Designing DeFi

Had a ton of fun presenting at @Designing_DeFi my paper "Paper Agents, Paper Gains: An Empirical Study of DeFi Investment Agents", a survey tracking the scope, design, and performance of trading agents from Nov '24 to Nov '25 with @theamyzhao @sui414. Our key findings: > We scraped 1900+ projects on CoinGecko (post-TGE) and Messari (pre-TGE) tagged as AI, filtered out pure infra/non-agent projects, and selected 10 representative agentic projects, incl. Giza, Surf, Numerai, AIXBT, Eliza. > We evaluated their strategy, observability, source of funds, AUM. Most agents don't actually autonomously spot trade - either they provide investment advice or engage in passive yield strategies. Even if they do trade, they don't have great onchain observability and verifiability that an agent is actually signing (vs. a human signer). > We chose to analyze Virtuals + ElizaOS frameworks deeper as these had the highest onchain standardization + observability. Looking at top volume projects built on Virtuals + ElizaOS, we realize that several have $100M+ peak market cap, but extremely high MC-to-AUM ratios, with some peak ratios exceeding 10,000x (compared to 1-3x for DATs). They mostly also trade micro-cap tokens, often holding other agents' tokens. > We then choose 11 Solana projects to analyze onchain PNL for users and agent treasuries (rPNL + uPNL). There seems to a disconnect - treasuries have a net profit of +$34.3M, but users have losses of -$191.7M > Furthermore, there's heavy user PNL inequality, 81.4% of gains are captured by top 1% users, while 62.2% of all users suffer net losses. Agent tokens had 93% peak to trough drawdown vs. Solana only had 54% drawdown. So for the average user buying into these DeFi Investment Agents, things didn't really turn out great. > So where do we go from here? Our findings align with theoretical results abouts the "CoinAlg Bind", which posits a tradeoff between economic fairness and profitability for Collective Investment Algorithms (CoinAlgs). But DeFi trading agents are clearly here to stay, and the space is moving extremely quickly. > In our view, a mature DeFi Investment Agent must satisfy 3 criteria - (1) verifiable autonomy/execution of trades, (2) sustainable profits vs. passive benchmarks, (3) stakeholder alignments, where profits are actually passed back to individual users. While the space is still early, we're really excited about how these DeFi Investment agents can continue to evolve. [FULL PAPER LINK BELOW]