‘Grandma friendly' DeFAI could bring blockchain finance to the masses.

In tech, new solutions can bring new problems. If a groundbreaking innovation is hard to use, more innovation will be needed to fix it. 

That's where decentralized finance (DeFi) finds itself: ready to transform financial services but held back by jargon and fiddly processes that make it hard for newcomers to grasp.

Enter DeFAI, a mashup with agentic AI. This latest twist in the blockchain saga has the potential to cast-off DeFi's process-heavy chains and open it up to a wider audience.

Just tell a chatbot how to execute certain on-chain actions and it hands everything over to an AI agent, automating an often tricky and time-consuming series of technical steps. Anyone who's ever tried a new DeFi protocol for the first time will appreciate the potential benefits.

The current crop of DeFAI contenders wants to make handling crypto holdings easier for retail traders. Can they live up to the hype?

At a glance

• Complexity, jargon, and an abundance of scams can be off-putting for DeFi newcomers
• DeFAI – DeFi's integration with agentic AI – aims to change that. It allows users to run multi-step actions automatically using verbal commands
• DeFAI can also strengthen security by minimizing input errors for common things like crypto wallet addresses
• It could give retail traders more power to act on real-time market insights

The dawn of frictionless DeFi

It's hard to overstate DeFi's impact on financial services. Instant loans, peer-to-peer trading, permissionless transactions, and straightforward forex exposure through platforms like Uniswap (UNI) and Aave (AAVE) have changed forever how money and markets intersect.

But — and it’s a big but— using DeFi can be painful. Even technically accomplished traders balk at the manual and glitchy onboarding processes behind wallet setup, managing gas fees, staking, and completing cross-chain transactions.

DeFAI deploys AI agents to do the tedious stuff, arguably removing another roadblock to adoption. According to crypto researcher 0xJeff, harnessing AI in this way could be transformational: "Why spend hours digging for alpha, manually executing trades, and trying to optimize your portfolio when you could have an agent do it for you?

"Autonomous trading agents are taking the idea of trading bots to the next level, transforming them into dynamic companions that adapt, learn, and make smarter decisions over time."

DeFAI applications in action

DeFAI solutions are being created that enable users to interact with DeFi protocols verbally via natural language processing (NLP). For example, placing a trade order or launching a new meme coin can be executed by simply chatting with an AI agent, e.g. giving it a vocal prompt.

One example is Griffain. It allows users to automate common on-chain tasks like buying and selling cryptocurrencies, creating tokens, and following airdrops.

AI agents can also source information in real-time and execute commands automatically based on what they learn, allowing crypto traders to act faster and potentially gain a market advantage.

HeyAnon applies the principle to social media. Users can apply its decentralized application (dApp) to collect and analyze data from various sources, such as X (formerly Twitter), Telegram, GitHub, and Discord. Based on pre-set conditions, it then executes DeFi interactions such as token swaps, staking, lending, and bridging.

The top DeFAI projects by market cap

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1. PAAL AI (PAAL)

PAAL AI enables users to build and deploy AI applications across various platforms such as Telegram, Discord, WhatsApp, and Slack. AI agents currently on PAAL AI include workflow management programs, autonomous trading solutions, meme-creating tools, and more.

The PAAL token exists on the Ethereum (ETH) blockchain.

2. aixbt by Virtuals (AIXBT)

Aixbt is the most valuable AI agent on Virtuals, an on-chain protocol that allows developers to create AI agents and co-own them with other users via crypto tokens. A token is minted whenever a new AI agent is created, which crypto users can buy to gain co-ownership and access.

Aixbt agents act as an analytics tool, tracking crypto-related discussions on X to detect market trends.

3. ChainGPT (CGPT)

ChainGPT is a DeFAI token operating on the Binance Smart Chain and Ethereum networks. Users gain access to a suite of AI tools and applications including automated AI trading, blockchain analytics, and, smart contract creation.

The project aims to enhance the Web3 experience for retail users and startups. It uses a deflationary model with a burning mechanism to cap the overall supply at any given time.

Takeaway

In crypto, complexity is often the mother of invention. As of mid-January, DeFAI’s combined market cap surged by more than 350% in seven days, making it one of the most sought-after crypto investments in Q1.

Prices of the major DeFAI tokens have dropped in recent weeks, reflecting wider crypto market volatility and perhaps a wait-and-see attitude from investors.

Market watchers recognize DeFAI's potential to solve issues related to crypto user experience. How quickly users will flock to these solutions remains to be seen.