An Exploration into Blockchain and Artificial Intelligence Integration: AUTONOLAS ($OLAS)
Project Name: Autonolas
Network: Ethereum, Gnosis, Polygon, Solana
Project Type: Artificial Intelligence
Cryptocurrency Rank: #200
Market Cap: $259M
Circulating Supply: 55.59M (10.36%)
Total Supply: Not capped (limit of one billion OLAS in the first ten years)
In the previous year, interest from investors in the artificial intelligence field has seen a substantial rise. In the United States, the amount of startup funding allocated to AI jumped remarkably by 230%, representing about 26% of total funding.
This notable uptick in AI funding took place while funding for both AI and non-AI sectors generally faced reductions.
Since today’s digital world is moving from simple automation to more autonomous systems, this study focuses on Autonolas, a key player in this transformation.
Autonolas is dedicated to developing autonomous services that operate continuously and independently, transcending traditional blockchain constraints, implementing intricate logic, and embracing key attributes of crypto-native applications, including decentralisation, transparency, and robustness.
The fundamental goal of Autonolas is to maximise machine autonomy, enhancing human autonomy. This approach is notably relevant in the realm of blockchain, where Autonolas positions its applications as off-chain services, yet secured on-chain
This study outlines three primary focal points of Autonolas within the crypto sector:
- Empowering open-source developers with sustainable, unrestricted income through their work on Autonolas-secured services.
- Assisting service providers, particularly DAOs, in developing accessible, reliable, transparent, and decentralised products.
- Offering investors potential for returns via enhanced utility and efficiency in their investments.
Additionally, this study will delve into the components of the Autonolas Stack, which comprises the Open Autonomy framework, the Autonolas Protocol, and various toolkits designed for the creation of a wide array of autonomous services.
Open Autonomy framework
The Open Autonomy framework, part of the Autonolas crypto project, is a tool for developing agent services, which are off-chain autonomous services operating as a multi-agent system (MAS). These services enhance on-chain functionalities, offering capabilities beyond what traditional smart contracts can do, such as executing complex operations like machine-learning algorithms.
The framework provides:
- Command line tools for building, deploying, and testing agent services.
- Base packages providing essential functionalities for agent services.
Designed to accelerate the development cycle of autonomous services, Open Autonomy helps in swiftly transforming ideas into production-ready services, broadening the scope and efficiency of operations possible with traditional smart contracts.
The Autonolas Protocol is a collection of smart contracts designed for managing and securing software on public blockchains, initially launched on Ethereum’s mainnet and Görli testnet, with plans to expand to other major blockchains. Rooted in the Open Autonomy framework, it incentivizes developers based on their contributions to the ecosystem.
Key elements of the protocol include:
- On-Chain Registries: For registering autonomous services, software agents, and components as NFTs, enabling the creation of functional autonomous services.
- Tokenomics: Focused around the OLAS token, this aspect coordinates the economic activities within the ecosystem.
- Governance: Managed by the Autonolas DAO, it allows decentralised decision-making and adaptability to community needs.
The protocol promotes open-source development by rewarding developers for their contributions, with software components in the ecosystem secured as NFTs. This system supports software composability and utility, ensuring fair rewards for developers.
The Autonolas DAO employs a complex governance system based on smart contracts, inspired by Compound’s model and OpenZeppelin’s architecture. This framework ensures decentralised decision-making within the Autonolas ecosystem.
Key aspects include:
- veOLAS Contract: Participants lock OLAS tokens to obtain veOLAS, used for DAO voting. Voting power depends on the amount and locking period of OLAS tokens.
- GovernorOLAS Contract: Manages DAO voting, allowing proposals and voting with a necessary quorum for approvals, followed by a timelock period before execution.
- Timelock: Introduces a delay in executing governance decisions, adding a layer of security.
- The GovernorOLAS contract is non-upgradeable, ensuring stability. Any updates require a governance vote.
- OLAS Contract: An ERC-20 token contract optimised for governance stability.
- Community Multisig: A trusted group can make urgent protocol changes, subject to a time delay, for scenarios not covered by formal governance.
