Previous section: AI trading agent: Stateless agent
Project repository: Web3 AI trading agent
This section introduces a memory-enabled trading agent that learns from trading history to make data-driven decisions. Unlike the stateless agent that treats each decision independently, a stateful agent analyzes past trade performance, identifies successful patterns, and adapts strategies based on historical outcomes.

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Learning capabilities

The stateful agent implements several learning mechanisms: Historical performance analysis
  • Tracks profit/loss for each trade type (ETH->USDC vs USDC->ETH)
  • Calculates success rates and identifies most profitable strategies
  • Analyzes recent performance trends to detect improving or declining performance
Market pattern recognition
  • Identifies price levels where trades were most successful
  • Correlates market volatility with trading outcomes
  • Detects market conditions similar to past successful trades
Context-aware decision making
  • Includes recent trade history in LLM prompts
  • Provides performance insights: “ETH selling trades averaged +2.3% profit (5 trades)”
  • Highlights similar market conditions: “Similar conditions: 3 trades, avg profit +1.8%”
Intelligent memory management
  • Preserves key learning insights during context summarization
  • Retains top-performing trades and recent trading history
  • Maintains performance metrics across context resets

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Technical implementation

The stateful agent implements sophisticated technical mechanisms to manage memory, context windows, and learning persistence.

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Context window management

Token estimation and monitoring The agent continuously tracks context usage through advanced token estimation: 
# Real-time context monitoring
prompt_token_count = self._estimate_token_count(user_query)

# Safely calculate context tokens with null check
context_token_count = 0
for decision in self.context.trading_decisions:
    if decision.reasoning:
        context_token_count += self._estimate_token_count(decision.reasoning)

# Add market state tokens
market_state_tokens = len(self.context.market_states) * 20

# Calculate total usage
total_estimated_tokens = prompt_token_count + context_token_count + market_state_tokens
context_usage_ratio = total_estimated_tokens / self.context_capacity
Threshold-based summarization When context usage approaches the configured threshold, automatic summarization triggers:
  • Warning threshold: 90% of context capacity (configurable via CONTEXT_WARNING_THRESHOLD)
  • Automatic trigger: Summarization activates when threshold exceeded
  • Cooldown period: 2-minute between summarizations (configurable via SUMMARIZATION_COOLDOWN)
  • Recursive protection: Prevents summarization loops during processing
Adaptive prompt management The agent dynamically adjusts prompt complexity based on available context space: 
if self.last_context_usage.get('ratio', 0) > 0.7:
    # Use simplified prompt when context is getting full
    user_query = f"Given ETH price... {historical_context}"
else:
    # Use full enhanced prompt when context allows
    user_query = f"Given ETH price... TRADING HISTORY... PERFORMANCE INSIGHTS... MARKET PATTERNS..."

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Configuration integration

Model-specific context handling The agent automatically adapts to different model capabilities through config.py: 
# Dynamic context capacity based on selected model
AVAILABLE_MODELS = {
    'qwen-trader': {
        'model': 'trader-qwen:latest',
        'context_capacity': 32768
    },
    'fin-r1': {
        'model': 'hf.co/Mungert/Fin-R1-GGUF',
        'context_capacity': 32768
    }
}

# Agent automatically uses appropriate capacity
self.context_capacity = get_context_capacity(MODEL_KEY, test_mode)
Configuration-driven behavior All context management parameters respect configuration settings:
  • Context warning threshold: CONTEXT_WARNING_THRESHOLD = 0.9 (90%)
  • Summarization cooldown: SUMMARIZATION_COOLDOWN = 2 * 60 (2 minutes)
  • Test mode: Reduced context capacity for testing summarization logic
  • Model selection: Automatic adaptation to selected model’s capabilities
For troubleshooting, to force an actual transaction even if the LLM model advises to hold based on the market observation, you can set REBALANCE_THRESHOLD = 0 to force a trade without asking an LLM instance.

