{"id":22247,"date":"2025-03-20T11:00:00","date_gmt":"2025-03-20T09:00:00","guid":{"rendered":"https:\/\/forklog.com\/en\/defi-ai-equals-defai-the-markets-new-equation\/"},"modified":"2025-03-20T11:00:00","modified_gmt":"2025-03-20T09:00:00","slug":"defi-ai-equals-defai-the-markets-new-equation","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/defi-ai-equals-defai-the-markets-new-equation\/","title":{"rendered":"DeFi + AI equals DeFAI: the market\u2019s new equation"},"content":{"rendered":"<p>Decentralised finance lacks simplicity. For people outside Web3, engaging with DeFi protocols\u2014and grappling with liquidity, staking yields and complex trading strategies\u2014remains difficult.<\/p>\n<p>To ease newcomers in and enhance the experience for crypto financiers, developers have turned to AI. Thus the DeFAI narrative emerged.<\/p>\n<p>ForkLog explores the symbiosis of today\u2019s AI and DeFi trends, unpacks new features in financial apps and assesses their impact on users and the industry.<\/p>\n<h2 class=\"wp-block-heading\">Why bring AI into DeFi?<\/h2>\n<p>In their current form, decentralised finance could credibly rival the existing financial system and take a place in the global economy. One barrier to mass adoption of crypto and DeFi is technological complexity.<\/p>\n<p>Many users, accustomed to intuitive modern apps, do not wish to delve into the intricacies of blockchain protocols or the workings of decentralised finance. How can they still benefit from DeFi? Developers have responded by introducing network abstraction (NA), including the more widespread account abstraction (AA).<\/p>\n<p>Enlisting AI, builders of financial <span data-descr=\"decentralised applications\" class=\"old_tooltip\">dapps<\/span> are rolling out simplifications to minimise the user-experience (UX) hurdle. This approach has become part of a new narrative\u2014DeFAI (DeFi + AI). The symbiosis is meant to remove frictions by offering simple, customised interfaces for decentralised applications.<\/p>\n<p>For advanced crypto financiers, DeFAI promises a better user interface (UI) and higher returns through sophisticated trading strategies and on-chain analytics.<\/p>\n<p>Coupling with AI has brought several functions to dapps:<\/p>\n<ul class=\"wp-block-list\">\n<li>risk management\u2014identifying potential threats to profit or capital and mitigating the consequences;<\/li>\n<li>automated trading\u2014algorithms analyse market patterns and execute orders on their own;<\/li>\n<li>fraud prevention via intelligent detection systems;<\/li>\n<li>yield optimisation\u2014strategies seek higher returns by interacting with multiple protocols and selecting the most favourable.<\/li>\n<\/ul>\n<h2 class=\"wp-block-heading\">AI agents carved out a niche\u2014and filled it<\/h2>\n<p>AI agents account for the lion\u2019s share of dapps in the DeFAI category. The bot sector slowed markedly after the late-2024 <a href=\"https:\/\/forklog.com\/en\/news\/big-techs-arms-race-how-2024-unfolded-in-ai\">boom<\/a>. And although in early February 2025 Binance <a href=\"https:\/\/forklog.com\/en\/news\/binance-explores-the-rise-of-memecoins-and-ai-agents\">tried<\/a> to draw attention back to them, that did not help tokens of popular projects recover from the <a href=\"https:\/\/forklog.com\/en\/news\/ai-tokens-plunge-after-binance-futures-listings\">major sell-off<\/a>.<\/p>\n<p>On March 18th, former platform chief Changpeng Zhao <a href=\"https:\/\/forklog.com\/en\/news\/binance-founder-utility-trumps-token-issuance-for-ai-agents\">urged<\/a> AI-agent developers to focus on building useful products rather than minting tokens.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">On AI agents, I have an unpopular opinion:<\/p>\n<p>While crypto is the currency for AI, not every agent needs its own token.<\/p>\n<p>Agents can take fees in an existing crypto for providing a service.<\/p>\n<p>Launch a coin only if you have scale. Focus on utility, not tokens.?