In an era where cryptocurrency markets never sleep, artificial intelligence (AI) is rapidly reshaping decentralized finance (DeFi). As of May 2025, AI agents are stepping beyond their traditional roles, taking on tasks such as liquidity management and yield optimization around the clock. The twist? These digital masterminds are sprinting far ahead of the wallets designed to secure them, exposing a critical weak point in the DeFi ecosystem. For more on how AI is transforming the landscape, see AI Crypto Agents Are Ushering in a New Era of ‘DeFAI’.
The Push for Programmable Infrastructure
AI’s integration into DeFi is no longer a futuristic fantasy. These agents are evolving from niche tools for quantitative traders into mainstream financial operators. However, the security infrastructure is lagging, largely due to the reliance on externally owned account wallets that demand manual approvals. While advancements like smart contract wallets and account abstraction are on the rise, they remain fragmented and costly, especially on primary layer-1 networks. According to blockchain experts, the pressing need is for a standardized, secure, and cost-effective system that operates seamlessly across multiple blockchain platforms.
“Without robust, programmable permissions, we’re essentially gambling with user assets,” said blockchain analyst Rachel Ng. “The potential for catastrophic loss is real when AI is left unchecked.”
Case Studies: Lessons from the Field
The vulnerabilities in current infrastructure aren’t just theoretical. Last September, users of the popular Telegram-based trading bot, Banana Gun, suffered losses amounting to 563 Ether (valued at roughly $1.9 million at the time) due to an exploited oracle vulnerability. More recently, Aixbt’s dashboard was compromised, leading to unauthorized fund transfers totaling over 55.5 ETH, equating to more than $100,000. These incidents underscore a systemic issue — the dangerous rigidity of legacy wallets unable to adapt to the dynamic needs of AI agents.
The New Frontier: Programmable Permissions
In the quest for a secure DeFi landscape, programmable permissions emerge as the new trust layer. As smart contracts bring logic to DeFi protocols, wallet infrastructure must evolve to encode user control. This means introducing session-based permissions, cryptographic verification, and real-time access revocation capabilities.
“Think of it as a digital seatbelt,” commented fintech strategist Daniele Rossi. “These features not only mitigate risk but democratize access to advanced DeFi strategies, making them available to users without deep technical knowledge.”
Scaling DeFi with Automation
Secure automation is more than just a safety measure — it’s a catalyst for scalability. The fragmentation across chains and protocols has long hindered automated strategies. A universal keystore protocol could synchronize permissions across networks, paving the way for interoperable agent ecosystems. With institutional interest in DeFi on the rise, the demand for secure automation is becoming non-negotiable. This aligns with the growing trend of multi-wallet usage, as detailed in Multi-wallet usage up 16%, but AI may address crypto fragmentation gap.
“Firms won’t deploy capital without verifiable safeguards,” Rossi added. “Programmable wallet permissions could soon become as standard as zero-knowledge proofs for privacy and compliance.”
Looking Ahead: A Call for Evolution
Skeptics may question the wisdom of entrusting AI with financial autonomy. Yet, if traditional markets can embrace algorithmic trading and black-box automation, DeFi must adapt or risk obsolescence. The crypto space prides itself on transparency and user sovereignty, but to maintain these principles, it must develop infrastructure that holds AI agents accountable.
DeFi stands on the brink of an automation revolution. It’s not a matter of if AI agents will play a role — it’s about whether we equip them with the rails necessary to serve users effectively and ethically. As the landscape evolves, the conversation shifts from potential risks to actionable solutions, heralding a new era of decentralized finance that’s as secure as it is innovative.
Source
This article is based on: AI agents are coming for DeFi — Wallets are the weakest link
Further Reading
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- AI-Powered Court System Is Coming to Crypto With GenLayer
- Tokenized Apollo Credit Fund Makes DeFi Debut With Levered-Yield Strategy by Securitize, Gauntlet
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
