[TL;DR]
- Banks and financial institutions monopolize the massive interest margin between depositors and borrowers while controlling individuals’ financial data. Along with opaque AI-driven credit scoring, this limits fair access to financial services for individuals.
- DeFi provides direct financial services without intermediaries—such as P2P lending, decentralized exchanges, and mutual insurance—through blockchain-based tokenization of personal assets and AI-powered smart contracts, while achieving fair value distribution via token rewards based on contribution.
- With user-friendly services enabled by WaaS and AI agents, and through cross-chain interoperability, DeFi becomes easily accessible to anyone, creating a personalized global decentralized financial ecosystem.
1. The Structural Limitations of Traditional Finance: Centralization and Value Monopoly
1.1. The Monopoly of Intermediation by Banks and Financial Institutions: Capturing the Real Value Between Depositors and Borrowers
When we look into today’s financial ecosystem, we encounter a fundamental contradiction. The enormous value created between the money entrusted by billions of depositors worldwide and the interest paid by borrowers is converted solely into the profits of a small number of financial institutions. While global banks such as JP Morgan or Goldman Sachs report tens of trillions of won in annual net income, depositors who actually provide the funds receive only a meager 1–2% annual interest, whereas borrowers pay high interest rates ranging from 5–15%.
The most problematic aspect of this structure is the monopoly over the massive interest margin generated in the process of financial intermediation. For example, if an individual deposits 100 million KRW in a bank, they receive 2 million KRW in interest annually. The bank, however, lends this money to another individual at 8% interest, collecting 8 million KRW. The 6 million KRW difference is absorbed by the bank purely as compensation for intermediation. Yet, the reality is that the depositor’s credit and the borrower’s repayment ability are the true core of the transaction, but they are excluded from the process of value creation.
Furthermore, because of the monopolistic position of banks, individuals face severely limited choices in financial services. To obtain a loan, one must pass the bank’s complex screening criteria, and to invest, one is restricted to the limited products offered by securities firms. Even more problematic is that the evaluation of an individual’s creditworthiness or asset value is monopolized by banks. As a result, even individuals with objectively sufficient repayment ability may be excluded from financial services if they do not meet the bank’s internal standards.
The concentration of power and information becomes a structural factor that undermines the efficiency of the entire financial market. Banks monopolize all information about depositors and borrowers, while the actual suppliers and demanders of capital lack access to each other’s information or to the broader market context. Consequently, the supply and demand of capital cannot connect directly but must always pass through intermediaries. This entrenches an inefficient structure where financial services remain costly and accessibility remains low, perpetuating a vicious cycle.
1.2. The Undervaluation and Dependence of Individual Investors and Consumers
The biggest problem faced by individual investors and consumers in the current financial system is that there are almost no direct pathways to independently utilize their own assets and credit. Even highly creditworthy individuals cannot raise funds without going through a bank, and even those with sufficient investment capital cannot easily access diverse investment opportunities without the intermediation of securities firms or asset managers. For example, a property owner who wishes to use their real estate as collateral to raise funds must undergo complicated legal procedures and obtain approval from financial institutions.
The institution-centered structure pressures individuals into standardized financial needs and restricts them to uniform products. Even when individuals have complex and personalized financial goals or investment strategies, they are forced to choose only from the standard products offered by banks or securities firms. For someone seeking startup funds, loans are granted not based on the strength of their idea or technology, but rather on traditional credit criteria such as collateral or guarantors. Similarly, investors are often limited to indirect investments through packaged products like funds or ETFs, rather than being able to invest directly in individual companies or projects.
An individual’s financial assets and transaction history are continuously controlled by the commercial logic of financial institutions. A more serious issue is that the financial history and credit records an individual has built up over decades become the property of the financial institution. This means that when moving to another bank or using a new service, it is difficult to prove or leverage one’s prior financial record. Even a customer who has faithfully repaid loans for 20 years may be treated as a new client by another bank and subjected to credit evaluation from scratch.
Such dependence weakens individuals’ bargaining power and leaves them powerless in the face of changes in institutional policies. If a bank unilaterally raises loan interest rates, existing borrowers have little choice but to accept. If a securities firm alters its fee structure, investors must endure those changes. Despite having strong creditworthiness or asset value, individuals remain structurally vulnerable, as their access to financial services depends on institutional policies and market conditions beyond their control.
