ARTIFICIAL INTELLIGENCE ADOPTION ON DECENTRALIZED FINANCE IN NIGERIA

Abstract

The growing adoption of Artificial Intelligence (AI) in the decentralized finance space has opened new opportunities to improve fraud detection, smart contracts, liquidity pooling, efficiency, and scalability of decentralized finance (DeFi) platforms. Despite the global expansion of AI-powered DeFi applications, Nigeria faces unique challenges such as regulatory uncertainty, high fraud penetration, low digital literacy, and infrastructural gaps, which hinder full integration and trust in AI-enabled DeFi systems. This study is motivated by the need to understand how AI can foster inclusive and transparent financial ecosystems. Therefore, the study examined the effects of AI adoption on decentralized finance in Nigeria. It adopts a survey research design, with a sample size of 400 active DeFi participants determined through Cochran formula. Regression analysis was performed to examine the relationships between variables using the Statistical Package for Social Sciences (SPSS Version 23). Findings reveal that stakeholders’ perceptions have a positive and significant association on AI’s role in building trust and security in Nigeria (0.627; 0.000<0.01). Perceived barriers also have a positive and significant association with the integration of artificial intelligence (AI) into DeFi systems by blockchain developers and financial professionals in Nigeria (0.506; 0.000<0.01). DeFi users have a significant and positive association with AI-driven tools used in decision-making for decentralized financial activities in Nigeria (0.551; 0.000<0.01). Regulatory changes have a significant and positive association with AI adoption in Nigeria (0.519; 0.000<0.01). AI practitioners have a significant and positive association with the development of decentralized finance in Nigeria (0.614; 0.000<0.01). Based on these findings, the study concludes that AI is a powerful tool that can potentially revolutionize the face of decentralized finance in Nigeria. The study further recommended that policymakers and regulators develop and scale an adaptive AI-DeFi regulatory framework by developing a tiered regulatory sandbox specific to DeFi-AI platforms, enabling controlled experimentation under policy oversight and a national registry of certified AI-DeFi practitioners.