The Autonolas Protocol’s tokenomics model is focused on fueling the development and composability of autonomous services, attracting developers, bonders, and fostering an ecosystem where code and capital are synergistically paired. It pursues three key objectives:
- Pairing Capital and Code: This involves a bonding mechanism for growing protocol-owned liquidity and a novel staking model for code, allowing developers to track and be rewarded for their code contributions.
- Enabling Protocol-owned Services (PoSe): Aims to create a self-sustaining cycle of value, with protocol-owned services autonomously operated and generating donations, managed by a DAO.
- Incentivizing Composability: Focused on enhancing the integration and reuse of software components within the ecosystem.
The OLAS token, following the ERC-20 standard, enables participation in DAO governance, service whitelisting, and acquisition of LP tokens required for the bonding mechanism. The tokenomics also feature an inflation model with a cap to ensure balanced growth.
- OLAS Locking for veOLAS: Locking OLAS tokens grants veOLAS, used for governance participation, with locking duration influencing voting power.
- Bonding Mechanism: Allows OLAS holders to bond LP tokens, contributing to protocol liquidity and receiving OLAS at a discount.
- Developer Incentives: Developers mint software as NFTs, receiving rewards based on the utility and donations generated by their code in services.
- Service Owner Role: Service owners can make donations in native currency, which are then allocated between the treasury and code developers.
- Agent Operator Role: Focuses on operating autonomous services off-chain, with rewards and structures varying per service.
The Autonolas tokenomics is an evolving system, with the DAO playing a crucial role in its ongoing refinement and potential introduction of advanced levels, adapting to ecosystem growth and changing needs.
Token Inflation Model
Here’s a breakdown of the model for clarity:
Initial Cap and Inflation Rate: The total number of OLAS tokens is capped at 1 billion for the first 10 years. After this period, the annual inflation rate is limited to a maximum of 2%.
Distribution of Tokens:
～ Founding Members:
- 32.65% of the tokens.
- Distributed to the founding members of the DAO.
～ Valory AG:
- 10% of the tokens.
- Allocated to Valory AG, responsible for maintaining, operating, and developing the Autonolas protocol.
～ Autonolas DAO Treasury:
- 10% of the tokens.
- Reserved for the Autonolas DAO treasury.
～ Incentives for Developers and Bonders:
- 47.35% of the tokens.
- Earmarked for incentivizing developers with top-ups for contributing useful code, and for bonders. This allocation is managed autonomously by the protocol over the first 10 years.
- Token Emission Curve: The protocol aims to follow an S-shaped curve for token emissions. In the first 10 years, up to 47.35% of the token supply could be issued to the ecosystem. This includes incentives for component and agent development and bonding activities. Post the 10-year mark, the inflation rate is designed to be low, capped at up to 2% per annum.
- Comparing Bonding Mechanisms: A Focus on Olympus DAO
The Autonolas Protocol incorporates a bonding mechanism similar to, yet distinct from, the Olympus DAO. This mechanism allows OLAS token holders to contribute to the protocol’s liquidity and, in return, receive OLAS tokens at a discounted rate.
Similarities to Olympus DAO:
- Autonolas allows holders to provide liquidity in a Decentralised Exchange (DEX) and exchange their liquidity provider (LP) tokens for OLAS tokens.
- The process of bonding in Autonolas mirrors the Olympus DAO’s initial version, where participants receive OLAS at a discount, calculated based on a Discount Factor.
Differences from Olympus DAO:
- Autonolas introduces a control mechanism to ensure the growth of protocol-owned liquidity and the capital bonded is proportional to the growth and usefulness of the code in the ecosystem. This involves on-chain metrics and a production function to estimate potential code production.
- Unlike some models where bonds can be reversed (buy-back mechanisms), Autonolas’ bonding is not directly reversible.
The Olympus DAO’s bonding mechanism has shown limitations in long-term effectiveness. Autonolas introduces an innovative approach, with a bonding mechanism that dynamically adjusts to the ecosystem’s needs. This could enhance the stability of the OLAS token price and align more closely with the interests of token holders.