1.3. Lack of Transparency and Trust: Information Asymmetry and Biased Financial Services
Another fundamental limitation of the traditional financial system is that there is no fair mechanism to ensure transparency in the pricing of financial products and the processes of risk evaluation. The criteria banks use to set lending rates, the methods insurers use to calculate premiums, or the principles fund managers rely on for investment decisions—all these processes remain opaque. Such opacity becomes fertile ground for arbitrary decisions and unfair treatment by financial service providers.
Financial institutions with personal or commercial interests in specific clients can apply service conditions not based on objective data but instead shaped by internal policies or profit motives. Ordinary customers, lacking the information or benchmarks needed to judge whether their service conditions are fair or reasonable compared to others, are structurally vulnerable to accepting unfair interest rates or fees.
In recent years, many financial institutions have adopted AI-based credit evaluation systems, but the black-box nature of these algorithms has only deepened the transparency problem. Individuals are left in the dark about why their loans were rejected, what data was used in the evaluation, or what criteria determined their credit score. More troubling is that systemic biases embedded in AI models can lead to discrimination against certain regions, professions, or age groups—yet individuals often cannot detect or contest these outcomes.
Poor decisions or policies by financial institutions can cause serious economic harm beyond mere inconvenience. During the 2008 global financial crisis, many banks recklessly issued subprime loans, but individual depositors and investors were not informed about the risks. Everyday cases of financial loss from misleading investment product information, denied insurance claims, or lost opportunities due to opaque loan reviews continue to occur.
In the current system, accountability for poor decisions made by financial institutions remains unclear. Banks and insurers often evade responsibility by citing “market conditions” or “product terms,” while the actual damages are borne by individual customers. Even when individuals make rational financial plans, they may still suffer losses due to poor advice or misinformation from financial institutions. Because of a lack of accurate information, they struggle to identify the causes or seek remedies, resulting in a vicious cycle of repeated harm.
2. DeFi’s Proposal for a New Financial System
2.1. Tokenization of Personal Assets and the Establishment of Direct Ownership
As a fundamental solution to the structural problems of the traditional financial system, a new model has emerged that establishes clear ownership of all assets and financial activities through blockchain. Real estate, stocks, bonds, and even future income can be tokenized into unique digital assets, enabling individuals to retain permanent control. Beyond simple digitization, this model ensures that all value generated from the use and monetization of assets in the financial market is returned directly to the original owner without the intervention of intermediaries.
In the traditional system, once individuals entrusted their assets to financial institutions, all subsequent use and monetization became the institution’s domain. In DeFi’s tokenization system, however, whenever those assets are used for lending, investment, or trading, the original owner receives transparent, real-time distribution of profits. For example, when an individual’s real estate is tokenized, it can generate rental income for investors, serve as collateral, or be used in liquidity provision—automatically delivering economic rewards to the asset owner.
This ownership model fundamentally changes individuals’ incentives for asset utilization. Since tokenized high-quality assets can generate continuous income over time, there is less motivation for short-term liquidation or sale. Instead, individuals are encouraged to manage assets for long-term value creation. Furthermore, documenting one’s assets systematically and having them verified in the market itself becomes a long-term wealth-building activity, fostering a cultural shift where individuals actively optimize their financial status and portfolios.
The shift directly improves the quality of financial services. No longer needing to prepare complex documents or suffer from undervaluation of collateral to secure approval from institutions, individuals can fully leverage their true asset values and creditworthiness for efficient financial transactions. As a result, asset owners gain accurate value assessments and fair returns, while capital seekers access better financial services through direct transactions without intermediary fees—a virtuous cycle.
2.2. Decentralized Protocols and Autonomous Financial Systems
While asset ownership enables direct value realization, decentralized financial protocols form the core mechanism that guarantees safe and transparent financial transactions without intermediaries. In blockchain-based DeFi, all financial transactions are executed automatically via smart contracts within a trustless system. Loan approvals are determined objectively by algorithms that evaluate collateral value and loan conditions; investment products are automatically structured according to predefined rules; and insurance claims are executed instantly once external data confirms the conditions are met.
