DeFAI's Breakthrough: How AI Agents Are Quietly Fixing Crypto's Biggest Problem

The cryptocurrency market is facing problems. Bitcoin price is currently about $94,000 after experiencing numerous ups and downs; Ethereum is now struggling to remain above $3,000; and the Fear and Greed Index is hovering around 65. Altcoin values have decreased significantly in many cases due to fewer available dollars for investing at this time of year, along with an increasingly negative recreational investor sentiment.

Nevertheless, there is likely much more to this story than a current price decline in the cryptocurrency market; for example, while we were looking only at the price of each cryptocurrency, we would miss the overall advances happening with respect to the underlying blockchain technology infrastructure. Currently, the total dollar value of all cryptocurrencies in DeFi has been increasing, and furthermore, it has recently surpassed the $300 billion mark; additionally, the number of AI agents being developed has increased to the point where they have many of the same capabilities, and are now being used as a more convenient and efficient way for customers to interact with businesses through chatbots.

DeFAI is the combination of decentralized finance and AI that is taking off in 2026. We've seen the changes: from AI memes that were popular in early 2024 to clunky natural-language interfaces in the middle of the year to autonomous yield agents like Giza's ARMA generated over $5.4M volume for Base Network (BASE). Now we can see AI-created, verifiable strategies that really work on a large scale.

From Manual Hell to Autonomous Finance

Unlike traditional DeFi where the user decides between several protocols to lend out funds to, attempts to compare different yield offerings, determine the cost of gas or transaction fees, determines the exact time to execute trades, check and/or rebalance multiple lending protocol positions (which may vary on different blockchain networks). For those who do not have access to an institutional-level blockchain infrastructure this is both operationally exhausting; costly (both in terms of transaction fees) and unproductive (potentially due to lost income).

The ARMA agent created by Giza is an example of how autonomous finance should be implemented. ARMA has been developed on the Base Layer blockchain and uses this infrastructure to monitor multiple lending protocols 24/7 (Aave, Morpho, Compound and Moonwell) for stablecoin lending opportunities, and uses its algorithms to select the lending pool with the highest yield and automatically rebalances the capital across those multiple lending pools without any user intervention. In a four month period of time that ARMA has been tested; it achieved an 83% increase of yield over manual management of the same lending pools, currently manages assets worth over $2.9 million, has completed over 100K transactions without any user intervention, and has created profits on each of the trades that ARMA has completed.

The point I want to emphasize is that every trade that ARMA has done created a positive PNL. This proves that autonomous finance isn't still theoretical or in development. There are currently operational infrastructures that are successfully generating profits autonomously through the use of blockchain technology with no human involvement.

With the introduction of its (Almanak's) 18-agent Swarm technology, Almanak is taking the industry a step further. Rather than using a single-purpose bot on each transaction, Almanak employs teams of specialized agents coordinated to work together as a Swarm. Each agent specializes in different areas of the medium.

A strategy agent analyzes the current market state and provides recommendations for the next steps. The alpha-seeking agent identifies edge opportunities across multiple protocols to capture profit potential, while the optimization agents tweak individual parameter values within the existing protocol to enhance overall capital efficiency.

Monetary simulations are treated as part of this coordinated effort employing over 10,000 scenarios. The product will be launched in conjunction with their partnership with WOOFi and represents an investment of $8.45 million from Delphi Labs, HashKey Capital and NEAR Foundation. Additionally, through their collaboration with WOOFi and associated launch of strategy tools into WOOFi's user community of over 250,000 monthly active users, Almanak can effectively reach users and provide AI strategy capabilities to all of them, not just those users who already possess the technical know-how to use the AI tools.

Why Now? Standards Enable Coordination

The technology has existed for quite some time, but in 2024-2025 the introduction of new standards on how agents work together and trust each other.

New Standards such as ERC-4337 and x8004 address some of the main issues concerning the agent's verification processes, keeping their reputation in all protocols while ensuring that an agent can work safely on another platform.

Agents previously were treated as Independent Units. However, with ERC-4337 and x8004, agents can now review others' histories of actions, collaborate on complex multi-step projects, and maintain a cross-protocol reputation with multiple agents. This transforms these types of systems from experimental prototypes into dependable infrastructure for organizations to utilize.

Security Architecture Is Equally Important. The Smart Account Integration of Giza uses session keys to govern granular permissioning over agent activity. This allows for agents to execute specific strategies while not being able to access the entire contents of the wallet. As such, the custodial nature of the security of the account remains intact, while enabling autonomous execution of agent-based strategies. Almanak implements a SAFE-based multisig strategy with Trusted Execution Environment. Thus, the user continues to hold all rights to their funds while the agent performs optimizations for them.

Decentralized finance (DeFi) has been able to solve one of its primary issues regarding trust. Trust issues arise when attempting to determine how much authority to grant a certain agent or intermediary without risking complete and total loss of your assets. DeFi solves this by providing a solution through "programmatically assigned permissions" as well as "verification via cryptography." Through programmatically assigned permissions and cryptography all action performed by an agent will be documented and stored within the blockchain itself.

