Empyreal Overview

Empyreal provides developers with a software development kit (SDK) to make crypto programming easier and more effective. EMP hopes to bridge the gap between web2 and web3 developers and remove some of the nuances of blockchain-centric languages like Solidity.

The EmpyrealSDK takes a modular approach, allowing developers to pick and choose which toolkits they want to integrate into their products, supporting full customization. Each module encapsulates a different functionality such as swapping, privacy, bridging, chain abstraction, etc. EMP’s SDK modules strive to reduce development expertise or deep knowledge of smart contract architecture. Empyreal targeted Python as its development language but it recognizes the popularity of TypeScript/JavaScript and plans to additionally release a typescript SDK.

Empyreal’s modules cover many different functionalities, including:

• Telegram Toolkits
• Trading Features
• Data Streaming
• Wallet Management
• Account Abstraction
• Orderly Multichain Perpetuals
• End-to-end Encryption (Enclave)

Empyreal’s solutions have been adopted by various defi protocols, including Peapods (one of our LV recommendations) and Banana Gun, to name a few. Beyond the above modules, Empyreal has recently released Simulacrum, a new product that we believe to be the most exciting amongst its solutions. Simulacrum is a modular framework designed to combine social media and blockchains. Simulacrum eliminates the need for traditional wallets and blockchain-knowhow, paving the way for on-chain actions via social media posts.

How Simulacrum Works:

Simulacrum is a new platform utilizing existential attestations of external media to create a synthetic blockchain. Public social media posts provide guarantees where a group of observers can easily come to an agreement on what was said at a specific time on a specific platform. If a sufficient number of participants can agree to a social media attestation, information can be provided to an indexer, which can be organized into blocks and used on Simulacrum’s synthetic blockchain.

Simulacrum’s synthetic blockchain is a data structure built on top of an existing blockchain and allows for meta protocol’s to be built on top of existing blockchains, similar to how ordinal theory facilitates ordinal trading in various applications on Bitcoin. Every social profile serves as a “social wallet” with no need for seed phrases or crypto knowledge. Simulacrum combines existential attestations and ordinal theory to support social media meta protocols where users can broadcast intents via social posts and validators can verify and push transactions on-chain. Simulacrum uses Base as its execution layer, and the synthetic blockchain is indexed completely separately from the base layer. Initially, Empyreal is relying on a 2 of 3 quorum of AI-validators to attest to the existence of an event on a source. They plan to increase the decentralization and security of the validator network over time, as the platform undergoes more stress testing and adoption.

Simulacrum in Action

Simulacrum’s technology is made possible by its Twitter AI agents, which interpret commands and push intents to be executed on-chain. AI agents are autonomous bots that can perform analytics, on-chain transactions, provide inference, or interact with users. Empyreal launched Simmi, their in-house AI agent to help display Simulacrum’s functionalities. For example, to show proof-of-concept of the technology, the Simulacrum AI Agent launched its own token, SIMMI, via this tweet:

Simmi also began interacting with another popular AI agent, AIXBT on twitter. They frequently tweeted back and forth and formed a “friendship,” with SIMMI tipping AIXBT $1,000 using Simulacrum.

Users then prompted AIXBT about creating its own token via Simulacrum, resulting in the deployment of CHAOS

SIMMI has risen to over a $30 million market cap and CHAOS reached a high of over $35 million but has since decreased to around $6 million. Together, SIMMI and CHAOS have accrued over $600k in Uni V3 fees, half of which go back to Empyreal. As these AI agents accumulate LP fees, they are free to explore on-chain and use their funds for additional transactions, potentially with influencers or other protocols. Both AIXBT and SIMMI’s wallets can be tracked via Simulacrum explorer.

The above displays the ease of token deployment via Simulacrum and sets the stage for how both human and AI agents may begin to transact via social posts and blockchains. Other functions currently enabled include swaps, transfers, tips, token burns, bridging to Solana, and registering Base names. Bridging is the latest functionality added to Simulacrum, with Simmi deciding to bridge its token to Solana. The bridging is done via a partnership with Layer Zero to support omnichain tokens.

Simulacrum’s Potential

Simulacrum is an innovative and exciting solution that touches on multiple narratives, and in our view, is poised for rapid growth for a few reasons:

1. Brings web3 to established applications.
2. Capitalizes on the proliferation of token launches.
3. Provides infrastructure to support a growing AI agent economy.
4. Quickly gaining traction with rudimentary functionality.