Participants in these automated protocols receive token rewards for providing liquidity or engaging in governance, giving them incentives not only to use financial services but also to actively contribute to the ecosystem. Those who provide liquidity accurately and consistently earn higher yields and gain priority access to advantageous financial products in the future, reinforcing a performance-based system.
More recently, AI-powered risk assessment and dynamic pricing systems have been integrated into DeFi protocols, enabling personalized financial services. By analyzing real-time market data, on-chain activity patterns, and external economic indicators, AI accurately assesses each individual’s risk profile and offers differentiated interest rates and collateral ratios. Unlike the static, uniform interest rate systems of traditional finance, this ensures fair pricing that reflects individuals’ transaction histories and asset conditions in real time.
The greatest strength of decentralized finance is that it enables objective financial services free from the arbitrary judgments of institutions or individuals. Unlike traditional banking where decisions may be influenced by subjective reviews or political considerations, all transaction conditions and processes recorded on blockchain are transparent, allowing anyone to verify how financial products operate. Additionally, participants’ transaction histories and credit records accumulate into reputation scores, making the system increasingly accurate and trustworthy over time.
In such systems, participants who consistently perform well gain access to more favorable conditions, while those with poor track records naturally face restricted access—forming a self-regulating mechanism. Malicious activity or manipulation attempts are filtered out effectively, while individuals with genuine creditworthiness and valuable assets receive the financial benefits and services they deserve, creating a fair environment.
2.3. Token Rewards Based on Contribution and Liquidity Mining Mechanisms
The economic foundation supporting individual ownership and decentralized protocols is a sophisticated incentive structure that measures each participant’s contribution to the ecosystem and provides proportional token rewards. Instead of a one-time fee for using financial products, rewards are distributed continuously, based on how much stable liquidity an individual provides, how much their activity supports other users’ transactions, and how much they contribute to the growth and stability of the protocol.
For instance, if an individual provides liquidity that is heavily used by other participants and improves transaction efficiency, they receive not only the initial deposit rewards but also ongoing token rewards proportional to utilization.
If a governance participant proposes an improvement to the protocol that is validated by others and enhances system performance, they are rewarded for that contribution. This performance-based system encourages participants to move beyond simple transactions and make meaningful contributions that advance and stabilize the overall ecosystem.
The challenge of tracking and optimizing returns across hundreds of protocols, which is nearly impossible for individuals, is solved by AI-powered yield optimization systems. By considering factors such as personal capital size, risk tolerance, and expected holding period, AI identifies the best liquidity pools in real time and automatically reallocates assets when market conditions change. Even without a deep understanding of DeFi mechanisms, individuals can achieve expert-level yield optimization with AI support.
Another crucial aspect of token rewards is incentivizing connections and integrations across different DeFi protocols. Contributors who link liquidity between platforms or provide technical solutions to complex cross-chain challenges are rewarded. For example, combining lending protocols with exchanges for leveraged trading, merging insurance protocols with yield farming for safer high-return products, or integrating prediction markets with derivatives for risk management—all such innovations are valued and incentivized.
This layered reward system encourages natural role differentiation and specialization within the DeFi ecosystem. Some participants may excel at developing new protocols, others at auditing and strengthening security, and others at integrating or bridging protocols. Each individual can contribute according to their strengths and be rewarded accordingly, creating a more diverse and personalized financial ecosystem beyond the standardized services of today.
Moreover, liquidity mining economics enable the long-term accumulation of value from individual contributions. Liquidity provided or protocols developed in the early stages can continue generating revenue over decades, with newer participants building upon those foundations and sharing the results with the original contributors. This creates a virtuous cycle in which liquidity providers, developers, and governance participants all receive fair compensation while simultaneously enhancing the overall efficiency and stability of the financial system—a new model of financial operation.
3. DeFi Application Scenarios by Sector
3.1. Personal Loans and Deposits: A Tokenized P2P Financial Model
One of the biggest financial constraints individuals face today is that without banks as intermediaries, it is nearly impossible to directly connect the supply and demand of capital. Even individuals with surplus funds can only earn returns through bank deposits, and those in need of funds must rely on bank loans. In a DeFi system, however, lenders and borrowers connect directly via smart contracts, achieving higher yields and lower interest rates simultaneously, without intermediary fees.