The Use Cases That Actually Matter

The primary advantage of AgentFi's first killer app, Yield Optimization, is that it quantifies success based on measurable metrics. When evaluating the agent's performance, you can compare the yield they generate to the yield you would receive by managing your own portfolio. ARMA has demonstrated an 83% improvement in yield compared to holding static positions via the use of an intelligent agent.

AI agents are capable of monitoring thousands of protocols simultaneously, performing thousands of transactions in less than a second, and working continuously without any fatigue.

One of the earliest targets for lending and liquidity mining is lending, liquidity mining, which are both standardized, composed, and have plenty of liquidity to them. The AlphaSwarm by Theoriq, the Brahma Platform and the Olas Agent Series are currently developing "agents" that are specifically designed for lending and liquidity mining, and each "agent" is designed with a different risk to return profile in mind

However, our ultimate goal is more than just yield farming. Almanak allows users to communicate their intent to maximize yield (e.g., "Maximize ETH yield with moderate risk") and Automate Strategies based on those intents through AI Agents linking all relevant DeFi protocols, including lending, liquidity pools, asset bridging, swapping and re-balancing, and more.

The Institutional Angle Nobody's Discussing

While affording them plenty of concern over price charts; while all stores are going to continue to worry about price charts; institutions around the world are currently looking at building the AgentFi infrastructure that will change everything come 2026. The demand from BlackRock for tokenized assets via their token initiatives aligns with how the future of DeFi has been, and with respecting how they can be utilized through DeFi AIs that build on them. Together, tokenized treasury bonds (and other RWAs) require good ways to structure and manage them; that layer is provided by AI agents.

By utilizing the Wormhole protocol to scale to multiple chains Ripple's RLUSD creates readily available new sources of liquidity for stablecoins throughout the ecosystem. The stablecoin marketplace is projected to grow into a $500B marketplace by 2026, creating significant yield optimization opportunities for agents. Institutional forecasts expect RWA tokenization to grow 10x, allowing agents to be the infrastructure for sophisticated strategies that utilize both tokenized and real world assets.

Each sector is working on their own plan to grow together. Quantitative management is a well recognized area that exists in traditional finance and hedge funds have been utilizing this type of algorithmic trading for many decades. The area where they needed to focus to provide those strategies would be via permissionless, trustless and an on-chain infrastructure that will allow these same strategies to occur without requiring any additional layer of trust. Blockchain provides the infrastructure; AI agents provide the missing data.

What 2026 Actually Looks Like

The AgentFi 2026 vision is not just about leveraging the moon for speculative investing; its purpose is to help financial institutions implement Crypto 2.0 protocols on a massive scale. Through conservative estimates, it is believed the total amount of crypto an institution can invest using Artificial Intelligence (AI)based crypto strategies will exceed $10B when institutions begin to use agents as a fundamental component of their business model.

The amount of agent capital flowing into traditional financial investments by institutions will be measured in the hundreds of billions of dollars ($100B+) as institutional investors begin to invest their money into agent managed verified strategies and assets. Why use quantitative analysts who can charge large fees with little upside potential when agents can outperform quantitative analysis with less risk and be operational 24/7/365 and have no limitations?

This migration will be accelerated with the implementation of Traditional Finance (TradFi) integrations. When banks introduce their "AI Managed DeFi Yield Accounts" products to the general public, by removing the seed phrase/ease of use, high cost of using gas fees, and cumbersome protocol steps, all people will have access to these types of accounts. Therefore, they will not need to have any knowledge of blockchain technology in order to utilize them, akin to how web users do not need to be familiar with TCP/IP in order to use the internet - the agents handle the backend of all complexities for their users.

AI agents may actually be the consumer-friendly gateway that people have been seeking for years, not due to a change in technology, but due to the convergence of User Experience (UX) between Web2 and Web3, while allowing the consumers to have access to Web3 without having to have permission to do so.

The Contrarian Bet

The recent market crash in December 2024 has caused an increase in the real adoption of digital currencies, as well as a decrease in speculation. There are numerous projects that have been built (shipped) during this time, including many that are not affected by the volatility of prices from month to month. Banks are building custody services; there are agents managing billions of dollars of capital flow through their DeFi (Decentralized Finance) protocols; and the integration of artificial intelligence into DeFi protocols is growing exponentially.

Agents are not placing bets on individual companies, such as Giza, Almanak, Theoriq, or Brahma, but rather, on the infrastructure that will allow for the massive migration of capital in and out of DeFi protocols.

The tokens from the DeFi companies mentioned earlier may not have the capability to provide investors with a 100x return on investment within a period of 24 hours, but investing in these companies gives you an opportunity to be part of an industry that will support the future growth of trillions of dollars worth of capital flows as DeFi becomes more widely adopted.

Thus, the answer to the question, "Will AI agents change DeFi?" is that the answer has already been provided; ARMA's metrics have shown that it has already started. The true question now is whether current prices reflect the market participants' belief about the true value of the infrastructure of AgentFi or whether they are still based on speculation. The difference in price between the two will determine the opportunity for growth in the years leading to 2026.