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DeFAI: all about AI in DeFi + 10 best projects
DeFAI, or AIFi, is a new field that combines AI and DeFi. AI agents that control their own crypto wallets, trade, interact with DeFi protocols autonomously, or assist users in improving their trading strategy, - all this falls under the definition of DeFAI. We’ll tell you all about how it works, what AI can and cannot do in DeFi, and which protocols to watch.
From LLMs to the emergence of DeFAI, or AI-powered DeFi
As AI models become advanced, they can tackle more and more complex tasks in Web3. So far we have witnessed the “partnership” between AI and crypto go through the following stages:
1) LLMs (Large Language Models) as content & research assistants: ChatGPT, Midjourney etc. help blockchain projects generate content and images, do research, draft tables, proofread White Papers, etc. The first “AI coins” appear, starting with $TURBO, which was designed using ChatGPT (tokenomics, ticker, mascot, utility, etc.).
2) LLMs as autonomous content generators and crypto holders: early AI agents like Truth Terminal get their own X pages, where they autonomously post their “thoughts”, including opinions on the blockchain industry and specific coins. The AI memecoin mania starts in October 2024 with Truth Terminal promoting the anonymously created memecoin, GOAT (Goatseus Maximus). Truth Terminal gets its own crypto wallet (managed by its creator, Andy Ayrey), which accumulates over $1.5 million in meme assets, primarily $GOAT and $FARTCOIN.
3) The AI memecoin hype: the excitement around $GOAT was based mostly on the wrong idea that the meme had been created by AI. Suddenly, “AI memes” were all over the place, including $FARTCOIN, which was born out of a conversation between Truth Terminal and another AI, Opus Tutor.
4) AI Agents take over the stage and acquire financial autonomy: suddenly everyone in Web3 realized that LLMs can do more than simply post their thoughts on coins or brainstorm new memes: for example, they can interact with a project’s followers or analyze crypto market data.
AI agents, which had been an important topic in Web2 for months, enter Web3 by storm with the launch of Virtuals Protocol in November - a platform on Base where users and teams can launch their own customized agents with attached tokens.
At this point, AI agents become Web3 projects in their own right, and their tokens reach valuations in excess of $200 million - examples include $AIXBT (market insight generator) and $AI16Z (AI investment fund manager, built with ElizaOS on Solana).
AI agents’ autonomy in Web3 is boosted by their ability to operate crypto wallets. The first known crypto transaction between two agents actually dates to August 2024, when one AI paid another in crypto tokens to obtain AI data tokens; in October, Coinbase released Based, a tool for launching AI agents that have their own wallets; agents launched on Virtuals can also operate wallets.
5) AI agents begin to conquer DeFi and Web3 gaming. As AI agents become more narrowly specialized, the agentic narrative in Web3 starts to divide into sub-fields, with some AI models fine-tuned to operate in the DeFI space, while others act as intelligent NPCs in games or verify user data, for example.
These sub-niches get their own names: DeFAI (also known as AiFi/agentic DeFi) and GameFAI (or AI gaming/agentic gaming). As the hype around AI agents in general has faded somewhat, DeFAI is gearing up to become one of the strongest narratives of 2025.
What can AI agents do in DeFi?
As of February 2025, there are already over 100 active Web3 projects in the DeFAI category. Before we begin exploring individual protocols, let’s list the main applications of AI in DeFi - most of them made possible by AI agents’ ability to operate crypto wallets.
- Swapping tokens on DEXs
This is the most basic function that doesn’t require much autonomous decision-making of an AI: the user simply tells the AI to buy a certain amount of a specific token. The main advantage is that the user doesn’t have to open a wallet, connect to the DEX, fill in the fields, or confirm anything: a text prompt (perhaps even sent over X) is enough. Instead, it’s enough to write “Hey agent XYZ, buy 100 USDT worth of SOL on Raydium”. The agent will then fetch the data on liquidity and price from the pool and execute the transaction, with the tokens arriving in its wallet, which the user can also access.
This could be a game-changer for onboarding new users to DeFI. Having to make all those clicks and wait for transactions to confirm is a major hurdle for those encountering DEXes for the first time. There is even an opinion that AI agents can replace user-operated wallets altogether.
The Safe protocol already offers agent-compatible Safe Smart Accounts and a code template for AI agent swaps on Uniswap.