For instance, if an individual with 100 million KRW in surplus funds supplies liquidity to a DeFi lending protocol instead of depositing in a traditional bank, they could earn annual yields of 8–12%. At the same time, borrowers can access capital at 6–10%, lower than bank loan rates. The interest margin that banks previously absorbed is now distributed directly between the actual parties. Moreover, real-time valuation of crypto or tokenized assets used as collateral enables much faster and more efficient capital procurement compared to traditional bank loans.
A noteworthy aspect of this model is that individual creditworthiness and repayment history are transparently recorded on-chain, allowing personalized interest rates. Borrowers with strong repayment records receive lower rates, while liquidity providers who contribute stable funds secure higher yields. This reputation-based system allows individuals to build credit assets through responsible financial behavior and utilize them throughout their lives. At the same time, liquidity providers enjoy higher returns and safety guaranteed by smart contract-based automatic collateral liquidation—a win-win structure.
Furthermore, individual loan and deposit transactions can interconnect and combine, giving rise to collective investment solutions in complex financial products that would otherwise be inaccessible to individuals. For example, real estate investments may require tokenized real estate assets, liquidity from lenders, and insurance protocols for risk management. Each participant contributes their tokenized share, and the resulting investment product distributes profits accordingly—enabling a new form of collaborative finance.
3.2. Decentralized Exchanges and Liquidity Provision: Individuals Building Decentralized Investment Banks
If P2P lending focuses on direct finance, the application of DeFi in decentralized exchanges dismantles the monopoly of traditional securities firms and investment banks, enabling anyone to become a market maker in a global financial network. In today’s system, stock or bond trading often disadvantages small investors due to high fees and complex account procedures. By contrast, in decentralized exchanges (DEXs), individuals directly supply liquidity to participate in exchange operations and earn proportional fee income.
For example, in decentralized exchanges such as Uniswap or Compound, an individual who supplies liquidity to an ETH–USDC pool automatically receives a proportional share of all transaction fees generated from that trading pair. Unlike traditional packaged investment products, individuals can selectively provide liquidity for specific token pairs or risk levels, executing only the strategies they deem necessary.
What’s even more interesting is that the strategies and judgments of individual liquidity providers combine to produce more accurate, real-time price discovery than traditional investment banks. A retail investor, for instance, can combine technical analysis from on-chain data, market insights from other liquidity providers’ behavior, and automated stop-loss mechanisms to construct investment strategies more sophisticated and transparent than those of many existing institutions.
The core of the decentralized exchange model is a dynamic reward system tied to trading performance. It’s not just about supplying liquidity; the system measures how much trading volume a pool processes and how much it contributes to price stability, then distributes proportional token rewards automatically. Moreover, liquidity providers who share their investment strategies or market analyses with others can earn additional rewards based on accuracy and usefulness, turning investment into a process of mutual learning and collective intelligence rather than one-sided profit-seeking.
3.3. Insurance and Derivatives DAOs: Valuing Risk Sharing and Mutual Protection
If systematic liquidity provision is essential for exchanges, in the realm of insurance and derivatives, the core value lies in risk distribution and mutual protection. In traditional insurance systems, a few large companies monopolize risk assessment and claim payments. By contrast, in DeFi-based insurance ecosystems, individuals can form mutual insurance DAOs to share each other’s risks, receiving premiums for the risks they underwrite and providing payouts when those risks materialize—enabling true P2P insurance.
For example, an individual interested in smart contract hacking insurance can deposit funds to underwrite that risk. In return, they receive premiums from users of the relevant protocol, and if a hack occurs, compensation is automatically executed under predefined smart contract conditions. Similarly, a participant underwriting crop climate insurance can provide coverage that, when an actual climate disaster impacts farmers, results in payouts along with additional rewards proportional to the social value of their contribution.
The key to this system is oracle mechanisms that ensure objectivity in risk evaluation and claim payments. Insurance events are verified by external data sources or multiple validators, and whether payout conditions have been met is transparently validated. Participants who consistently provide accurate, reliable risk assessments gain high reputation scores, which in turn grant them access to more profitable insurance opportunities and higher rewards.
