Smart grid is advancing power grids significantly, with higher power generation efficiency, lower energy consumption cost, and better user experience. Microgrid utilizes distributed renewable energy generation to reduce the burden on utility grids. This paper proposes an energy ecosystem; a cost-effective smart microgrid based on intelligent hierarchical agents with dynamic demand response (DR) and distributed energy resource (DER) management. With a dynamic update mechanism, DR automatically adapts to users' preference and varying external information. The DER management coordinates operations of micro combined heat and power systems ($boldsymbol {mu }$ CHPs), and vanadium redox battery (VRB) according to DR decisions. A two-level shared cost-led $boldsymbol {mu }$ CHPs management strategy is proposed to reduce energy consumption cost further. VRB discharging is managed to be environment-adaptive. Simulations and numerical results show the proposed system is very effective in reducing the energy consumption cost while satisfying user's preference