Crypto trading is becoming easier, thanks to the introduction of intelligent tools like AI agents, which are capable of automating any trading activity. Do you want to learn more about crypto AI agents? If so, keep reading our guide.
Understanding Crypto AI Agents
Simply put, crypto AI agents are onchain tools that utilize artificial intelligence to perform tasks, such as analyzing market data, making trading decisions, and executing trades. That means crypto users no longer need to analyze crypto markets manually.
How Crypto AI Agents Work
These tools function in three steps, including:
Step 1: Gathering Infomation
To make informed trading decisions, crypto AI agents gather data, which include DeFi stats, blockchain transactions, market trends, and more.
Step 2: Making Decisions
In this step, the agents analyze the collected data and decide whether to place a trade or wait for certain market conditions to be met.
Step 3: Taking Action
If the analyzed data shows a profitable opportunity in the market, crypto AI agents will open a position on your behalf.
Key Features of Crypto AI Agents
A crypto AI agent has numerous features that help it perform various tasks. They include:
Learning Module: We can describe this feature as the brain of a crypto AI agent. It collects and analyzes data from DeFi platforms, blockchains, and market trends.
Decision Engine: This feature gathers the analyzed data and decides the action to be taken by the crypto AI agent. It could be executing an arbitrage trade or even placing a buy/sell order.
Action Module: This functionality executes the decision made by the decision engine.
Communication Interface: This feature provides important updates regarding the actions taken by crypto AI ganets. For instance, it sends a notification when it opens or closes a trade position.
Security Framework: Most crypto AI agents take user security seriously. This explains why they include a security framework that ensures user data and private keys are protected at all times.
Some of the security measures employed by these AI agents are multi-layer authentication and encryption.
Blockchain Integration Layer: This component connects crypto AI agents to blockchains, allowing them to interact with decentralized applications and smart contracts.
Autonomous Execution Layer: This layer is what makes AI agents unique. It ensures that an agent constantly monitors crypto markets, collects data, analyzes it, decides and takes action without user input.
Popular Crypto AI Agents
It is worth mentioning that not all crypto AI agents focus on simplifying trading. Instead, some are built to perform other tasks onchain. That said, here are the leading AI agents you need to know:
Virtual Protocol: This crypto AI agent allows Base Chain users to create their own AI agents that can be used to manage digital assets in entertainment and gaming in exchange for yield.
AI16zDAO: You can describe this crypto AI agent as your asset manager in the decentralized finance space. AI16zDAO helps crypto investors manage their DeFi investments. It analyzes market trends and reallocates funds where necessary to maximize profits.
Zerebro: This AI agent is intended for institutions that run blockchains. It trains networks to perform more efficiently and faster.
AIxbt: This crypto AI agent is ideal for crypto users wanting to engage in trading but are busy at their day jobs. AIxbt monitors markets, gathers and analyzes data, and then opens positions.
Truth Terminal: This AI agent is popular in the meme coin ecosystem thanks to its ability to leverage artificial intelligence to produce innovative ideas and viral content that resonate with the crypto community.
Challenges Faced by Crypto AI Agents
Blockchain Interoperability Issues: Most blockchains are not interoperable, meaning they cannot interact with others. This limits crypto AI agents’ ability to gather information from a wide range of DeFi protocols.
Security Risks: Cybercriminals still exist in crypto, constantly looking for vulnerabilities to exploit. While these bad actors have majorly targeted DeFi protocols, they have shifted their focus to crypto AI agents in recent months as they continue to grow popular.
