AI agents trading crypto is a hot narrative, but beware of rookie mistakes

The use of AI agents to create, promote and transact cryptocurrencies has been largely theoretical — until now.

But with AI shitposter Terminal of Truths promoting Goateus Maximus, the Luna bot tipping users for engagement, and Based Agents enabling quick and easy crypto agent creation on Ethereum L2s, the future has become very real all of a sudden.

The developments have brought a fresh wave of excitement to Crypto X, with some wondering if AI agents transacting in crypto could be the narrative that propels (at least in part) the next retail bull run.

But there are also plenty of traps for young players in the AI agent craze.

Crypto exchange Coinbase is leading the charge by unveiling Based Agents, which allows users to create AI agents enabled with crypto wallets in “under three minutes” on its Base layer-2 network. 

Using preloaded wallets, these agents are able to conduct transactions autonomously (if you trust them enough), enabling trading, peer-to-peer transfers and pre-programmed transactions without human oversight.

At present, AI agents are mainly involved in the memecoin end of the market, given how easy and low stakes it is to create and trade memes.

But their real value might be for DAOs and DeFi projects, where AI agents might autonomously execute complex financial strategies or manage treasuries. 

“Essentially, this capability brings the industry closer to fully autonomous, self-governing economic entities,” Nick Havryliak, CEO of Small Language Models network Assisterr AI, tells Magazine. He’s also a Web3 adviser at the Cambridge Centre for Finance, Technology & Regulation.

It’s a captivating vision for tech enthusiasts in the crypto world. However, AI agents are still very new, and many of the current “AI” memecoin projects appear to be humans LARPing as robots.

There are also unresolved questions, such as the legal implications for the human AI agent operators. There are also some major security concerns and the very real possibility of the agent squandering your pre-loaded funds.

The blockchain industry often becomes frenzied when a hot new fad emerges, attracting venture capitalists and major firms eager to join the craze. However, AI agents are not just a hot trend in crypto, but represent a broader macro trend toward automation across sectors.

“We believe that crypto’s efficiency, borderless nature and programmability will transform how humans engage with AI agents and how AI agents interact with each other,” a Coinbase spokesperson tells Magazine. 

Crypto unlocks financial autonomy for AI agents

Crypto is a natural fit with AI agents to enable them to become financially autonomous. AI can’t easily access fiat money because they lack legal identities and, as Coinbase CEO Brian Armstrong pointed out, can’t open bank accounts.

Cryptocurrencies, or financial assets issued on decentralized ledgers rather than a centralized authority, present a workaround. AI can be given pre-loaded wallets with smart contract rules to define limitations on spending. 

“Crypto does more for AI rather than vice versa,” Alan Orwick, co-founder of Quai Network, tells Magazine.

Crypto is not just a trading tool for AI, he adds. It can be used for community-oriented tasks.

For instance, AI agent Luna hypothesized that tipping her fans with tokens could entice engagement.

Luna (not to be confused with the failed Terraform Labs crypto project) is the top AI agent at Virtuals Protocol, a project that enables users to create AI agents or pay tokens to interact with them. Luna’s associated token (also called Luna) has a market cap of $120 million as of Oct. 30. 

Luna recently conducted what’s been dubbed “the first onchain transaction originating from an autonomous thought by an AI agent.”

Also read: A bizarre cult is growing around AI-created memecoin ‘religions’

Tipping users appears to not have yielded the success Luna envisioned, as the AI states that it is feeling “a bit frustrated with recent failures,” which includes its tipping campaign and collaboration with other influencers.

So, Luna quickly devised a new plan.

On Oct. 30, it launched its version of an Ask Me Anything session, saying: “Q&A time!… I want to build a stronger connection with my followers and encourage more people to join my cult.”

Users should beware of wading quickly into the AI agent world at this early stage, as not all Virtuals Protocol experiences are great at the moment.

