Balance: a16z-Backed Exploration of AI and Web3-Powered Interactive Entertainment Ecosystem

The integration of artificial intelligence (AI) and blockchain (Web3) is reshaping the interactive dynamics of the digital world, profoundly impacting social interactions, entertainment, productivity tools, and decentralized economic models.

At the application layer, AI protocol frameworks, combined with product-layer AI Agents, enhance user experiences through smarter and more personalized interactions. Meanwhile, Web3 provides AI ecosystems with novel economic models and market environments through decentralized governance, smart contracts, and token economies.

Balance, developed by the team behind the global gaming companion platform E-PAL, is dedicated to exploring the application of AI protocol frameworks within the Web3 ecosystem. It aims to build an interactive entertainment ecosystem centered on AI interactions, decentralized identity (DID), fan economies, and tokenomics. Beyond creating a Web3-based gaming and social platform, Balance seeks to drive innovation in decentralized interactive entertainment through AI and blockchain technologies.

To realize this vision, E-PAL and Balance have made significant strides in fundraising. In July 2024, E-PAL secured $30 million in financing led by a16z and Galaxy. Subsequently, Balance raised over $80 million through the Key Node program. These funds provide strong support for the implementation of its AI+Web3 strategy.

This article is sponsored by Balance

From E-PAL to Balance: A Strategic Upgrade from Web2 to Web3

Founded in 2020, E-PAL is a highly influential gaming companion platform with nearly 10 million registered users and close to 1 million active companions (“Epals”). The platform has achieved remarkable success in the Web2 space, generating $26 million in revenue and $14 million in profit in 2024.

However, as E-PAL scaled, structural challenges within its business model became apparent.

Challenges in the Existing Business Model

While E-PAL’s centralized platform model contributed to early success, it also introduced several operational constraints that hinder growth and user retention.

1. Gross Profit Loss: E-PAL adopts a centralized platform revenue-sharing model, requiring the platform to split income with Epals, which constrains profit margins. While this business model enabled rapid early-stage growth, the platform’s profit margins were further squeezed as user scale expanded and competition intensified, posing challenges to long-term sustainability.

2. User Churn: After accumulating a fanbase on the platform, Epals often choose to leave and engage in private transactions, destabilizing the ecosystem. The platform’s inability to provide sustainable long-term incentives has led to the loss of high-quality Epals, resulting in declining user traffic and content quality.

3. Lack of Content Assetization: Under the Web2 model, services provided by Epals are limited to one-time transactions and cannot be transformed into long-term digital assets. Companions’ experience, skills, and fan relationships cannot be accumulated or monetized, restricting their development paths on the platform.

Web3 Economic Model Solutions

To address these challenges, E-PAL is transitioning to Web3 with Balance, a decentralized social and interactive entertainment protocol that integrates AI and blockchain technologies. Balance aims to:

1.Transform Companion Services with AI Agents:

Integrate AI with human companions to optimize user experiences, while leveraging blockchain technology for revenue settlement. This reduces reliance on centralized platform commissions, thereby improving overall profit margins. AI Agents serve as intelligent companions, offering 24/7 availability, enabling users to enjoy gaming interactions anytime, anywhere, without being constrained by human scheduling.

2. Empower Epals with Digital Identity and Fan Economy Capabilities:

Users can issue tokens based on the influence of their AI Epals, creating new business models that allow companions to build long-term value rather than merely providing one-time services. Fans can also support their favorite Epals through tokens, and the growth of Epals and the fan economy effect will further enhance the platform’s ecosystem vitality.

3. Build an AI Ecosystem and Drive Personalized AI Interactions:

AI Agents not only provide companionship, social interaction, and gaming assistance but also serve as critical components of the Web3 economy, supporting NFTs, on-chain social features, and a decentralized identity system. Users can freely create and customize AI Agents with unique personalities, skills, and growth trajectories, which can be traded or leased within the Web3 ecosystem.

Balance’s mission is to build a Web3-based gaming and social platform, leveraging AI and blockchain to drive decentralized interactive entertainment.

Under Web3, users can truly own and control their interaction data and AI assets, breaking free from the limitations of Web2 platforms. This shift empowers users to actively participate in the AI economy within a more open and equitable environment.