Their bonding strategy appears more flexible and potentially offers sustainable growth. However, specific details of this mechanism are not fully detailed in the whitepaper, and it’s real effectiveness will need to be evaluated over time through practical application.
This section offers a selective overview of some notable projects in comparison to Autonolas. We should also remember that protocols don’t always have to compete with each other; instead, they can complement one another.
Autonolas vs Fetch.ai
- Both Autonolas and Fetch.ai are pioneers in the AI agent sector, utilising the Autonomous Economic Agent (AEA) framework since its introduction in 2019.
- David Minarsch, founder of Autonolas and a former member of Fetch.ai, was instrumental in developing the AEA framework.
- While Fetch.ai resembles a Web 3.0 RPA platform, automating tasks for efficiency gains, Autonolas concentrates on co-ownership in autonomous agent services, particularly aiding DAOs in managing off-chain operations.
- Fetch.ai targets single-agent tasks like booking and business finding, whereas Autonolas is more focused on broader applications involving multiple agents.
- Both demonstrate robust GitHub activity, indicating a high level of commitment to developing their respective AI agent technologies.
Autonolas vs Bittensor (TAO)
- Bittensor aims to democratise AI, moving its control from a few dominant corporations to a broader community, while Autonolas focuses on leveraging AI for DAOs.
- Bittensor functions as a Parachain in the Polkadot network and acts as an on-chain oracle. In contrast, Autonolas is not restricted to a specific blockchain, emphasising flexibility in its operations.
- Bittensor’s network hosts over 4,000 AI models, surpassing the scale of models like GPT-3. Autonolas, while not explicitly focusing on the scale of AI models, integrates various AI services into its framework.
- Autonolas has connected to the TAO network via API, indicating a complementary relationship where Autonolas can utilise decentralised AI models developed by Bittensor.
Autonolas vs Morpheus
- Morpheus Network, an AI agent project, is set to launch on February 8th, 2024 with the deployment of Morpheus smart contracts on Ethereum/Arbitrum mainnet.
- The project gained notable recognition following a Coindesk feature that spotlighted its significant role in advancing DeAI, along with a mention of Hedera.
- Unlike Autonolas, Morpheus differentiates itself with a decentralised and fair-launch approach (there was no pre-mine or early token sale).This strategy has attracted prominent supporters, including Eric Voorhees.
- MorpheusAI introduces a unique reward mechanism, distributing $MOR tokens to various contributors. Key aspects include:
- Capital Providers: Earn $MOR tokens by locking ETH to generate stETH, with rewards based on stETH yield.
- Coders: Receive $MOR tokens proportional to their contributions by registering agents or software.
- Compute Providers: Earn $MOR tokens relative to fees burned for registering API endpoints.
- Frontend Developers: Gain $MOR tokens by registering frontend tools, linked to the fees generated by these tools.
- Morpheus, though newer in the industry, has rapidly gained momentum with over 1,000 GitHub commits since mid-2023. While Autonolas exhibits a higher number of GitHub commits, indicating extensive development, Morpheus is in the process of establishing its market position.
Since its launch in July 2023, $OLAS saw an impressive 3980% rise to it’s all-time high. Naturally, a correction was anticipated in the short to mid-term, and after a 60% drop, it appears to have found support.
EMAs are often used to gauge market momentum. A bullish trend is suggested when the shorter EMA, based on recent prices, is above the longer EMA, derived from a broader price range. This is usually a signal to favour long positions. A trend reversal is typically indicated by an EMA crossover in the opposite direction or a dip below key price levels.
Despite its limited effectiveness in highly volatile assets, the indicator currently points to a bearish trend. However, the EMAs are converging again after finding support, hinting at a potential rally that could propel $OLAS to new highs if the crossover occurs.
For investors, corrections like this often present a prime entry point into the project.
Bullish Fundamental Factors
- $OLAS presents a unique value proposition, distinguishing itself from other network tokens by deriving value from the autonomous services it facilitates, rather than solely supporting decentralised applications and transactions. This approach directly ties the value of $OLAS to the effectiveness and impact of its ecosystem’s code, promoting the creation of valuable toolkits through token incentives.
