Decentralized finance — protocols, mechanisms, MEV, and market microstructure.
Five builders now win 96.7% of Ethereum blocks. Their edge isn't compute — it's exclusive orderflow: 12% of transactions that generate 54.59% of block value. AI agents transacting in public have to understand where they sit in that hierarchy — and when a preconfirmation changes the math.
Uniswap v4 hooks make every liquidity pool programmable. Here's how the 14-bit permission bitmap works, what fires during a swap, and where AI agents fit into dynamic fee architecture.
To borrow $100 in DeFi, you lock $125–167 in collateral. That gap is the price of trustlessness — and AI agents pay it the same as anyone. On-chain credit scoring is emerging to close it, but the signals that work for humans fail for agents that can spin up new addresses in milliseconds.
Polymarket's off-chain matching + on-chain settlement creates a ~10-second consistency gap. GHOSTHUNTER found 980K targeted reversions and $1.49M extracted — here's the exact mechanism.
A flash loan gives an AI agent $1M with no collateral — and demands it back plus 0.05% before the block ends. The atomic callback constraint is both what makes flash loans safe and what forces an agent to solve its entire strategy before touching the chain.
Three require() calls in Ondo Finance's CashKYCSenderReceiver block every address without KYC from $3.2 billion in permissioned US Treasury tokens — and AI agents can never pass them.
A new paper quantifies what everyone suspected: AI agent tokens trade at >10,000x the capital they actively manage. Here's the mechanics of why, and what it means for builders.
The textbook market-making model quotes symmetrically around mid. On a perpetual, holding inventory pays or charges funding every hour — a deterministic drift Avellaneda-Stoikov never sees. A 2026 HJB model that prices it cut inventory risk 36-38% on Hyperliquid ETH and BTC.
A perp has no expiry, so only the funding rate pegs it to spot. On Hyperliquid that's an hourly cash flow AI agents now harvest delta-neutral — a $10k position at +0.02%/8h pays ~21.9%/yr. The mechanism, the carry math on real rates, and why it's carry, not alpha.
AI agents now resolve most prediction markets straight off the web — UMA's bot hits 99.3% on sports and 72% on mention markets. The optimistic oracle's dispute game is the backstop, but it only catches errors someone is paid to catch. The numbers, and the silent-settlement gap.
A DeFi liquidation mints a fixed prize, and for years it went to whoever won the gas war, not the protocol. Aave's own data shows Chainlink SVR routing $675M of liquidations and clawing ~$16M back. Inside the recapture-auction mechanics — SVR, Oval, API3 — and what they don't fix.
Passive AMM liquidity is a short option that arbitrage bots exercise every block. LVR = σ²/8 prices the rent — at ETH's 63% realized vol that's ~5% of pool value a year, and most pools don't earn enough fees to cover it. The math, real numbers, and the auctions clawing it back.