DeFi Transformative Impact and the Future Role of AI in Enhancing Liquidity and Global Adoption, according to Milan Novakovic

AI Serves as the Gateway to Enhanced DeFi Liquidity: Milan Novakovic Outlines Three Methods

Milan Novakovic articulates how artificial intelligence can enhance accessibility, security, and compliance in the DeFi sector, thereby attracting increased capital inflow, through the strategic implementation of three particular approaches.

Decentralized finance (DeFi) has emerged as a transformative miracle in the financial sphere. It has democratized wealth-building by enabling anyone with an internet connection to make digital investments. People worldwide, irrespective of their economic condition or geographical location, are leveraging DeFi to make investment decisions that were once exclusively available to professional investors. Moreover, DeFi offers a cheaper and more transparent alternative to traditional financial transaction methods.

Paul Volcker, the former Chairman of the U.S. Federal Reserve Board, once famously jestingly noted that the ATM was the only financial innovation that had genuinely enhanced people’s lives. I would argue that DeFi deserves to join this prestigious shortlist.

Market traders have certainly recognized its advantages: the aggregate revenue in DeFi is projected to increase by nearly 20 percent per year until 2027. The Total Value Locked (TVL) in DeFi is approximately $63 billion and has even spiked to $200 billion during the most recent bull market.

Nevertheless, like all burgeoning technologies, DeFi’s expansion has not been without its set of challenges and pain points, deterring numerous potential participants. The substantial advancements in artificial intelligence (AI) illuminate a promising pathway, positioning it as a potential catalyst to further DeFi’s development and evolution.

I believe that a significant portion of the obstacles to wider DeFi adoption can be categorized under the umbrella term of “liquidity,” which pertains to the ease with which an asset or security can be turned into cash at its market price. Although liquidity is a multifaceted issue at its core, it essentially revolves around a sufficient number of people desiring something to make buying and selling as straightforward as a click.

AI stands poised to bolster liquidity within the DeFi sector. While DeFi already has a global reach, further efforts can promote broader adoption, particularly given the barriers to understanding elements like language and coding proficiency. For instance, if a DeFi protocol’s documentation is available only in English, it inevitably poses a challenge for non-native English speakers to interact with the technology. This is where AI-driven Large Language Models (LLMs) can be instrumental. LLMs can facilitate instant translation of documentation into various languages and offer “live” customer support worldwide, truly globalizing DeFi.