<\/p>\n<p>\u2014 CZ ? BNB (@cz_binance) <a href=\"https:\/\/twitter.com\/cz_binance\/status\/1901542080649781487?ref_src=twsrc%5Etfw\">March 17, 2025<\/a><\/p><\/blockquote>\n<p> <script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>According to <a href=\"https:\/\/x.com\/CryptoRank_io\/status\/1880292727633363301\" target=\"_blank\" rel=\"noopener\" title=\"\">CryptoRank<\/a>, the DeFAI narrative has gathered momentum since January 2025. The chart below shows a 62.6% rise for the subcategory over a 30-day period. Leading the pack are tokens from adjacent niches: AI agents, portfolio managers and platforms for trading strategies.<\/p>\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/lh7-qw.googleusercontent.com\/docsz\/AD_4nXcgodNB1Y_qzE-BbP6ek9xXa-X2quE6aSV6lfBf6zs0dVIh_unKxZbGVMsNr8WWxCHcESX6SBROAkyFeEJ9lCPabglDGphKfLXz1UO2h8bwMfOe1Dw52RHYzHEoP0e-3hszM3Yuiw?key=wKyE6LOdBufTrgy5TmArMrNX\" alt=\"DeFi + AI equals DeFAI: the market\u2019s new equation\"\/><figcaption class=\"wp-element-caption\">Top-10 fastest-growing subcategories over 30 days as of January 17th 2025. Source: CryptoRank \/ X.<\/figcaption><\/figure>\n<p>The emergence of AI agents capable of submitting transactions autonomously on-chain\u2014such as <strong>Griffain<\/strong> and <strong>Orbit<\/strong>\u2014helped cement the DeFAI trend.<\/p>\n<p>On March 17th 2025, crypto analyst Miles Deutscher underscored DeFAI\u2019s long-term significance. He highlighted users\u2019 allegiance to two leading categories over the past 90 days. For investing in the theme, he chose a favourite\u2014the ANON token from Hey Anon.<\/p>\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\">\n<div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">2 strongest sectors for mindshare over the last 90 days: DeFAI and Data.<\/p>\n<p>Market has clearly shifted to utility.<\/p>\n<p>Fundamentally (long term):<\/p>\n<p>For DeFAI, I like <a href=\"https:\/\/twitter.com\/search?q=%24ANON&#038;src=ctag&#038;ref_src=twsrc%5Etfw\">$ANON<\/a>.<br \/>For data, I like <a href=\"https:\/\/twitter.com\/search?q=%24GRASS&#038;src=ctag&#038;ref_src=twsrc%5Etfw\">$GRASS<\/a> &#038; <a href=\"https:\/\/twitter.com\/search?q=%24LINK&#038;src=ctag&#038;ref_src=twsrc%5Etfw\">$LINK<\/a> <a href=\"https:\/\/t.co\/ZLCiHkMkFz\">pic.twitter.com\/ZLCiHkMkFz<\/a><\/p>\n<p>\u2014 Miles Deutscher (@milesdeutscher) <a href=\"https:\/\/twitter.com\/milesdeutscher\/status\/1901608211687538747?ref_src=twsrc%5Etfw\">March 17, 2025<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div>\n<\/figure>\n<p>AI assistants quickly became popular thanks to automation that simplifies interactions with DeFi protocols. On Griffain, for example, users can create agents to launch tokens, stake SOL and manage liquidity.<\/p>\n<p>These advances were enabled by <span data-descr=\"trusted execution environment\" class=\"old_tooltip\">Trusted Execution Environments<\/span> (TEE). The <strong>Phala Network<\/strong> protocol implements the technology and allows custom AI agents to be deployed on its base. TEEs provide a secure, confidential environment, protecting sensitive data from malicious attacks while boosting efficiency and reliability.<\/p>\n<p>Despite <a href=\"https:\/\/forklog.com\/en\/news\/trump-tariffs-and-bitcoin-at-80000-what-is-going-on-with-the-market\">bearish sentiment<\/a> in the market, experts at the crypto bank Sygnum Bank offered a positive <a href=\"https:\/\/forklog.com\/en\/news\/sygnum-ai-agent-tokens-promising-yet-speculative\">outlook<\/a> for AI-assistant tokens in 2025. At this point in the cycle, however, they remain mostly speculative assets.<\/p>\n<h2 class=\"wp-block-heading\">How DeFAI applications work<\/h2>\n<p>Systems based on NA or intent-based blockchains also aim to simplify UX. In the former, users state a desired outcome and the system\u2014often with the help of solvers\u2014finds the optimal way to achieve it.<\/p>\n<p>For example, when swapping tokens or moving assets across chains, a solver determines the best route given gas fees, slippage and liquidity, then executes the required transactions.