DeFAI not only enhances the performance of existing DeFi protocols but also explores new application scenarios, bringing long-term development momentum that transcends market cycles.
Part One: Overview of the DeFAI Industry
1.1 Background and Evolution of the DeFAI Industry: Since the rise of DeFi in 2020, the decentralized finance market has evolved from the initial stages of liquidity mining and decentralized exchanges (DEX) to diversified directions such as DAO governance, NFT financialization, and GameFi. However, as the market matures and competition intensifies, DeFi is gradually facing core issues such as stagnation in user growth, inadequate risk management, and low capital efficiency. Meanwhile, in recent years, artificial intelligence technology has made breakthrough advancements in fields like generative AI, natural language processing (NLP), and automated decision-making. Especially since 2024, the combination of AI and Web3 technology is considered a key direction for a new narrative. The integration of DeFi and AI, known as DeFAI (Decentralized Finance + Artificial Intelligence), represents a new pathway to address the internal competition within the DeFi market, improve user experience, enhance protocol security, and increase asset management efficiency. DeFAI not only enhances the performance of existing DeFi protocols but also explores new application scenarios, bringing long-term development momentum that transcends market cycles.
1.2 Driving Forces Behind the Concept of DeFAI: The core factors driving the emergence of the DeFAI narrative include the following: Internal competition and stagnation in innovation in the DeFi market: From 2020 to 2022, the DeFi market experienced explosive growth, but starting in 2023, the market growth has gradually slowed, and user demand has shifted from purely high returns to safer and more intelligent financial services. Rapid advancements in AI technology: Since the emergence of generative AI technologies like ChatGPT, AI has demonstrated immense potential in data analysis, risk prediction, and automated execution of smart contracts. Particularly in the fields of automated asset management and intelligent risk control, AI can effectively address the shortcomings of DeFi protocols. Upgrading user demands: The demands of DeFi users have evolved from simple mining arbitrage to efficient asset management, intelligent risk control, and personalized financial services. The proposal of DeFAI is precisely to meet this new market demand. Updates in the Web3 narrative: The market's demand for new narratives has never ceased, evolving from DeFi to GameFi, SocialFi, and DAO. The year 2025 may be the launch year for the DeFAI narrative, with new market consensus being formed.
1.3 Evolution of DeFAI: DeFAI will be a key development direction in the future DeFi market. DeFAI will optimize asset management, enhance risk control levels, and promote protocol autonomy by incorporating AI technology, achieving a more intelligent, secure, and efficient decentralized financial service. The potential market size of the DeFAI ecosystem is enormous. According to market forecasts, the potential market size of the DeFAI ecosystem is expected to reach hundreds of billions of dollars within the next five years, particularly in the fields of intelligent risk control, automated asset management, and governance optimization. The application scenarios of DeFAI are extremely broad. From automated investment strategies and credit risk management to the optimization of decentralized autonomous protocols, the application scenarios of DeFAI will cover all aspects of the DeFi ecosystem and even extend to fields like GameFi, SocialFi, and NFTs. The evolution path of the DeFAI narrative is clear. The evolution of the DeFAI narrative will undergo an early experimentation phase, a protocol innovation phase, and an ecosystem maturity phase, ultimately becoming one of the mainstream narratives in the DeFi market.