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Proponents of decentralized finance believe that the development of artificial intelligence (AI)-powered tools could enhance security and counter cybercriminals.
AI to Help Defi Platforms Combat Cybercrime
According to Peckshield’s Annual Crypto Security Report, digital assets worth $3.01 billion were stolen in 2024. The report’s data shows losses were split nearly evenly between centralized finance (cefi) and decentralized finance (defi), suggesting improved security for defi platforms. For context, defi platforms accounted for roughly 80% of the $3.6 billion lost in 2022 and 70% of the $2.6 billion lost in 2023.
While losses for cefi and defi platforms in 2024 appear almost identical, the data highlights large heists like the $305 million DMM Crypto hack as significant factors in the rise of cefi-related losses. Critics argue this demonstrates that defi platforms have yet to fully address cybercrime threats.
However, some defi proponents told Bitcoin.com News that the development and deployment of artificial intelligence (AI)-powered tools could help decentralized finance gain the upper hand against hackers and scammers. In fact, Lingling Jiang, partner at DWF Labs, believes 2025 will see the emergence of a new category known as decentralized finance powered by AI (DEFAI). Explaining why AI-related tools are likely to succeed where others failed, Jiang said:
AI and machine learning are becoming game-changers for identifying threats – imagine having smart systems that can spot suspicious activity in smart contracts before anything goes wrong.
The DWF Labs partner insists the solutions coming on stream are no longer just about “patching holes” but about building a new generation of defi protocols where “security is woven into every transaction.”
Luke Xie, co-founder and CEO of Satlayer, concurs, adding that AI-related solutions “will provide early warning of potential attacks before they can be fully exploited.” AI security solutions will empower users to avoid things such as honeypots and blatant rug pulls, Xie explained.
Global Regulators to Intensify Collaboration
Although the solutions emerging are unlikely to make the defi space less adversarial than it is currently, the Satlayer CEO argues they at least provide users with the ability to detect and avoid the most obvious scams.
Meanwhile, several experts interviewed by Bitcoin.com News agreed that continued reports of massive defi losses could prompt regulators to adjust their approach. Gianluca Sacco, COO of the crypto exchange VALR, believes this shift might involve greater global regulatory coordination. However, Sacco believes such collaboration could lead to regulations that clash with the privacy benefits that attract users to defi protocols.
It’s unclear whether the implementation of KYC measures in DeFi will be practicable or broadly adopted given the decentralised nature of this industry and ability for developers to create protocols while remaining entirely anonymous and thereby not being directly beholden to any regulator.
Besides increased cooperation between regulators, Sacco also anticipates intense regulatory scrutiny of stablecoins, which raises questions about the assets backing them.
Hong Yea, co-founder and CEO of GRVT, also predicts collaborations between regulators. He identified the Abu Dhabi Global Market (ADGM), the Virtual Assets Regulatory Authority (VARA), and the Bermuda Monetary Authority as some of the key regulators likely to seek cooperation with other jurisdictions. Yea said he also expects to see greater collaboration between traditional finance (Tradfi) and defi.