- DeFAI aims to simplify DeFi operations through AI agents that can automatically manage tasks like yield optimisation and liquidity pool management based on user-defined parameters.
- The sector currently features prominent projects like Griffain, Hey Anon, and Orbit though many emerging projects remain unlisted on major tracking platforms.
- Analyst Miles Deutscher suggests DeFAI could surpass traditional DeFi’s growth trajectory from 2020 due to its enhanced accessibility and potentially reach a trillion-dollar market cap through broader user adoption.
DeFAI, the latest trend in crypto, is a combination of decentralised finance (DeFi) and artificial intelligence (AI). In a nutshell, it uses AI agents to automate and optimise DeFi operations, which could otherwise be difficult to navigate for the average investor.
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The DeFAI altcoin sector currently has a market cap of US$933 million (AU$1.5 billion) and a 24-hour trading volume of US$143 million (AU$232 million).
Notable DeFAI coins are Griffain (GRIFFAIN) with a US$351 million (AU$569 million) cap, Hey Anon (ANON) with a US$188.9 million (AU$306.6 million) cap and Orbit (GRIFT) with a US$80.8 million (AU$131.2 million) cap.
Aussie Analyst Explains Use Case of DeFAI
According to Aussie analyst Miles Deutscher, you could see DeFAI as an interface for DeFI, simplifying what’s often a very cumbersome experience. Let’s face it, he’s not wrong here, DeFi can indeed be a difficult process to learn, and at the end of the day, most users won’t have the time to learn about token swaps, yield farming and the like.
This is where AI agents and DeFAI can step in and make things so much easier for investors.
You could, explains Deutscher, have your AI agent optimise yields “for your stablecoins within your risk parameters”, and get the bot to auto-update LP positions, claim profits and re-invest them for you, based on your personalised instructions.
Deutscher believes the market could be replicating the success of DeFi in the early days of 2020. At the time the DeFi sector grew from a sector with a few hundred millions to a sector worth tens of billions of dollars.
Deutscher believes it could even surpass the early success of DeFi:
It could potentially be even bigger, because dentralised finance was limited in terms of user adoption. Once you have AI […] you’re basically combining the two, which creates a much bigger addressable market.
Miles DeutscherThe analyst thinks a trillion-dollar market cap for DeFAi is possible.
DeFAI Strategies and Coins
Deutscher recommends two strategies for the DeFAI play: buy large-cap AI projects like AI16Z or TAO for broad exposure, or buy small-cap cryptos that specifically cater to the DeFAI narrative.
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While the above-mentioned are also on Deutscher’s list, like GRIFFAIN, ANON and GRIFT, he explains that some of these projects are not even listed on CoinGecko or CoinMarketCap yet, because the sites need to add listings manually.
Relying on just these sites will likely lead to missing out on an early entry on some of the more exciting stuff, albeit at a greater risk. Which is why Deutscher recommends to always do your own research, especially with a sector this young.
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