Blockchain, Distributed ledger technology, AI
The meteoric rise of AI over the past year has attracted worldwide attention. With hundreds of millions of users flocking to tools like ChatGPT and a flood of other AI-powered apps, investors and startups have quickly shifted their focus, directing more money to AI projects. This surge of interest has not been limited to Big Tech, it has also sparked interest in the financial world.
Well-known crypto and blockchain-focused investors, such as Framework Ventures and Peter Thiel’s Founders Fund, are now tackling new “crypto + AI” projects such as. Listener or Place & Time. Although many of these new innovations have been used using crypto against those in AI technology, we have not yet seen many financial institutions think about how the combination of AI and blockchains can affect their technology sector, that is. until last month.
Recently, the team behind oracle’s main protocol, Chainlinkrelease a report revealing that they have been working on a project that integrates AI, oracles, and blockchain technology to solve the lack of real-time and standardized data on corporate events.
A Who’s Who Of Global FMI providers
Participating companies are leading global market intermediation (FMI) providers including Swift – the world’s largest interbank messaging platform and Euroclear – a global clearing and settlement company, along with investment management firms such as Franklin Templeton and Wellington Management, and major banks, including UBS, CACEIS, Vontobel, and Sygnum Bank.
Oracles are organizations that provide support to blockchainsperforming tasks that they cannot do independently, such as importing live data from the real world or managing transactions between different blockchains. In the crypto industry, Chainlink is the most popular oracle network it has supported $16 billion in total trade value and its data feeds and Cross-Chain Interoperability Protocol (called “CCIP”), a bridge between chains.
Financial institutions around the world are facing difficult data sharing problems, especially related to integration, sharing, sharing of resources, and more. Information related to multiple parties in a partnership often has to go through a complicated journey through the hands of managers, brokers, fund managers, brokers, and investors.
What goes through the pipeline, often comes in a variety of disparate formats (think PDFs, press releases, spreadsheets, etc.), resulting in the confusion of duplicate or different formats, formats, text, data cleaning challenges, and incorrect information. Corporate action planning in particular is a decade-long problem that many, including giants like DTCCwill try to solve it.
What may seem trivial to an outsider is actually the most complex and complex issue in the world of post-trade finance: today’s inadequacies in corporate governance with thousands of regional businesses, brokers, and maintenance businesses facing $3-5 million in annual costs and 75 percent of companies having to re-verify managers and exchange data manually.
The Chainlink project brings a possible solution using the blockchain annotation. The goal is to reduce the need for manual feedback by creating a “golden consensus record” around the company’s actions that are displayed on blockchains and accessed in real time by managers, asset managers, and other relevant parties.
AI for Data Cleaning
The Chainlink oracle network is used in conjunction with major language models (LLMs) such as OpenAI’s ChatGPT 4o, Google’s Gemini 1.5 pro, and Anthropic’s Claude 3.5 sonnet to verify and provide financial information on the blockchain, or onchain. On-chain transaction data is transferred across private and public blockchains using Chainlink’s CCIP.
“The combination of AI and speech is a powerful tool for taking business action and turning data into a more efficient way,” he said The founder of Chainlink Sergey Nazarov, “Solving this problem brings many benefits to asset managers, banks, and the financial sector to all communicate faster than today, at a lower cost, and with a significant reduction in costs. The most expensive mistakes that affect the financial system.”
So why is this important?
According to Laurence MoroneyThe AI researcher and best-selling author of AI said in a statement to Forbes, “Although this project is focused on the business sector, Chainlink’s approach of combining AI, oracles, and blockchains can be applied to other types of unstructured data in finance and beyond. .”
The possibilities are even more if this method is applied to other types of unstructured data. Much of the world’s human-generated content such as legal documents, insurance contracts, real estate contracts, surveys, audio recordings, and social media posts is not easily readable by machines. The potential is significant and can change the way industries work, from contractors to customer groups, especially through the use of AI.
In sectors like financial services, where information is unstructured, this solution may not be useful as there are many problems. LLMs are still highly speculative, which means they can still produce incorrect or false information. In fact, a study comparing 11 public LLMs showed a similar trend from 3 to 27 percent. To reduce the risk of LLMs, the pre-trained model should be important for the validation process, to ensure that the system is ready to deal with complex and unquantifiable datasets.
Although it is a statement to confirm the results through a coordinated approach and the use of several LLMs, there should be ways to show the uncertainty about the results that cause manual evaluation, especially in high-income areas, where many investors make. their decisions based on this data. Many experts are now also looking at Small Language Bases (SLMs), data that is better stored and better organized, especially for companies that manage it.
The New Plumbing
In order for the powerful combination of AI and blockchain to be interesting in a way that is efficient and sustainable, organizations must find practical applications for blockchain technology. In many cases, these can come in the form of business processes and critical tasks.
As Stéphanie Lheureux, Director of the Digital Assets Competence Center at Euroclear, he saidthe combination of oracles and AI “can address critical pain points and reorganize workflows for efficiency, transparency and cost.”
If not, this shows that some of the best things could be happening quietly, and solving unpleasant problems in the big financial institutions that support the global financial sector.
Digital Financial Market Infrastructure (dFMI) is not the most exciting news for consumers, businesses, and policymakers – few are happy to replace old pipes with new ones – but it is the digital transformation that allows our money to flow freely to increase the volume. people and businesses, at affordable prices, with better products, services and accuracy on Web3 for 21St century, and beyond.