The emergence of AI and DeFi technologies have, over the years, transformed the status quo in the financial realm. As two of the most disruptive technologies in this century, DeFi and AI power the future of the financial landscape, unlocking extensive opportunities while also ensuring transparency and decentralization. In this article, readers will learn more about AI and DeFi trading and how the former impacts the latter.
What is DeFi?
Fully known as Decentralized Finance, DeFi leverages the powers of blockchain to eliminate third parties and centralized firms from financial transactions. By removing intermediaries, it streamlines the processes of executing financial transactions.
At the heart of DeFi lies the smart contracts, ensuring open and permissionless access to financial services. While traditional finance depends on intermediaries, like banks, exchanges, and lending institutions to facilitate transactions, DeFi puts the decentralized nature of the blockchain into use to ensure a trustees and transparent financial system.
Meanwhile, one of the core aspects of DeFi is Peer-to-Peer (P2P). It involves the agreement of two parties to exchange cryptocurrencies or other assets without the involvement of any intermediaries. That said, just like other blockchain-powered sectors, DeFi has, in recent years, enjoyed massive investments from users.
With over $105 billion in market cap as of press time, the DeFi crypto market is causing waves in the broader financial landscape. Scores of users are embracing DeFi projects to engage in various forms of crypto trading and maximize their investments.
What is AI?
Known as Artificial Intelligence, AI refers to the simulation of human intelligence processes and capabilities by computer systems. AI technology is capable of executing complex tasks or solving problems that only humans can do. In essence, AI features a combination of machine learning, Internet of Things, and neural networks to gather and analyze a large amount of data.
Today, AI has become one of the most-talked about innovations in the digital space. Experts see the niche as one with the potential to transform the realities in many industries. Hence, it is no surprise that many projects that are springing up are integrating AI.
That said, AI started gaining traction following the rise of OpenAI’s ChatGPT, generative AI, and other notable machine-learning technologies. Presently, there are scores of AI-based crypto projects in the market. They include eTukTuk, WienerAI, Fetch, SingularityNET and a host of others. These projects have built special use cases around AI. WienerAI, for instance, leverages the powers of AI to provide an automated trading bot.
Influence of AI in DeFi trading
AI has emerged as an effective ticket to better DeFi trading, thanks to its ability to analyze a large amount of data, spots patterns, and predict market trends. With the emergence of AI-powered trading bots like WienerAI, traders can now easily detect high-potential opportunities in the market. These bots merges the capabilities of AI and blockchain to give users an edge over other traders.
From real-time market insights to trading strategies and suggestions, AI-powered bots provide everything traders need to thrive in the volatile market. In essence, AI-powered bots makes automated trading possible, making it possible for everyone to maximize their investments.
It is possible for traders to establish some trading rules which will be implemented automatically. For instance, traders can set both entry and exit point which when programmed, will be executed. Beginners still finding their feet in the market can even engage in copy trading which involves replicating the strategies of successful traders in the market.
Another major use case of AI in DeFi is fraud detection and security. Over the years, DeFi trading solutions have embraced AI algorithms to detect vulnerabilities and strengthen security measures. This aspect of AI contributes to the safety of users and their data on DeFi platforms, thereby improving their overall experience.
Conclusion
AI plays a huge role in ensuring efficient DeFi trading experience. While helping users to analyze market trends so that they can make informed decisions, it also helps DeFi platforms detect any signs of vulnerabilities early. As such, there’s no doubt that the emergence of AI has redefined trading in the DeFi space.