Crypto Protocol Fetch.ai Offering AI Trading Tools for Decentralized Exchanges

Fetch.ai, which develops artificial intelligence (AI) tools for crypto, is rolling out a set of enhanced trading products for decentralized exchanges (DEX).

The Cambridge, U.K.-based firm wants to facilitate peer-to-peer transactions between decentralized finance (DeFi) users using AI-powered “agents” to execute trades based on user-defined parameters, it said Wednesday. It will roll out the suite of trading tools later this quarter.

“Users submit their orders to an agent, which then puts it in escrow or an atomic transaction while it works out where it can do the order matching,” CEO Humayun Sheikh said in an interview. “The ability of the platform to find and create liquidity is where the platform comes into itself, whereby agents work together to create those decentralized order books.”

The absence of a liquidity pool, the mechanism usually employed by DEXs to facilitate quick and efficient trading, means there is no trove of coins for hackers to target.

By focusing on individual agents, Fetch.ai is attempting to overcome the risk that the smart contract at the heart of a DEX is exploited, or that the developer promoting a new project disappears with users’ money in what’s known as a rug pull. The agents employ their own smart contracts to carry out users’ instructions.

“A hacker would have to hack every single agent. They couldn’t just hack the central smart contract because there isn’t one,” Sheikh said.

As of last month, nearly $120 million in crypto had been stolen in 2023 across 19 different breaches, according to analytics firm Crystal Blockchain, with most involving attacks on vulnerabilities in the code and design of decentralized protocols.

Not only is this directly damaging to the victims of these thefts, but it is detrimental to the confidence and the potential for further adoption of DeFi, something Fetch.ai is aiming to tackle with its alternative paradigm for how the ecosystem can operate.