DeFi intelligence is the way of the future in finance

DeFi intelligence is the way of the future in finance

Blockchain News
June 27, 2021 by Delnia
Over the last year, decentralized finance has become one of the fastest-growing industries within the Bitcoin ecosystem. The entire value locked in DeFi has grown to above $100 billion at the time of writing. Yet, despite these great numbers, decentralized finance is still in its infancy, which raises the question: What's next for this game-changing financial technology?
DeFi intelligence is the way of the future in finance

When DeFi intelligence and AI are combined, it will greatly improve financial services. And a new level of innovation will be unlocked.

Artificial intelligence (AI) and machine learning, combined with decentralized finance to produce DeFi intelligence, will most certainly open new possibilities.

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DeFi intelligence in the wild

Several businesses are leading the charge to integrate AI and machine learning with Blockchain, concentrating on automation and working toward a vision in which intelligent capabilities become a key component. Also, the capacity to create fully effective intelligent DeFi systems requires interoperability. So they’ve created a network of autonomous economic agents to provide efficient, dependable. And future-proof infrastructure and tools to the Web 3.0 ecosystem to construct a smart decentralized digital economy.

Shopify Capital revealed intentions this spring to employ machine learning. And also artificial intelligence to finance qualified merchants based on their prior sales history and business performance. Similarly, Singularity NET, a decentralized AI marketplace, has launched Singularity DAO, a new DeFi project that aims to handle dynamic token sets, conduct predictive market-making, and execute hedging strategies based on predictive modeling.

DeFi intelligence has the potential to transform DeFi protocols by introducing an extra layer of data that will enable intelligent and decentralized asset management vehicles and bring new levels of efficiency to the market.

DeFi intelligence and financial freedom

As DeFi strives to replace outmoded systems. Revealing the shortcomings of existing centralized institutions and presenting a realistic choice for global financial independence. The need for an open and transparent financial system has become increasingly evident. DeFi, unlike its centralized rivals. It has demonstrated that it promotes global financial independence by allowing users to have complete control over their assets at any time and communicate without the need for mediators.

The progress of DeFi intelligence toward automation is anticipated to allow vital news services that will help make financial transactions and services easier and more broadly available. As a result of these modifications, a new set of services will be available, including:

Artificial intelligence-assisted derivatives that will improve the investing process and add liquidity to peer-to-peer financial marketplaces. Improved risk mitigation will be a bonus as well.

On decentralized exchanges, AI-assisted risk management will assess trading circumstances and hedge on markets as needed.

User evaluation. AI technology is currently transforming the banking industry, allowing for faster and more effective user risk assessment. Also, the same approach may be extended to DApps to enable more complicated customer tiers and elaborate incentive systems without infringing too much on users’ privacy. At the very least, the customer may have access to greater liquidity yields or other unique product/service features.

DeFi intelligence and interoperability

Interoperability allows funds to readily move across multiple Blockchain systems, including Bitcoin, Ethereum, Binance Smart Chain, and others, providing liquidity and making decentralized finance more user-friendly. Furthermore, interoperability will become a key function in the next generation of DeFi intelligence protocols thanks to artificial intelligence.

Based on the analysis of hundreds of data points, it may deploy more sophisticated intelligence in real-time to automate liquidity migration. This will help with price discovery, as well as reducing volatility and simplifying risk management across Blockchains.

Intelligent AMM

If you see an automated market maker or AMM. Like a robot who is constantly prepared to quote you a price between two assets. Besides, it’s apparent that software like Uniswap or Balancer is on the right track. But how do we go one step farther with this? First, intelligent AMMs might learn from previous market performance based on a particular set of liquidity behaviors by adding AI. Then, it would develop an asset distribution mechanism that is accurate in reflecting current market circumstances.

Intelligent DeFi lending

DeFi intelligence lending procedures can expand to include collateralization levels and elements like liquidation history and transactional patterns if intelligence capabilities added. Resulting in borrowers’ and lenders’ intelligent and quantitative profiles.

Intelligent insurance

The traditional insurance industry is now worth more than $6 trillion. DeFi insurance will become required for Cryptocurrency investors as institutional wealth pours into DeFi and the danger of theft rises. Insurance is progressively becoming a well-established part of the DeFi ecosystem, but it still lacks intelligence.

Smart contracts may be insured using sophisticated models that employ quantitative DeFi parameters like the number of liquidations in lending protocols to which the smart contract has been exposed or the sorts of pools to which certain addresses contribute liquidity. Another useful function AI can provide is assessing the danger of a smart contract being compromised by an exploit or a hack/bug.

To Sum-up

The drive toward adding AI will undoubtedly gain traction as DeFi continues to generate a wide network of platforms and protocols that allow users to exchange, sell, deposit, borrow and lend Bitcoin. Also, combining these two movements is inevitable. And it will unleash a new level of DeFi intelligence innovation that will fuel a new age of decentralized and intelligent financial services.

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