Frankly, around this time last year, I personally buried my third on-chain arbitrage bot. The code ran like a beast during backtesting, generating frighteningly high annualized returns, but it instantly crashed once deployed on-chain. Either the oracle's price feed was a beat too slow, allowing it to outbid others, or the cost of modifying a smart contract to adapt to a new DEX's routing algorithm was so high it could deter a small studio. Sitting in front of my computer, staring at a screen full of failed trades, I had only one thought in my mind: the so-called "on-chain AI" we're talking about in 2024 is simply a false proposition, tightly bound by infrastructure.
After falling into this trap, I realized that to truly make AI run on-chain, algorithmic models alone aren't enough; two critical underlying issues must be addressed: where does the AI's "food" come from, and where should its "brain" be placed? What the Kite ecosystem is doing is precisely addressing these two points, attempting to give AI traders a freely functioning "body."
First, let's discuss the "food" problem for AI, namely data availability. The biggest bottleneck for my failed AI robot was data. It needed millisecond-level market depth, order flow, and on-chain event data, but traditional oracles are like adding 92-octane gasoline to an F1 race car—not only is the speed insufficient, but the price is also exorbitant, not to mention the data's verifiability. If an AI model consumes contaminated or delayed data, its decisions won't be intelligent, but disastrous. Kite's solution isn't simply to build a faster oracle, but to construct a decentralized data layer that allows AI agents to directly and efficiently access and verify the massive amounts of information they need. This is like building an information superhighway for AI traders, instead of letting them bump along country roads. The quality and efficiency of data source acquisition directly determine the upper limit of AI's decision-making ability. Of course, the risks are also there. How to ensure the absolute neutrality of data provided by massive nodes and resist Sybil attacks is a fortress that must be continuously overcome along this path.
Having solved the "food" problem, let's look at the issue of where the "brain" is located, that is, the autonomous execution environment for AI. Why can't we directly write a complex AI model into a smart contract? Because it's expensive and inefficient. On-chain computing resources are extremely valuable; every complex calculation means exorbitant gas fees. Furthermore, logic hard-coded into contracts lacks flexibility, making them vulnerable to market changes. This is why most "AI trading tools" on the market are essentially centralized black boxes. Kite's approach is to allow the AI's brain to perform high-frequency thinking off-chain, using mechanisms like state channels or fraud proofs to submit only the final, verified decision to the blockchain for execution. For example, the AI is like a company CEO who doesn't need to broadcast daily brainstorming sessions to the world (paying exorbitant gas fees); it only needs to stamp a legally binding (on-chain consensus) seal when making a final decision. This significantly reduces the cost of AI operation and gives it the flexibility to adapt to market changes—true "autonomy." However, the challenges are equally significant. This off-chain computation, on-chain verification model places higher demands on developers. Designing an efficient and secure AI agent is a challenging task.
Therefore, when Kite says it wants to "enable free trading for AI," it's not just shouting empty slogans, but rather paving the way and building bridges to solve the underlying problems that once tore developers like myself to shreds. It's not just another trading strategy promising 100x returns, but rather the one providing the shovel and mortar, enabling more people to truly build their own decentralized, trustless AI traders. The future on-chain world may very well consist of countless such AI agents engaging in efficient game theory and collaboration.
Besides trading, in which field do you think this kind of autonomous on-chain AI will first make a name for itself (e.g., gaming, DAO governance)? Share your ideas in the comments section.
Disclaimer: This article represents only personal opinions and does not constitute any investment advice. The crypto market is extremely risky; please conduct your own research before making any decisions.
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