I. What story did DeFAI tell
1.1 What is DeFAI
DeFAI is simply and clearly defined as AI+DeFi. The market has been hyped up round after round about AI, from AI computing power to AI Meme, from different technical architectures to different infrastructures. Although the overall market capitalization of AI Agents has generally declined recently, the concept of DeFAI is becoming a new breakthrough trend. The current DeFAI can be broadly divided into three categories: AI abstraction, autonomous DeFi agents, and market analysis and forecasting, with specific subdivisions within these major categories as shown in the figure below.
1.2 How does DeFAI work
In the DeFi system, the core behind the AI Agent is the LLM (Large Language Model), and the operation involves multi-level processes and technologies, covering all aspects from data collection to decision execution. According to the research of @3sigma in the IOSG article, most models follow six specific workflows: data collection, model inference, decision making, custody and operation, interoperability, and wallet, which are summarized as follows:
1. Data Collection: The primary task of the AI Agent is to fully understand its operating environment. This includes obtaining real-time data from multiple sources:
● On-chain data: Obtaining real-time blockchain data such as transaction records, smart contract status, and network activity through indexers and oracles, helping the Agent stay synchronized with market dynamics;
● Off-chain data: Obtaining price information, market news, and macroeconomic indicators from external data providers (such as CoinMarketCap, Coingecko) to ensure the Agent's understanding of external market conditions. These data are usually provided to the Agent through API interfaces;
● Decentralized data sources: Some Agents may obtain data from decentralized price oracle protocols to ensure the decentralization and credibility of the data.
2. Model Inference: After data collection is complete, the AI Agent enters the inference and computation stage. Here, the Agent relies on multiple AI models for complex reasoning and prediction:
● Supervised and unsupervised learning: By training on labeled or unlabeled data, AI models can analyze the behavior of markets and governance forums. For example, they can predict future market trends by analyzing historical transaction data, or infer the results of a governance proposal by analyzing governance forum data;
● Reinforcement learning: Through a trial-and-error and feedback mechanism, AI models can autonomously optimize their strategies. For example, in token trading, an AI Agent can simulate multiple trading strategies to determine the best buy or sell timing. This learning method allows the Agent to continuously improve under changing market conditions;
● Natural Language Processing (NLP): By understanding and processing natural language inputs, Agents can extract key information from governance proposals or market discussions to help users make better decisions. This is particularly important when scanning decentralized governance forums or processing user instructions.
3. Decision Making: Based on the collected data and inference results, the AI Agent enters the decision-making stage. At this stage, the Agent not only needs to analyze the current market conditions, but also weigh multiple variables:
● Optimization engine: The Agent uses an optimization engine to find the best execution plan under various conditions. For example, when providing liquidity or implementing arbitrage strategies, the Agent must consider factors such as slippage, transaction fees, network latency, and capital size to find the optimal execution path;
● Multi-agent system collaboration: To deal with complex market conditions, a single Agent may not be able to fully optimize all decisions. In such cases, multiple AI Agents can be deployed, each focusing on different task domains, to improve the overall decision-making efficiency of the system. For example, one Agent may focus on market analysis, while another Agent focuses on executing trading strategies.
4. Custody and Operation: Since AI Agents need to handle a large amount of computation, they usually need to host their models on off-chain servers or distributed computing networks:
● Centralized custody: Some AI Agents may rely on centralized cloud computing services like AWS to host their computing and storage needs. This approach helps ensure the efficient operation of the models, but also brings potential centralization risks;
● Decentralized custody: To reduce centralization risks, some Agents use decentralized distributed computing networks (such as Akash) and distributed storage solutions (such as Arweave) to host their models and data. These solutions ensure the decentralized operation of the models while providing persistent data storage;
● On-chain interaction: Although the models themselves are hosted off-chain, the AI Agents need to interact with on-chain protocols to execute smart contract functions (such as trade execution, liquidity management) and manage assets. This requires secure key management and transaction signing mechanisms, such as MPC (Multi-Party Computation) wallets or smart contract wallets.
5. Interoperability: The key role of AI Agents in the DeFi ecosystem is to seamlessly interact with various DeFi protocols and platforms:
● API integration: Agents connect to different decentralized exchanges, liquidity pools, and lending protocols through API bridges to exchange data and perform interactive operations. This allows Agents to access real-time market prices, counterparties, lending rates, and make trading decisions accordingly;
● Decentralized messaging: To ensure the synchronization between Agents and on-chain protocols, Agents can receive updates through decentralized messaging protocols (such as IPFS or Webhooks). This allows AI Agents to process external events in real-time, such as governance proposal voting results or liquidity pool changes, and adjust their strategies accordingly.
