DeFAIning DeFAI

February 19th, 2025

Rethinking DeFAI: Building What We Truly Need

The DeFAI space is evolving rapidly, with countless new tools and protocols emerging every day. While innovation is thriving, we've taken a different approach — building something we personally need.

One of the biggest challenges in DeFi is efficiently managing positions: finding the best opportunities, optimizing APY, harvesting/auto-compounding rewards and automating rebalancing. Instead of chasing trends, we set out to solve these core pain points in a way that simplifies the experience for everyone.

What Do People Want in DeFi?

We've taken the time to understand what users truly need in DeFi - beyond hype and speculation. Through extensive analysis and conversations within the industry, we've identified two primary user groups:

Experienced Users — They prefer hands-on control but are open to automation that enhances efficiency, optimizes yield strategies, and reduces manual workload.
Newcomers — They struggle with DeFi's complexity and need intuitive, low-maintenance solutions that simplify entry and reduce risk.

Users want to manage their positions but are open to automated solutions.

Experienced users spend hours researching, managing, and rebalancing their positions, while newcomers often find DeFi overwhelming - navigating protocols, handling gas fees, and assessing security risks.

This is where a well-designed DeFAI solution becomes essential — it should empower experienced users with automation and provide newcomers with an easy, intuitive way to engage with DeFi.

The Challenges of DeFi (ZKsync Era Use Case)

ZKsync Era is rapidly expanding, offering numerous DeFi protocols and lucrative opportunities. The Ignite Program alone is distributing 300M ZK tokens ($50M) over nine months, leading to significant engagement and a TVL of $236M.

If calculated at today's prices over a 12-month period, APYs could range between 25% and 30%.

However, leveraging DeFi on Ignite or within the broader ecosystem is challenging:

Fragmentation Across Protocols → All protocols compete for liquidity, requiring users to navigate multiple platforms manually.
Shifting APYs → Incentives fluctuate, and keeping track of the most profitable pools requires constant rebalancing.
Risk Management → Not all protocols are equally secure, and without on-chain intelligence, users risk exposure to underperforming or vulnerable projects.
Gas Fees & Execution Complexity → Even if a user identifies the best opportunity, moving liquidity and rebalancing positions incurs gas fees and demands efforts.
Harvesting, auto-compounding, ve(3,3) votes → DeFi is complex, and missing key opportunities often comes down to a lack of knowledge.

This is where ZyfAI comes into play.

ZyFAI's DeFAI Agent

ZyFAI introduces an in-house DeFAI Agent, built first for ZKsync Ignite and ZKsync, designed to make DeFi management effortless and efficient.

Let's say you ask yourself the following question:

"I have $10k and want to generate an average yield of 20% while taking the minimum risk?"

The Reasoning Phase

What you will do: It's essentially about preparing yourself and identifying where to focus your search for the necessary information.

What will the ZyFAI Agent do: It will transform the question into sub-queries to ensure it finds the right data sources and knowledge to answer the initial question.

The Data Scraping Phase:

What you will do: To determine the best opportunities and make informed investment decisions, it's essential to gather all the relevant data. You would look at different sources like project websites, Dune, Twitter, DeFiLlama, CoinGecko, and for the ZKsync Ignite program, you would also check the Ignite website.

What will the ZyFAI Agent do: It will do the exact same based on Vector/Postgres databases from numerical sources (such as CoinGecko and DeFiLlama) and textual sources (like Twitter and websites) while also leveraging his own memory/knowledge to generate an informed output.

The Action/Output Phase:

What you will do: Once you’ve gathered all the relevant data, the next step is to strategically allocate your $10K across the identified protocols. This is where you take action based on your research, manually depositing/swap/collect funds into each protocol.

What will the ZyFAI Agent do: At this stage, the ZyFAI Agent enhances the process by offering 2 distinct approaches, depending on whether you prefer more control or an automated experience.

A Prompt: For those who prefer hands-on control, the ZyFAI Agent provides real-time insights to guide investment decisions. By combining on-chain and off-chain data, the agent helps you identify the best opportunities. It also facilitates transaction building or suggests yield optimization strategies based on your portfolio.

A DeFAI Agent Smart Account: For those who seek a fully automated solution, the Smart Account takes care of everything. From information to actions, it dynamically allocates liquidity across protocols (starting on ZKsync Era) and optimizing for the best possible APY. You will also have the option to auto-compound, harvest & dump, and enable other advanced DeFi features.