ai/fi: AI x DeFi

0. ORA Onchain AI Oracle (OAO)

a) Introduction

ORA’s Onchain AI Oracle (OAO) is ORA's verifiable and decentralized AI oracle.

Onchain AI Oracle enables anyone to use onchain AI inference on any blockchain.

Onchain AI Oracle uses opML to create a verifiable proof for ML computations that can feasibly be verified on the blockchain. This opens up new possibilities for AI in blockchain, and especially for greater yield, efficiency and speed in DeFi.

1. ai/fi: AI x DeFi


ai/fi is the fusion of AI and DeFi.

With verifiable AI inference provided by Onchain AI Oracle, ORA is leading a new era of DeFi: ai/fi, which is DeFi powered by AI. This allows for the reimagining of AMMs, lending protocols, aggregators, stable coins, and much more with ORA's Onchain AI Oracle.

The strategy to transform DeFi into ai/fi is simple:

"Identify the computationally intensive part of any DeFi protocol and replace it with AI."

For more information on creating ai/fi, refer to our previous blog: How to Start Building with AI on OP Mainnet. Moreover, any ai/fi project's data source for AI can be accessed trustlessly using ORA's other product, zkOracle.

a) AI Aggregator

Aggregation with Best Swap Rate with AI

Most onchain trading traffic is handled by aggregation or router protocols like 1inch and Paraswap.

These onchain protocols are often limited by the computational power of the Ethereum Virtual Machine (EVM). They cannot consider all factors that affect trading. Consequently, they are not effectively efficient in quickly finding the true optimal path.

With the integration of AI, these computations for aggregation and transaction routing can be significantly optimized. An onchain AI can evaluate parameters such as liquidity, pairs, MEV, slippage, order flows, and even the characteristics and features of DEX protocols in a verifiable and efficient manner.

AI Aggregator, powered by ORA Onchain AI Oracle, will intelligently maximize profits for traders with uncapped computational intelligence.

Interested in building? ORA's Discord offers support and resources to get you started.


Dynamic Market Making Curves with AI

Automated Market Making (AMM) protocols, such as Uniswap v3 and Curve Finance, use a predefined mathematical function or curve for onchain market making. These AMMs often face the issue of disproportionate risk of impermanent loss for Liquidity Providers (LPs) and various arbitrage opportunities that can impact user returns.

The concept of the Dynamic Curve AMM is to dynamically alter the curve (for instance, from x + y = k to x * y = k when the token price fluctuates excessively) to offer efficient swapping for traders and more consistent returns for LPs.

The notion of dynamic curves has been previously proposed, but the main challenge in practice is finding an efficient oracle to execute the evaluation and adjustment of these curve changes.

The implementation of the Dynamic Curve AI AMM will be realized by Onchain AI Oracle. An AI model can autonomously, intelligently and dynamically manage the AMM, executing complex analysis to facilitate efficient swapping for traders while maximizing LP returns.

The introduction of AI AMM with a dynamic curve will bring innovation to the mechanism design of the AMM space, offering full onchain verifiability and optimal asset trading.

Join ORA’s discord for support and resources if you want to start building this!

c) AI Yield

Yield Optimization with AI

Yield protocols like Convex and Yearn aggregate DeFi yields, making it easier for DeFi users to invest.

However, these traditional yield protocols have several limitations:

  • They lack flexibility and essentially operate by fixed rules.

  • They can't account for complex returns, such as accurately predicting expected return when points are involved.

  • They don't adjust strategies dynamically and promptly.

By utilizing AI, AI Yield can overcome these limitations, and thus provide superior yields to existing products. ORA’s Onchain AI Oracle, for instance, will be able to conduct sentiment analysis, farm points, and even make predictions to adjust the most effective strategy in advance.

If you're looking to start building, join ORA's Discord for support and resources!

d) AI Lending

Lending of Any Asset with AI

Lending protocols like Aave offer decentralized protocols for supplying and borrowing liquidity to DeFi users.

Typically, these lending protocols only support "blue chip" assets. This is primarily because long-tail assets, which are often volatile, are challenging to price. Lending protocols create a "scarcity" of supported assets, leveraging this to negotiate with asset issuers.

We discussed the concept of asset pricing with AI in a previous post. With AI Asset Pricing, we can tackle the challenges of AI Lending. This strategy allows for the efficient, verifiable pricing of all assets, whether they're Blue Chip, Memecoins, or NFTs, by going above and beyond the analytical capacity of the EVM.

AI Lending can support any asset, thus fostering a truly open and permissionless liquidity market for all. In doing so, it will unlock the intrinsic value of all assets on the blockchain.

Want to begin building? Join ORA's Discord for the support and resources on this ai/fi idea.

e) Others

Moreover, AI can be applied to any DeFi-related domain to create AI-enhanced financial tools:

  • AI AMM with AI-powered dynamic fee

  • AI CDP with AI as a risk engine

  • AI Lending with AI minimizing losses during liquidation

  • AI ETF with AI as a fund manager to manage risk and adjust holdings

  • AI Gaming with AI serving as a Moderator, Governor, NPC, Opponent, or Counterparty

  • AI Insurance with AI as an insurer to evaluate DeFi insurance claims

  • AI Risk Management for protocols

  • AI Governance for staking protocols, DAOs and more

  • ...

2. Era of ai/fi

ai/fi = DeFi + AI

ORA Onchain AI Oracle is set to revolutionize the entire DeFi space.

With the integration of AI, DeFi will become more decentralized and intelligent.

To build ai/fi with ORA, you can check out these resources:

About ORA

ORA is Ethereum’s trustless AI that enables AI and any-size compute on blockchains.

ORA breaks down the limitations of smart contracts by offering AI, richer data sources and arbitrary compute so developers can innovate freely.

ORA’s work has been trusted by Compound, Ethereum Foundation, Uniswap, Optimism and beyond. | |

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