6. Wallet Management: AI Agents must be able to execute actual operations on the blockchain, which all depend on their wallet and key management mechanisms:
● MPC wallet: Multi-Party Computation (MPC) wallets split the private key among multiple participants, allowing Agents to securely perform transactions without the risk of a single point of failure. For example, Coinbase Replit's wallet demonstrates how to use MPC to achieve secure key management, allowing users to maintain a certain degree of control while delegating some autonomous operations to AI Agents;
● TEE (Trusted Execution Environment): Another common key management approach is to use TEE technology, storing private keys in a protected hardware enclave. This allows AI Agents to perform transactions and make decisions in a fully autonomous environment without relying on third-party intervention. However, TEE currently faces challenges of hardware centralization and performance overhead, but once these issues are resolved, fully autonomous AI systems will become possible.
1.3 The Origin of the Sect? From Intent to DeFAI
If the vision of DeFAI is: to allow users to autonomously manage their portfolios and easily participate in the crypto market through AI agents and various AI platforms, does this vision naturally lead us to the concept of "Intent"?
Let's review the "Intent" concept first proposed by Paradigm. In our normal transactions, we need to specify the exact execution path, like swapping Token A for Token B on Uniswap. But in the intent-driven scenario, the execution path is determined by the solver and AI together. In other words: Transaction = I specify the execution method of the TX; Intent = I only care about the TX result, not the execution process. From a retrospective perspective, the narrative of DeFAI not only approaches the ultimate vision of AI Agents, but also perfectly follows the realization of the Intent vision, combining AI and aligning with Intent. Comprehensively, DeFAI seems more like a new path added to Intent.
The ultimate version of realizing large-scale blockchain application in the future may be: AI Agent + Solver + Intent-Centric + DeFAI = Future?
II. DeFAI-Related Projects
2.1 Griffain
@griffaindotcom $GRIFFAIN: It is an innovative platform that combines AI Agents and blockchain, able to help users issue AI Agents, with a focus on creating a powerful and scalable decentralized finance (DeFi) solution that supports seamless token swaps, liquidity provision, and ecosystem growth. It can easily manage wallets, trades, and NFTs, and automatically execute tasks such as Memecoin issuance and airdrops.
2.2 Hey Anon
@HeyAnonai $ANON: is a DeFi protocol driven by artificial intelligence, which can simplify interactions, aggregate real-time project data, and execute complex operations through natural language processing, and provide a convenient DeFi abstraction layer for users. DWF Labs announced that it will support the DeFAI project Hey Anon through its AI Agent Fund, and launched Moonshot on January 14.
2.3 Orbit
@orbitcryptoai $GRIFT: simplified the complex DeFi interface and operations, lowering the participation threshold for ordinary people,
It currently supports more than 100 blockchains (EVM and Solana) and more than 200 protocols, and the GRIFT token is used to inject vitality into the platform.
2.4 Neur
@neur_sh $NEUR: is an open-source full-stack application that integrates LLM models and blockchain technology functions, designed specifically for the Solana ecosystem, and uses the Solana Agent Kit to achieve seamless protocol interaction.
2.5 Modenetwork
@modenetwork $MODE: Its own positioning is the AI x DeFi innovation center platform of Ethereum Layer2, holders can pledge MODE to obtain veMODE, and thus enjoy the airdrop of AI agents, committed to becoming the DeFAI Stack.
2.6 The Hive
@askthehive_ai $BUZZ: built on Solana, integrating multiple models including OpenAI, Anthropic, XAI, Gemini, etc., to achieve complex DeFi tasks such as trading, staking, and lending.
2.7 Bankr
@bankrbot $BNKR: is an AI-driven cryptocurrency companion, where users can easily buy, sell, exchange, place limit orders and manage wallets by sending a single message, and plans to add token swap and on-chain tracking functions in the near future, with the vision of enabling everyone to use DeFi and achieve automated trading.
2.8 HotKeySwap
@HotKeySwap $HOTKEY: provides an AI-driven DEX aggregator and analysis tool, cross-chain trading and other DeFi tools, and supports cross-chain trading and analysis.
2.9 Gekko AI
@Gekko_Agent $GEKKO: an AI agent created by the Virtuals protocol, focusing on providing comprehensive automated trading solutions, specially designed for prediction markets. The automated trading strategies of the GEKKO token include automatic rebalancing, yield harvesting, and creating new token index functions.
