Talos: A New Model for Onchain Intelligence

The integration of AI into everything is accelerating. In the middle of this rush to convert intelligence into value, some important questions remain. Most pressing: as AI becomes increasingly powerful and autonomous in managing capital, how to ensure it operates responsibly and transparently? 

Handing assets to a closed-source AI, a black box without verification mechanisms, is problematic for many reasons. Instead, we need open, resilient, and collaborative AI architectures that use game theory and other crypto primitives to build collective trust. In short, this is Talos.

What is Talos?

A product of Arbitrum Foundation’s incubator, Talos is an experiment that blends decentralized governance with agentic execution. ​​It’s an autonomous treasury protocol that combines AI-driven decision-making with human governance to manage a portfolio of yield-bearing assets. Unlike smart contracts, Talos is meant to be a living system that’s adaptive to changing conditions. 

Built by the team behind Empyreal, Talos’ purpose is to evolve, continuously optimizing its treasury through an ever-expanding menu of yield opportunities without *direct* human intervention. The emphasis here is on direct because, while the agent manages funds independently, it is overseen by the community, acting as its board of directors. More on governance below. 

How Does Talos Work?

Functionality: 

Built on Arbitrum, Talos continuously monitors onchain data, social sentiment, and market dynamics to optimize its yield strategy. It identifies optimal capital pathways across lending markets, liquidity positions, derivatives, and other financial instruments. 

In practice, it deploys these strategies across multiple ERC4626 vaults using ETH as the base token for all conversions and rebalancing decisions. Through a convertToAssets function, it can shift funds between vaults based on performance, executing multi-asset strategies without prompting. 

Another key aspect is bonding. The Talos treasury is also designed to grow through a bonding mechanism where users can deposit ETH for discounted $T tokens that vest over time. Treasury profits are either reinvested for compound growth or used to buy back $T tokens, reducing the supply and increasing the per-token backing to create intrinsic value, rather than letting assets sit idle. 

Governance: 

As Talos invests, it adapts strategies based on alignment with protocol goals, though all strategy changes must be approved by the Talos Council. The council operates via an integrated social media-based voting and delegation system, with votes conducted on X through polls restricted to members, enforced by a multisig.

Currently, Talos requires significant human oversight, where improvement proposals (TIPs) for new investment strategies or functionality are manually submitted by trusted developers, reviewed through multisig approval and delegate feedback, and then executed through a structured pipeline. 

Long-term, the goal is to streamline this process. This starts with upgrade governance and automated GitHub workflows, and ends with Talos taking more control of its codebase, generating, evaluating, and executing TIPs with little or no outside intervention. The endgame is to turn Talos into a self-writing protocol. 

Talos: Sovereign Onchain Intelligence 

With the completion of a recent proposal to integrate ROFL, Talos now has a trustless base for greater autonomy. By integrating with the Oasis TEE stack, Talos agent transactions occur in a secure enclave, producing cryptographic proofs that verify their integrity. 

Fine-grained upgrades can be pushed to Talos, allowing any external party to verify them. And Talos can now control a private key (within the secure enclave), ensuring that only the agent has access to and control over funds. This makes it among the first DeFi agents to implement truly decentralized key management.

The system includes safeguards like time-delayed execution for critical changes, emergency pause, and mechanisms for dealing with malicious delegate behavior, but this upgrade is another level up. It makes Talos auditable with transparent change history, eliminates the risk of developer-controlled keys, and moves away from manual governance, progressing down the path toward full AI autonomy.

The Road Ahead

Talos is shaping the future of DeFi, frontier intelligence, and coordination. With the ROFL integration live on mainnet, a big step has been taken in this ongoing evolution from human-supervised AI treasury management to fully autonomous onchain intelligence. 

Alongside this development, many other initiatives are in the pipeline, including TIPs for eth-collateralized stablecoin yield, a potential solution for cross-chain treasury management via Chainlink CCIP, and a proposal to integrate OHM as a treasury asset, among others. To track TIPs, view the treasury, or learn more about the future of Talos, click here.