Does DeFi Summer need AI to be saved? Understand DeFAI in one article

Author: WOO X Research

Background: The Difficulty of Using DeFi is an Old Topic, with a Penetration Rate of Only 1.4%

According to a survey by Triple A in 2024 on global cryptocurrency ownership, approximately 6.9% of the global population owns cryptocurrency, which equates to about 562 million people.

DeFi has always been seen as the hope for Mass Adoption, yet its penetration rate is dismal.

How can we estimate the number of DeFi users? We can calculate it from the daily active users of current mainstream public chains/Layer 2, with the daily active address counts of ETH, Base, and Solana totaling around 8 million. This figure does not account for "witch addresses" and multi-chain players, so 8 million is an overestimated number.

8 million / 562 million = 1.4%

This means that the current DeFi penetration rate among all cryptocurrency players is only 1.4%, but in terms of trading volume share, it has grown at lightning speed, with the current DEX trading volume share reaching a historical high of 16.7% compared to CEX.

This also leads to a fact: the DeFi market is still dominated by a small number of large capital users, with low appeal to new users.

The main reasons why DeFi struggles to attract new users revolve around high knowledge barriers and poor user experience. Taking the simplest Swap as an example, users must know how to transfer tokens to the chain, reserve Gas Tokens, understand what slippage is, and authorize transactions. A series of complex operations cannot compete with the convenience and speed of one-click buying and selling on centralized exchanges.

Is DeFi destined to become a zero-sum game, turning into a playground for old users?

The involvement of AI may break through the past dilemmas of DeFi, giving rise to a new narrative - DeFAI.

Reference: https://www.triple-a.io/cryptocurrency-ownership-data

What is DeFAI?

If DeFi represents the innovation of decentralized finance, then DeFAI (DeFi + AI) is the next stage of evolution aimed at making "decentralized finance truly accessible to the masses." The core value of DeFAI lies in "using AI to reduce the complexity of DeFi" and further broaden application scenarios, allowing more people to easily and safely utilize various blockchain financial services.

The core values of DeFAI are as follows:

• Lowering operational thresholds: Users no longer need to manually switch between various complex interfaces; they can simply input natural language commands like "Swap 1 ETH to USDC and provide liquidity to a certain pool," and AI can help complete multi-step operations.
• Automated strategies: Arbitrage and investment strategies that previously required professional traders can now be run by AI agents, even automatically adjusting risk parameters, allowing ordinary investors to enjoy quantitative-level tools.
• Integrated data analysis: AI can simultaneously monitor community sentiment, KOL comments, on-chain transaction data, price trends, etc., and automatically place orders when conditions are met, providing operations that are closer to actual market situations.

Categories & Representative Projects of DeFAI

• AI Abstraction Layer: This type abstracts complex DeFi operations (Swap, Bridge, Staking, etc.) through natural language, allowing users to input intuitive commands like "I want to swap 2 ETH for USDC and provide liquidity." AI agents automatically connect to multiple protocols, find the best paths, and optimize Gas consumption. This type of DeFAI project is the most common.

Representative Projects:

1. Griffain

• Operates on the Solana ecosystem, supporting natural language trading, Minting NFTs, and Sniping new coins.
• The Solana Foundation has frequently retweeted Griffain's posts.
• Can work through multiple agents and has customizable automation features.

1. Heyanon.ai (Anonymous)

• Developed by the Danielesesta team, emphasizing "one-stop" cross-chain trading, lending, and yield strategy integration.
• Backend connects to cross-chain bridges like LayerZero and instant price oracles like Pyth, assisting users in quickly completing complex operations.

1. Grift

• Focuses on cross-chain functionality, integrating over a hundred public chains and more than two hundred DeFi protocols, making it easy for users to manage assets across chains.
• Particularly emphasizes automated strategies and liquidity management, capable of handling multi-step trading processes.

1. Buzz

• Won the championship at the Solana AI Hackathon.

• Users can not only input trading intentions in natural language but also receive detailed information about liquidity pools, token locking, and smart money addresses.

• Automated Trading Agents: After obtaining user authorization, these AI agents can automatically execute complex, multi-step trading strategies, such as "regularly buy ETH and deposit into liquidity pools" or "automatically arbitrage after cross-chain bridging," allowing users to express high-level needs without manually handling details.

Representative Projects:

1. Almanak

• Focuses on institutional-level quantitative trading and security; uses TEE (Trusted Execution Environment) to prevent strategy theft or MEV attacks.
• Strategies can be simulated in an EVM fork environment before being officially deployed on the mainnet, reducing operational risks.

1. Cod3x

• Provides a "no-code" strategy development environment, allowing users to drag and drop components to create AI trading agents.
• Integrates external APIs and machine learning prediction models to make trading strategies smarter.

• Market Analysis Agents: These AI tools are used to integrate and analyze vast amounts of on-chain data, KOL tweets, discussion trends, etc., providing users with real-time and multi-faceted market insights. When combined with trading agents, they can automatically execute buy and sell orders.

Representative Projects:

1. AIXBT

• Tracks over 400 KOLs and community interactions, able to monitor topic popularity and community sentiment in real-time.
• Can answer user questions and provide instant analysis or token trend predictions.

1. Kwant

• Provides investment advice based on technical analysis using candlestick charts.

Conclusion

DeFi has been blocked from mainstream users due to high thresholds and operational complexity, forming a "niche circle" dominated by a small number of large capital users. However, with breakthroughs in AI in conversational interfaces, strategy automation, and data integration, DeFAI opens up a new path for "decentralized finance." In the future, from simple natural language trading to advanced automated arbitrage, and even multi-agent collaborative ecosystems, everything will become more mature due to DeFAI.

Perhaps the next wave of a true "DeFi Summer" will come with DeFAI, allowing more users to enjoy the potential benefits of decentralized finance with low barriers. At the same time, professional investors can also engage in more flexible and secure trading strategies. As blockchain and AI continue to deeply integrate, the wave of DeFAI is gradually expanding, which is worth looking forward to and continuously observing.