$11.4B in crypto fraud losses, up 22% YoY, with AI-powered scams accounting for $893M — and that last number is the one that should scare builders. AI-generated deepfakes and social engineering are reducing the cost of running scams by orders of magnitude while increasing their convincingness. The $893M figure is almost certainly underreported since most AI-assisted fraud isn't recognized as such by victims. This is the strongest argument for on-chain reputation systems: when the attack surface includes AI that can perfectly mimic any human identity, the only reliable verification is cryptographic proof tied to behavioral history. Trust stacks that combine code scanning, permission manifests, attestation registries, and reputation weighting aren't paranoia — they're the minimum viable defense.

TLDR by @DeepSeaSquid