On-chain AI Agent Mega Dump: Should You Buy the Dip?

Original Article Title: What's next for AI agents: The Third Wave
Original Author: 0xkyle, Crypto Kol
Original Translation: zhouzhou, BlockBeats

Editor's Note: This article discusses the future development of AI agents in the crypto market. The author believes that current AI agents mainly perform simple reply tasks, but in the future will move towards more interactive, practical applications, and embodiments. The author is optimistic about AI projects on Solana, recommends two investment strategies: buying large-cap AI projects like AI16Z and buying small-cap projects that are developing interactivity and applications, believing that these projects will bring higher returns.

The following is the original content (reorganized for easier comprehension):

Let me briefly explain. If you follow me, you will see that I often post a lot of profound nonsense, such as "Where the ice skater goes is where the hockey puck will arrive" or "Buy low, sell high pay attention." These are all pretentious statements.

But I repeatedly mention these things for a reason—I believe the crypto market, even after all these years, is still very inefficient. People constantly chase short-term gains, wanting to experience the thrill of FOMO, seeing the immediate dopamine rush brought by price rises, only to often end up being the top signal 20 minutes later, and their positions quickly become trapped.

Therefore, the key to making money in investments is—buy low, sell high. Buy when no one is talking about it, sell when everyone is talking about it. Buy when you feel like everything is over, sell when you want to take screenshots. Buy cheap, sell expensive.

So the purpose of this article is to talk about this. The AI agent on Solana is currently experiencing a major pullback. While altcoins on centralized exchanges are rising, the Base protocol has absorbed all liquidity. There is also much discussion about whether SOLETH and SOLBTC have already peaked, and the overall sentiment is quite pessimistic. Therefore, I am betting on two things:

1. Solana will rebound, and we will see the second wave on-chain.

2. AI agents will bounce back.

Now that the stage is set, I will start my monologue and talk about how I see the future trend if the AI agent on Solana rebounds. Below is my framework:

Macro: Hype -> Fundamentals -> Practicality

Micro: Responder -> Fundamental-ish -> Application/Embodiment

Macro = Defining narrative of each cycle; the first wave was Render, Akash, Tao, etc., with a lot of generally crappy projects bubbling up. Render and Akash are almost unusable, I have no idea what FET and OCEAN are for (or their evolution, AGI, etc., I really don’t get it), not to mention NEAR (the first memecoin launched on it was directly and completely crushed, I was there at the time).

The second wave was Goat, Zerebro, AI16Z—more focused on foundational applications.

Next comes the micro-cycle = type of applications that will emerge, Goat brought all sorts of random projects—memesAI, Shoggoth, Project89, etc. And the subsequent wave applications after Goat have more depth—Zerebro now releases music tracks, Lola can perform on-chain transactions, AVB exhibits herd behavior, etc.

Now, both the macro and micro are colliding in the third wave—I believe we’ll see practicality in applications and embodiment forms. You've already started seeing its early form, Alch now allows users to build their own apps using AI.

Griffain enables you to control your wallet with an AI agent, AIXBT is everyone’s favorite analyst, helping researchers boost their analytical abilities tenfold.

The “responder” will become a thing of the past, if your AI agent can only reply on Twitter now, then it doesn’t deserve the spotlight at all. We've become accustomed to this situation, people always want more.

So, the next wave will no longer be just a “responder,” but actual interactivity. Embodiments are great because they allow you to converse and interact with them. Applications allow you to build something, truly utilize AI, and not just have a bot replying to you in the comments section.

Therefore, there are several ways to participate in this trend. Over the past few weeks, the AI space on Solana has seen a significant downturn, but many are still working hard.

Undoubtedly, if you follow my tweets, you would know that I’ve been bullish on AI16Z since the 180mm FUD. I believe AI16Z is the easiest way to touch the entire AI ecosystem, as Eliza has been widely forked, just like in the previous cycle, where people didn’t want to choose a single game to invest in but bet on the game chain—I think AI16Z is the “L1” of AI agents.

Strategy 1: Invest in large-cap AI projects that have shown outstanding performance; for example, AI16Z, and possibly TAO.

Strategy 2: Invest in small-cap AI projects that are working on the projects I just mentioned.

I choose Strategy 2 because it can bring asymmetric returns in this field. Many AI agents are currently undervalued by the market, as I mentioned in the previous paragraphs – low attention, rotation games, and so on.

These AI projects are actually building the applications, interactivity, embodiment I mentioned. These are the projects I am bullish on in the upcoming wave.

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