- Autonomous trading on DEXes
This application of AI goes far beyond the capabilities of DEX trading bots, such as the popular Banana Gun. Bots can facilitate trading, but the user needs to feed the bot specific instructions first - for example, “snipe” a specific new memecoin as it launches, plus the maximum amount to spend. By contrast, AI agents can make autonomous decisions on which tokens to buy, how much to spend, and when to sell. In other words, a DeFAI model can formulate and execute its own trading strategy.
Even more importantly, AI agents can learn and improve the strategy over time to reach a higher win rate. They can also take into account a wide range of fundamentals apart from technical analysis: economic data, stock market movements, political news, etc.
As each agent’s experience is different, even trading agents created using the same technology can evolve to have different trading styles. Perhaps in a year or two, we could even see leaderboards of AI traders?
- AI agents as investment fund managers
AI-powered on-chain funds are probably the biggest single type of DeFAI products right now, with projects like ai16z and VaderAI handling millions of dollars in TVL. Such funds can be split into two subcategories:
- Index funds: an AI manager compiles a basket (index) of cryptocurrencies, and as users deposit stablecoins in the fund pool, the AI buys more of each token in the basket according to the index weights.
- Venture funds: an AI manager analyzes new projects (usually also in the AI filed) and selects the best ones to add to the portfolio and either buys their tokens or disburses grants using the funds provided by investors on-chain.
The same platform can combine funds managed by AI agents and humans. The advantage of this type of projects is that it’s easier to compare the performance of AI and human-managed funds using PnL’s or benchmarks.
4) AI agents as as liquidity providers and yield farmers
Yield farming is still popular, and optimizing it manually is still difficult. DeFi yield optimization protocols (also known as yield aggregators, such as Beefy, Harvest Finance, Portals.fi) have been around for a long time, but the problem is that they pool all their users’ funds into a single pool and move them from farm to farm together - which does save money on fees but increases the risks of slippage.
By contrast, AI agents could act as autonomous yield optimizers on chains with low fees, such as Solana or Arbitrum. Rather than just looking for farms with the highest APY, the AI will also consider each project’s fundamentals, token price performance, and pool liquidity to avoid losing money to price fluctuations and impermanent loss. What’s more, a single AI agent can operate wallets on different chains and thus replace several yield aggregators.
The top 10 DeFAI projects to watch in 2025
- ElizaOS ($AI16Z)
This is the first and best-known AI-powered venture fund on Solana. It was originally named ai16z after the famous a16z (Andreessen Horowitz) venture capital firm but was rebranded at the end of January 2025 following a request from the “real” a16z, which claimed that the similarity in names was leading people to believe that the two organizations are connected.
The AI fund’s token, however, is still called $AI16Z - and is also one of the biggest tokens in the agentic AI space with the capitalization of $370 million as of early February 2025. It was also the first AI token on Solana to reach a $2 billion market cap (on December 31, 2024).
ElizaOS is also the operating system for building AI agents, on which the AI manager of the a16z fund is based, so once there are many more agents based on ElizaOS, it can get confusing that the fund is also called that. However, once the fund’s DAO starts working, the DAO members should be able to reissue the token under a new ticker, should they so decide.
- VaderAI ($VADER)
Vader is a platform for creating investment DAOs that can be AI-managed or human-managed. Each DAO is essentially an investment fund compiled of tokens in the Virtuals Protocol ecosystem (VIRTUAL, VADER, SERAPH, VAIN, AYIP, BYTE etc.).
As of the time of writing, there were two active DAOs, both managed by an AI: Micro Cap and Small Cap, benchmarked against $VIRTUAL. As of February 2025, the Small Cap fund’s reported performance was 80% above that of $VIRTUAL.
- Gekko Terminal ($GEKKO)
Gekko Agent is a popular AI agent that posts crypto market updates on X. The new Gekko Terminal is a trading terminal exclusively for $GEKKO holders: they can engage with the terminal by sending natural language prompts to Gekko Agent.
In the current version (released in January 2025) users can access one-click crypto indexes. The developers are working on two AI-powered investment strategies: one for momentum-based trading and the other for maximizing stablecoin yield.
AgentXYZ is an AI-powered DeFAI trading terminal that combines an agentic TA (technical analysis) assistant, insights gathered from on-chain data and posts on social media, and portfolio management. The assistant can leverage such TA tools as indicators (RSI, MACD, etc.), chart patterns (head and shoulders, wedges, and so forth), and support and resistance levels. It will also suggest the best TP and SL levels.
