The Convergence of Decentralized Finance (DeFi) and Artificial Intelligence (AI): Synergies, Opportunities, and Challenges

Department of Business and Media, Selinus University Business School, Ragusa, Italy
jnartey79@gmail.com (J.N.N.)
Manuscript received May 16, 2024; revised June 28, 2024; accepted August 27, 2024

Abstract—The Convergence of Decentralized Finance (DeFi) and Artificial Intelligence (AI) represents a transformative development in the financial industry, offering the potential to revolutionize traditional financial services and create new, innovative solutions. This research paper explores the synergies, opportunities, and challenges arising from the integration of AI technologies into DeFi platforms. By leveraging the decentralized, transparent, and secure nature of blockchain technology and the data-driven, intelligent capabilities of AI, DeFi-AI solutions can enable more efficient, accessible, and personalized financial services. The paper discusses various AI-powered DeFi applications, such as automated market makers, AI-driven lending and credit scoring, intelligent yield farming strategies, and AI-assisted portfolio management. Furthermore, it examines the potential of decentralized AI (DeAI) to address issues of data privacy, bias, and centralization in traditional AI systems. However, the convergence of DeFi and AI also presents significant challenges, including regulatory uncertainty, scalability limitations, data privacy and security risks, and talent scarcity. The paper highlights the need for a multi-stakeholder approach to address these challenges and realize the full potential of DeFi-AI integration. The implications of DeFi-AI convergence for the financial industry and society are discussed, emphasizing the potential for increased financial inclusion, innovation, and stability. Finally, the paper identifies future research directions and calls for collaboration among researchers, developers, regulators, and industry participants to drive responsible innovation in this emerging field.

Keywords—Decentralized Finance (DeFi), Artificial Intelligence (AI), blockchain, decentralized AI (DeAI)

Cite: Josephine N. Nartey, "The Convergence of Decentralized Finance (DeFi) and Artificial Intelligence (AI): Synergies, Opportunities, and Challenges," International Journal of Blockchain Technologies and Applications vol. 1, no. 2, pp. 78-89, 2024.

Copyright © 2024 by the authors. This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).