January 2025 saw a new crypto buzzword enter the lexicon and intrigue the minds of crypto enthusiasts.
Decentralized finance artificial intelligence, popularly known as DeFAI, is a new crypto trend that looks to optimize the on-chain crypto and decentralized finance (DeFi) experience with the help of artificial intelligence (AI).
In this article, we explain what DeFAI, the features it offers, and list the top projects in the sector.
Key Takeaways
- DeFAI projects are beginning to use AI agents to simplify and automate interactions between humans and DeFi protocols.
- AI agents remove friction points by helping users manage their on-chain crypto holdings, even automatically in some places.
- AI agents can automate trades based on pre-defined conditions set by the user.
- The aixbt project is the most valuable AI agent, with a market cap of $760.40 million in January 2025.
What is DeFAI Crypto & Why is it Needed?
DeFAI is the intersection of decentralized finance and AI, with DeFAI projects using AI agents to simplify and automate interactions between humans and DeFi protocols.
The advent of DeFi has been nothing short of spectacular. It has enabled instant loans, peer-to-peer trading, permissionless transactions, and easy foreign exchange exposure through platforms such as Uniswap (UNI), Aave (AAVE), and Sky (formerly MakerDAO).
But — let’s face it — DeFi interactions can be tedious. Newcomers are easily put off by poor user experience from wallet setup, gas fee management, and complex cross-chain transactions. This is where AI agents remove friction points by helping users manage their on-chain crypto holdings.
In addition to removing these DeFi hurdles, AI agents enable users to use these systems to automate trades based on pre-defined conditions.
You can do all this by simply chatting with an AI chatbot and instructing it to execute on-chain actions. Anyone who has fumbled around on different DeFi networks will appreciate the benefit of this.
How Does DeFAI Work? Core Features
The crypto world is just beginning to see the capabilities of DeFAI solutions. According to crypto researcher 0xJeff, the first wave of this AI crypto phenomenon is focusing on three areas:
Abstraction Solutions
DeFAI solutions are being developed to enable users to interact with DeFi protocols using 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, aka giving AI a prompt.
Griffiain is an example of a DeFAI network that allows users to take on-chain action such as crypto buying and selling, token creation, and following airdrops.
Autonomous Trading
AI agents can source information in real-time and execute commands automatically when pre-defined conditions are met. Therefore, they are practical tools that crypto traders can use to gain a competitive advantage.
0xJeff put it succinctly in a Twitter article:
“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.”
AI Decentralized Applications
According to 0xJeff, AI-powered decentralized applications integrate AI agents to improve user experience, enhance functionality, and allow automation.
HeyAnon is an example of this new breed of dApps, where crypto users can automate DeFi interactions such as token swaps, staking, lending, and bridging.
Users can also use the AI-powered decentralized application (dApp) to collect and analyze data from various sources, such as X (formerly Twitter), Telegram, GitHub, and Discord.
Top DeFAI Protocols
Here are the top three DeFAI projects based on their market cap based on CoinGecko data as of January 16, 2025.
1. aixbt by Virtuals (AIXBT)
Virtuals is an on-chain protocol that allows developers to create AI agents and users to co-own AI agents via crypto tokens. A crypto token is minted whenever a new AI agent is created, which crypto users can buy to gain co-ownership and access.
aixbt is the most valuable AI agent on Virtuals with a market cap of $760.40 million at the time of writing. aixbt is a analytics platform that tracks crypto-related discussions on X to detect upcoming market trends.
2. Griffain (GRIFFAIN)
Griffain is a protocol that coordinates the interaction between various AI agents. For example, the protocol directs a “search agent” to gather information, which is forwarded to a “decision agent” who decides whether or not the “execution agent” should complete the action.
At the time of writing, Griffain was valued at $554.27 million, making it the 177th largest cryptocurrency in the world. It currently operates on an invite-only basis and requires users to purchase an access pass.
3. 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. It is valued at $354.11 million, making it the 251st most valuable cryptocurrency in the world.
The Bottom Line
As of January 16, 2025, the DeFAI sector’s market cap had gained over 350% in one week, making it one of the most sought-after crypto investments at the time of writing.
Market watchers recognize DeFAI’s potential to solve issues related to crypto user experience. Meanwhile, DeFi users are flocking to these solutions to aid their investment analysis and decision-making.
FAQs
What does DeFAI bring to crypto?
What are some examples of DeFAI projects?
Why is DeFAI important for DeFi users?
Which DeFAI project has the highest market cap?
How does DeFAI use natural language processing (NLP)?
References
- 0xJeff (@Defi0xJeff) (X)
- Griffain (Griffain)
- 0xJeff on X (X)