The Convergence of Artificial Intelligence and Blockchain Technology: Applications, Challenges, and Future Directions in Decentralized Finance

The convergence of Artificial Intelligence (AI) and blockchain technology represents a paradigm shift in the financial industry, promising to unlock unprecedented levels of efficiency, security, and automation. This paper explores the synergistic relationship between AI and blockchain, with a particular focus on their applications within the burgeoning field of Decentralized Finance (DeFi). We analyze the technical integration of these two transformative technologies, examining how AI can enhance blockchain's capabilities and how blockchain can provide a trusted environment for AI-driven processes. The paper investigates a range of applications, including AI-enhanced trading, autonomous financial agents, and cross-border payments, while also addressing the critical challenges related to security, trust, and regulation. By synthesizing insights from a broad range of academic literature, including foundational and recent works, this paper provides a comprehensive overview of the current state of AI-blockchain integration in DeFi and identifies key areas for future research. We argue that the fusion of AI and blockchain is not merely an incremental improvement but a fundamental evolution that will reshape the future of financial markets.