The market value of AI Agent far exceeds that of the DeFi Summer period. Will it replicate the DeFi-style market trend?

Every crypto cycle sees the emergence of dominant narratives, and AI+ is undoubtedly one of the biggest themes in this bull market, especially as the AI Agent craze is capturing the vast majority of on-chain liquidity. The market discussion on crypto AI is increasingly similar to the DeFi Summer cycle. This article will compare the market development scale of crypto AI and DeFi, and explore the similarities and differences in the development of these two fields. According to CoinGecko data, as of January 2, the market capitalization of the crypto AI sector has reached $48.8 billion, far exceeding the market capitalization of DeFi during the "DeFi Summer" period. According to The Block data, after the explosive growth phase in 2020, the DeFi market capitalization reached a peak of $6.04 billion, and it was not until mid-April 2021 that it broke through the $50 billion mark, by which time the market had gradually matured and diversified. This comparison shows that the explosive power of crypto AI has surpassed the early development stage of DeFi, and it has shown stronger advantages in market appeal and growth potential. Particularly, the AI Agent sub-sector has been continuously exploding during this period. CoinGecko data shows that as of January 2, the market capitalization of AI Agent has reached $16.93 billion, accounting for 34.7% of the entire crypto AI track, which is equivalent to the total market capitalization of DeFi protocols in January 2021. Taking the leading projects Virtuals Protocol ($5.02 billion) and ai16z ($2.7 billion) as examples, the sum of their market capitalizations has already exceeded the market capitalization of all DeFi protocols at the end of 2020, further highlighting the rapid development of the AI track. In contrast, the peak circulating market capitalizations of the DeFi leading projects Uniswap and Aave during the last bull market were $22.05 billion and $6.58 billion, respectively. In terms of capital investment, DeFi has attracted a large amount of venture capital after its rapid development, and crypto AI is also in a similar stage, with more and more funds flowing into the AI field. According to the 2024 financing report compiled by PANews, the DeFi sector received $1.69 billion in 269 investment and financing events in 2024, while AI-related projects, as an emerging category, have seen rapid growth this year, with nearly 100 disclosed financing events, 15.2% of which received funding in the tens of millions of dollars, with a total funding scale of around $600 million. Although the data performance of the crypto AI track looks impressive, the market still has different views on whether its development cycle can be similar to DeFi. For example, Messari's latest report points out that AI Agent will reach its peak in the first quarter of 2025 and will not recover. The reasons are as follows: (1) AI Agent agents have not yet proven their product adaptability to support market speculation; (2) the success of Alt-L1 is based on the clear demand for block space during the DeFi boom, but AI Agent lacks both demand and a clear user base; (3) the launch of AI Agent depends on market speculation, but this speculative cycle will collapse when the market realizes that they will only be toys in the foreseeable future. There are also views that AI has similar development potential as DeFi. For example, crypto KOL @0xWizard said that 2020 can be called the "Cambrian explosion of DeFi", and 2025 is likely to be the "Cambrian explosion of AI Agent". The various Ai+Crypto gameplay will emerge in the coming year. Researcher Haotian believes that the arrival of AI Agent is like the DeFi Summer in 2020, which will create a new "bubble" narrative cycle of Build+Speculation. Although the AI Agent ecosystem does not even have its own dedicated infra conditions yet, in terms of ecosystem plasticity, the industry narrative opportunities brought by AI Agent are much grander than DeFi. Former Spartan Group member @0xJeff predicts that 2025 will be known as the Agentic era, with Agentic-type L1 reaching a market capitalization of $100 billion, similar to the 2020-21 L1 valuation cycle; DeFi will reach a TVL peak of over $200 billion with the help of AI Agent, etc. Regarding the valuation of AI-type projects, crypto KOL @Rui said that in the early market, the valuation of projects was closely related to whether they could be listed on exchanges, especially top exchanges. But with the rise of AI Agent and changes in the market, the valuation system based on exchange logic for large-cap is no longer valid, and people's valuation expectations for projects are not which exchanges they are listed on, but what kind of ecosystem they will create. For projects with existing ecosystems, valuation can be determined based on their ecosystem share; for single-project or "wild ecosystem" projects, the key to valuation is whether they can break through a $100 million market cap, below which they rely more on dissemination, community, and early capital support.

Four Commonalities from Cultural Impact to Capital Efficiency

The combination of technology and capital is the core driving force for the development of the crypto industry. In the last bull market, DeFi reshaped the crypto financial world through decentralized platforms and smart contracts. Now, crypto AI is changing the way the crypto market operates in a more intelligent and automated way. From the current perspective, the two have similarities in terms of cultural influence, technological foundation, access threshold, and capital efficiency.

Meme Culture

As one of the core narratives of the last crypto bull market, DeFi itself has a spirit of rebellion against traditional finance. Many DeFi projects, while providing real financial functions, attract attention through humorous and prank-like naming methods (such as various food series). Initially, the market even more often regarded DeFi as a liquidity game rather than a pure financial tool, but this culture of breaking the "seriousness" of traditional finance unexpectedly sparked reflection and discussion on the traditional financial system, and quickly accumulated a large number of developers and users' participation. Similar to the meme culture in the early DeFi narrative, the popularization of crypto AI also relies on the power of . The rise of AI Agent not only depends on technological innovation and application value, but also quickly gathers emotions through humorous and playful methods, thereby stimulating the interest and participation of on-chain users, including bringing new groups such as off-chain developers and researchers into the field in a more relaxed and interactive way.

