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DeFi and AI can transform the future of global finance

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  • DeFi, along with artificial intelligence, can potentially transform our current global financial system
  • Several firms globally are planning and spearheading the integration of DeFi and AI
  • DeFi intelligence can potentially revolutionize the protocols available in the sector
  • the decentralized finance sector is also highlighting the failures of traditional centralized entities and offering a viable option for financial freedom
  • Interoperability can allow funds to flow across different blockchain platforms freely

DeFi or the decentralized finance sector has been performing tremendously since the beginning of this year. Notably, DeFi has been known to be one of the fastest-growing industries within the crypto ecosystem. Many experts in the cryptosphere have deemed that the sector coupled with Artificial Intelligence (AI) can significantly improve financial services globally. Moreover, both sectors have the potential to unlock a never seen before level of innovation. It is expected that the next frontier will bring new possibilities in machine learning.

DeFi blockchain with AI and machine learning

In the current scenario, we have observed that several firms globally spearhead the integration of AI and machine learning using blockchain. Such firms are focussing on automation and working towards a vision that makes intelligent capabilities a core feature. Experts believe that interoperability is vital for building fully functional intelligent DeFi-based solutions.

Following the scenario, such firms have created a network of autonomous economic agents. These agents aim to offer the blockchain ecosystem efficient, reliable, and future-proof infrastructure. Moreover, these agents will be providing tools to create a smart decentralized digital economy. 

Firms embracing decentralized finance and AI

This year, Shopify, one of the leading online store builders, announced its plans to use machine learning and AI. The new addition was expected to offer eligible merchants funding based on their previous sales history and store performance. 

Simultaneously, SingularityNET, a decentralized AI marketplace, has built a new DeFi project entitled “SingularityDAO.” The new platform aims to manage dynamic token sets, carry out predictive market-making, and execute hedging strategies based on predictive modeling.

However, the adoption shows that the DeFi intelligence can potentially revolutionize its protocols. And such intelligence will add another layer of data that will bring new levels of efficiency to the market.

An accessible and transparent financial system is needed

DeFi is working on replacing the outdated financial systems. On the other hand, the need for an accessible and transparent financial world is increasing. Notably, the decentralized finance sector also highlights the failures of traditional centralized entities and offers a viable option for financial freedom.

In contrast, to the centralized counterparts, the decentralized sector has proven to promote global financial freedom. Ultimately, the factor allows participants to exert full control over their funds at any point in time and interact without intermediaries.

Evolution of decentralized finance to automation

The evolution to DeFi intelligence is likely to enable vital services that will help make the financial services simpler. Such services include AI-managed derivative products that will significantly enhance the investment process. Moreover, it will onboard liquidity to P2P financial markets with improved risk mitigation as an added benefit. Such risk management on decentralized exchanges (DEXs) will help evaluate trading solutions and hedge on the market.

On the other hand, the mainstream banking sector is also being transformed by AI technology. Such technologies are helping the banks to enable faster and more efficient user risk profiling without intruding too much on user’s privacy. Simultaneously, AI can help decentralized applications (dApps) to enable more sophisticated client tiers and advanced incentive mechanisms.

How will interoperability help the decentralized sector?

Interoperability can allow funds to flow across different blockchain platforms freely. It will help generate liquidity and build a more user-friendly environment for the mass adoption of DeFi. The AI utilization will help bring interoperability to be a core capability in the next generation of DeFi protocols.

Furthermore, liquidity relocation could be further automated. Notably, once more challenging intelligence is applied in real-time based on the analysis of several data points. Indeed, that will benefit price discovery and dampen volatility and streamline risk management across blockchains.

DeFi has continued to spawn a vast network of platforms and protocols. The move towards incorporating AI is something that can help the sector gain more traction. However, the collaborations of the industries will bring a brand new generation of the decentralized and intelligent financial world.

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