How will automation change the financial markets?
As part of an industry-wide effort to scale businesses to peak efficiency, automation is increasingly becoming a feature of major systems. From the automation of small business operations, to the scaling of critical systems with heavy scaling needs.
When we come down to the cryptocurrency ecosystem, we find various instances of automation with the most common being the use of smart contracts to automate trade settlements and achieving high efficiency.
This process not only scales usage flexibility, it also eliminates intermediaries and associated costs.
That said, the rise of artificial intelligence is yet another technological advancement aiding to automate various business operations. With current heavy use in customer services where AI replaces low-end virtual assistance, reducing staff costs while also scaling customers problem solving thereby improving product or service satisfaction.
Coming back to crypto, we can already find significant evidence of automations, especially in trades and payments.
70% of stablecoin transaction volume in 2024 was related to bot activity. In Solana and Base networks, bot transactions accounted for 98% of the volume.
This is from the Stablecoins landscape report by Cex.io.
Why are there so many bot transactions and how does that relate to automation? Out of the reported $27.6 trillion volume in the period, 70% were considered bot volumes, with chains like Solana and Base having the highest percentage share at 98% each.
Bot volumes simply means that transactions were handled by software that functions autonomously. Some of these bots may be AI-powered to move assets on-chain for various reasons.
This is something we are going to see more of as it has evidently become clear that manually executing trades for instance, proves ineffective, especially during peak trading hours. When it comes to Solana and Base, we see this play out in real time as the growing bot activities on both chains is due to heightened memecoins trading.
The future of financial markets is automated
The Financial Times reports that Norway’s sovereign wealth fund (NBIM) is using AI to cut trading costs, aiming to save $400 million annually from its estimated $2 billion yearly trading expenses.
So far, AI-driven trading strategies have already saved about $100 million over two years. The AI system improves trade execution and reduces slippage by analyzing market conditions more efficiently than humans.
This initiative is part of NBIM’s broader push to integrate technology for better efficiency and performance. — ChatGPT summary of FT.com report
As previously highlighted, automation as the heart of major systems scales usage flexibility while also saving on costs. The quoted report above proves this.
Through the use of AI and various automation software, businesses will be able to save several billions in operations costs, effectively growing their net income in the process. The financial markets is bound to be a major beneficiary in the age of automation, not just in costs savings but in growing global involvement.
When automation grows to becomes a consumer ready solution, larger capital injection is to be expected as manual executions is taken out of the picture. With AI as a critical piece of this age, a significant portion of global economies will shift to become intelligence-based, potentially changing how markets react to trends or evolve with reported growths or slowdowns.
Posted Using INLEO