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On-Chain AI Agents

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Morteza Khedri

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On-Chain AI Agent

Introduction

The transformative impact of artificial intelligence (AI) on our lives is nothing short of fascinating. AI is not just a technological evolution; it represents a paradigm shift. It has elevated the internet beyond merely being a tool for storing and transmitting information. We are now in an era where machines can think, analyze, and act based on data.

AI agents have the potential to revolutionize industries by automating tasks currently performed by humans. This extends to blockchain technology, where on-chain AI agents can introduce new efficiencies, security measures, and opportunities. This article explores the concept of on-chain AI agents and the innovative possibilities they bring to decentralized ecosystems.

What is an AI Agent?

An AI agent is an autonomous or semi-autonomous system that perceives its environment, processes information, and takes actions to achieve a goal. In Web3, AI agents can enhance decentralized applications by automating trading, optimizing smart contract execution, assisting in DAO governance, and enabling autonomous blockchain interactions.

AI AgentAI Agent

Key Characteristics

  • Autonomy: AI agents operate independently, making decisions based on programming, learned behavior, or real-time data.
  • Perception: They gather information through sensors, data inputs, or user commands.
  • Reasoning: They use AI techniques like machine learning, natural language processing, or rule-based systems to make decisions.
  • Action: AI agents can execute commands, manipulate data, and communicate with users or other agents.
  • Learning: Many AI agents improve over time by learning from experience or data without explicit reprogramming.

What is an Onchain AI Agent?

An on-chain AI agent is an AI system that operates directly within a blockchain network. By combining AI’s decision-making capabilities with blockchain’s security, transparency, and decentralization, these agents unlock innovative applications.

Use Cases & Benefits

On-chain AI agents can significantly enhance decentralized ecosystems by introducing greater flexibility, security, and automation. Some key applications include:

  • Automated Portfolio Management
  • AI agents can monitor markets, analyze trends, and rebalance portfolios in real time.
  • They can execute predefined strategies or dynamically adjust based on market data.
  • Smart Contract Auditing & Security
  • AI can analyze smart contracts for vulnerabilities before deployment.
  • Continuous monitoring using AI-based reasoning can detect and respond to anomalies in real time.
  • Yield Optimization
  • AI agents can identify and execute high-yield farming opportunities across multiple DeFi protocols.
  • Automated strategies for staking, lending, and liquidity provision improve returns.
  • Decentralized Governance
  • AI can analyze governance proposals, provide insights, and even vote based on predefined criteria.
  • Simulation models help DAOs make informed decisions.
  • Dynamic Pricing & Market Making
  • AI-driven market makers can adjust asset prices based on supply and demand.
  • Enhancing liquidity by optimizing spreads and managing inventory efficiently.
  • Fraud Detection & Risk Management
  • AI agents monitor transactions to flag suspicious activities and prevent fraud.
  • They assess credit risk in lending protocols, reducing loan defaults.
  • On-Chain Data Analysis & Insights
  • AI agents analyze blockchain data to uncover transaction trends and user behaviors.
  • These insights optimize protocol operations and inform investment decisions.
  • Flash Loan Execution & Arbitrage
  • AI detects arbitrage opportunities across decentralized exchanges.
  • Executes flash loans with split-second precision for profit maximization.
  • Automated Insurance Claims
  • AI verifies DeFi insurance claims by analyzing on-chain events.
  • Faster claim processing and reduced fraud risks.
  • Personalized Financial Services
  • AI tailors DeFi solutions such as investment strategies based on user profiles.

How Onchain AI Agents Work

1. Data Input & Acquisition

  • On-chain sources: Smart contract states, transactions, and event logs.
  • Off-chain sources: Market prices, IoT data, and web APIs via oracles (e.g., Chainlink).

2. AI Processing & Analysis

  • On-chain processing: Simple AI logic, such as rule-based decision-making, in Solidity.
  • Off-chain processing: Advanced AI models (machine learning, neural networks) hosted externally, with results communicated via oracles.

3. Decision-Making & Action Execution

  • AI executes predefined or dynamic actions via smart contracts, including trading, fund transfers, and governance interactions.

4. Blockchain Interaction

  • Writing data to ensure transparency and auditability.
  • Triggering smart contract functions for fund distribution, voting, or protocol changes.

5. Feedback & Adaptation

  • Reinforcement learning: Agents improve by learning from past actions.
  • Human oversight: Allows partial control for critical decision-making.

6. Security & Decentralization

  • Immutability: Ensures actions and logic remain tamper-proof.
  • Transparency: All activities are recorded and auditable.
  • Decentralization: Operates autonomously without central control.

AI Agent Tools

ElizaOS

  • AI agent for Web3 applications, operating on platforms like Discord, Telegram, and blockchain-based services.
  • Features retrieval-augmented generation (RAG) for memory and autonomous trading capabilities.

Eliza Key FeaturesEliza Key Features

AutoGPT

  • Automates complex workflows with minimal human input.
  • Breaks tasks into smaller steps for more autonomous decision-making.

BabyAGI

  • Focuses on structured task execution.
  • Efficient for automating repetitive processes and research tasks.

LangChain

  • Framework for AI-powered app development with integrations into external APIs and databases.

HyperWrite AI Agents

  • Designed for content creation and writing assistance with personalized AI-driven features.

AgentKit (Coinbase)

  • Enables AI agents to interact with blockchain networks securely.
  • Supports multiple AI models and smart contract monitoring.

Airoboros

  • AI agent focused on reasoning, structured decision-making, and research automation.

Comparison TableComparison Table

Building an On-Chain AI Agent with Eliza OS

Prerequisites

Ensure you have:

  • Node.js (version 23+)
  • pnpm (version 9+)
  • Git

Installation

# Clone the repository
git clone https://github.com/elizaOS/eliza.git
cd eliza

# Checkout the latest release
git checkout $(git describe --tags --abbrev=0)

# Install dependencies
pnpm install --no-frozen-lockfile
pnpm build

Configuration

cp .env.example .env

Edit .env and set values like:

OPENROUTER_API_KEY=your_openrouter_api_key
ETERNALAI_API_KEY=your_eternalai_api_key
ETERNALAI_CHAIN_ID=8453
ETERNALAI_RPC_URL=https://mainnet.base.org/
ETERNALAI_AGENT_CONTRACT_ADDRESS=0xAed016e060e2fFE3092916b1650Fc558D62e1CCC

Running Your AI Agent

pnpm start --character=myagent

Your AI agent is now live and ready to interact with on-chain data!