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Observation mode capabilities

Data collection without trading The agent supports observation-only mode for market analysis and strategy development. You can start the stateful agent in observation mode for a number of cycles and then it’ll switch to active trading but will act based on the collected observation data. Collect market data for 5000 tokens before trading: 
python on-chain/uniswap_v4_stateful_trading_agent.py --observe 5000
Observe for 30 minutes before trading 
python on-chain/uniswap_v4_stateful_trading_agent.py --observe-time 30
Collect 50 observation cycles before trading 
python on-chain/uniswap_v4_stateful_trading_agent.py --observe-cycles 50

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Memory optimization techniques

Learning insight compression To prevent context explosion, the agent employs sophisticated compression: 
# Insight compression algorithm
most_valuable_insights = sorted(learning_insights, key=len, reverse=True)[:2]
for insight in most_valuable_insights:
    compact_insight = insight[:200] + "..." if len(insight) > 200 else insight
Selective data retention During context summarization, the agent preserves only the most valuable information:
  • Learning insights: Top 2 most valuable patterns (compressed to 200 characters)
  • Performance metrics: Last 3 results for each trade type
  • Market states: Most recent 2 market conditions
  • Trading decisions: Best performing trade + most recent trade
  • Strategy information: Current strategy parameters and timing
Context explosion prevention Multiple safeguards prevent uncontrolled memory growth:
  • Compression limits: All insights truncated to manageable sizes
  • Retention limits: Fixed maximum items preserved per category
  • Cooldown enforcement: Minimum time between summarization events
  • Recursive protection: Flags prevent summarization during summarization
  • Priority-based selection: Keeps most valuable data, discards redundant information
Memory efficiency monitoring
The agent provides real-time visibility into memory usage in the terminal printouts.

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Core stateful components

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Memory management system

Trading history database The agent maintains comprehensive trading records in memory using the TradingDecision on market states and trading decisions.

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Context window management

Intelligent memory allocation The system optimizes memory usage based on the model’s context capacity and the configured thresholds in config.py. The agent automatically determines optimal memory allocation using the existing configuration parameters. Adaptive summarization algorithm When approaching context limits, the agent compresses data through the _summarize_and_restart_context() method.

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Strategy persistence engine

Basic strategy tracking The agent maintains simple strategy information in TradingContext. Strategy functionality The system provides basic strategy management:
  • Strategy generation — creates initial strategy based on observation mode
  • Strategy timing — tracks duration and elapsed time using MIN/MAX_STRATEGY_DURATION
  • Performance tracking — separates rebalancing ROI from LLM trading ROI
  • Strategy display — shows current strategy information in portfolio table

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Basic analytics engine

Simple performance tracking The agent tracks basic performance metrics through TradingContext for rebalancing script PnL and LLM-driven PnL.

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Configuration and deployment

Stateful agents require careful configuration to balance memory usage, performance tracking, and strategic consistency.

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Step-by-step stateful agent deployment

Deploy your memory-enabled trading agent with proper initialization and monitoring.

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1. Environment preparation

Ensure your base environment is ready: Verify Ollama is running with adequate memory: 
ollama serve
Check available system memory On Linux: 
free -h
On macOS: 
memory_pressure
Confirm Foundry fork is active: 
cast block-number --rpc-url http://localhost:8545

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2. Stateful agent initialization

Launch the stateful trading agent with various configuration options: Basic trading mode: 
python on-chain/uniswap_v4_stateful_trading_agent.py
Observation mode options: 
# Collect market data for 5000 tokens before trading
python on-chain/uniswap_v4_stateful_trading_agent.py --observe 5000

# Observe for 30 minutes before trading  
python on-chain/uniswap_v4_stateful_trading_agent.py --observe-time 30

# Collect 50 observation cycles before trading
python on-chain/uniswap_v4_stateful_trading_agent.py --observe-cycles 50
Additional configuration options: 
# Test mode with reduced context capacity
python on-chain/uniswap_v4_stateful_trading_agent.py --test-mode

# Custom target allocation (60% ETH, 40% USDC)
python on-chain/uniswap_v4_stateful_trading_agent.py --target-allocation 0.6

# Limited number of trading iterations
python on-chain/uniswap_v4_stateful_trading_agent.py --iterations 100

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Next steps

With your stateful agent successfully managing memory and learning from trading history, you’re ready to explore advanced model integrations for enhanced decision-making capabilities.
Next section: AI trading agent: Grok-4 integration with OpenRouter