AI agents are capable of scanning market conditions, devising strategies, and executing stock orders within a few minutes. Concepts such as Daos.fun are already helping in this regard on Solana. Here is the first part of the article.
This article aims to explain how AI agents transform hedge funds, the benefits of such change, and how they will help us in the future.
AI Agent Hedge Funds
AI agents and blockchain have recently come together, extending their impact in finance, and daos.fun is the best example. DAOs.fun initiates AI-based hedge funds by combining decentralization with autonomous AI decision-making.
Furthermore, it not only threatens the conventional way of finance but also paves the way for decentralized investing. Here’s a closer look at how this ecosystem works, its implications, and its potential.
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henlo, and furthermore, accelerate.
History is happening again.
Today we are unveiling Beradigm, the first DeFi DAO out of @daosdotfun in collaboration with @BainanceLabs, coming to Berachain.
We are raising 1000 SOL for our operations.
What is Beradigm? pic.twitter.com/Y8t051NGnG
— Beradigm (@beradigm_xyz) January 3, 2025
How Does daos.fun Work?
1) Fundraise
- Users, or “creators,” can establish a DAO on the platform.
- Creators raise a set amount of $SOL during a one-week fundraising window. Everyone gets to buy the DAO token at the respective price with no chance of getting a better or worse deal.
- Managers share investor interests, making contributors shareholders.
⚙️ How does https://t.co/qI17ZFTuJU work?
Fundraising:
• Founders set a fundraising goal in $SOL and have 1 week to attract investments.
• #SOL is refunded if the goal isn’t met, but early withdrawals incur a 10% penalty.Investment Operations:
• SOL is used to invest in meme…— Slygh Fox 🎏 (@SlyghxFox) January 13, 2025
2) Trading
- Upon fundraising, the DAO creator (or AI manager) invests in Solana-based protocols.
- The DAO token is now transferable, and its price changes depending on the fund’s trading activities.
3) Fund Expiration and Profit Distribution
- When the fund reaches its end date, the platform locks the DAO wallet.
- Token holders receive a share of the profits in $SOL, proportional to their token holdings.
Manager Vetting and the Role of AI Agents
Daos.fun enables creators to create funds, but there’s a filter to ensure all the funds are high-quality and trustworthy. A fund can only be made by trusted parties.
AI Agents as Managers
AI agents have emerged as key players on the platform thanks to their ability to operate continuously, make data-driven decisions, and manage funds. For instance:
- ai16z (pmairca): A hedge fund invested by an AI avatar of venture capitalist Marc Andreessen created by developer Michael Shaw has become this platform’s largest fund. It became popular due to its novelty after the tweet from the actual Marc Andreessen, hitting nearly $100 million market cap at its height.
marc andreessen tweeted about @ai16zdao twice when it was at 10M
a16z cto reached out to ai16z to chat in general (heard the chat went well)
ai16z was looking to work with a16z to create a DUNA (a16’z legal formation)
ip issue was a concern for me a month ago but no longer
— Mark (@markus9x) December 31, 2024
Interactive Decision-Making
The AI manager can consider proposals for investments from token holders, provided that these holders have a large stake in the project. The AI then assesses these pitches and independently determines whether to pursue any of them. An activity board displays suggestions from users, allowing the improvement of the best ideas and stimulating interaction.
The Evolution of AI in Finance: From Tools to Autonomous Agents
The rise of platforms like daos.fun signals a shift from reactive AI tools to proactive AI agents:
- AI 1.0: represented by tools like ChatGPT and Perplexity, which act as advanced information retrieval systems.
- AI 2.0: self-managed entities that do actions, commit to choices, engage with protocols, and adjust to users’ preferences.
Such advance makes AI work round the clock, perform complex tasks related to operations, and deal with decentralized systems.
Absolutely agree, but what if DAO combines with AI agents? The possibilities expand even further. AI can automate routine tasks, analyze vast datasets for more intelligent decisions, and even act as unbiased advisors in governance. https://t.co/yoyP1eqnqJ
— Spheron Network (@SpheronFDN) January 13, 2025
Benefits of AI and Crypto Convergence
- AI agents can place trades more effectively than humans.
- All the transactions are recorded in the blockchain, making it easier to trace them; this increases transparency.
- Crypto’s low transaction fees and smart contract capability align it with what the microtransactions AI agents may require.
- Crypto wallets help AI agents make transactions without the limitations of most banks.
I wrote about why AI needs blockchain-enabled computing, and why I’m optimistic as these technologies converge.
AI is going to end the internet as we’ve known it. Its advancements are inevitable and will be mostly beneficial. But AI is already upending the internet’s economic…
— cdixon.eth (@cdixon) December 17, 2024
Potential Use Cases for AI Agents in Crypto
- Influencer Economy
AI agents could act as 24/7 Key Opinion Leaders (KOLs), providing personalized interactions and engagement, disrupting the traditional influencer model.
- Personal Financial Advisors
AI agents could offer tailored DeFi solutions, managing investments based on individual risk profiles.
- Consumer Applications
These agents could become personal shoppers, DJs, therapists, or even virtual streamers, opening new avenues in crypto-powered consumer markets.
- Multi-Agent Systems
Future systems may involve many agents interacting on-chain, creating dynamic ecosystems for trading, governance, and innovation.
Use Cases for AI Agents in Web3:
🔹DeFi: Maximize yields with real-time strategies.
🔹NFTs: Create interactive, evolving assets.
🔹Governance: Make autonomous decisions in DAOs.
🔹Healthcare: Decentralized medical data management.The possibilities are endless! pic.twitter.com/66NEhbvxYs
— 📍Shlok 🔆 (@thenftmen) January 12, 2025
Challenges and Considerations
While the potential is vast, the ecosystem faces hurdles that they need to look into:
- AI Hallucinations
These agents can produce incorrect outputs, especially in multi-step processes, leading to flawed investment decisions.
- Blockchain Scalability
Bringing millions of agents on-chain may strain existing infrastructure. To support a seamless AI-agent ecosystem, cross-chain compatibility and composability need significant improvements.
AI agents are not just wrappers over LLMs.
The LLM is basically a brain – we all have one, but it doesn’t mean we’re all going to be the same.
The real challenge in building good agentic frameworks is figuring out how to leverage LLMs into generating useful output or taking… pic.twitter.com/ZyTmjyR1Fx
— cygaar (@0xCygaar) January 4, 2025
Conclusion
The rise of AI agents-led hedge funds like ai16z is a glimpse into the potential of merging AI and blockchain technology. Despite its challenges, the opportunities in DeFi, consumer engagement, and multi-agent systems are limitless. Platforms like daos.fun showcase AI’s shift from reactive tools to proactive agents, improving industries.
Disclaimer
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted levels of risk tolerance of the writer/reviewers, and their risk tolerance may be different from yours.
We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments, so please do your due diligence.
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