Moreover, decentralized insurance systems capture new and complex risks that traditional insurers ignore. Niche risks or uncertainties tied to emerging technologies—areas large insurers typically avoid—can be covered by individuals who understand those fields and create dedicated insurance pools. This expands the diversity and accessibility of insurance services, while ensuring all contributors to risk management receive fair compensation, establishing a new mutual insurance ecosystem.
3.4. AI Agent-Based Autonomous Finance: Personalized DeFi Portfolio Management
To overcome the difficulty individuals face in managing the complexity of the DeFi ecosystem, AI agent-based autonomous financial services have emerged. With hundreds of DeFi protocols, thousands of token pairs, and constantly shifting yields, it is unrealistic for individuals to track and optimize everything themselves. AI agents, however, can manage portfolios 24/7, maximizing returns according to each individual’s risk tolerance, investment goals, and asset size.
When an investor sets their preferences and target returns, an AI agent monitors yields across various DeFi protocols in real time, automatically reallocating funds to pursue optimal results. Without needing to manually shift liquidity between protocols like Compound, Uniswap, Aave, or Curve, the AI executes transfers automatically at the best timing, even considering gas fees.
Furthermore, AI agents can share information and learn from each other, collectively executing advanced investment strategies that individuals alone could not. Strategies such as arbitrage, yield farming optimization, or impermanent loss minimization are learned from thousands of user data points and then applied in a personalized manner, enabling a new form of collective intelligence investing.
The core of AI agent systems is that transparency and control remain with the individual. All AI-driven decisions and rationales are recorded on blockchain for the user to verify at any time, and individuals can halt automation and take direct control whenever they wish. This ensures that even those unfamiliar with DeFi’s technical complexity can enjoy expert-level results with AI support, while still maintaining full ownership and control of their assets—a new model of financial service.
4. The Technological Infrastructure Supporting DeFi Protocols
4.1. Wallet-as-a-Service (WaaS): A User Interface That Hides Complexity
For individuals to provide liquidity to P2P lending, participate in decentralized exchanges, or use AI agents for automated portfolio management, a seamless user experience that eliminates the need to understand complex blockchain technology is essential. At this point, Wallet-as-a-Service (WaaS) serves as the critical bridge connecting DeFi to mainstream users.
The core goal of WaaS is to allow users who want to earn yield through liquidity provision or benefit from AI-driven investment services to do so with the same convenience as using a mobile banking app—without worrying about private key management or gas fees.
The most important feature of WaaS is the complete abstraction of blockchain wallet creation and management through social login. Instead of memorizing seed phrases and securely storing private keys, users simply log in with accounts like Google or Kakao, while wallets are created and managed automatically in the background. Experts seeking to operate an insurance DAO or individuals wanting to use AI investment services can access everything seamlessly without needing prior knowledge of blockchain or crypto.
Another key value WaaS delivers is the integration of multi-chain asset management. Currently, DeFi services are spread across multiple blockchains such as Ethereum, Polygon, Solana, and Arbitrum, requiring users to manage separate wallets and transfer tokens across chains. With WaaS, however, users can manage tokens earned from liquidity provision, returns from AI investments, and rewards from insurance participation—all in a single interface.
Users no longer need to worry about which chain holds which tokens, how much network fees cost, or how to execute cross-chain transfers—WaaS automatically finds the optimal path and processes the transactions. This abstraction of technical complexity enables natural interaction between different areas of the DeFi ecosystem. For instance, income from a lending protocol can be invested in an exchange, or insurance rewards can be used in AI-driven investment services—all with just a few simple taps.
4.2. AI-Powered Smart Contracts and Automated Financial Execution Systems
While WaaS enhances accessibility for users, AI-powered smart contracts serve as the core technology that intelligently automates and optimizes complex financial transactions. Unlike traditional smart contracts that only execute predefined conditions, AI-integrated contracts analyze market conditions, user behavior patterns, and external data in real time to dynamically determine the best execution strategies. Loan interest adjustments, liquidity reallocation, insurance payouts, and portfolio rebalancing can all be automatically executed based on AI-driven predictions and analysis.