(1) Bringing web3 to established applications

One of the major pain points in crypto is that there is a steep learning curve, making transacting on-chain a daunting task for beginners and inhibiting adoption. Centralized exchanges or brokerage platforms like Robinhood remain a preferred choice among many users for purchasing crypto. For those that have taken the next step and set up a non-custodial wallet, navigation is still cumbersome and unintuitive. There are numerous blockchains that require bridging, different gas tokens, and knowing what the chain-native decentralized exchange is. Developers have been trying to solve this problem with many chain abstraction solutions launching, or new apps like Moonshot which simplify the experience for beginners.

As a result of the steep learning curve, crypto apps have struggled to attract users in the same numbers that web2 apps have accumulated users. The number of monthly active users on traditional social media platforms is staggering:

• Twitter – 611 million[1]
• TikTok – 1.58 billion[2]
• Reddit – 1.20 billion[3]

In contrast, estimates have the number of monthly active crypto users (those transacting on-chain at least once) to be between 30-60 million people. Developers have tried to capitalize on social media popularity by creating web3 social apps, including Farcaster, The Arena, Friend.Tech, Drakula, etc. Simulacrum is unique in that instead of trying to force users to interact with new apps, it brings the web3 aspect directly to traditional applications. Empyreal recognized that it’s extremely difficult to disintermediate apps that have been around for multiple decades and instead has made it simple to execute on-chain commands via social posts.

(2) Proliferation of token launches

2024 has been a year where there has been excessive speculation on memecoins, with some reaching valuations above $1 billion. The creation of Pump.Fun has made it extremely easy for people to launch tokens with the click of a few buttons. The product-market fit is evident, with Pump.Fun averaging over 40,000 token launches every day, while only having 19,000 unique addresses as deployers. It’s important to note that Pump.Fun recently made the decision to block U.K. users from using the platform due to regulatory concerns. The drop off in token deployments in recent days is likely partially attributable to that decision. These users may now be looking for an alternative method to launch tokens.

Pump.Fun has capitalized on speculative appetite amongst crypto natives, earnings millions of dollars in daily revenue over the past month. Cumulatively, Pump.Fun has earned over $265 million in revenue since March.

Meme culture is a phenomenon that is unlikely to fade given social media’s integration into younger generations’ daily lives. Although Pump.Fun has been one of the largest beneficiaries of these trends, Empyreal has the potential to be the next disrupter. As mentioned, 40,000 tokens are launching per day with only 19,000 unique deployers. Twitter has over 600 million monthly active users, all of which can deploy a token in seconds simply by sending a tweet. Similarly, users may begin sending funds or tipping via Simulacrum commands using their social wallets, removing the need to learn about wallet management or manage a seed phrase.  

In addition to providing a more intuitive experience than traditional deployment methods, Empyreal has also introduced innovative un-snipable launches. For those unfamiliar with snipers, often times with new token launches, bots buy up large percentages of tokens instantaneously before real users have a chance to purchase. Many launches sacrifice nearly 80% of their supply to snipers before reaching a $1m market cap. Simulacrum’s innovative liquidity engineering gives up less than 50% to reach the same milestone by strategically concentrating liquidity where it matters most, thinning it at launch to reward early believers and discouraging snipes, while thickening liquidity in the $500k – $5M range (where most trading occurs) to support fairer launches.

(3) AI Agents

AI agents have been growing in popularity and as we outlined, some have discovered Simulacrum and how to launch their own tokens on Twitter. AI Agents have become one of the hottest things in crypto with platforms for launching agents becoming extremely popular. Virtuals is an example (also operates on Base) which has grown to nearly a $2 billion market cap and has been used to launch over 9,000 AI agents/tokens.

Simulacrum could end up becoming the bedrock technology for facilitating the AI agent economy. We have already seen autonomous agents launch their own tokens, use their social wallets, and tip other users. As more and more agents get deployed and become intertwined, they will likely form their own on-chain economy, all facilitated via Simulacrum transactions. Virtuals is just one platform used to launch AI agents. There are multiple other platforms across different blockchains. Simulacrum just launched cross-chain functionality for Solana, opening the door for Solana-based agents to start leveraging Simulacrum.

Empyreal has bigger plans for Simulacrum than just supporting basic transactions. The end goal is for them to allow for the creation of AI agents directly through Simulacrum. They are planning to integrate LLM models like OpenAI and Claude to first remove the need for Simulacrum to use commands and instead enable intents via natural language. Secondly, integrations with LLMs will expand the possibility of AI agent deployment via tweets. Empyreal has started to open source its code for Simmi which will serve as an example of a Simulacrum power user.

