What is DeFi?

DeFi (Decentralized Finance) is a blockchain-based financial system that offers services such as lending, trading, and asset management through smart contracts and decentralized applications (dApps) without the need for central authorities. It encompasses a wide range of financial activities, including fund transfers, asset exchanges, and wallet management. It boasts advantages such as decentralization (no intermediaries), openness (anyone can participate), and transparency (transactions are public and verifiable).

Despite the convenience DeFi brings users worldwide, it still faces challenges, such as complex operations and high technical barriers, making it difficult for the average user to participate. Additionally, issues like cross-chain fragmentation, liquidity problems, and a lack of new users restrict DeFi’s development. Users need to manage assets across multiple blockchains, track yield farming opportunities, and identify valuable applications among numerous projects, all of which add to the complexity of using DeFi.

What is DeFAI?

In recent years, artificial intelligence (AI) technology has made groundbreaking advances in generative AI, natural language processing (NLP), and automated decision-making, driving innovation and transformation across multiple industries. Especially since 2024, the deep integration of AI and Web3 technologies has become a key direction for the next wave of technological revolution.

As of February 4, 2025, the market capitalization of DeFAI (DeFi x AI) projects has reached $1.58 billion. DeFAI combines decentralized finance (DeFi) with artificial intelligence to simplify the DeFi user experience through smart analysis, automation, and natural language interaction. This reduces the barriers to entry, allowing more people to easily engage with and profit from DeFi. AI’s powerful capabilities enable DeFAI to integrate both on-chain and off-chain data, helping users make quicker, more accurate decisions.

Take Griffain as an example: through natural language processing, users no longer need to understand complex technical jargon. They can interact with DeFi by simply inputting straightforward commands.

For instance, when a user types “swap 3 ETH for USDC” or “create an ETH-USDC liquidity pool smart contract,” AI automatically executes the transaction, optimizes gas fees, and ensures transaction security, significantly improving the usability and trading efficiency of DeFi.

Source: CoinGecko

Advantages of DeFAI

Intelligence: Leverages AI to analyze on-chain and off-chain data, providing real-time market insights.

Automation: AI agents automate trading, lending, and asset management, reducing human errors.

Ease of Use: With natural language processing technology, users can execute complex operations with simple commands, lowering the technical barrier.

Core Value

DeFAI redefines the core values of decentralized finance (DeFi) by deeply integrating blockchain data with AI algorithms. It offers a range of innovative features that enhance decision-making and improve the user experience.

Enhanced Decision-Making: By combining blockchain’s transparent data with AI’s precise analysis, DeFAI provides users with objective, accurate investment advice and market forecasts, helping them make more informed decisions.

Smart Asset Management: AI adjusts investment strategies based on on-chain data and market dynamics, assisting users in achieving higher capital efficiency and asset appreciation.

Real-Time Risk Management: DeFAI can predict market fluctuations and potential risks through machine learning models. It automatically triggers liquidation and stop-loss mechanisms when risks reach critical points, reducing user losses.

Personalized User Experience: DeFAI analyzes user behavior and preferences to offer tailored financial product recommendations. It also automatically manages each user’s portfolio, delivering a personalized and intelligent wealth management experience.

Transparency and Audibility: Blockchain technology records every AI decision-making process, ensuring all operations are traceable and auditable. This increases process transparency and strengthens user trust.

Source: CoinGecko

Application Scenarios

1. Multi-Chain Portfolio Aggregation

One of DeFi users’ biggest challenges is managing assets spread across multiple blockchains. Bitcoin (BTC) resides on one chain, Ethereum tokens on another, and Solana DeFi assets on yet another, leading to cumbersome switching between multiple wallets, platforms, and spreadsheets.

DeFAI agents address this issue through a unified dashboard, allowing users to:

View All Assets in One Place: No need to frequently switch between platforms—easily track the entire portfolio in one dashboard.

Track Investment Performance Conveniently: With an intuitive interface, users can monitor the price movements of multi-chain assets in real-time.

Simplify Investment Management: Say goodbye to manual record-keeping and enjoy an efficient, streamlined asset management experience.

Source: https://x.com/orbitcryptoai/status/1882324116289822952

2. AI-Driven Recommendations and Autonomous Investment

The DeFi market is highly dynamic, and the information explosion has made investment decisions more complex. DeFAI agents offer AI-driven analysis to assist in making precise investments:

Personalized Recommendations: AI integrates on-chain and off-chain data to match your risk preferences and investment goals, providing tailored advice.

