Among all the use cases of web3, DeFi is the most popular. Developing and deploying a DeFi dApp is a challenging task any day. So, what to do when the emergence of the AI trend makes these dApps look like a dinosaur? The smart idea is integrating DeFi and AI, and this is how DeFAI came into being.
The biggest improvements that DeFAI brings to the table are reduced complexity and improved UX through personalized and automated UI. The fast-populating landscape is already intriguing.
Early Days
For those who need a reason to move to DeFAI, let's review the list of challenges that DeFi has been facing over the years. Wallets, bridges, gas, slippage, seed phrases, multi-step transactions, fragmented liquidity, etc., have made DeFi the domain of crypto natives, with mass adoption being stunted through the years. AI has opened new doors of simplified utility, while AI agents have taken the abstracting away of complex blockchain technology to the next level. But it is still early days, and DeFAI is evolving every day.
Trustless agents will define next-gen DeFAI, and Oasis has a crucial role to play with its expertise in TEEs, remote attestations, and off-chain verifiability with on-chain confidentiality.
DeFAI vs DeFi
DeFAI improves DeFi drastically in 4 key areas - core technology, data sources, decision-making, and interface.
The utility is staggering, and it is only the beginning. From trading to yield farming, from risk management to data analysis & insights, AI-powered DeFi enhances seamless user participation and rewarding experiences across dApps, and even in the governance utility of DAOs.
Challenges & Solution Opportunity
Since DeFAI spans a wide range of exciting use cases in infrastructure, abstraction, investment optimization, and analysis/prediction, what potential problems can web3 developers and dApp builders face? Frankly, it is threefold.
Trust is a basic issue. You need to have faith that a particular model is in use, the request execution is in line with expectations, external APIs are providing accurate data, and also, private key and treasury management are uncompromised.
Hallucination caused by bias leading to false information generation, erroneous execution, incorrect conclusions, or any combination of these. If the issues start to cascade, it is practically impossible to stop.
Privacy is the perennial problem. AI models processing or storing sensitive data are vulnerable to leaks, hacks, etc. The repercussions range from loss of competitive edge to manipulation to even doxing.
Oasis has been working on solutions for years and has built robust technologies using TEEs in conjunction with MPC, zkTLS, etc. While this takes care of the on-chain confidentiality aspect, to handle off-chain verifiability, Oasis has introduced the ROFL (runtime off-chain logic) framework (here is a deep dive https://docs.oasis.io/build/rofl/).
So, what are you waiting for? DeFAI needs some BUIDL-ing, and there is a world of opportunities knocking at the door offering smart privacy tools and techs.
Top comments (3)
Great breakdown! DEFAI is exactly the kind of innovation DeFi needs — bringing automation, privacy, and real-world data together without compromising security. Excited to see where this leads!
The journey starts here youtube.com/watch?v=e8Ioaa4nDEU as later today, Matej Janez represents Oasis on “AI & Privacy” during DefaiCon@Token2049, Singapore.
Can’t wait to hear Matej Janez break down how Oasis is leading the charge in private, verifiable AI at DefaiCon. Let’s go! 🌿