When Will the Next Wave of the AI Sector Begin? First, Look at Innovations in On-Chain Yield Scenarios
TechFlow Selected TechFlow Selected
When Will the Next Wave of the AI Sector Begin? First, Look at Innovations in On-Chain Yield Scenarios
In the future, Crypto AI will pioneer a decentralized intelligent economy, where AI agents not only optimize the DeFi ecosystem but also become the core of on-chain wealth circulation and value creation.
Navigating Web3 tides with focused insightsAuthor: 0xJeff (@Defi0xJeff)
Translation: Asher (@Asher_0210)
As market liquidity tightens, capital is concentrating toward projects with stronger fundamentals, revealing a clearer picture: the next wave of AI innovation is poised to directly challenge Crypto's most robust moat.
In this process, the integration of Crypto and AI will deepen further, giving rise to more AI-native use cases within the Crypto ecosystem. These applications will not only demonstrate AI’s value in the Crypto space but also establish unique utility of their own.
The most evident synergy lies in combining AI with Crypto’s strengths in capital efficiency and yield optimization—core demands within the Crypto ecosystem.
DeFi: On-chain Yields
DeFi has long been central to the crypto space, offering global users open access to on-chain yields and trading opportunities. However, with the rise of AI, these values can now be captured and optimized more efficiently while further enhancing capital utilization. With AI integration, DeFi becomes not just a tool against inflation but also a means for users to generate excess returns. Key areas where AI adds value include:
-
Stablecoins: As the primary monetary medium in the on-chain ecosystem, stablecoins are used across nearly all on-chain transactions, lending, payments, and yield optimization;
-
RWA: Tokenizing real-world assets such as government bonds, corporate debt, real estate, DePIN loans, and GPUs expands DeFi’s asset base by bringing traditional financial instruments on-chain;
-
Spot & Perpetual Trading: AI can optimize trading fees and returns, improving execution efficiency of trading strategies;
-
Lending Markets: AI enhances capital efficiency through intelligent lending strategies, achieving superior yield enhancement;
-
Yield Markets: By introducing dynamic interest rate adjustments and smart yield strategies, AI makes yield markets more efficient, providing users with better rate environments.
At its core, DeFi is about creating, transferring, and growing capital—and Web3 AI shows immense potential in this domain. Compared to closed Web2 systems, AI in the Web3 ecosystem can leverage blockchain’s openness and token-based incentives to manage assets more intelligently.
Let’s now examine early implementations of DeFi + AI. Though still in early stages, the DeFi AI (DeFAI) space has already produced several exciting examples:
-
Giza (@gizatechxyz): Its AI-driven stablecoin yield optimization agent has surpassed $1 million in TVL, delivering over 83% higher returns than traditional lending strategies, with cumulative trading volume reaching $6 million;
-
Cod3x (@Cod3xOrg): Launched the Sophon Spark agent trading competition, where AI agents compete for a $1.5 million prize pool while using data to train smarter trading strategies;
-
Olas (@autonolas): Features Modius and Optimus AI agents as personal portfolio management tools. Their team is the only one supporting local desktop execution of agents, allowing users to manage via the "Pearl" agent marketplace (recently launched a $1 million Olas Accelerator Program);
-
AI DeFi Access Layer: Projects like @HeyAnonai, @AIWayfinder, and @slate_ceo are improving DeFi accessibility, enabling deeper integration of AI into the DeFi ecosystem.
Why are AI agents well-suited for DeFi?
-
24/7 Operation: AI agents can continuously optimize yields, adjust positions, and respond in real-time to market changes;
-
Automated Management: AI can intelligently manage DeFi positions, significantly boosting efficiency in on-chain trading and yield optimization;
-
Multi-Protocol Integration (MCP): AI agents can connect to multiple on-chain protocols, uncovering richer DeFi yield opportunities. Over the next year, AI agents may execute a significant portion of DeFi on-chain activity due to their high automation efficiency.
Additional areas worth watching in this sector include:
-
Teams driving technical innovation: Supporting developer ecosystems through hackathons, competitions, and workshops;
-
Teams focused on privacy, verifiability, and non-custodial solutions: Ensuring users retain full control over their AI agents rather than relying on centralized platforms;
-
AI Agent Growth Metrics: Such as Assets Under Agency (AUA) or Agent-Managed TVL, measuring AI’s impact within the DeFi ecosystem.
However, the DeFi AI race has only just begun. Crypto x AI is fueling an evolutionary survival-of-the-fittest competition, where only the strongest AI agents and teams will survive and thrive.
Darwinism: The Natural Selection of AI Evolution
Web3 AI is driving a “Darwinian evolution,” where survival rules within the AI ecosystem are becoming clear: innovators are rewarded, while laggards are eliminated. This competitive environment differs from traditional AI fields. In Web3, token incentives, inflationary rewards, and penalty mechanisms create a highly competitive, meritocratic ecosystem.