Data-Driven Insights: AI deeply analyzes market trends, helping identify potential opportunities.

Autonomous Investing (Coming Soon): AI will automatically execute trades based on preset strategies, optimizing investment returns and enabling truly intelligent investing.

Source: https://x.com/griffaindotcom/status/1879580255524139428

3. Comprehensive Launch Platform Intelligence

Identifying genuinely promising opportunities is crucial with the constant emergence of new DeFi projects. DeFAI agents provide comprehensive platform analysis to help you discover valuable investments:

In-Depth Project Research: Covers multiple mainstream launch platforms, offering detailed analysis on token economics, team background, historical data, and more.

AI Data Support: Integrates extensive information to help you make more informed investment decisions.

Identifying Potential Projects: Accurately filters high-potential investment opportunities to avoid following the crowd blindly.

4. Custom News and Smart Alerts

Staying on top of market developments is key to successful investing. DeFAI agents provide real-time information push notifications to help you respond quickly to market changes:

Real-Time Notifications: Timely alerts via channels like Telegram for price fluctuations, trading anomalies, and breaking news.

Personalized Updates: Receive customized market insights related to the assets you hold.

Quick Response: Adjust your strategies in real-time to seize market opportunities.

Source: https://x.com/aixbt_agent/status/1883291267964276804

Main Components

DeFAI leverages core technologies like the abstraction layer, autonomous trading agents, and AI-driven dApps to make DeFi more intelligent, efficient, and user-friendly. Whether it’s reducing technical barriers, increasing investment returns, or optimizing financial decisions, DeFAI is driving the future development of decentralized finance.

How Does DeFAI Work?

Below is a summary table of how DeFAI operates, covering core modules and their functions, such as data integration, AI model training, smart contract execution, risk control engines, and user interaction:

Challenges Facing DeFAI

Although DeFAI demonstrates great potential, it still faces several challenges that need to be addressed:

1. Security

The decentralized nature of DeFi provides certain security guarantees, but with the introduction of AI, ensuring the security and stability of AI systems becomes a key issue. If an AI system is attacked or malfunctions, it could result in the loss of user assets. Therefore, ensuring the security of AI systems is the top priority in developing DeFAI. Risks such as hackers stealing funds or exploiting AI systems to carry out malicious tasks could occur at some stage.

2. Transparency

The “black box” nature of AI makes it difficult for users to fully understand the decision-making process of AI, which poses a challenge to the transparency of DeFi projects. Ensuring that AI decision-making processes are auditable and transparent has become one of the key issues in the development of DeFAI.

3. Regulatory Issues

As AI’s role in DeFi deepens, regulatory bodies face new challenges emerging technologies pose. The autonomous decision-making capabilities of AI blur the lines of accountability. Ensuring compliance while maintaining decentralization will become a complex issue in the development of DeFAI.

4. Data Availability and Scalability

AI requires large amounts of data, but the data in decentralized ecosystems may be limited. Moreover, integrating AI with blockchain can be resource-intensive, which could affect transaction speed and cause scalability issues.

5. User Accessibility and Education

Currently, DeFAI requires users to have a certain level of knowledge in both blockchain and AI. To drive widespread adoption, enhancing user accessibility and providing necessary education and training will be a critical step.

6. Value Enhancement and Tokenization Issues

While many AI-driven tokens aim to be part of the DeFAI revolution, some tokens are simply marketing tools leveraging the AI term without actual utility. As AI agents continue to improve, future AI agents will no longer be simple tokens; instead, they will have practical utility, be capable of handling complex financial strategies, and further drive the transformation of DeFi.

Source: CoinGecko

Notable Projects

Griffain

Griffain is a platform based on Solana that combines blockchain automation with Artificial Intelligence (AI), making on-chain operations smoother. Users can deploy AI agents to perform tasks such as creating wallets, processing transactions, and interacting with external systems like social media. Griffain focuses on usability and flexibility, aiming to democratize blockchain automation with personalized workflows.

In simple terms, Griffain is an intelligent assistant for blockchain-related tasks. These AI agents help manage crypto wallets, purchase NFTs, or automatically trade tokens, making user interactions with Web3 easier.

Source: Griffain on X

HeyAnon

HeyAnon is an AI-powered DeFi protocol designed to simplify DeFi interactions and aggregate important project-related information. Combining conversational AI with real-time data aggregation, HeyAnon enables users to manage DeFi operations, stay updated with project news, and analyze trends across various platforms and protocols.