- OLAS positions itself at the convergence of two major 21st-century trends: AI and Blockchain. Autonolas utilises blockchain technology to equitably capture the economic benefits and value created by advancements in artificial intelligence.
- Well-articulated whitepaper. Interested parties can review it for detailed insights.
- Autonolas’ offerings are currently accessible on a variety of blockchain networks such as Polygon, Solana, Ethereum, and Gnosis Chain. At the moment, there is a proposal under consideration to extend these services to Arbitrum, a prominent Layer 2 blockchain. This expansion is expected to significantly enlarge the market reach for OLAS agents.
- $OLAS is experiencing a rapid increase in activity and usage (Most of the activity happening on Gnosis Chain (low activity on Ethereum and Polygon).
Bearish Fundamental Factors
- The tokenomics of $OLAS raise concerns, with the team holding 50% of the OLAS supply. Although there’s no immediate indication of a sell-off, the potential exists. Notably, the team’s holdings are time-locked until 2026.
- The bonding model of $OLAS is under scrutiny. Other protocols with similar economic structures, akin to OlympusDAO, have faced sustainability challenges. While $OLAS claims to have a slightly altered bonding model, its effectiveness remains unverified.
- The token exhibits inflationary characteristics.
- The Fully Diluted Valuation (FDV) of $OLAS is considerably high and challenging to justify. For the supply unlocks to be meaningful, $OLAS agents must successfully identify and dominate their product market fit. It’s important to remember that the value of $OLAS is reliant on the productivity of its AI agents.
- Currently, Autonolas is operating with 27 agents, but there’s a lot of optimism about the future of the AI agents market. If this optimism holds true, we can anticipate seeing an increase in the number of agents on Autonolas.
Olas Network Website: https://olas.network/
Olas Whitepaper: https://olas.network/documents/whitepaper/Whitepaper%20v1.0.pdf
Autonolas Developer Documentation: https://olas.network/documents/whitepaper/Autonolas_Tokenomics_Core_Technical_Document.pdf
Olas Stats: https://dune.com/adrian0x/olas
Autonolas Ecosystem Activity: https://dune.com/adrian0x/autonolas-ecosystem-activity
Binance AI developments: https://www.binance.com/en/research/analysis/ai-x-crypto-latest-data-and-developments
Morpheus Network: https://news.morpheus.network/
Fetch.ai Documentation: https://fetch.ai/docs
Bittensor Documentation; https://docs.bittensor.com/
Important notice and disclaimer
This presentation has been prepared by Greythorn Asset Management Pty Ltd (ABN 96 621 995 659) (Greythorn). The information in this presentation should be regarded as general information only rather than investment advice and financial advice. It is not an advertisement nor is it a solicitation or an offer to buy or sell any financial instruments or to participate in any particular trading strategy. In preparing this document Greythorn did not take into account the investment objectives, financial circumstance or particular needs of any recipient who receives or reads it. Before making any investment decisions, recipients of this presentation should consider their own personal circumstances and seek professional advice from their accountant, lawyer or other professional adviser. This presentation contains statements, opinions, projections, forecasts and other material (forward looking statements), based on various assumptions. Greythorn is not obliged to update the information. Those assumptions may or may not prove to be correct. None of Greythorn, its officers, employees, agents, advisers or any other person named in this presentation makes any representation as to the accuracy or likelihood of fulfilment of any forward looking statements or any of the assumptions upon which they are based. Greythorn and its officers, employees, agents and advisers give no warranty, representation or guarantee as to the accuracy, completeness or reliability of the information contained in this presentation. None of Greythorn and its officers, employees, agents and advisers accept, to the extent permitted by law, responsibility for any loss, claim, damages, costs or expenses arising out of, or in connection with, the information contained in this presentation. This presentation is the property of Greythorn. By receiving this presentation, the recipient agrees to keep its content confidential and agrees not to copy, supply, disseminate or disclose any information in relation to its content without written consent.