How Decentralized Finance Supports Dubai's Growing Crypto Economy

Dubai, a city with a flourishing economy, is a trailblazer for technological innovation, and it is now competing to become a global hub for blockchain innovation and crypto enthusiasts.

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Dubai, a city with a flourishing economy, is a trailblazer for technological innovation, and it is now competing to become a global hub for blockchain innovation and crypto enthusiasts. For those of you who still haven't heard, but new regulations is already making the Gulf state a haven for the global crypto industry, quickly rivaling Silicon Valley, Singapore, and Hong Kong. For example, crypto exchange ByBit recently stated it would relocate its global headquarters from Singapore to Dubai, joining major industry players Crypto.com, FTX, and Binance in establishing a foothold in the city.

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Over the last few years, the policies of the Dubai government have demonstrated that they are ready to embrace the future, and that they will never stop working towards progress. These steps are crucial in order to build a functioning ecosystem typically made of capital, technology, and talent. Leading the way in innovation in the blockchain began with Dubai's Crown Prince Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum and his vision of the Dubai Smart City. In December 2021, the government services of Dubai became entirely digitized thanks to the capabilities of blockchain, artificial intelligence (AI), and data science innovations.

Furthermore, with the foresight of Dubai Blockchain Center CEO Dr. Marwan Al Zarouni, Dubai is now operating as a blockchain hub using emerging technologies and businesses to solve real-world problems, particularly in healthcare. In 2021 alone, Dubai Multi Commodities Centre issued licenses to over 150 crypto blockchain businesses. The city also attracted global attention when it launched its Future Accelerators program, aiming to reinvent city services using blockchain technology.

More than 40 international companies have applied to participate in this initiative and test their products on live city services. It's also worth mentioning that Emirates NBD bank recently launched blockchain-powered electronic wills for customer assets. Additionally, players like CryptoOasis, New Tribe Capital, and Cypher Capital are also helping massively push the edge of the ecosystem. That said, it's interesting to explore why decentralized finance (DeFi) which is one of many new blockchain use cases is so popular in Dubai.

Related: Crypto Czar: Velas Co-Founder Alex Alexandrov Is All About Being Ahead Of The Curve

First of all, what is DeFi? DeFi offers financial tools for investing, trading, loans, borrowing, and other applications directly to individuals without the need for intermediaries like banks or brokerage firms- thanks to smart contracts on the blockchain. Dubai is certainly not blind to the growth of DeFi popularity worldwide, and here are a few reasons why its residents are very interested in this innovation:

  • High income group: The UAE is home to some of the wealthiest people in the world, in addition to its beneficial tax rates constantly encouraging people to move their wealth offshore. The new opportunities and benefits of DeFi, including exposure to Bitcoin and other cryptocurrencies, are increasingly appealing to this group due to their exposable income.
  • Interest rates: The average interest rate for personal loans in Dubai is 11%. This rate is much higher compared to other cities in UAE, such as Abu Dhabi (5%) and Sharjah (6%). This has resulted in many residents being compelled to look to DeFi as an alternative borrowing source.
  • Accessibility: With DeFi platforms, anyone with access to an internet connection and a smartphone can use these services without the need of banks or large financial institutions.
  • Inflation-resistant assets: The UAE dirham is pegged to the U.S. dollar, but the latter is losing value because of America's enormous stimulus packages and high inflation. On the flip side, DeFi tokens are often considered inflation-resistant assets and have been rising steadily against other major fiat currencies.

DeFI is only to become bigger- one example is in the combination of AI and DeFi that has become one of the most promising innovative technologies on the blockchain. The fact is that we as humans have limitations. As much as we might like to think we can process information and act quickly and decisively, as highly sophisticated computers running AI, the truth is that we are prone to error and not nearly as quick. Thankfully, AI is always on. And it doesn't get emotional about its trades, or feel like it's owed a win after many losses. Rather, AI executes the trades according to its parameters, makes no judgments on outcomes, and is continuously learning.

Some organizations, like SingularityDAO, have paired DeFi with advanced AI to democratize access to highly sophisticated financial tools and opportunities previously only available in exclusive hedge funds for its high net-worth clients. Here are three main advantages of using AI in crypto:

  • Predict crypto price fluctuations: The crypto market is highly volatile and an asset's price can see a significant change in its value within minutes or even seconds. While many platforms offer tools for automated crypto trading, most of these platforms use outdated algorithms that rely on technical analysis only. Good AI learns as it grows and goes far beyond simply technical analysis.
  • Keep up with right latest crypto news and trends: Some people make significant profits from their crypto investments while others lose their investments. This can be partially attributed to reading signs earlier and reacting more quickly than other investors. It is impossible to keep current with highly fragmented crypto conversations and news that includes Discord and Telegram communities, Twitter, Reddit, and so much more. Natural language processing can read through these communities and understand the sentiment regarding specific coins. This information has been used for half a decade in traditional finance with much less available data, and it is now becoming valuable in predicting crypto price movements with AI in crypto.
  • Simplify access to the crypto economy: In traditional finance, it's common for institutions to have bespoke software for trading and investment management, but these algorithms are less available to individual investors. The algorithmic trading tools for retail investors are complicated and require expensive subscriptions. In some projects, AI in DeFi simplifies access to these highly sophisticated tools for people. With SingularityDAO, for example, the goal of AI in DeFi is to provide the best investment results on the market for all participants and eliminate these barriers to entry.

Dubai is at the heart of blockchain, and DeFi, with its multitude of opportunities, is only getting started. AI will greatly benefit the growth of DeFi investing as it can lessen losses -thanks to the intelligence of knowing when to sell/buy- and sweeten gains at the same time. It's often the significant fluctuations and unpredictability of cryptocurrencies that keep so many leary of ever getting involved. AI in DeFi will quickly change these reservations.

In conclusion, the crypto market is booming in Dubai, and artificial intelligence is reshaping DeFi and how people manage their finances.I encourage you to keep learning more and take advantage of the opportunities of AI to help investors (retail and institutional investors, including hedge funds and family offices) make the right decisions. The beauty of it all is that organizations, including SingularityDAO, make this cutting edge AI combined with DeFi available to everybody. Artificial Intelligence in investing is no longer for the few of the wealthiest.

Related: Pulse Co-Founder And CEO Mehdi Cherif On How Blockchain Changes Brand Engagement In The Music Industry