<\/p>\n<p>DeFAI uses machine-learning algorithms and large language models (LLMs) to smooth interactions with the blockchain. Rather than focusing on the infrastructure needed to execute intents, AI makes better-informed decisions ahead of execution.<\/p>\n<p>AI agents analyse on-chain data, forecast market trends and recommend actions aligned with a user\u2019s goals\u2014for instance, selecting the optimal <a href=\"https:\/\/forklog.com\/en\/news\/risks-opportunities-and-more-risks-a-checklist-for-a-successful-liquidity-provider\">pool<\/a> for providing liquidity or optimising asset allocation for yield farming.<\/p>\n<p>AI is upgrading DeFi tools. Among available dapps, notable additions include:<\/p>\n<ul class=\"wp-block-list\">\n<li>personalised financial strategies\u2014AI derives insights from a user\u2019s transaction history, investment patterns and risk profile; DeFAI apps then propose tailored strategies. Example: analysing on-chain activity to spot frequent stablecoin usage and recommending high-yield platforms for staking them;<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>goal-based trading\u2014short-term price swings often trigger impulsive decisions. DeFAI apps help automate strategies and reduce emotion. Users can set clear objectives, for example: \u201cSell 30% of ETH if the price drops below $1800 to limit losses, or sell at $2500 to lock in profit\u201d;<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>validator selection for staking\u2014choosing poorly among many validators can cut rewards or even incur penalties. DeFAI apps evaluate candidates by uptime and reputation;<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>text-based portfolio control\u2014via chatbot-style interfaces, DeFAI apps let users manage portfolios conversationally. Some dapps integrate with Telegram and Discord.<\/li>\n<\/ul>\n<h2 class=\"wp-block-heading\">DeFAI in practice<\/h2>\n<p>As of March 20th 2025, the DeFAI category on <a href=\"https:\/\/www.coingecko.com\/en\/categories\/defai\" target=\"_blank\" rel=\"noopener\" title=\"\">CoinGecko<\/a> was nearing a $900,000 market capitalisation.<\/p>\n<p>Projects on the list include market-analytics agents, assistants for trading decisions, infrastructure for programming strategies and automated investment systems.<\/p>\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/lh7-qw.googleusercontent.com\/docsz\/AD_4nXfsUNo8CY5Llgr2cgltjeMluT1ToTD2EmoLkxC3HekouuV4fESxABvq08xFzLQ5xiw6yhN5Pl9Vb-QrUtLce5XHMQzGzCdAdkeVCz347NiwkLdfq12-kMVsNL2xXsqVS_9Zo2Uo?key=wKyE6LOdBufTrgy5TmArMrNX\" alt=\"DeFi + AI equals DeFAI: the market\u2019s new equation\"\/><figcaption class=\"wp-element-caption\">Top-10 DeFAI tokens by market capitalisation. Source: <a href=\"https:\/\/www.coingecko.com\/en\/categories\/defai\" target=\"_blank\" rel=\"noopener\" title=\"\">CoinGecko<\/a>.<\/figcaption><\/figure>\n<p>First place goes to <strong>PAAL AI<\/strong>, a multipurpose AI platform presented as a chat bot.<\/p>\n<p>Next is the popular AI agent <strong>Aixbt<\/strong>, an autonomous assistant released on the Virtuals Protocol in the Base network. It supports fundamental analysis of cryptocurrencies, tracks social sentiment and builds a dynamic view of the market.<\/p>\n<p>In third place is <strong>ChainGPT<\/strong>, a startup focused on automated trading, smart-contract generation and NFTs.<\/p>\n<p>Infrastructure is represented by <strong>RSS3<\/strong>, a project for information aggregation and a launchpad for AI agents.<\/p>\n<p>Fifth by market cap is <strong>Hey Anon<\/strong>, the brainchild of seasoned DeFi developer Daniele Sesta. The dapp gathers information about projects across blockchains and \u201ctalks\u201d to users through a dialogue window. It helps users make informed decisions and fine-tune trading algorithms with stop-losses of varying sophistication.