IIARD International Institute of Academic Research and Development

WORLD JOURNAL OF INNOVATION AND MODERN TECHNOLOGY (WJIMT )

E-ISSN 2504-4766
P-ISSN 2682-5910
VOL. 9 NO. 5 2025
DOI: 10.56201/wjimt.v9.no5.2025.pg58.85

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Integrating Blockchain with AI: A Data-Driven Model for Secure, Scalable Decentralized Finance (DeFi) Systems

Damodar Bihani, Bright Chibunna Ubamadu, Andrew Ifesinachi Daraojimba

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Abstract

The rapid evolution of decentralized finance (DeFi) has ushered in transformative opportunities for global financial inclusion, digital asset management, and permissionless transactions. However, the growth of DeFi also presents significant challenges related to data integrity, security, scalability, and regulatory compliance. This paper proposes a novel data- driven model that integrates blockchain technology with artificial intelligence (AI) to address these challenges and optimize DeFi operations. By leveraging the transparency, immutability, and decentralization of blockchain in conjunction with AI's predictive analytics, automation, and pattern recognition capabilities, this integrated framework enhances the resilience, efficiency, and scalability of DeFi systems. The model introduces an intelligent smart contract ecosystem powered by AI algorithms for fraud detection, anomaly monitoring, and automated compliance auditing. Machine learning techniques are applied to real-time transactional data across decentralized exchanges (DEXs), liquidity pools, and lending platforms to identify suspicious behaviors and mitigate risks proactively. Furthermore, the use of blockchain ensures tamper-proof audit trails, consensus-driven trust, and transparent governance, thus increasing user confidence and institutional adoption. Scalability is addressed through the application of layer-2 blockchain solutions and AI-based resource optimization strategies, enabling faster transaction throughput and reduced latency. Privacy-preserving AI models such as federated learning and homomorphic encryption are integrated to maintain user confidentiality while allowing intelligent data analysis. The paper also highlights potential use cases in automated asset management, decentralized credit scoring, and cross-chain interoperability. This interdisciplinary approach presents a secure, adaptive, and scalable paradigm for the next generation of DeFi sys

keywords:

Blockchain, Artificial Intelligence, Decentralized Finance, Smart Contracts, Scalable DeFi Systems, Fraud Detection, AI-Blockchain Integration, Secure Transactions, Financial Innovation, Predictive

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