Key AI projects attracting community attention include:
1. Bittensor: Decentralized Infrastructure for All AI
-
Uses subnets to allow teams to innovate freely, accelerating AI development;
-
Subnets SN6, 41, and 44 have driven the GambleFAI narrative, leveraging AI/ML predictive capabilities to gain edges in prediction markets.
2. Allora: AI-Powered Machine Learning & Prediction Markets
-
Replaces Bittensor’s subnet model with “Topics,” each representing a financial forecasting use case;
-
Teams with the most accurate AI predictions receive the largest rewards;
-
@steerprotocol example: AI-powered LP strategy achieves higher returns with lower impermanent loss (IL).
3. Bit Robot: Focused on Robotics AI Ecosystem
-
Built by the @frodobots team, similar to Bittensor but focused specifically on robotics;
-
Plans to launch various subnets covering robotics data, hardware, vision models, and large language models (LLMs).
The Web3 AI ecosystem has entered a "Hunger Games mode," where the most advanced teams capture more resources while weaker ones get phased out. In the future, AI agents will play increasingly critical roles in this evolutionary race, pushing the entire AI ecosystem toward greater efficiency and intelligence.
Decentralized Infrastructure
The core goal of decentralized infrastructure is to promote open collaboration and innovation, preventing technological monopolies by a few centralized giants. As DeFAI and Darwinian AI ecosystems mature, these infrastructures will see broader adoption, advancing developments in data, model training, verifiability, privacy protection, and DePIN. Currently, key mid-to-short-term directions to watch include:
1. Social & Sentiment Data
Social data is vital in the AI ecosystem, helping AI understand market trends, track project developments, and optimize trading decisions. Several projects have already made progress in this area.
-
Kaito AI (@KaitoAI): Launched the Yap Leaderboard and Yaps Open Protocol, enabling teams to build atop its scoring system and improve social data utilization;
-
aixbt (@aixbt_agent): Tracks and maps project alphas and social trends on Twitter, helping investors discover new opportunities;
-
Cookie DAO (@cookiedotfun): Provides market and social intelligence analytics, enabling AI agents to interpret market sentiment more accurately.
2. On-chain Data
No clear leader has emerged yet in on-chain data, but it remains one of the key frontiers for infrastructure development.
3. Other Data Players
-
Data Crawling: @getgrass_io leverages unused bandwidth to collect data, increasing data availability;
-
Data Ownership: @vana incentivizes personal data ownership through DataDAOs, empowering users with control over their own data;
-
Privacy Computing: @nillionnetwork develops Blind Compute technology to enhance privacy during computation; its token NIL is approaching TGE.
As the DeFAI and Darwinian AI narratives deepen, infrastructure components like data, compute power, and privacy protection will see wider application. We will witness a more mature infrastructure ecosystem and expanded roles for AI agents in decentralized data processing, trade optimization, and market forecasting.
Crypto AI Breaking Web2 AI Limitations
Crypto AI does more than enable AI to think—it gives AI the ability to transact. Through DeFi infrastructure, AI agents can autonomously manage assets, optimize capital flows, and operate independently within open, permissionless networks.
Three Capabilities Enabled by Crypto AI for AI Agents
-
Autonomous Capital Flow Without Centralized Intermediaries: AI agents can directly allocate funds, optimize yields, and execute trades within the DeFi ecosystem, free from centralized gatekeepers;
-
Access to Data Unreachable by Web2 AI: Decentralized data streams (on-chain data, social data) provide unique informational advantages, enabling AI to make more precise on-chain decisions;
-
Open Collaboration Enables Faster AI Evolution: Relying on open models and collaborative innovation, Crypto AI evolves faster and enables broader applications compared to the closed AI systems of the Web2 era.
Core Value of Crypto AI
-
AI + DeFi: Intelligent agents become true participants in the on-chain economy. They’re no longer mere task executors but can hold assets, arbitrage, and optimize capital operations—becoming integral parts of the DeFi ecosystem;
-
Transparent, Verifiable & Composable: All AI transactions and yield management activities on-chain are traceable. Smart agents can reuse, iterate, and collaborate, accelerating the growth of the AI ecosystem;
-
Web2 Started the AI Race, Web3 Drives AI Toward Autonomous Economies: AI agents will evolve from “assisting humans” to becoming active creators in the on-chain economy, building a more intelligent and decentralized financial world.
In the future, Crypto AI will unlock a decentralized intelligent economy unattainable by Web2 AI. AI agents will not only optimize the DeFi ecosystem but also become the core engine behind on-chain wealth movement and value creation.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