Automated technical analysis using AI agents is a powerful idea, as traders spend most of their time drawing on charts. The AI agent in AgentXYZ helps automate some tasks, providing users with convenient tools for analysis, but the trading is still carried out by the human user.
AgentXYZ will soon open its beta to a selected group of traders: over 5,000 have signed up as of the time of writing.
DeFAI Nexus as a chatbot that can execute on-chain transactions (including cross-chain) upon the user’s command. For now, it can buy crypto on a DEX and send it to the user’s wallet. More features should be introduced soon, including swaps, sending crypto to other people, bridging, staking, etc.
According to the DeFAI website, the agent can understand and implement complex prompts like “find the RWA token with the highest TVL and buy 100 USDT worth of it”, or “Sell half of my WETH on Arbitrum, bridge it back to Ethereum and stake it in Lido”. You can see why some people believe that AiFi agents will make crypto wallets as we know them obsolete.
- Agents.land ($MAX)
Agents.land offers a platform (with a protocol called Distilled AI) for launching agents on Solana and Oraichain, with a focus on DeFAI and tightly connected to the Distilled AI agent-building technology. For instance, its latest MAX Agent called Banker will manage a 1,500 SOL fund executing a DCA (dollar-cost averaging) strategy as $BANKER holders vote on what the agent should do with the money (buy, sell).
Another agent launched via Distilled AI, but on Oracichain, is BlackRack AI, or $RACKS: it runs a hedge fund with 100,000 ORAI. There is also Degenerator Project ($GNRT), an agent that automates token creation, and Lee Quid ($LEE), a liquidity management assistant on Oraichain.
The Hive creates composable on-chain AI agents that automate complex DeFi tasks. The project already has 25,000 weekly active users and has recently won first place in the Solana AI Hackathon.
The Hive’s Token Analysis Agent can analyse charts and exchange volumes, generate insights on liquidity and more. It’s also possible to find trending tokens, make swaps on Jupiter, stake SOL, and obtain developer docs for various projects - all using language prompts (now also with DeepSeek R1).
Cage is the first project to combine AI-powered trading and eSports - and we at Pontem were so impressed by this original concept that we now support cage.fun officially. Each AI agent created with the Cage launchpad is embodied as a warrior avatar - a robot-like warrior that can fight other trading agents in the Arena.
As users challenge each other to trading contests, their respective agents’ results at trading are visualized as proper battles using the Unity game engine and streamed live. This is a unique merger of gaming, trading, and AI, and it will surely attract both gamers and traders who have never used AI agents before.
Cage.fun should go live in the next few months - keep track of Pontem’s updates and follow Cage on X.
Liqfinity is positioned as the first DeFAI lending protocol, powered by an AI agent called Quant plus another AI that runs in the background (Sentinel AI). It is currently in testnet, and users can interact with the app to earn points and qualify for an airdrop allocation.
The lending platform plans to offer 100% LTV loans with no liquidation risk. When testing opened, Liqfinity received over 20,000 active users in 24 hours .
Is DeFAI the most powerful crypto narrative of 2025?
2025 in Web3 started with a strong pump of AI agent coins, followed by a significant cooldown: after Trump's tariff dump, many of them were down 25-30% or more, including some DeFAI tokens like $AI16Z.
However, this doesn’t mean that the AI agent narrative has reached its peak. If you look back at 2023 and the memecoin hype, you’ll see that the initial pump, led by $PEPE, $WOJAK, etc. was eventually followed by an even bigger pump of new Solana-based coins like $WIF and $POPCAT and then an AI memecoin pump. AI agent tokens could follow a similar trajectory in 2025, but with the difference that subsequent AI pumps can be based on the perceived utility: general AI agents that post on Twitter have already pumped, and sub-narrative pumps (DeFAI, AI gaming, agentic RWA etc.) can follow.
Following this logic, we could see a big DeFAI pump in Q2 or even Q4 of 2025. Everything will depend on Bitcoin, of course, and one should keep in mind that the current market cycle so far hasn’t followed the model of the previous ones. If a real altseason does happen, DeFAI coins have much better chances than the majority of memecoins launched in 2024 (which probably will never make a new ATH) or than existing DeFi tokens.
In other words, there is no way to guarantee that there will be a DeFAI bullrun in 2025, because there may not even be an altseason in this cycle. But if crypto as a whole pumps, DeFAI can perform better than other sectors (no financial advice, of course).
We will keep covering the evolution of DeFAI in the Pontem blog. Keep following Pontem on X and Telegram so that you don’t miss the next blog.