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">Nerding out on this a bit more here is a practical example:<\/p>\n<p>Example Setup:<br \/>Entry price: $0.0010<br \/>Initial ATR (10-period, 1-minute candles): $0.0001<br \/>Initial stop-loss: Aggressive at 5\u00d7 ATR<\/p>\n<p>Below you can see the different stop losses at different volatility as the coin goes up. <a href=\"https:\/\/t.co\/bsgQeRNVEI\">https:\/\/t.co\/bsgQeRNVEI<\/a> <a href=\"https:\/\/t.co\/J3qsbD1kVE\">pic.twitter.com\/J3qsbD1kVE<\/a><\/p>\n<p>\u2014 Daniele ? ( Revenge Arc ) (@danielesesta) <a href=\"https:\/\/twitter.com\/danielesesta\/status\/1901746250652745885?ref_src=twsrc%5Etfw\">March 17, 2025<\/a><\/p><\/blockquote>\n<p> <script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>DeFAI systems for investment management aim to help with portfolio control:<\/p>\n<ul class=\"wp-block-list\">\n<li><strong>Aspis.<\/strong> The AIDAO framework can configure AI agents to service vaults and the dynamic parameters of funds;<\/li>\n<li><strong>Mozaic Finance.<\/strong> An AI platform for managed yield farming with interoperability that optimises yield strategies and auto-reinvests;<\/li>\n<li><strong>Almanak.<\/strong> Uses DeFi analytics and forecasting to optimise trading strategies and automatically rebalance portfolio assets.<\/li>\n<\/ul>\n<h2 class=\"wp-block-heading\">Hallucinations, not insight<\/h2>\n<p>It is worth remembering that AI agents are prone to \u201c<a href=\"https:\/\/forklog.com\/en\/news\/chatgpts-hallucinations-spark-eu-privacy-complaint\">hallucinations<\/a>\u201d, when LLMs produce nonsensical or incorrect answers. Imagine such a \u201cfit\u201d during a token swap: an agent inflates a fee or sends assets to a wrong contract address, causing financial losses.<\/p>\n<p>AI models are also potentially vulnerable to hacking. In DeFi, that could lead to user funds being lost. Widespread use of AI agents in decentralised finance raises the risk of systemic failure across the crypto market.<\/p>\n<p>The synthesis of \u201cDeFi + AI\u201d invites a rethink of the balance between autonomy and automation. Unlike intent-based network-abstraction protocols, DeFAI keeps humans in the loop, acting as an adviser rather than an executor.<\/p>\n<p>The potential of AI agents in DeFi is only beginning to unfold. The very fact that they are always on and can execute limitless transactions in milliseconds gives them an edge. Yet, as with any new technology, the consequences are not always predictable, and users should always weigh the associated risks.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Decentralised finance lacks simplicity. For people outside Web3, engaging with DeFi protocols\u2014and grappling with liquidity, staking yields and complex trading strategies\u2014remains difficult. To ease newcomers in and enhance the experience for crypto financiers, developers have turned to AI. Thus the DeFAI narrative emerged. ForkLog explores the symbiosis of today\u2019s AI and DeFi trends, unpacks new [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":22246,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"","news_style_id":"","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[1144],"tags":[1751,438,1093],"class_list":["post-22247","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-longreads","tag-ai-agents","tag-artificial-intelligence","tag-defi"],"aioseo_notices":[],"amp_enabled":true,"views":"89","promo_type":"","layout_type":"","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/22247","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/comments?post=22247"}],"version-history":[{"count":0,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/22247\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media\/22246"}],"wp:attachment":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media?parent=22247"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/categories?post=22247"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/tags?post=22247"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}