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Analysis Study Research Paper | Computer Technology | India | Volume 13 Issue 8, August 2024 | Rating: 5.1 / 10
Machine Learning-Enhanced Decentralized Finance (DeFi)
Ohm Patel
Abstract: This paper ushers an investigation into such an alignment of Machine learning (ML) algorithms in decentralized finance (DeFi) platforms, arguing the innovation?s benefits of increasing security and facets of trading strategies besides predicting sessions in an ecosystem of decentralized finance. DeFi, based on blockchain technology, promotes traditional financial services as fair, secure, transparent, and non-tamperable outside the financial system?s institutions. Specifically, predictive analytics and algorithmic trading substantially benefit from machine learning, as large volumes of data are analyzed for patterns and relations, which help improve the efficiency of the market. The current use of ML in DeFi is the implementation of varying functions, such as detecting fraud with the help of anomaly detection algorithms and, identifying vulnerabilities using intelligent contract auditing. Compound, Aave, and MakerDAO depict how the four suit has successfully integrated ML, enabling risk management, providing liquidity, and improving collateral management. However, incorporating ML into DeFi also has some issues, including computation power and size difficulties, adversarial attacks, data privacy and fairness, and regulatory issues. Mitigating these challenges with the help of novel technologies and collaborative approaches in the regulatory sphere is essential for unlocking the potential of DeFi with the help of ML. Therefore, this paper, r calls for continuing research and innovation to cater to these complexities and harness the interaction between machine learning and decentralized finance.
Keywords: Decentralized Finance, DeFi, Machine Learning, Blockchain Technology, Smart Contracts, Predictive Analytics, Algorithmic Trading, Security Enhancements, Market Trend Prediction
Edition: Volume 13 Issue 8, August 2024
Pages: 499 - 508