Opinion: Exploring DeFi Trading and Portfolio Management’s Next Boundaries
Disclaimer: The author’s views and opinions expressed in this article are solely their own and do not reflect the views and opinions of crypto.news’ editorial team.
When it comes to the integration of AI into defi, there are certain aspects that stand out as particularly significant and have the potential to reshape the financial industry indefinitely. Two of these aspects are “intents” and “solvers.”
Essentially, an intent represents the desired outcome of a market participant translated into an actionable directive. For example, wanting to acquire Bitcoin (BTC) at a specific price would be considered an intent. This is where AI-powered solvers come into play. These sophisticated algorithms utilize extensive data analysis and machine learning to not only secure the best possible execution of intents but also predict market movements, identify hidden opportunities, and customize complex trade requests to align with an individual’s risk profile and financial goals.
It is important to note that intents and solvers are not entirely new concepts in the world of defi. In fact, they have their origins in traditional finance (TradFi) and centralized finance (CeFi). Request-for-quote (RFQ) is an example of intents in TradFi and CeFi, as it helps solve problems for large traders.
Automated market makers (AMMs) may face challenges when dealing with large orders, such as slippage and impermanent loss. However, by utilizing intents, decentralized exchanges (DEXes) can access cheaper liquidity from professional market makers, who in turn source liquidity from both centralized exchanges (CEXes) and DEXes, including their clients’ orders.
But it’s not just about fulfilling orders; it’s about transforming the entire financial architecture. In the near future, AI-powered solvers will dynamically allocate assets across various asset classes, not limited to cryptocurrencies but also encompassing forex, stocks, and commodities. Think of these solvers as personal financial architects, constructing portfolios that adapt to market conditions and an individual’s evolving needs.
The integration of AI into defi holds seismic implications. While decentralized exchanges currently pale in comparison to their centralized counterparts, they are poised for exponential growth. Users will not only experience execution quality similar to CeFi but will also enter a financial future where regulatory burdens and counterparty risks disappear. This is the enticing vision that AI-powered intent-driven trading presents, with each platform armed with its own unique blend of AI algorithms and functionalities, fostering fierce competition and unparalleled financial innovation.
The integration of AI into defi is not just a technological race; it is a battle for the future of finance itself. As AI-powered intent-driven trading expands beyond its traditional boundaries, encompassing lending, borrowing, and wealth management, defi has the potential to become the all-knowing financial steward for everyone. Intents paired with AI could unlock mass adoption, empowering users to take control of their financial destinies and achieve previously unimaginable opportunities.
In conjunction with intent-driven trading, AI-powered predictive analytics will empower investors with unmatched accuracy, forecasting market trends and identifying investment opportunities with uncanny precision. Whether it’s discovering the next defi gem or anticipating market fluctuations, AI will transform novices into savvy investors.
The impact of AI-powered intents and solvers will extend to related areas such as portfolio management. AI has the potential to usher in a new era of dynamic optimization, risk mitigation, and personalized asset allocation. Manual adjustments will become a thing of the past, as traders will be able to adapt to ever-changing market conditions, maximizing returns and minimizing risks for defi participants. Risk mitigation will also be enhanced, as AI’s real-time monitoring and data analysis will detect anomalies and potential security breaches, fortifying defi protocols and creating a more secure and reliable ecosystem.
AI-enabled automated trading will empower users to execute complex strategies quickly and precisely. By leveraging vast datasets, learning from patterns, and making data-driven decisions, AI eliminates human emotions from the equation and achieves consistent, disciplined execution.
This unique perspective of AI augmenting human decision-making sets the stage for unparalleled opportunities in defi trading. AI-driven liquidity provision strategies will further enhance the ecosystem by ensuring a seamless trading experience and mitigating risks associated with low liquidity events.
While the current defi landscape is already exciting, the future of defi lies in intent-driven trading supported by a comprehensive AI-powered ecosystem. From predicting market trends and optimizing portfolios to mitigating risks and automating trading, AI is poised to revolutionize our interaction with finance. In the years to come, defi, armed with the potent tools of AI, will challenge centralized giants and pave the way for financial liberation.
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Ran Yi is the CEO and co-founder of Orderly Network, a company established in 2022 that is revolutionizing trading with its permissionless, omnichain liquidity layer. Ran has also co-founded WOO Network and has a background in traditional finance, including roles at China Merchants Bank and Freddie Mac. He is a graduate of Carnegie Mellon University.
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