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The convergence of artificial intelligence and decentralized finance is one of the hottest areas of innovation in crypto today, helping to solve some of the most pressing challenges holding back DeFi applications.
AI promises to make life dramatically easier and more efficient for DeFi users, easing problems around liquidity fragmentation, simplifying complex cross-chain interactions and automating yield farming strategies to help users earn more than they could ever do by relying on human intuition.
For instance, AI can help to automate complex transaction flows, moving tokens across networks, identifying the most secure bridge protocols, optimizing swap routes, analyzing market conditions, connecting liquidity and more besides. If it all works out, AI could be a game-changer for DeFi users and dramatically reduce the technical barriers to entry.
Such technology is still in its infancy and somewhat experimental, but the willingness of crypto users to try out bleeding edge technologies means it’s an area where substantial progress has already been made, as we’re about to see when we examine these three projects.
SONEX
The number one DeFI protocol on Sony’s Soneium blockchain, SONEX is a self-described AI-powered project that aims to fix liquidity fragmentation and automate trading strategies for users.
SONEX’s all-in-one DeFi hub is said to combine AI-based trading insights with smart routing capabilities to help users identify the best, most profitable token swap routes across any blockchain ecosystem. It’s working to bring about a “DeFi Quickening” by ensuring users always have the liquidity they need to trade any crypto they like in an efficient way. With its flexible APIs and SDKs, DEX platforms from any network can easily connect to SONEX, which aggregates liquidity from them all.
SONEX facilitates the flow of cross-chain funds through its Multi-Chain Bridge, which enables any protocol to connect to the Soneium network, and it also offers AI agents that can help traders to identify the most efficient trading strategy by sourcing the liquidity they need from across any network.
The other aspect of SONEX is “Alpha Hunting”, which employs AI agents that can act on behalf of human traders. Its agents are programmed to discover profitable trades by studying and analyzing market prices in real time. By crunching all of this data, they can quickly create sophisticated trading strategies to try and exploit the volatility of crypto asset prices. They can then either execute these trades automatically, or deliver them as personal recommendations to their users, giving them an edge over other traders.
In this way, SONEX uniquely enables traders to spot potentially profitable trades that they would be unlikely to identify alone, due to the overwhelming nature of all of the signals coming in from different sources, including price movements, social media sentiments and more.
THENA
THENA is another DeFi project that’s looking to streamline crypto trading experiences. It sees itself as the BNB Chain ecosystem’s “liquidity layer”, and aims to ensure smoother swaps primarily by providing better incentives to liquidity providers and token holders.
Last year it rolled out a key update known as THENA ve(3,3), which better aligns the incentives of the key stakeholders in the DeFi ecosystem – traders, veTHE token holders, liquidity providers and DeFi protocols. It results in a new, AI-powered dynamic that ensures the emission rate of its native THE token, the “bribes” paid by protocols and the rewards paid to liquidity providers are determined by market mechanics.
The purpose is to ensure every stakeholder is equally incentivized, based on the concept of “decentralized emissions”. The emission rate is determined by market demand, while DeFi protocols can ensure they have access to optimal liquidity through multiple tools, such as “bribes”, where they offer additional rewards to LPs, or by acquiring veTHE tokens and subsequently vote to allocate more THE within their own pool.
Additionally, protocols can use veTHE to deploy their own liquidity on THENA, enabling them to farm THE tokens and lock up the proceeds to increase their share of the total supply of veTHE. Another strategy gives protocols the option to buy THE tokens and lock them up to increase the rate of emissions they receive. Further options include “bribe deposits”, where protocols can add customized reward amounts to any liquidity pool, which can then be claimed by veTHE token holders in return for voting to increase their THE emissions.
Other ways to use THENA to incentivize liquidity include bringing liquidity providers with revenue from the pool, or selling voting power to create revenue that the protocol can deploy as it wants.
Griffain
Solana-based Griffain has emerged as one of the most recognizable “DeFAI” projects, aiming to provide accessible and scalable decentralized finance opportunities to every kind of crypto user.
The key to Griffain is it’s use of AI agents, which are able to automate various aspects of DeFi for users. When the user gives them access to their crypto wallet, these AI agents can perform tasks such as trading, staking and yield farming autonomously, making the most efficient use of their funds to find the most profitable opportunities based on their willingness to tolerate risk.
Griffain’s AI agents are mainly focused on making profits for DeFi users, but it also caters to protocols by facilitating the most efficient and clean token swaps, optimizing liquidity and more. Its AI agents are built on a decentralized network with a novel registry and reputation system, which helps users to find the most reliable and efficient trading bots. Its decentralized network also provides authentication tools and handles payments, enabling AI agent creators to earn a share of the profits their bots generate for individual DeFi investors.
With Griffain, anyone can develop, deploy and monetize an AI agent, while novice DeFi traders can make use of their services to increase the value of their DeFi investments.
Final Thoughts
The integration of AI with DeFi is still in its infancy, yet the rapid rate of progress that’s been made so far, not to mention the adoption of these early tools, suggests that this movement is more than just hype.
The ability of AI algorithms to automate complex DeFi operations, optimize liquidity and token swaps and autonomously execute trading strategies is incredibly powerful. It provides unparalleled convenience for DeFi users, while increasing accessibility and potentially increasing trader’s profits.
It’s still early days for AI and DeFi and the above projects are still ironing out the kinks, but the promise is so great that they’ll either stick around and ultimately end up leading this industry, or else be superseded by something even better.