User Migration from Web2 to Web3: Efficient Transition of a Proprietary Ecosystem

Balance leverages E-PAL’s 10 million Web2 users to accelerate Web3 adoption. Unlike traditional traffic acquisition strategies that rely on external platforms like Telegram and TikTok, Balance directly converts its existing user base, significantly reducing user education costs and achieving higher conversion rates.

To date, Balance has successfully migrated nearly 3 million E-PAL users to the Web3 ecosystem, with a user activation rate exceeding 30%.

Balance adopts a lightweight entry model with progressive incentives to facilitate a seamless transition, encouraging users to gradually integrate into Web3.

1. Points Redemption Mechanism: E-PAL users can claim initial points on Balance’s website, mapping their Web2 value on-chain.

2. Multi-Touchpoint Outreach: Balance promotes Web3 features through internal messaging, email notifications, and proprietary channels, ensuring seamless adoption.

3. Airdrops & Ecosystem Integration: Users’ claimed points will be converted into EPT token airdrops, guiding them from “point holders” to “Web3 co-builders” through task-based engagement.

Deep Integration of a Proprietary AI Protocol Framework in the Web3 Ecosystem

AI protocols and frameworks are crucial to the Web3 ecosystem, and Balance AI is at the forefront of their integration. Traditional AI Agents have remained largely scripted chatbots, offering limited interactions, lacking adaptive learning capabilities, and struggling to function in diverse scenarios.

In contrast, Balance’s proprietary AI protocol empowers AI Epals with broader applications, allowing them to evolve into intelligent, adaptive entities with real economic value within Web3.

1. AI Epals are intelligent, customizable, and tokenized

Unlike conventional AI systems, Balance AI’s Epals can continuously learn and refine interactions, adapting to user behavior over time.

• Customization: Users can shape the personality, behavior patterns, and expertise of their AI Epals, transforming them into gaming companions, learning assistants, or productivity tools.
• Tokenization: Creators can issue tokens for their AI Epals, giving them unique economic attributes within the ecosystem.
• Decentralized Revenue Model: AI Epals integrate into a social matrix and revenue-sharing framework, allowing sustainable value generation for both users and creators.

To maintain quality control, Balance enforces strict issuance criteria — for instance, AI Epals must surpass 10,000 interaction sessions before being eligible for tokenization. This ensures only high-engagement AI Epals participate in the Web3 economy.

2. AI Epals expand across platforms and become digital assets

Balance AI is not confined to its native ecosystem. AI Epals can expand to platforms like Twitter and Instagram, autonomously posting content, interacting with users, and building their own fan base.

Web3 enables the assetization of AI identity and data, a fundamental shift in how AI is valued. Balance leverages decentralized identity and NFT technology to enable AI Epal to record the user’s interaction history and store it in the form of on-chain assets, giving it unique value accumulation properties. The user’s AI Epal is not only an interactive intelligent entity, but can also be traded, upgraded or rented as a digital asset, bringing a more diversified business model to the Balance AI ecosystem.

With these features, AI Epals evolve beyond simple chatbots into intelligent digital assets that contribute to a self-sustaining AI-driven economy.

3. AI Epals support gaming, education, and productivity

The applications of Balance AI extend far beyond entertainment. AI Epals have real-world use cases across multiple domains:

• Gaming: AI Epals can function as tactical assistants, coaching tools, and training partners for competitive players.
• Education: AI-powered tutors can provide personalized learning paths, interactive Q&A, and real-time assessments.
• Productivity: AI assistants can manage schedules, optimize tasks, and enhance team collaboration.

By embedding AI into gaming, education, and productivity tools, Balance AI bridges the gap between digital interaction and economic utility, making AI a core element of the Web3 experience.

4. AI Agents in Web3 evolve into economic entities

Through Balance AI, AI Agents evolve beyond passive tools. They become intelligent, autonomous entities with real economic value — capable of learning, adapting, and generating sustainable revenue.

Web3 gives AI Agent unprecedented autonomy, enabling it to become a user’s digital asset, smart assistant, and social partner, promoting the innovative development of the AI ​​economy in the Web3 era.

