Why Decentralized Finance (DeFi) Needs Its Own Intelligence Layer

DeFi promised a revolution – open markets where anyone could invest and trade without fear or favor. Unfortunately, the revolution became a dumpster fire, a fertile quagmire of smart contract breaches, pump-and-dump schemes, and insider-driven daylight robbery.

In the first six months of 2025 alone, blockchain security incidents caused $2.37 billion of losses across 121 attacks, an affront to the auditors, cybersecurity gurus, and outspoken voices claiming the industry had turned a corner.

Although the trust of many investors has been left in tatters, crypto is on a paradoxically upward trajectory as evidenced by a market cap that currently stands at $3.4 trillion – a YoY rise of 51%. In a sense, you can view this news positively or negatively: be happy it’s doing well, or feel aggrieved because it’d be doing better if not for the aforementioned woes.

The problem isn’t just hacks, of course: it’s the number of shady projects burning hopeful investors and damaging DeFi’s rep. Despite blockchain’s open ledger, the vast majority of users still get duped by fraudulent projects due to a surfeit of data that is about as readable as an Assyrian script etched on a tablet of stone.

We already have layers for scaling and identity, so an intelligence layer – one that leverages publicly available data to expose insider trading and sound the warning alarm about worthless projects – is long overdue.

Don’t Trust Anybody: DeFi in a Nutshell

As DeFi evolves, so do its scams. While most rug pulls perpetrated in 2024 were DeFi protocols and NFT ventures, this year memecoins have been to blame – a consequence of the ease with which one can now spin up a memecoin, hype it to hell, then dump the tokens after they’ve pumped.

Between the outright cybercrimes (bridge exploits, phishing email attacks), AI-powered scams, and savage token dumps, there’s no wonder some would-be investors take a hard pass on crypto entirely. Without clear insights, everyday investors appear outgunned in a game that seems to work for a chosen few.

This crisis of trust necessitates more than the natural scepticism that compels users to self-custody funds, activate 2FA, and eschew cross-chain bridges. While having that kind of opsec in place is great, we need an intelligence layer that aids everyone – not just super-savvy cynics – to assess projects with a degree of confidence. A layer that transforms blockchain’s voluminous data into intuitive visuals by revealing wallet connections, token distributions, and suspicious flows. To eliminate the need for guesswork.

Such a layer would benefit everyone: retail traders could spot scams, institutions could conduct due diligence, and regulators could track illicit activity without pursuing more invasive measures. An analysis of token ownership would be particularly useful, revealing just how concentrated ownership of a token supply is – indicating an obvious red flag for a dump. Armed with this kind of info, investors needn’t blunder ahead with their fingers crossed.

Unlike intuition or manual data-sifting, an intelligence layer offers digestible insights, the sort that can’t always be gleaned from combing through a whitepaper or scritizining a project’s social profiles. It’s about verifying veracity on-chain, and part of an evolution that’s entirely necessary given the industry’s maturation.

Whether it’s small investors or hedge funds, investors crave tools which help them navigate DeFi’s choppy waters. Without them, DeFi risks remaining a foreboding arena to which only insiders gravitate.

Exposing Bad Actors Hidden in Plain Sight

Thankfully, an intelligence layer already exists in the form of Bubblemaps, a DeFi data visualization platform that demystifies blockchain data by turning it into intuitive bubble maps. With Bubblemaps, crypto wallets appear as bubbles – sized by holdings, linked by transactions – the better to expose fraud or insider collusion. Since launching in 2022, it’s become a platform many traders trust when concerned about becoming someone else’s exit liquidity.

Now available in public beta, Bubblemaps V2 supports several of DeFi’s most-active chains, including Ethereum and Solana, and thanks to a recent integration with xStocks, it now tracks tokenized stocks like NVDA and TSLA, too. By revealing valuable data like top token-holders, historical trends, and hidden wallet ties, it’s proven to be a godsend.

Like many DeFi projects, Bubblemaps has its own utility token (BMT) which has governance functions, rewards project investigations, and unlocks premium features for holders. For those interested in the former, there is the chance to allocate tokens to vote on which project ‘investigation’ happens next: by participating, users can ensure decisions reflect the desires of the community.

Bubblemaps is just one of several projects operating in the so-called InfoFi sphere, a growing division of DeFi that seeks to commoditize data itself. 

Some InfoFi projects enable users to tokenize attention and reputation as well as data, acknowledging the value of public sentiment when it comes to trading. Web3 information platform Kaito, for instance, offers a $833 subscription service to traders, AI agent companies and funds whose operations depend on reliable sentiment tracking.

Don’t Trust, Verify

Anyone who’s been around the blockchain block knows the expression ‘Don’t trust, verify.’ It’s become a mantra, one that stresses the need for personal responsibility and due diligence over the mania of FOMO. But that verification process can be both complex and time-consuming. Which is why an intelligence layer that provides usable at-a-glance info is required.

The future of DeFi depends on trust, and trust demands transparency: the sort that’s easy to understand, analogous to glancing at your wrist to tell the time. With an effective DeFi intelligence layer, we can say sayonara to scams and let honest projects bask in the spotlight. In a world where you hold your keys, make sure you’re also armed with the truth.