February 21, 2025 12:15 PM 3 min read

How Level 3 AI Agents Could Transform DeFi—And What's Holding Them Back

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Over the past year, AI agents have gained major traction in the crypto sector, driven by their ability to perform autonomous trading, predict market trends, and optimize financial operations.

These digital systems execute trades, forecast market shifts, and perform other complex financial tasks with minimal human intervention.

The market capitalization of AI agents has surged, with CoinMarketCap reporting a total valuation exceeding $13.5 billion.

Source: Grand View Research

The global AI agents market was valued at $5.40 billion last year, and projections suggest a compound annual growth rate of 45.8% from 2025 to 2030.

What Are Level 3 AI Agents?

As AI agents evolve, Level 3 agents have emerged with enhanced autonomy and advanced learning capabilities.

Unlike basic AI agents, which follow predefined workflows, Level 3 AI Agents exhibit independent learning, long-term memory, and decision-making capabilities that mirror human cognitive functions.

James Ross, founder of Ethereum layer-2 network Mode, explained to Cryptonews that while most artificial intelligence today relies on human guidance and predefined workflows, Level 3 agents operate with minimal intervention.

"Level 3 agents can make independent decisions based on richer context and real-time data," Ross said. "They possess long-term memory, allowing them to retain and apply past experiences, user preferences, and environmental factors to future decisions."

Ross noted that these agents continuously refine their behavior through experience, autonomously detecting patterns and adapting without explicit retraining.

They can also process multiple data types simultaneously, including text, images, audio, video, and live environmental inputs, leading to more sophisticated decision-making.

"These agents anticipate user needs, offer recommendations, and take actions based on behavioral patterns rather than simply responding to commands," Ross said.

Level 3 AI Agents for the Crypto Industry

With their advanced capabilities, Level 3 AI Agents have the potential to impact the cryptocurrency sector.

Jessica Salomon, advisor to Chirper.Fun Level 3 Agent Launchpad, told Cryptonews that Level 3 agents will enhance user interaction within the crypto space.

"The key transformation will be the shift from transactional to relationship-based interactions, where AI agents function as true users rather than just tools," Salomon said.

Ross noted that earlier AI agents were confined to tasks such as trading, market monitoring, and executing smart contract functions.

These agents followed static models, limiting their effectiveness in rapidly evolving crypto environments.

Level 3 AI Agents address these constraints by refining their models in real-time, adapting to new market trends, and identifying anomalies.

"They will analyze subtle patterns, predict market movements, and proactively adjust their strategies instead of merely reacting to changes," Ross said.

Level 3 AI Agents for DeFi

Ross pointed out that decentralized finance (DeFi) is a great use case for Level 3 AI agents.

This is because these agents can autonomously manage portfolios, lending strategies, and liquidity pools by adapting to market conditions.

"For example, an AI agent could detect an impending market downturn and proactively reallocate assets, interact with DeFi protocols, or trigger hedging strategies – all without human intervention," Ross said. "This level of real-time, adaptive decision-making is beyond the capabilities of today's agents, which are typically confined to predefined rules."

Ross added that the AI agents being leveraged by Mode – which enables DeFi Agents to actively move assets on-chain – are performing better than human traders.

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