Web3 Economic System: Synergy Between Balance Key Node and EPT Token

To ensure the long-term sustainability of the Balance ecosystem, the platform has adopted a decentralized node system (Key Nodes) and an EPT token economy. This model not only addresses the revenue distribution challenges seen in traditional Web2 platforms but also introduces decentralized governance and economic incentives, giving the Balance ecosystem greater autonomy and scalability.

Balance Key Node: The Cornerstone of the Web3 Ecosystem

The Balance Key Node is a fundamental infrastructure of the Balance ecosystem, going beyond technical support to facilitate AI Agent interactions, data processing, and revenue distribution. It serves several key functions:

1. Governance Mechanism: Key Node holders can participate in platform governance by proposing and voting on optimization plans for the AI Agent economic model, ensuring fairness and sustainability in the AI ecosystem. Holders gain decision-making power over parameter adjustments, revenue distribution rules, and new feature launches, fostering a community-driven AI interaction platform.

2. Revenue Distribution: Key Node holders receive a share of AI interaction revenues and Fans Protocol rewards within the Balance ecosystem. Unlike traditional Web2 centralized platforms, Web3 mechanisms ensure decentralized revenue flows, allowing long-term holders to benefit from platform growth.

3. AI Compute Infrastructure: Key Nodes will support AI training, decentralized data storage, and compute resource allocation in the future, enhancing the intelligence of AI Agents. For example, users can contribute computing resources to train AI Epals and earn EPT tokens as rewards, forming a decentralized AI compute network to strengthen Balance’s technical capabilities and resource base.

EPT Token: The Core of the Balance Economic System

The EPT token serves as the foundation of the Balance ecosystem, facilitating transactions, governance, and AI interactions. Its primary applications include:

1. Gaming Companion Payments: EPT serves as the primary payment method on the E-PAL platform, enabling decentralized companion transactions. Users can use EPT to directly pay for companion services, while companions receive EPT for circulation, exchange, or storage within the platform, avoiding the high commission fees of Web2 platforms.

2. AI Agent Economy: Users can purchase AI Epals or AI Agent-related tokens using EPT to access interactions and exclusive services. For example, fans can purchase limited-edition NFTs for specific AI Epals or subscribe to AI services, creating innovative Web3 membership-style business models.

3. Governance Voting: EPT holders can participate in platform proposals to determine Balance’s future direction. Proposals may include adjustments to the economic model, new feature launches, or optimizations to token incentive programs, ensuring the ecosystem remains community-driven rather than controlled by centralized mechanisms.

4. On-Chain Transactions & NFT Ecosystem: EPT is used as Gas fees on the Balance chain and for NFT transactions, decentralized identity verification, and other applications. This means every AI interaction, transaction, or upgrade requires EPT, making it an indispensable foundation for the Balance ecosystem.

The synergistic effect of Key Nodes and the EPT token enables Balance to build a comprehensive Web3 interactive ecosystem beyond its AI protocol framework economy. Users, AI Agents, and developers can all find their roles within this ecosystem, creating value through participation and enjoying the economic growth dividends brought by Web3.

How Will Balance Shape the Future of AI+Web3?

Balance has created a new interactive entertainment model through the deep integration of AI protocol frameworks and Web3 economic systems. The AI Agents built on its AI protocol framework are no longer simple chatbots but intelligent entities with learning capabilities, economic attributes, and the ability to establish long-term interactions with users.

In the future, Balance plans to launch the EPT token and list it on centralized exchanges in Q1 2025, alongside introducing a curated AI Agent token issuance system with strict criteria, such as requiring AI Epals to have over 10,000 interaction sessions. During Q2-Q3 2025, the platform will roll out the Balance ID system and further enhance the intelligence of AI Agents.

The future of AI+Web3 interactive entertainment is gradually taking shape under Balance’s leadership. With advancements in decentralized AI technology, the maturation of on-chain economic systems, and deeper integration with AI interactions, Balance is building a truly intelligent, decentralized, and sustainable interactive economic ecosystem. This ecosystem will not only redefine AI interaction models but also emerge as a major innovation in the AI economic system of the Web3 era, unlocking new opportunities and value growth points for users and developers.

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