For example, when an individual supplies liquidity to a DeFi lending protocol, the AI system analyzes their transaction history, market liquidity conditions, and yield rates from other protocols to automatically determine the optimal allocation ratio and timing. Instead of offering a fixed return, it provides personalized financial services adjusted in real time to each user’s risk profile and investment objectives. Similarly, in insurance DAOs, AI can calculate differentiated premiums and coverage by considering past incident data, current risk factors, and market volatility.
Another core function of AI-powered smart contracts is predictive risk management and automated loss-prevention mechanisms. Instead of reacting after losses occur, AI continuously monitors on-chain data, market indicators, and macroeconomic conditions to detect early warning signals and trigger protective measures automatically. For example, if a portfolio faces imminent liquidation risk, AI may automatically sell some assets or secure additional collateral. If a market crash is anticipated, it can preemptively reallocate assets into safe havens.
Moreover, AI systems learn from each individual’s transaction patterns, providing increasingly personalized financial services. By analyzing income patterns, spending habits, risk tolerance, and past performance, AI automatically executes financial strategies optimized for each user. As a result, even those unfamiliar with DeFi mechanisms or market analysis can enjoy expert-level financial services, while every transaction remains transparently recorded on blockchain for verification and control.
4.3. Cross-Chain Interoperability and AI-Optimized Asset Transfers
While AI-powered smart contracts enable intelligent automation within individual chains, cross-chain interoperability ensures that DeFi services across different blockchains can connect and integrate seamlessly.
Unlike today’s fragmented blockchain environment, where assets and services remain siloed, AI-supported cross-chain protocols allow transactions initiated on one chain to interact smoothly with services on another, enabling true interoperability.
For instance, an individual could start a lending transaction on Ethereum, deploy the funds in a Polygon-based exchange, and link it to an insurance protocol on Solana, with AI automatically calculating the optimal bridging path and fees. This cross-chain compatibility frees users from being locked into a single blockchain, allowing them to choose the best DeFi services globally, while protocols themselves gain access to a broader user base and deeper liquidity.
AI optimization plays a crucial role in drastically improving the efficiency of cross-chain asset transfers. By monitoring gas fees, bridge costs, transaction speeds, and security levels in real time, AI automatically selects the optimal route based on transaction size and urgency. A large transaction of 10 million KRW, for example, might be processed on a highly secure mainnet, while small transfers use low-cost Layer 2 solutions. Less urgent transactions may even wait for low-fee time windows, all managed automatically.
Another vital aspect of asset transfer optimization is AI-based liquidity forecasting and slippage minimization. By analyzing past trading volume patterns, market volatility, and the impact of large trades, AI can predict how a transaction will affect the market. It may split trades into smaller portions or execute at optimal times to minimize price shocks. Additionally, it can leverage multiple DEXs and liquidity pools simultaneously to secure the best possible prices for users.
This flexible protocol-connection system enhances usability while ensuring asset safety. For small-scale or educational use, fast and low-cost chains are utilized, while large-scale asset management and long-term investments rely on proven secure mainnets. Beyond that, standardized cross-chain systems enable the formation of a truly global DeFi service market, where individuals’ assets and investment strategies transcend geographical and blockchain boundaries, achieving optimal utilization worldwide.
5. The Challenges of DeFi and the Future of AI-Integrated Decentralized Finance
5.1. Resistance from Traditional Institutions and Regulatory Barriers
Despite the fundamental changes DeFi proposes, several real-world barriers must be overcome before a new decentralized financial system can be fully realized. One of the greatest challenges is the strong resistance from existing large financial institutions. Having earned enormous profits for decades through intermediary fees and interest margins, global banks are unlikely to surrender market share to P2P transactions between individuals. They may attempt to restrict DeFi through regulatory lobbying, or lock in existing customers by introducing their own CBDCs or stablecoin systems.
Additionally, leveraging their vast capital resources, traditional institutions could pressure emerging DeFi protocols with short-term high interest offers or exclusive contracts. Large investment banks might lure away key developers from DeFi projects with significantly higher salaries, or traditional asset managers could monopolize popular AI models or algorithms through exclusive deals with top experts, hindering fair competition.