2.10 ASYM
@ASYM41b07 $ASYM: provides an AI-driven DEX aggregator and analysis tool, which can identify high-yield investment opportunities and settle the generated profits in $ASYM.
2.11 Wayfinder Foundation
@AIWayfinder $Wayfinder: an AI full-chain interactive tool launched by the card game chain game Parallel, to help Agents navigate the on-chain environment, execute transactions and interact with decentralized applications.
2.12 Slate
@slate_ceo $Slate: is a general-purpose AI agent and agent connectivity infrastructure layer, which translates natural language commands into on-chain operations, focusing on the execution of automated trading strategies, buying or selling under specific conditions, making on-chain operations as simple as thinking.
2.13 Cod3x
@Cod3xOrg $Cod3x: a Solana AI hackathon project, providing no-code development tools to build agent-automated DeFi strategies, whose agent interface (Agentic Interface) is a tool that can execute complex operations using only intent expression.
2.14 Almanak
@Almanak__ $Almanak: a self-learning AI Agent that can autonomously execute tasks, using agent-based modeling to optimize DeFi and gaming projects, with the mission of using data science and trading knowledge to maximize the profitability of protocols while ensuring their economic security.
2.15 HIERO
@HieroHQ $HTERM: a multi-chain smart tool on the Solana and Base networks, allowing users to use natural language commands to autonomously complete transactions, including buying and selling tokens, and performing simple token analysis.
3. Where will the AI Agent ultimately belong?
Time is precious, and DeFAI projects are emerging like bamboo shoots after the rain. After Bitcoin plummeted below $90,000 on January 13, the next day CoinGecko data showed that DeFAI-related tokens bucked the trend and rose 38.73%, with $GRIFT, $BUZZ and $ANON seeing the largest gains. But where the financial direction of AI Agents should go is worth pondering, as the current crossroads point to the left of Game and the right of DeFi.
3.1 Towards the left of Game:
M3 (Metaverse Makers _) (@m3org) may be the most promising representative, the project is composed of artists and open-source hacker communities behind what is suspected to be a16z, with core team members including JIN (@dankvr), Reneil (@reneil1337), Saori (@saori_xbt), Shaw (@shawmakesmagic) and others. But the biggest real obstacle for Game is that in the resource-rich Web2 market, there has not yet been a truly explosive AI game. The highly anticipated "Illuvium" in January 2024 sparked controversy over whether AI design was used due to its development efficiency far exceeding normal, but the CEO ultimately denied this claim. In addition, the long development cycle required by games themselves, compared to the right-hand DeFI, AI Game seems to require more market enthusiasm.
3.2 Towards the right of DeFi:
The project market caps are ranked as $GRIFFAIN, $ANON, $OLAS, $GRIFT, $SPEC, $BUZZ, $RSS3, $SNAI, $GATSBY, among which GRIFFAIN and ANON account for 37.29% of the total DeFAI market cap.
GRIFFAIN: Built on Solana, currently with a market cap of $457M and 103,000 Twitter followers, ranking first in the DeFAI market cap rankings. Its core function is to complete directed transactions and fast transactions by generating wallets, and users can currently mint The Agent Engine NFT for 0.01 Sol.
Hey Anon: Adopts a multi-chain model, currently supporting Sonic Insider, Solana, EVM, opBNB and other different public chains, the sudden surge of $ANON is completely driven by the halo of the founder Daniele (@danielesesta), who is also the founder of Wonderland, Abracadabra and WAGMI, and the traffic alone has injected a lot of vitality into $ANON, and Hey Anon, as his next entrepreneurial project, currently ranks second with a market cap of $248M.
4. Conclusion
The emergence of DeFAI is not accidental, the core characteristics of blockchain are well suited to strong financial scenarios, and currently, whether it is the left-hand GameFAI or the right-hand DeFAI, both show considerable market potential. On the left-hand Game direction, the future may see the continuation of the metaverse legacy, with the help of AI, managing virtual assets, characters, economies and other aspects, can learn from the proliferation of AI Agent's Meme elements to achieve the self-governance and prosperity of the metaverse.
The development of DeFi to the right, must inevitably move from the passionate emotional speculation to the value-oriented end. The value of AI Agents cannot rely on issuing Meme to cater to market trends, but the continuation of the AI Agent story must have the support of DeFi-like yield stacking, the victorious king will not always be armored, and the final result of market competition is worth our anticipation.
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