with internship and employment opportunities.
The Hong Kong government is also committed to supporting AI-driven innovation through some impressive financial backing. A total of 3 billion Hong Kong dollars ($385.6 million) was allocated for the launch of a three-year AI Subsidy Scheme under Cyberport.
AI and Web3 Get $100M Boost from Disrupt.com
Dubai-based venture capital firm Disrupt.com also recently announced plans to invest $100 million in artificial intelligence startups operating at the intersection of Web3 and other industries. The investments will help accelerate the commercialization of emerging AI technologies.
According to the firm’s Feb. 27 announcement, the funds will support AI-driven solutions across cybersecurity, automotive technology, the retail sector, and blockchain applications. The move aligns with Disrupt.com’s history of fostering tech innovation, as its founders previously created cloud solutions provider Cloudways, which was acquired by Digital Ocean Holdings for $350 million in cash in 2022.
The announcement was made at a time when venture capital funding in the Middle East and North Africa experienced a big downturn. According to Arab News, startups in the region secured $2.3 billion in funding last year, which was a 42% decline from 2023.
This trend mirrors broader challenges in the emerging venture markets, including MENA, Africa, Pakistan, Turkiye, and Southeast Asia, as reported by data provider Magnitt. Despite the decline, the United Arab Emirates was the largest VC market in the MENA region, with local firms raising $1.1 billion across 207 deals in 2023.
(Source: Magnitt)
While venture funding in emerging markets has been sluggish, AI is still a major draw for investors worldwide. The United States has seen a big surge in venture capital activity in the AI sector, with EY reporting a 57% increase in AI-related deals in the fourth quarter of 2023. The four largest AI venture deals during this period totaled $26.6 billion. With AI infrastructure still in its early stages, EY predicts that investment in AI startups will continue to accelerate, potentially capturing 45% of all VC funding in 2025.
AI startups are taking advantage of breakthrough advancements from industry leaders like OpenAI and Anthropic, whose large language models are being applied across various industries for content creation, customer service, data analytics, and code generation. Analysts at Bain & Company identified generative AI inference as the next major application for edge computing.