Regulatory uncertainty and legal complexity also present serious obstacles. It remains unclear how existing tax laws, securities regulations, or banking laws would apply when individuals tokenize their assets to supply liquidity or earn yields through AI-driven investment. Questions also persist about liability—who is responsible for losses caused by automated smart contract or AI agent transactions? How governments view DeFi and AI-powered finance, and what regulatory frameworks they establish, will heavily influence the pace and direction of ecosystem development.
Moreover, differences in data protection laws and AI ethics regulations across countries further complicate global DeFi services. Europe’s GDPR and AI Act, China’s data localization requirements, and U.S. AI safety regulations may all restrict the free cross-border flow of financial data and AI investment algorithms, potentially becoming obstacles to realizing truly global decentralized finance.
5.2. Technological Maturity and Limitations of AI Security
Alongside regulation, another crucial factor is the limitations in technological maturity and AI security. Current blockchain infrastructure still lacks the scalability and processing speed needed to support billions of individuals simultaneously using DeFi services and operating AI agents.
Ethereum’s high gas fees and slow processing speed, coupled with other blockchains’ relatively lower security and decentralization levels, remain barriers to mass adoption. For general users, the complexity of tokenomics and AI investment strategies still requires a steep learning curve.
Token price volatility also poses a significant technical challenge in minimizing negative impacts on real-world financial services. If rewards from DeFi services fluctuate widely due to token price changes, individuals cannot plan stable financial strategies. Even AI-optimized strategies may face significant losses under sudden market shocks or black swan events. Until solutions such as stablecoin-based reward systems or improved AI prediction accuracy are fully validated, stability will remain an issue.
Furthermore, the technologies ensuring the quality and reliability of AI-based financial services are still evolving. In finance, subtle market judgments and personal circumstances matter greatly, yet current AI struggles to fully understand and adapt to complex situations. Faulty AI predictions may lead to severe investment losses, while biases in AI models may impose unfair loan terms on certain groups—problems that demand continuous technological improvements and ethical oversight.
More fundamentally, striking a balance between AI autonomy and human control remains a critical challenge. When AI autonomously manages assets and makes investment decisions, questions arise: how much autonomy should be allowed? Who bears responsibility if AI makes poor decisions in unexpected scenarios? How can individuals protect their assets if AI training data or algorithms are compromised by hacking? Clear answers and safeguards are required, though real-world adoption may involve trial and error and the risk of financial loss.
5.3. The Social Transformations of AI-Integrated Decentralized Finance
Despite these challenges, the core value of combining AI and DeFi is that these obstacles will eventually be overcome, paving the way for an entirely new form of financial society. Individuals will tokenize their assets for continuous income, achieve expert-level investment performance with the help of AI agents, and access complex DeFi services through simple interfaces. This system is clearly more efficient and accessible than the traditional one.
Initially, tech-savvy younger generations and those underserved by traditional finance are likely to adopt DeFi and AI finance. As these groups demonstrate superior financial outcomes and service experiences, adoption will spread gradually.
The most important transformation lies in dramatically improved accessibility to financial services. Investment strategies once restricted to the wealthy—such as private banking or hedge fund-level strategies—can be made available to the general public via AI agents. A person in a developing country could leverage Wall Street-grade AI investment algorithms, small business owners in rural areas could directly access global DeFi lending markets, and small investors could gain the same investment opportunities as large institutions.
Beyond accessibility, the convergence of AI and DeFi will bring about the full realization of personalized finance. Every individual’s financial activities and asset management will be optimized through AI, replacing one-size-fits-all products with services precisely tailored to each person’s circumstances and goals. AI will learn income patterns, spending habits, investment preferences, and risk tolerance in real time, acting as a personal financial assistant for everyone.
Ultimately, AI-integrated DeFi will transform personal assets into social infrastructure and embed everyday economic activity into a unified global financial ecosystem. Borders and institutional barriers will dissolve as all assets and liquidity worldwide connect into a single network. Even while individuals sleep, AI agents will continuously scan global markets and execute optimal investment opportunities, creating a 24/7 financial system.
Such a system also has the potential to address broader societal challenges. Green finance for climate change, inclusive finance for reducing inequality, and resilient finance for crisis response will no longer depend on unilateral government or institutional policies. Instead, billions of individuals, empowered by AI and connected through decentralized finance, will voluntarily participate in solving these challenges within a self-organizing global financial system—a new era for finance and society.
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