Like firms, nations, or neural networks, markets are fundamentally information processing systems that compress vast amounts of uncoordinated knowledge into actionable signals. A well-functioning market is a form of distributed cognition that aggregates countless local bits of knowledge into a coherent outcome (price, volume) that guides economic decisions.

Markets, in other words, are an adaptive means of responding to change and coordinating action without central control. But market intelligence is not intrinsic nor inevitable. Rather, it is an emergent property of the agents that populate them and the interfaces that enable them to sense, process, and act on information in context. The participants in a market, whether organic or artificial, are its sensory organs and its effectors.

When the complexity of a market’s environment exceeds the cognitive capacity of its participants, its intelligence breaks down. Signals degrade and behaviour becomes noisy, reactive, and extractive. Cybernetician W. Ross Ashby called this dynamic “the law of requisite variety,” arguing that a system can only remain viable if the range of responses (its internal variety) it is capable of producing matches or exceeds the variety of challenges and changes in its environment. 

Today’s permissionless markets are plagued by precisely this variety gap. In the absence of institutional mediation, users face the full weight of system complexity absent any means of absorbing it. DeFi removed the institutional barriers of traditional finance, but exacerbated the information asymmetries that they served to maintain. 

The result is a market driven by hype cycles rather than fundamentals. Those with privileged access to information can shape market narratives, often at the expense of participants with less visibility into market mechanics. This dynamic inhibits genuine innovation, concentrates market intelligence, and limits effective participation across the ecosystem.

A new interface paradigm is needed. One that increases the capacity of participants to make sense of the complex system in which they find themselves.

From Intermediaries to Interface

The sheer volume of information embedded in market activity has always exceeded what any individual can process directly. If any single market participant, even theoretically, possessed perfect information about supply, demand, and preferences across an economy, there would be no need for the price discovery function that markets provide. 

Because of this, markets have evolved alongside tools that address this information asymmetry and reduce cognitive load for participants. Major transitions in market structure are the result of new technologies and techniques of information compression that reshape how the market is represented to individual participants and how participants in turn operationalize their preferences and strategies in the market.

These mediators shape not only participation, by representing market state, but also market structure, by shaping how intents are expressed and executed. Shifts in mediation architecture therefore reconfigure the entire ecosystem.

Traditional financial markets rely on institutional intermediaries (banks, brokers, investment managers) to absorb complexity on behalf of participants. In these markets, institutions perform the critical function of pre-processing information, compressing vast amounts of market data into standardized formats and simplified signals. Because institutions manage complexity by centralizing intelligence, however, they risk becoming “numb” to local or marginal signals. Information reaches participants diluted and distorted through these institutional filters, while intent reaches markets warped by the ignorance or interests of institutions. The resulting market structure is stable but epistemically coarse, biased toward incumbents, resistant to innovation, and blind to emerging signals that fall outside institutional models of relevance.

Permissionless financial markets emerged with DeFi’s promise to connect participants directly to protocols without the buffer of institutional gatekeepers. When institutions are stripped away, however, participants become directly responsible for parsing vast complexity they’re cognitively unequipped to handle, falling back on reactive or mimetic behavior in lieu of rational strategies. Information reaches participants through raw interfaces that facilitate access but inhibit sense-making, while intent reaches markets distorted by the cognitive limitations of participants. The resulting market structure is a volatile dark forest where alpha hoarders and risk-immune gamblers exploit volatility to prey on inexperienced newcomers.

The disintermediation of financial markets thus expands participation, driving up the information density of the market and its latent intelligence, while dismantling the sense-making mechanisms by which that intelligence might be harnessed. To expand market intelligence to meet this new complexity threshold, and for the rhetoric of decentralization to be rooted in function rather than self-enforcing dogma, sense-making capacity must scale alongside with participation, bringing intelligent sensing and action to the edges of the system. The burden of cognitive processing must be placed not on individuals or institutions, but the interfaces themselves that facilitate market participation. 

Toward Xenocognitive Finance

For much of economic history, the hard constraint on market function was the circulation of information. With the proliferation of network technologies and subsequent market disintermediation, this constraint has shifted to the computational limits of human cognition itself. Overcoming this constraint requires new forms of cognitive systems that can sense, process, and act at scales and speeds beyond human capability while remaining anchored to human intent. If cognition describes “the process of interpreting information in contexts that connect it with meaning,” then what we are calling xenocognitive finance represents a new form of market cognition that expands this interpretive process beyond human limitations while preserving individual autonomy and control over financial outcomes.

Xenocognitive finance reimagines the sensory-motor structure of markets through the introduction of a new species of market interface: autonomous, non-custodial algorithmic agents guided by user inputs and preferences. These agents are not institutional stand-ins, but a decentralized web of cognitive scaffolding that extends the capacity of individual participants to interpret and act within complex markets. In extending these capabilities, they in turn extend the aggregate information-processing capacity of markets themselves.

By serving as the primary interface between participants and markets, these agents manage complexity without filtering intent through institutional interests or exposing users to overwhelming informational noise. Participants gain access to less diluted representations of market state, enabling more accurate strategy formation and disciplined execution. At the strategy level, agents process data streams beyond the scope of individual attention, integrating both aggregate market conditions and individual preferences. At the execution level, they act with consistency and precision, enabling users to implement strategies with machinic discipline. 

Simultaneously, market structure benefits from a greater number of informed participants: improving price discovery, increasing capital efficiency, and distributing market discipline more broadly. In this way, the system’s overall information bandwidth scales with participation rather than being eroded by it. As the scale of this high-quality participation increases, so does the probability that participants coordinate around consistent models of value.

XenoFi, then, is not simply a decentralized alternative to institutional mediation but a reconfiguration of market cognition. Embedding intelligence at the interface layer offers a new architectural possibility in expanding market intelligence and improving capital allocation: one where the sense-making apparatus of the market is not centralized in institutions nor fragmented across overwhelmed individuals, but situated across the connective tissue between them.  

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The full implications of these new market affordances remain to be seen. But some trajectories are already visible.

For users, the message is clear: effective participation in the next phase of permissionless markets will require agentic representation. You will no longer interact with individual protocols, but with agents that do so on your behalf; continuously, precisely, and safely.

For protocols, this is a new distribution channel and a new kind of liquidity source. You must design not only for human UX but for agent UX. That means cultivating a diverse set of primitives, reducing transaction friction, and making your protocol intelligible and attractive to autonomous participants. Protocols that fail to accommodate this shift will become invisible to the market participants of the present-future.

For mechanism designers, the agent is no longer a theoretical model but an actual market participant with a new class of preferences, execution patterns, and coordination possibilities. Incentives must be recalibrated not just for humans but for hybrid collectives of humans and agents. Governance, rewards, and risk modeling must evolve accordingly.

By Cem F Dagdelen & Guy McKinnon-Little