DeFi
AI enters DeFi on PancakeSwap
Bril Finance is set to launch a cross-chain liquidity pool in DeFi markets on AI (artificial intelligence)-based crypto DEX PancakeSwap.
The new tool will be called CupcakeHop and will include a cross-chain liquidity pool and yield aggregator. It was developed in collaboration with DEX PancakeSwap.
Crypto and DeFi: the new AI tool CupcakeHop arrives on PancakeSwap
CupcakeHop hasn’t been released yet, but according to the developers at Bril Finance this could significantly transform the DeFi landscape.
CupcakeHop would indeed, according to its developers, have the capacity to redefine the optimization of yield and cross-chain liquidity.
This new protocol promises to simplify the Challenge for new and experienced investors, making high-yield opportunities more accessible.
They even promise that its advanced AI-powered portfolio management and risk mitigation features will be set to set new standards in the industry.
CupcakeHop is defined as a revolutionary cross-chain liquidity pool that aggregates yields from various sources, providing users with the best rewards for their contributions to liquidity pools.
In addition, it will be equipped with an automated portfolio management system based on AIwhich optimizes investment strategies in real time, tailored to the user’s specific goals.
Being developed in collaboration with PancakeSwap should ensure robust and easy-to-use features.
The liquidity pool
A liquidity pool is made up of crypto funds locked in a smart contract that are used to facilitate transactions within decentralized exchanges.
In fact, DeFi platforms typically use automated market makers (AMMs) to enable trading of cryptocurrencies automatically and without permission, and liquidity pools allow AMMs to function properly.
Obviously, the higher trading volumes a DEX has to handle, the more it needs to tie up a lot of funds in its liquidity pools, and so it often tries to attract as much liquidity as possible by offering incentives and returns to those who deposit. their tokens in their liquidity pools.
The problem is that not only on the same DEX are there multiple liquidity pools, but now there are also many DEXs that operate on multiple chains.
The world’s largest DEX, Uniswap, now operates on 19 blockchains, and PancakeSwap on 9.
Besides these two, which are the most famous, today there are hundreds of other DEXes, such as Curve, Balancer, Raydium and many others.
Just think that out of 19 billion dollars of TVL locked up globally on all DEXs in the world, only 5.6 are on Uniswap, while on PancakeSwap there are 1.9 and on Curve almost 2.
Navigating this world in search of the best returns is very complicated if done manually.
Cross-chain search
It is for this reason that over time, several protocols have already emerged allowing the search for the best returns, but they generally operate on a single chain.
In contrast, protocols like the new CupcakeHop search for the best returns simultaneously across multiple chains, exponentially increasing the potential for finding the best.
We are now moving more and more towards cross-chain DeFi, that is, one that operates simultaneously on different chains with protocols that allow exchanges even between different blockchains.
AI is transforming the DeFi landscape: PancakeSwap will host the new cross-chain cryptocurrency pool
CupcakeHop further promises AI-based automated portfolio management.
In fact, even in the case of cross-chain management, it is practically impossible to obtain the best returns, which in some cases change continuously, if one operates manually.
Therefore, it is not only useful for a yield search protocol to work across multiple chains, but also to enable automated management of the allocation of funds, so that they can be reallocated very quickly, if necessary or useful, to DEXs which offer better returns.
However, it should be noted that it is not at all certain that artificial intelligence tools are efficient, because regardless of correct functioning from a technical point of view (which is absolutely necessary), it is not not 100% sure they will perform equally well. at best from a financial point of view.
For example, the fact that CupcakeHop was developed in collaboration with DEX PancakeSwap certainly provides good guarantees as to its technical functioning, but in reality, this does not add guarantees to its optimal functioning from a financial point of view.
Additionally, it is still a DeFi protocol, i.e. public and uninsured. Therefore, at least for the initial period, its use is not recommended for operators with little experience in decentralized finance.