Technological Foundation

Relying on its support in smart contracts, token standards, and developer ecosystems, Ethereum's flexibility has provided a strong technological foundation for the rise of DeFi, allowing developers to innovate financial products based on demand, and its decentralization and open-source mechanism also provide users with a fair and transparent financial platform. The rise and popularity of the crypto AI narrative in this cycle also originated from the explosive progress of AI technology, especially the emergence of large language models (such as ChatGPT), which has allowed people to see the huge potential of the combination of artificial intelligence technology and blockchain. At the same time, the rapid improvement of AI model capabilities has also empowered more intelligent on-chain applications, such as trading strategies, market forecasting, smart contract automation, and data analysis, providing new perspectives and momentum for crypto technology innovation.

Access Threshold

Compared to the complex procedures, bank accounts, and credit checks required by traditional financial systems, DeFi can provide a financial service model that is open, transparent, and does not require intermediaries through blockchain and smart contracts. Users only need a crypto wallet and a small amount of crypto assets to freely engage in activities such as lending, trading, and liquidity provision, without being restricted by region and economic background. Compared to traditional crypto tools and platforms, AI Agent provides a more intelligent and automated way of operation, allowing users to easily get started without delving into complex technical details and having professional trading knowledge and experience. At the same time, high-quality AI Agent projects also break down the high thresholds of VC and centralized exchanges (CEX) platforms through lower participation thresholds and convenient operation paths, providing not only more participation opportunities for individual investors, but also a lower-cost and more decentralized innovation channel for developers and project parties.

The AI Agent, combined with MEME culture, has also lowered the cognitive threshold for people to understand encrypted AI technology, especially for non-technical users, and has broken the high-threshold image of technical projects, making participation in this field more diverse, relaxed and entertaining.

Capital Efficiency

In the DeFi narrative, capital efficiency has always been one of the core driving forces. DeFi can greatly improve capital utilization efficiency through decentralized platforms, smart contracts and automated mechanisms. These platforms attract a large amount of institutional capital and retail users into the market by providing high APY and capital returns. Due to the lack of intermediaries and traditional banking processing procedures, capital can flow and obtain higher returns in a shorter period of time, greatly improving the capital efficiency of the market.

The AI Agent, through the automation and intelligence of artificial intelligence technology, can help users achieve more efficient capital operation in the crypto market. Unlike traditional manual intervention, the AI Agent can automatically execute transactions, asset management and risk control tasks based on real-time market data, helping users seize market opportunities, avoid emotional decision-making and human errors, and greatly improve the efficiency of capital operation. Moreover, the AI Agent project provides more users with the opportunity of benefit redistribution through on-chain execution mechanism, allowing participants to enjoy the growth dividends of the project under low thresholds.

Four Key Differences from Technology-Driven to User Participation

Although DeFi and Crypto AI have shown similar momentum and potential in driving innovation in the crypto market, they differ significantly in several key aspects. These differences are reflected not only in the complexity of technology and the breadth of application scenarios, but also in the different ways of driving the market and user participation.

Application Scope

The main focus of DeFi is on-chain finance, with major innovations concentrated on the construction of decentralized exchanges (DEX), automated market makers (AMM), lending protocols and other financial tools. Although these innovations have disrupted the traditional financial system, their application scenarios are relatively concentrated and clear. In comparison, the application scope of Crypto AI is broader, involving on-chain finance, AI-generated content (AIGC), Non-Fungible Tokens (NFT), smart contract automation, data analysis and other fields. Although the complexity of technology integration is higher in Crypto AI, it also allows it to reach more market and user demands. In the future, with the technological development of large-scale AI models, more cross-domain innovations and applications will be driven.

Technology Driving Force

The technological innovation of DeFi is mainly based on blockchain and smart contracts, driving the innovation of the decentralized finance ecosystem, with the core driving force coming from decentralized trading, permissionless financial innovation and smart contract automatic execution. The Crypto AI narrative, on the other hand, has complex and diverse technological driving forces, ranging from trading strategies and risk management in the financial field to content generation, personalized recommendation, data analysis and other broader application areas.

User Groups

The main user group of DeFi is on-chain native users, who usually have strong financial operation experience. In addition to attracting crypto natives, Crypto AI can also attract a large number of non-technical users, including content creators, developers and technical researchers, with significant advantages in penetration and market coverage.

Market Value Driving

The market value of DeFi projects is mainly determined by factors such as the amount of locked-in capital, the listing on exchanges and liquidity, and is more dependent on the frequency of use of the financial tools on the platform and the degree of user participation, with a more direct and transparent market operation. In contrast, the market value logic of Crypto AI projects is more complex and has higher uncertainty. It not only needs to look at the depth and breadth of technological innovation, but also needs to consider the project's ecological influence and the development potential of actual application scenarios. This means that the sustainability of the Crypto AI narrative depends on the combination of technological progress and user demand, with higher risks and potentials.