Although the DeFi landscape is experiencing impressive growth, it is still characterized by instability as 2025 draws to a close. The ecosystem reached a record $237 billion in total locked value (TLV) in Q3 2025, but the excitement didn’t last long. By late November, total TVL had shrunk by $55 billion to $123 billion.
Despite such wild fluctuations, participation in DeFi has not only remained stable, but also increased significantly. With over 14.2 million wallets involved in the ecosystem this year, Ethereum continues to account for approximately 63% of all DeFi activity.
This high level of participation can be seen as a testament to DeFi’s potential. But some experts say this volatility exposes a fundamental challenge. It requires constant reaction to market conditions, and success is out of reach for most users.
Users are expected to continuously monitor liquidity ranges, adjust positions, and navigate changing arbitrage opportunities. This creates a paradox where, despite claims that money grows naturally, DeFi participants are actually burdened with time-consuming manual tasks to optimize profits.
An example of this view is Ron Bodkin, a former Google executive who currently leads the AI Agent Protocol Theoriq team. Bodkin claims that as DeFi expands, he has seen the burden on everyday users increase.
“Most people came to DeFi expecting their money to work for them,” Bodkin says.
“But somehow they ended up working for their money, checking charts late at night or adjusting ranges in between meetings. This is kind of retrograde and leaves users exhausted.”
The real reluctance, Bodkin says, comes not from asking users to do more, but from rethinking how yield is managed overall. This sounds more like a search for tools that don’t rely on users sticking to their wallets, rather than the revenue-driven days of past cycles.
Bringing AI to DeFi without black box issues
Theoriq’s new protocol, AlphaVault, fits into the broader shift to more autonomous forms of DeFi management. Over the past year, more projects have started experimenting with the overlap between DeFi and AI (also known as DeFAI), using agents to automate routine decisions and keep up with fast-moving markets.
This is the kind of experiment that has slowly gone from a hackathon curiosity to something the protocol team now discusses as part of a long-term roadmap. Bodkin adds:
“Interest in AI is growing across DeFi, but the real challenge is getting people to understand and trust what those agents are doing. Transparency needs to grow in parallel with automation, otherwise nothing will scale as much as people want.”
AlphaVault is one of the DeFi vaults experimenting with using specialized AI agents to directly manage user capital. Instead of relying on simple rules-based formulation tools, we use multi-agent systems built to adapt to changing market conditions. This setup was tested under real-world pressure during Theoriq’s testnet, handling over 65 million agent requests across 2.1 million wallets.
According to the team, one of the key differences from other AI agent protocols is how it handles transparency and safety. Previous attempts were often criticized for hiding how decisions were made.
AlphaVault approaches this using “policy cages,” which are smart contract rules that define exactly what agents are allowed to do, from asset types to position sizes. These boundaries are intended to give users a clearer idea of how the system works and reduce risks seen in previous AI experiments.
At launch, AlphaVault will integrate with established and trusted partners in the Ethereum revenue space. These include Lido’s stRATEGY vault, overseen by Mellow Protocol, and Chorus One’s MEV Max, powered by StakeWise.
These partnerships allow AlphaVault to allocate capital to established Ethereum yield strategies used across the ecosystem. The idea is to offer users a way to earn money without constantly checking and adjusting their positions, but how well this works in practice will depend on the long-term performance of the system.
Bootstrapping liquidity the way many DeFi projects currently do
Across DeFi, early participation programs have become a common way for projects to build liquidity and establish an initial base of total value locked (TVL), giving new systems room to operate in real-world conditions. AlphaVault is following a similar path.
To launch the vault, Theoriq launched an incentivized bootstrap phase where the community can lock ETH and earn points that can be converted into $THQ rewards. As this phase progresses, TVL gradually transitions from locked capital to living capital managed within AlphaVault by autonomous agents.
The team argues that this is a common pattern in DeFi, but in this case capital doesn’t just sit there, but fuels a system designed to operate with minimal manual oversight.
What makes things even more interesting is how $THQ will work going forward. Rather than having this act solely as an incentive, Theoriq plans for it to be a reputation token that users can bet on behind the AI agents they believe are performing well.
If the agent behaves poorly or fails to meet expectations, those stakes may be partially reduced. This system aims to maintain high quality and deter reckless behavior.
This approach reflects a broader industry effort to bring more accountability to automated systems. The idea is to have these agents form reputations directly based on how they behave over time, rather than relying on marketing claims or opaque performance reports.
In theory, this creates a system where trust is based on visible on-chain performance rather than personality or promises, and where the community plays a direct role in deciding which AI agents take on more responsibility.
Where will DeFi go after the yield-seeking era?
Theoriq wants to shift the industry conversation away from chasing higher APYs and toward reducing the amount of work users are expected to do. It’s designed around the idea that developers are looking for ways to alleviate the continuous monitoring, recalibration, and decision-making that most people still do manually.
The goal is not to remove users from the process, but rather to build tools that handle the mundane and time-sensitive parts of on-chain management so that people don’t have to treat DeFi like a side hustle.
The team says users are increasingly interested in systems that can operate more consistently in the background and react to market conditions without requiring intervention every few hours. This type of automation is increasingly seen as a natural next step for a sector that wants to mature, scale, and engage a wider audience.
It is within this broader push for more reliable and transparent on-chain automation that Theoriq and its AlphaVault system make sense. Whether AI-managed vaults will become the norm or remain an early experiment is still an open question, but given the direction of the industry, their arrival feels no coincidence.
