Upon publication of the obituary for Matthew A. Sobol, a brilliant computer programmer and CTO of Cyberstorm Entertainment,the computer Daemon is activated. Sobol, dying of brain cancer, was fearful for humanity and began to envision a new world order. The Daemon becomes his tool to achieve that vision. The Daemon's first mission is to kill two programmers Joseph Pavlos & Chopra Singh who worked for CyberStorm Entertainment and unknowingly helped in the creation of the Daemon. The program secretly takes over hundreds of companies and provides financial and computing resources for recruiting real world agents and creating AutoM8s (computer controlled driverfull cars, used as transport and occasionally as weapons), Razorbacks (sword-wielding robotic riderless motorcycles, specifically designed as weapons) and other devices. The Daemon also creates a secondary online web service, hidden from the general public, dubbed the Darknet, which allows Daemon operatives to exchange information freely.

The sequel picks up shortly after the end of Daemon. Sobol's distributed AI has already infiltrated the computer systems of numerous companies and governments. Many companies have surrendered, either out of fear of annihilation or because they have been converted to the fairer and more efficient system. While the Daemon is a technological creation, much of the work is carried out by human beings, compelled by the Daemon to change the world, according to the vision of Matthew Sobol. Connected by the "Darknet", the human followers, using Sobol's game engine (for his award winning game "The Gate") as a base, have created their own ranking system and economy. Online identities mimic an MMORPG, with operatives doing tasks to gain levels and gaining access to new technologies and help from the Daemon in an effort to advance their communities. Numerous towns have slowly joined the Daemon's network as a means to improve their own situations and their society as a whole. The rest of the world believes the Daemon is still a hoax, due to the efforts of the US government (and its allies) to appear to the general public that they are still in charge. In truth, the American political and economic system is collapsing, with the price of fuel and the unemployment rates both skyrocketing.