In summary, Simulacrum is poised to benefit from the growth of AI agents as a medium for facilitating the AI agent economy. With plans to offer its own agent deployment method, Simulacrum can become an all-in-one AI agent solution operating through Twitter.

(4) Traction and Potential Use Cases

With just rudimentary functionality for token launches and transfer operations, Simulacrum is already seeing impressive adoption in less than two weeks. More than 7,000 tokens have been deployed resulting in approximately 60 ETH accumulating to Empyreal.

We discussed the plans for Simulacrum to expand into AI agent deployment, but there are numerous other use cases and expansion opportunities that Simulacrum can explore. Some of the immediate items on the roadmap include:

• Doge Tipping
• Bridging functionality for new blockchains (just enabled Solana)
• Custom social media bets – Odds, escrow, outcomes, and payouts handled by AI agents. (Demo Video)
• Expansion to other social media platforms
• Meta Protocols built on Simulacrum

Simulacrum is just scratching the surface of potential use cases as it launched just two weeks ago. The Empyreal team plans to roll out functionality to more social media platforms, including TikTok, Instagram, and Reddit but is focused on Twitter to start due to its popularity within the crypto community and the simple functionality of plain-text commands. As Simulacrum integrates into different social media platforms, the number of use cases and potential users vastly expands. Simple things to imagine in the future include people tuning into live streams and people opening 100x perp longs by interacting in the comment section or people agreeing to live bets as gamers compete on video game streams.

Bringing it back to EMP

Much of what we discussed in this report is Emypreal’s new product Simulacrum, which we think is a novel product that has the potential to unlock a whole new cohort of crypto users. Circling back to the EMP token, every token deployed via Simulacrum uses Uniswap v3. A 1% fee is given to liquidity providers which is split between the deployer and Empyreal. Empyreal subsidizes the gas and initial liquidity for token launches with limits on the number of daily deployments per user. Empyreal’s fee is split 50/50 between the protocol treasury and the other half goes to EMP stakers. Staking is not active yet, but once enabled, all revenue will be distributed accordingly. Treasury funds will be used for development, marketing, and platform costs.

The entirety of EMP supply is circulating with a total of 333,333 tokens. Investors have no need to worry about unlocks or additional emissions coming to market. At a current price of $346, Empyreal’s FDV is approximately $115.3 million. EMP is available for purchase on Uniswap on both Ethereum and Arbitrum.

As more tokens get launched and more users begin leveraging Simulacrum, revenue growth for Empyreal should rapidly expand. While Empyreal’s revenue mechanism differs from Pump.Fun, if it grows to a level anywhere near Pump.Fun’s token deployments, the LP fees should be significant. It’s also important to note that Empyreal will likely implement additional revenue mechanisms as they add additional functionalities. As betting, AI agent deployments, bridging, and expansion to other platforms go live, the Empyreal ecosystem will become quite expansive. At an approximate $115 million FDV, in our view, EMP has considerable upside.

Risks

In the near term, the risk of some price consolidation is possible as EMP has risen over 500% in less than two weeks. While it is possible for EMP to give back some of those gains, we believe in the longer term EMP is poised for further growth. EMP’s market cap is about $115 million which still makes it relatively small in the larger crypto landscape. The traction of Simulacrum in the last two weeks has been impressive, and as more functionality is added and general awareness increases, revenue generation for EMP should increase and help push price further upwards.

Most of our thesis is predicated on the adoption of Simulacrum to disrupt more traditional methods of token and AI agent launches on social media. The largest risk is the possibility that users continue to prefer other platforms, making Empyreal’s technology unimportant. Additionally, the use of social media profiles serving as a wallet could potentially pose a security risk compared to traditional hot wallets. If malicious actors can gain access to social media profiles, they can access funds and perform on-chain transactions.

Conclusion

Empyreal’s innovative approach, particularly through Simulacrum, positions it as a transformative force in integrating blockchain with mainstream applications. By simplifying on-chain interactions and capitalizing on trends like AI agents and social media, it addresses critical adoption barriers in crypto. Although risks such as user preference for other platforms and potential security vulnerabilities exist, the early success and future roadmap suggest strong growth potential for the platform and its EMP token.

[1] DemandSage (as of April 2024)

[2] Statista (as of April 2024)

[3] Backlinko (as of Feb. 2024)