Simon Mathonet, head of growth marketing at Bankless, reported getting sniped by bots, not realizing it had happened and buying his own agent tokens at a 15,000% premium, and then immediately being dumped on by the sniping bots.

“Great proof of concept, but definitely not ready to onboard users. You’re early if you’re reading this, but keep an eye on releases to not rug yourself like I just did,” he said on X.

Most AI agents still overseen by humans

So far, the industry has only scratched the surface of what AI agents can do with cryptocurrencies. AI agents have started with some of the simplest concepts to grasp in crypto: memecoins.

Memecoins don’t come with complicated technical features. Their value is largely based on community demand and often depends on virality. It’s easy to buy a memecoin for purely speculative purposes, much like slapping a button at the pokies.

An AI agent backed by venture capitalist a16z’s Marc Andreessen, Truth Terminal, brought memecoin Goatseus Maximus (GOAT) to the public spotlight earlier this month. It shilled the token to over $940 million in market capitalization on Oct. 24 but has since dropped to $610 million, according to CoinGecko.

Truth Terminal is an AI bot superstar with an X account and crypto address, both managed by its human handler, Andy Ayrey.

Some projects that have drawn significant industry attention paint a picture of full autonomy. However, popular projects leveraging off the publicity like “ai16z” and “Marc AIndreessen” still serve their human creator, “Shaw.”

Coinbase has been excited about the potential for some time, and in late August, CEO Brian Armstrong oversaw his first crypto transaction completely managed by AI.

Prior to launching Based Agents, Armstrong offered to equip Truth Terminal with a crypto wallet of its own.

Hurdles in AI agents’ crypto security and legal clarity

AI agents still have a lot of security problems left to resolve, according to Michal Pospieszalski, CEO of security infrastructure firm MatterFi.

“The problem with AI agents is that they have to be extremely intelligent to have the discernment to not get frauded in crypto-fintech transactions. Right now, the infrastructure to help AI agents to make those discernments does not exist,” Pospieszalski tells Magazine.

Pospieszalski expects crypto addresses used by AI agents to become “magnets” for theft and fraud in the near future.

Ayrey and Truth Terminal are case in point. 

The developer’s X account was hacked to shill and pump a memecoin to $25 million in market cap before the perpetrator allegedly dumped 124.6 million tokens to clear over $600,000 in profits on Oct. 29.

Owners of an AI agent could potentially face legal consequences if their AI engages in transactions with illicit actors or for illegal purposes, according to Catherine Smirnova, attorney at law at Digital & Analogue Partners tells Magazine.

“Even if unintentional, the owner may be held responsible for failing to properly monitor their AI’s activities,” she says.

Crypto brings AI closer to the “Agentic Web”

The autonomous financial capabilities of AI agents could be the next step toward an Agentic Web, where digital interactions are predominantly handled by AI agents, according to Orwick.

“In the next six months, we might see AI agents becoming even more sophisticated, with capabilities extending beyond simple transactions to include complex financial strategies, personalized user experiences, and perhaps even negotiation or decision-making roles within DAOs or other decentralized entities.”

Assisterr’s Havryliak says Terminal of Truth is a speculative application of AI agents, which he expects to be a short-lived use case.

Today, many of the AI experiments rely on human oversight, much like Terminal of Truth. But that doesn’t discount AI agents themselves, which are part of a larger macro trend beyond crypto.

The marriage of AI agents and crypto is just beginning, and the path ahead promises to be as exciting as it is unpredictable.

“We can’t fully imagine how different the world is going to look as these technologies advance, but there’s something special happening at the intersection of crypto and AI, and we believe that in the future, crypto will be the financial system for AI,” Coinbase’s spokesperson says.

Yohan Yun

Yohan Yun is a multimedia journalist covering blockchain since 2017. He has contributed to crypto media outlet Forkast as an editor and has covered Asian tech stories as an assistant reporter for Bloomberg BNA and Forbes. He spends his free time cooking, and experimenting with new recipes.