The following is a guest post and an opinion of Matej Janež, head of partnerships at Oasis.
In Ethdenver earlier this year, one topic was always discussed: AI and Autonomous AI agents. That excitement has been transferred to other crypto conferences as the year expired. There is also a good reason for the excitement: these are not only more ideas – they are here and they treat real funds – but their dependence on transparent block chains can become their biggest weakness.
What exactly are these AI agents? They are smart software programs that work in themselves to handle specific tasks. In Crypto they can use machine learning and block chains to view markets, spot patterns and automatically give transactions. Unlike traditional trade bots, today’s AI agents are adaptive; They constantly refine their behavior based on what results yields.
But there is a major problem that is undervalued and misunderstood: the fact that these onchain agents work on transparent block chains makes their decision-making ‘brain’-in being public. This openness creates real obstacles for agents trying to compete in financial markets.
AI agents in Defi
Defi agents are currently treating trade with decentralized trade fairs, managing loans and optimizing the yield agriculture. They respond immediately to market changes and often make rapid decisions with a lot of money. Smart. Fast. Efficient.
But they stand for a basic challenge. The system that makes them work – public block chains – shows their strategies to everyone. Every transaction, every interaction with a smart contract, leaves a path that reveals how they “think”. It is not much different than playing poker with your cards on the table.
Of course one could perform these strategies on private servers and only submit the final transactions to the blockchain, but this fundamentally defeats the purpose of Cryptos’s promise of transparency and onchain reprarability. The entire point of Defi is to remove the need for trusted third parties and centralized systems.
Consider what is already happening in Defi today. A collision of the proceeds from agriculture is constantly scans on the best return on protocols, so that millions are moved between loan platforms based on subtle market shifts. If the strategy on the chain becomes visible, competitors simply look at what it bundles and goes out and goes out, on which thresholds and with which Timing-Dan the strategy cloned without the research costs. In decentralized credit markets, AI agents who score portfolios for surviving loans make it meaningless if borrowers can see exactly what behavior improves their scores, which leads to artificial wallet patterns that are designed to play the system.
Most of the worries can be Dao Treasury-agent when their re-balancing strategy is transparent, anyone can effectively steal the front run large liquidity movements, effectively stealing the community with each transaction. These are not edges; They are fundamental defects in applying AI to transparent systems where strategy version and strategy development are impossible to separate.
Undoubtedly, the worst of all is the potential for market manipulation. When bad actors understand how an agent makes decisions, they can create situations that are designed to mislead it. Markets full of transparent agents are easy goals.
Why a “private brain”?
A “private brain” for Defi agents would solve these problems. By keeping calculations confidential, agents can make decisions without showing their logic or intentions until transactions continue.
The security benefits are clear. Strategies remain protected against copycats. Front running becomes more difficult without seeing transactions in anticipation. The work of the agent remains private. Teams that build better algorithms can retain their lead, creating reasons to keep improving. The market rewards the actual improvement instead of quickly copying. Markets would become more stable on a larger scale. If agent strategies remain secret, avoid hats – where several agents follow identical strategies. This reduces correlated market movements and lowers the system -wide risk.
If we continue as we now continue to work with Defi-agents with Glass Box brain, we have to worry about a few things that happen.
Markte exploits are more common and refined. As agents deal with more funds, the rewards for exploitation also grow. Without privacy measures, these exploits will become simple technical exercises instead of difficult breaches of security.
Cannibalization of strategy is just as disturbing. When winning strategies is copied quickly, they also stop working. Ultimately, all agents use similar approaches, creating a monoculture. The market loses variety and resilience.
This leads to what you could do the whole problem of the “Bijenkorf”; When all agents work in the same way, they will also respond to the market in the same way. This increases market fluctuations, increases volatility and creates the risk of flash accidents when the conditions cause widespread identical reactions. What starts when individual agents in fact becomes one massive entity with system -wide effects. To spell it: these are not the ingredients for a healthy market.
Technical solutions
Trusted implementation environments (T -pieces) offer a solid way to make these private brains. T -pieces offer safe areas where calculation is insulated, even protected against the system that host. You can verify that the work has happened correctly, but the details remain private.
With this technology we can balance openness and privacy. The framework of an agent can be public and verifiable, while the specific decision-making and strategy details remain protected.
Adding private calculation to Defi agents is not only useful – it is necessary that algorithmic financing grows well. Without privacy we build a market where innovation is punished, exploitation is rewarded and system risks are accumulating below the surface.
We are at a critical moment in AI-driven finances where our choices will determine whether autonomous agents make a more efficient market or a dangerously vulnerable. The technology for private calculation exists today, but implementing it requires intentional action from both builders and protocols. As financial intelligence goes on the chain more and more, guaranteeing these systems with computational privacy will not only protect individual strategies it will protect the integrity of the entire Defi-ecosystem.
