The vision of a “Self-Writing Internet,” made possible through DFINITY’s Internet Computer (ICP), is incredibly alluring. Picture this AI, able to produce DeFi apps just from natural language prompts. It sounds like science fiction, doesn't it? The truth is a bit more complicated. While the potential for democratizing DeFi development is immense, we need to ask ourselves: are we building a financial utopia, or inadvertently unleashing a regulatory Kraken?
AI DeFi: Uncharted Regulatory Waters?
Let's be blunt. Regulators can barely keep up with the breakneck pace that DeFi continues to move at anyway. Now, we’re discussing adding AI into the mix, automating the creation of these complex financial instruments. Think about the implications. Who do you hold accountable if an AI generated smart contract has an important bug, resulting in billions of dollars in losses. The developer who prompted the AI? DFINITY? The AI itself? (Good luck with that one!)
This isn't some theoretical exercise. As we have witnessed with flash crashes, exploits, and rug pulls that have all caused contagion throughout the DeFi narrative. Add the layer of AI, and without a strong regulatory framework it’s basically handing a toddler a flamethrower. First, we should think long and hard about how to include AI in DeFi, and if we should do it at all.
Imagine a rogue AI creating a new DeFi protocol. Its purpose? To game legal loopholes across multiple jurisdictions. Suddenly, we're not just talking about a bug in a smart contract; we're talking about international financial crime. But current DeFi regulations are just not up to the task.
DeFi Disruption: Empowerment or Chaos?
To hear DFINITY’s Pierre Samaties tell it, ICP is going to make the development of Web3 apps as simple and accessible as using a Web2 application already is. That's the core of the idea: lowering the barrier to entry. Our vision of the “Self-Writing Internet” is to make it possible for anyone to create and deploy on-chain applications. This would free developers to experiment on new, radical DeFi ideas—an outcome that would likely both democratize opportunities across geographies and projects, while accelerating innovation. At what cost?
The sheer number of DeFi applications isn’t enough to ensure meaningful advancements. It would be just as harmful to default to creating more systemic risk. Now multiply that out—more apps, more attack vectors, one more opportunity for malicious actors to exploit, one more opportunity for cascading failures. Are we truly ready for a world where anyone can spin up a complex financial product with minimal technical expertise?
Teams of developers, auditors, and security experts are constantly working on improving security on established DeFi protocols. They prioritize the safety and reliability of their platforms. Will the same scrutiny be applied to AI-generated applications? Or will we get a floodgate of bad actors with poorly designed, vulnerable and even malicious DeFi projects? AI can write code much faster than humans can inspect it. This of course leads to the burning question of what the future role of smart contract auditors should entail.
The combination of Bitcoin, Ethereum, and Solana is yet another double-edged sword. While interoperability is indeed a major technological advance, it opens up numerous new paths for exploits and vulnerabilities. The CkBTC, a digital twin of Bitcoin on ICP, allows for near instantaneous transactions and lower fees. Yet, it introduces a new layer of complexity in which bad actors might find ways to exploit. Though DFINITY boasts its cryptographically backed security, all systems are worth no more than their most vulnerable factor. The major question is whether that connection actually exists and if so, maybe it should be exploited.
Novelty or Nightmare Fuel?
DFINITY’s founder Dominic Williams might have invented the term “Self-Writing Internet,” but is this truly a fascinating innovation, or just some dystopian nightmare fuel? With the reverse gas model, developers can pay for compute cycles, freeing up users to have an unparalleled experience. It does ask significant questions of long-term sustainability and the danger of centralization. Potential investors could be particularly lured by the deflationary tokenomics of ICP. This arrangement incentivizes builders to prioritize quick flips over sustainable permanence.
One year later, we have more than 500 applications in production on ICP and that’s remarkable. We need to go further and think beyond the data. Are these applications true showcases of innovation? Or are they just duplicating current DeFi protocols with fresh branding? Are they secure? The growth team and possible grants from the process provide great assistance. They don't guarantee that the applications developed on ICP are good or secure.
The vision of an AI-powered Web3 application developer is pretty hard to resist. It has the potential to make DeFi development more democratic and create a new wave of innovation. We must proceed with caution. Though full of promise, without a clear regulatory framework, the “Self-Writing Internet” would quickly devolve into a disorganized regulatory hellscape. This risk would erode the fundamental tenets of decentralization that DeFi seeks to preserve and jeopardize security.