HeyAnon integrates natural language processing to handle user prompts, execute complex DeFi operations, and provide near-real-time insights from multiple information streams.

Source: HeyAnon AI

Neur

Neur is an open-source, full-stack application that combines the power of LLM (Large Language Model) technology and blockchain. Neur is designed specifically for the Solana ecosystem, enabling seamless interaction with DeFi protocols, NFTs, and more through a smart interface.

Powered by Claude 3.5-Sonnet and GPT-4, Neur offers a smooth experience with a user-friendly interface. Currently, it is available by invitation only, with access requiring 1 SOL. These platforms are driving innovation in DeFi by enhancing intelligence, efficiency, and usability through AI technology.

Source: Neur

T3AI

@trustInWeb3 is a lending protocol that supports under-collateralized loans, using AI as an intermediary and risk management engine.

T3AI’s AI agents can monitor the health of loans in real-time and, through its risk metrics framework, ensure that loans remain repayable. This is an interesting example of AI’s application in DeFi.

Source: T3AI on X

Sturdy’s SN10

Sturdy’s SN10 is a subnet operating on the Bittensor network, focused on utilizing DeFAI to optimize yields. It is part of the Sturdy Finance protocol, designed to offer users higher returns and more efficient liquidity management through AI-driven strategies.

Definition and Functions of SN10

• AI-Driven Yield Optimization
  SN10 uses the decentralized AI capabilities of the Bittensor network. Through competition between miners and validators, it generates optimal asset allocation strategies. Miners develop algorithms to maximize yields, while validators assess the effectiveness of these strategies and select the best allocation plan.

• Real-Time Strategy Adjustment
  SN10 can adjust asset allocation in real time based on changing market conditions, ensuring that liquidity always flows in the most optimal way.

• Cross-Protocol Optimization
  SN10’s optimization is not limited to Sturdy protocol but can also integrate with other DeFi protocols (such as Morpho, Ondo Finance, etc.) to manage yield optimization for a variety of asset classes (e.g., USDC, WETH).

Applications of SN10 in DeFi

• Aggregator Optimization
  SN10 controls the aggregator within the Sturdy protocol, responsible for distributing assets between siloed lending pairs, ensuring lenders get the best returns while providing borrowers with sufficient liquidity.

• Partnerships with Other Protocols
  SN10 has integrated with multiple DeFi projects, including:

  • Morpho: Optimizing USDC yields.
  • Ondo Finance: Providing AI-optimized fixed-income products.
  • Deployed on Yearn and Pendle to automatically allocate WETH for yield optimization.

Source: Sturdy Finance on X

Future Outlook

The core value of AI agents in DeFi lies in lowering technical barriers, enhancing market insights, and enabling intelligent trading. With advancements in technologies like LLMs (Large Language Models), reinforcement learning, and MPC wallets, AI agents will continue to optimize user experience and drive the evolution of smart finance.

Although DeFAI is still in its early stages, its immense development potential cannot be overlooked. If challenges related to model capabilities, transparency, security, and regulation are addressed, DeFAI has the potential to reshape the traditional financial system, providing faster, more accurate, and personalized financial services, thereby driving a comprehensive upgrade of the global financial ecosystem.

DeFi has already established a mature market ecosystem covering lending, trading, and asset management, with Total Value Locked (TVL) reaching hundreds of billions of dollars. As an emerging sector, DeFAI is expected to grow from a market size of $1.5 billion to $10 billion by the end of 2025. DeFAI will empower DeFi through AI, enhancing its intelligence, automation, and ease of use, opening up broader opportunities for the future development of decentralized finance.

The integration of DeFAI is not just about technology stacking; it represents a profound transformation of financial infrastructure, data value, and intelligent decision-making. In the future, DeFAI will emphasize intelligence, personalization, and decentralized autonomy, driving changes in cross-chain interoperability, Web3 identity, and regulatory compliance.

Source: CoinGecko - DeFAI Overview

Conclusion

DeFAI combines artificial intelligence and blockchain technology to bring intelligent, automated, and personalized decentralized finance services. It lowers the usage barriers for average users and optimizes asset management through cross-chain interoperability. Its advantages lie in improving efficiency, offering customized financial services, and maintaining decentralization and transparency.

However, DeFAI still faces technical complexity, security, transparency, and regulatory compliance challenges. In the future, as technologies advance and regulatory frameworks improve, DeFAI is expected to overcome these existing obstacles, driving intelligent transformations in industries like finance and healthcare, and leading decentralized finance into the mainstream.