DeFAI: A New Chapter in Decentralized Finance Empowered by Artificial Intelligence

Decentralized Finance (DeFi) has long been viewed as the hope for the large-scale application of cryptocurrencies, but its adoption rate is far below expectations. Data shows that approximately 562 million people globally own cryptocurrencies, but the actual number of DeFi users accounts for only about 1.4% of this group. Nevertheless, DeFi has achieved significant growth in trading volume, with the trading volume of decentralized exchanges now reaching a historic high of 16.7%.

This phenomenon reflects that the DeFi market is still primarily dominated by financially strong old users, with insufficient attraction for new users. The main reasons for this situation are the high knowledge threshold of DeFi and the poor user experience. Even the most basic token exchange operation requires users to understand how to transfer tokens to the blockchain, set aside gas fees, comprehend the concept of slippage, and authorize other complex steps, which are far less convenient than the one-click trading available on centralized exchanges.

Faced with this dilemma, the introduction of artificial intelligence (AI) may bring breakthrough progress to Decentralized Finance (DeFi), giving rise to a new concept—DeFAI (DeFi + AI). DeFAI aims to reduce the complexity of DeFi through AI technology, making decentralized financial services easier for ordinary users to use, thereby promoting its widespread adoption.

The core value of DeFAI is mainly reflected in three aspects:

1. Lower operational thresholds: Users can complete complex DeFi operations using simple natural language commands without the need to manually switch between various interfaces.

2. Automated Strategies: AI can replace professional traders in executing arbitrage and investment strategies, even automatically adjusting risk parameters, allowing ordinary investors to enjoy the advantages of advanced quantitative tools.

3. Data Integration and Analysis: AI can simultaneously monitor various information such as social media discussions, influencer comments, on-chain transaction data, and price trends, and automatically execute trades at the appropriate time, providing operational suggestions that are closer to actual market conditions.

The DeFAI project can be roughly divided into three categories:

1. AI Abstract Layer: These types of projects simplify complex DeFi operations into intuitive instructions using natural language processing technology. Users only need to input simple statements, and the AI can automatically perform cross-protocol operations, optimize trading paths, and gas fees, etc.

2. Automated Trading Agents: These AI agents can automatically execute complex multi-step trading strategies, such as dollar-cost averaging or cross-chain arbitrage, after obtaining user authorization. Users only need to present high-level requirements without having to handle the tedious operational details personally.

3. Market Analysis Agents: This type of AI focuses on integrating and analyzing vast amounts of on-chain data, social media information, and market trends to provide users with real-time, multidimensional market insights. Coupled with trading agent functionalities, it can also enable automated buying and selling decisions.

With the continuous breakthroughs of AI in dialogue interfaces, strategy automation, and data integration, DeFAI has opened up a new development path for Decentralized Finance. In the future, from simple natural language transactions to complex automated arbitrage strategies, and to an ecosystem where multiple AI agents work collaboratively, DeFAI is expected to make these functions more mature and user-friendly.

This innovation could trigger the next round of a true "DeFi summer," allowing more users to participate in Decentralized Finance with a low barrier to entry and enjoy its potential benefits. At the same time, professional investors can also use these tools to develop more flexible and secure trading strategies. With the deep integration of blockchain and AI technologies, the wave of DeFAI is gradually expanding, and its development prospects are worth our continued attention and anticipation.