Integration of Artificial Intelligence in DeFi

Abstract

This chapter looks at the interaction of decentralized finance and artificial intelligence in the financial industry. The investigation begins with a review of the history and objectives, laying the groundwork for a thorough study. Section 2 goes into the foundations of DeFi, addressing key ideas and ecosystem components necessary for understanding how it works. Following that, Section 3 explores AI's revolutionary potential in finance, focusing on its role in financial services and the many AI technologies driving industry innovation. Section 4 focuses on real-world applications, emphasizing use cases such as automated trading algorithms, risk management, fraud detection, and decentralized oracle networks to demonstrate the practical ramifications of merging DeFi with AI. Section 5 then discusses the issues and considerations that come with this paradigm change, such as ethical and regulatory concerns, as well as security threats related with decentralized technology and AI-powered systems. Finally, Section 6 provides a forward-looking view by highlighting themes that will impact the future.