Decentralized Finance (DeFi) and AI-Driven Smart Contracts

Decentralized Finance (DeFi) is a new way of applying finance involving blockchain to offer a financial ecosystem that emphasizes transparency and accessibility. If blockchain technology serves as the backbone of the financial system in terms of transparency and access, AI is the blood running through that system. AI is important to the DeFi ecosystem because of its contribution to "smart contracts," which are automated, executed without a middleman, and whose terms are written in code. Smart contracts are a transparent example of executing processes, in that they require any party to complete the terms of the agreement without requiring trust (or diligence) from either party.

AI and smart contract execution about DeFi is especially useful when it comes to smart contracts in terms of efficiency, security, and assurance of measurement. AI algorithms can analyze payment text, detect and prevent fraud in relation to decentralized exchange transactions to ensure fair transaction integrity. Smart contracts combined with AI possibilities can develop their terms dynamically during their life in a DeFi ecosystem, which can be functional for the user party and establish easier-to-use limits of the contract. By joining the trustless nature of blockchain technology and the expected outputs of the AI-driven algorithms, DeFi can offer many types of traditional financial services (leverage, borrowing, decentralized exchange) without the attached risk or costs.

Source: Luxoft