The DeFi ecosystem showed impressive growth by the end of 2025, but long-standing volatility remains a characteristic. This ecosystem had a total value locked (TVL) of $230.7 billion by the third quarter of 2025, setting a record, but that enthusiasm was short-lived. By the end of November, the total TVL decreased by $55 billion to $123.0 billion.
Despite these drastic fluctuations, DeFi participation not only remained but also significantly increased. This year, over 14.2 million wallets have participated in this ecosystem, with Ethereum still holding about 63% of all DeFi activities.
Such high participation rates reflect the potential of DeFi. However, some experts argue that volatility has revealed fundamental issues: in terms of needing to respond continuously to market conditions, achieving success is difficult for most users.
Users had to continuously monitor liquidity ranges, adjust positions, and look for changing arbitrage opportunities. Despite claims that money grows, DeFi participants are actually burdened with time-consuming manual tasks.
An example of this view is Ron Bodkin, a former Google executive who now leads the AI agent protocol Theoriq team. Bodkin claims to have observed that as DeFi expands, the burden on average users increases.
"Most people came to DeFi hoping that money would work for them," says Bodkin.
"But somehow they ended up checking charts in the middle of the night and adjusting ranges during meetings, making themselves work for the money. It's a bit of a backwards situation and wears out users."
According to Bodkin, true passivity comes not from demanding more from users but from completely reimagining yield management. This means looking beyond the times of chasing past profits and finding tools that do not keep users tied to their wallets.
AI introduced to DeFi... solving the black box problem
AlphaVault, Theoriq's new protocol, is part of a shift towards a more autonomous form of DeFi management. Over the past year, more projects have begun to experiment with the intersection of DeFi and AI. (Sometimes referred to as DeFAI) It uses agents to automate routine decisions and cope with rapidly changing markets.
These experiments have slowly become part of a long-term roadmap discussed by the protocol team, stemming from hackathon curiosity. Bodkin adds:
"There is a growing interest in AI across DeFi. But the real challenge is ensuring that people understand and trust what agents are doing. Transparency must grow alongside automation. Otherwise, scaling in the way people expect will be impossible."
AlphaVault is one of the DeFi vaults experimenting with specialized AI agents to directly manage user capital. Instead of relying on simple rule-based composite tools, it uses a multi-agent system to adjust to changing market conditions. This setup has been tested under significant pressure on Theoriq's testnet, processing over 65 million agent requests from 2.1 million wallets.
According to the team, one of the main differences between AlphaVault and other AI agent protocols is the way transparency and safety are managed. Early attempts were often criticized for hiding decision-making methods.
AlphaVault takes a 'policy cage' approach. This defines the range of permissible actions for agents, from asset types to position sizes, through smart contract rules. These boundaries aim to make it clearer for users to understand system operations and reduce the risks that appeared in previous AI experiments.
At launch, AlphaVault is integrating with trusted partners recognized in the Ethereum interest space. This includes the Lido's stRATEGY vault curated by Mellow Protocol and Chorus One's MEV Max provided by StakeWise.
This partnership allows AlphaVault to allocate capital to established Ethereum yield strategies across the ecosystem. It provides a way for users to earn yields without having to continuously check or adjust their positions. Whether this method will work in practice will depend on the system's long-term performance.
Many DeFi projects liquidity bootstrapping
Across DeFi, early participation programs have become a common way to build liquidity and establish an initial total value locked (TVL) base. This provides space for new systems to operate under real conditions. AlphaVault is taking a similar path.
To kick off the vault, Theoriq has initiated a bootstrap phase that offers incentives. In this phase, the community can lock ETH and earn points that will later convert to $THQ. As the phase progresses, the TVL will gradually shift from locked capital to live capital managed by autonomous agents within AlphaVault.
While familiar patterns in DeFi, in this case, the capital does not simply stay put; it fuels a system designed to operate with minimal manual oversight.
What $THQ will look like in the future is even more intriguing. It aims to be a reputation token that users can stake behind AI agents they believe are performing well, rather than just acting as an incentive.
If agents operate negatively or fail to meet expectations, their stake may be partially reduced. This mechanism aims to maintain high quality and curb reckless behavior.
This approach reflects a broader industry effort to give more accountability to automated systems. Rather than relying on marketing claims or opaque performance reports, it ensures that the reputation of these agents is formed directly by how they behave over time.
Theoretically, this means that trust is based not on individuals or promises but on visible on-chain performance, creating a system where the community can directly decide which AI agents to hold more accountable.
DeFi, what comes after the yield-seeking era
Theoriq hopes to shift the industry's conversation away from chasing larger APYs to reducing the tasks users have to perform. This is based on the idea of figuring out how developers can alleviate the ongoing manual monitoring, rebalancing, and decision-making that people still perform.
The goal is not to remove users from the process but to build tools that handle the routine and time-sensitive aspects of on-chain management so that people do not view DeFi as a side job.
According to the team, there is an increasing interest among users in systems that can operate more consistently in the background, responding to market conditions without needing intervention every few hours. Such automation is increasingly recognized as a natural next step for businesses wishing to mature, scale, and attract a broader audience.
Amid a broader movement for more reliable and transparent on-chain automation, Theoriq and its AlphaVault system may hold significance. Whether AI-managed vaults will become the standard or remain as early experiments is still unknown, but the industry's direction suggests that their arrival is no coincidence.
