How Decentralized Finance (DeFi) Achieves Secure Scalable Development in the Era of Artificial Intelligence (AI)

Source: Cointelegraph Original text: "How Decentralized Finance (DeFi) Achieves Secure Scalable Development in the Era of Artificial Intelligence (AI)"

The viewpoint comes from: Karan Sirdesai, co-founder and CEO of Mira Network.

In all smart contract blockchains, when decentralized finance (DeFi) transactions enter the mempool, it is like stepping into a "dark forest"—anyone can peek at and exploit it. The users with the best equipment and the most informed information often profit from this.

For the industry, this arbitrage motivation is known as miner extractable value (MEV). MEV bots have emerged, operating under simple preset rules with very low flexibility. So far, these rule-based bots have profited millions of dollars from Ethereum transactions. In the new era of AI and agent technology, this figure is expected to grow exponentially - along with the opportunities and risks that will also be amplified.

It is estimated that by the end of 2025, over 50% of on-chain transaction volume will be driven by various AI agents, whose capabilities will far exceed those of current robots. The launch pools of DeFi AI (DeFAI) platforms such as HeyAnon and Griffain have already shown significant spikes in usage and token prices.

The Role of AI Agents in DeFi

We are in the nascent stage of AI agents, and industry participants are assessing the potential of these new tools. In the current research and development phase, at least three precise functions of AI in DeFi have been observed:

Just as ChatGPT promotes the mainstream adoption of AI by lowering the barriers to usage, AI agents will also shorten the learning curve, making DeFi more accessible to the public. Clearly, the first to benefit will be industry professionals, who have always been the hunters equipped with new weapons in the "dark forest."

MEV agents and market-making agents are about to make their debut. Looking to the future, all AI optimists expect agents to evolve independent goals and decision-making capabilities, completely free from human intervention.

Given the potential impact of AI agents in DeFi and their high-risk characteristics, the security risks they pose should not be ignored. No one wants to repeat an AI black swan event like the Terra/LUNA collapse.

Hallucination issue

The known security risks introduced by AI agents include "hallucinations"—the phenomenon where large language models (LLMs) produce absurd or erroneous outputs. Imagine if AI, while executing simple swaps in DeFi, experiences a hallucination and incorrectly reports high fees or incorrect contract addresses, which would lead to significant losses for users.

Apart from unexpected hallucinations, some AIs may be manipulated by hackers to perform unauthorized operations. In a censorship-resistant DeFi environment, this risk will directly translate into user financial losses when handling tokens.

The proliferation of AI agents in DeFi may amplify the systemic risks of the entire cryptocurrency market, making "illusion" a key bottleneck in the development of DeFAI.

DeFAI Builders' Coping Strategies

In response to the real challenge of AI hallucinations, there are currently various research proposals. If focusing on the DeFAI field, builders should consider the following strategies:

Establish a robust rule set: Detailed and precise operational rules must be formulated for agents to reduce the risk of errors, but flexibility must be balanced—an overly rigid rule set will undermine the agent's ability to adapt to new information.

Implement extreme pressure testing: it is necessary to simulate massive interaction scenarios for testing, clarify the capability boundaries of the agent through data, and set reasonable goals.

Deploying a protective barrier system: The best solution is to use a real-time verification system that conducts automated stress tests through multi-LLM collaboration and dynamically evaluates each operation before execution.

The secure DeFAI will eventually be realized.

The potential of AI agents in DeFi has just begun to emerge. Their ability to be on standby 24/7, make autonomous decisions, and execute massive transactions in milliseconds is a deadly attraction for any trader. Numerous predictions indicate that DeFAI will soon handle the majority of on-chain transactions.

To achieve this vision, it is essential to have a clear understanding of the current limitations of LLMs, to tackle the challenges of hallucinations and biases, in order to realize the secure scaling of DeFAI. With the continuous evolution of AI models and the collaborative efforts of builders, the integration of intelligent agents and blockchain will come naturally.

The viewpoint comes from: Karan Sirdesai, co-founder and CEO of Mira Network.

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This article is for informational purposes only and does not constitute any legal or investment advice. The views expressed are solely those of the author and may not reflect the position of Cointelegraph.