rewrite this title On-chain AI: Can Smart Contracts Learn Over Time?

One of Arthur C. Clarke’s most famous quotes is, “Any sufficiently advanced technology is indistinguishable from magic”, and with the recent advances in the field of generative and discriminative AI, the field cannot be described as anything short of magical. We have witnessed AI that can create things that didn’t previously exist, as well as those that can classify or predict things based on existing data. 

From medicine to finance to IT, AI seems to have its hand in all these various sectors, and even more recently, blockchain. Smart contracts started out simple, automatic and unable to change after they have been deployed, but a fascinating question to ask in this age of advancing digital technology is what if smart contracts could learn over time? AI, in itself, works based on pattern recognition to train models and carry out various complex tasks. What if AI-powered smart contracts could learn over time and execute themselves?

Imagine a future where the contracts on the blockchain aren’t just locked pieces of code, but evolving pieces of intelligence, growing smarter with every transaction, adjusting to new data, and responding to the environment around them. Welcome to the world of on-chain intelligence.

When Ethereum first launched in 2015, it introduced the idea of programmable money that allowed developers to create smart contracts that automatically executed actions without the need for a middleman. However, there was one catch: once a contract was put on the blockchain, it couldn’t be changed, which made sense for security reasons. After all, you wouldn’t want someone rewriting a contract after it had been signed. This also made contracts rigid. If the world around them changed, the contracts couldn’t adapt.

As blockchain evolution continued, developers started dreaming bigger. What if these contracts could “think” a little? What if they could “learn” from the world and adjust their behaviour? This is where adaptive code, learning algorithms, and AI agents come into the story.

Can Smart Contracts Actually Learn

Right now, true learning algorithms like those that power tools like ChatGPT or self-driving cars mostly live off-chain, meaning they run outside the blockchain. That’s because blockchains, by design, are slow and expensive compared to traditional computing systems, and they prioritize security and transparency, not speed or complexity.

Things are beginning to change, as researchers and developers explore how lightweight versions of on-chain intelligence could work. Instead of full-blown AI models sitting on the blockchain, we might soon have smart contracts that can interact with off-chain AI systems, receive updated data, and evolve based on that information.

For example, a smart contract managing a decentralized insurance fund could adjust its policies over time based on real-world weather data pulled in through oracles like Chainlink. This would enable the contract to “learn” that floods are becoming more common in a region and adjust insurance rates accordingly.

Another example is AI agents embedded into Web3 games. These agents could evolve based on how players interact with them, creating richer and more personalized gaming experiences without centralized control. In short, the answer is: yes, with help, smart contracts can start to learn.

Real-World Progress

In 2024, the team at Chainlink launched a platform called Chainlink Functions, which allows smart contracts to access any external API in a secure manner. This means that a smart contract could pull in data from machine learning systems outside the blockchain, react to new information, and adjust its behaviour. Meanwhile, Fetch.ai, a project that combines blockchain with artificial intelligence, is developing autonomous AI agents that live on decentralized networks. These agents can negotiate deals, book appointments, or manage assets, all without human supervision. As Fetch.ai founder Humayun Sheikh said, “Autonomous economic agents are the future of decentralized economies.”

Other projects like Ocean Protocol and SingularityNET are also pushing the boundaries between blockchain and AI, enabling data markets and decentralized AI services. We’re still in early days, but these efforts show that blockchain evolution is heading toward a future where adaptive code and autonomous systems are the norm.

RELATED: AI in Blockchain Technology: An In-Depth Guide on Ocean Protocol 

Challenges on the Road

Of course, it’s not all smooth sailing. First, there’s the technical side: Blockchains are designed to be predictable and unchanging. Learning systems, by nature, change over time, making it incredibly hard to make these two ideas work together safely. Second, there’s the security side: If you have contracts that can evolve, how do you stop them from evolving in dangerous or unintended ways? If a smart contract suddenly “learns” something wrong, it could cause chaos on the blockchain.

Third, there’s the philosophical side: When we let code start making decisions without direct human control, we move into tricky ethical territory. Who is responsible if an autonomous system does something harmful? How do you regulate an AI agent that lives on a decentralized blockchain? These, and many other similar questions, don’t have easy answers yet.

Why It Matters for the Future of Web3

Even with all these challenges, the idea of on-chain intelligence could transform Web3 logic in huge ways. Instead of static apps, we could have living, breathing economies that adapt to the needs of users in real time and decentralized finance (DeFi) platforms could fine-tune lending rates automatically based on global economic conditions, supply chains could update themselves when goods are delayed and games could offer evolving quests that change based on player choices without needing a centralized server to update them.

In this future, your interaction with a DApp wouldn’t be a cold transaction; it would be a conversation with a system that listens, learns, and grows alongside you. That’s the promise, and the risk of merging blockchain evolution with adaptive code.

Teaching Smart Contracts to Adapt: The Future of Self-Updating Code on the Blockchain

Currently, smart contracts on blockchains are like locked treasure chests: once deployed, their code can usually not be changed, and this immutability keeps them secure but also makes them rigid. As technology evolves, there’s a growing interest in teaching smart contracts to adapt without sacrificing security. 

By combining learning algorithms and on-chain intelligence, researchers are exploring ways for contracts to update themselves safely and transparently based on new information. Imagine a DeFi lending protocol that automatically adjusts interest rates based on real-time market conditions, or a DAO governance system that learns to better reflect its community’s behaviour over time.

While we’re still in the early stages, projects like Autonolas and discussions within the Ethereum research community are already envisioning a future where autonomous systems on Web3 can “grow” without constant human intervention. It’s a major leap in blockchain evolution, making the dream of adaptive, intelligent decentralized apps feel a lot more real.

Decentralized AI: A Glimpse into the Future of Collaborative Intelligence

As the world moves toward greater decentralization, AI is evolving alongside it, and decentralized AI is offering the possibility of creating intelligent systems that collaborate across different platforms without relying on a central authority. Usually, by utilizing blockchain technology, these AI systems, often referred to as AI agents, can operate independently yet share data and decisions in a transparent and secure environment.

In a decentralized network, AI agents can work together to solve complex problems, such as optimizing supply chains, predicting market trends, or providing personalized healthcare solutions, all while maintaining privacy and autonomy. With each agent contributing its expertise, this model encourages collaborative intelligence without the bottleneck of a single centralized server or company controlling the system and by moving AI systems onto decentralized platforms, we not only improve privacy and transparency but also introduce resilience to potential system failures. This shift is set to revolutionize industries, enabling a more trustworthy, secure, and efficient AI future that aligns with Web3 principles.

Closing Thoughts: A New Kind of Evolution

As we venture further into the realm of blockchain evolution, the integration of adaptive code and learning algorithms will redefine what we think of as a smart contract, and instead of having static lines of code that execute predetermined functions, these smart contracts could begin to learn from interactions, improving their functionality and efficiency over time. This is very much like how an organism adapts to its environment; on-chain intelligence could enable contracts to evolve based on data, behaviours, and needs that weren’t initially anticipated.

Imagine a smart contract that not only fulfils its purpose but also fine-tunes itself, adapting to market fluctuations, legal changes, or user demands. AI agents integrated into the system could autonomously make decisions and execute actions without human input, evolving in a decentralized environment where Web3 logic governs their behaviour. This autonomy and resilience would make decentralized applications (dApps) more powerful, more efficient, and, most importantly, more responsive to the complexities of the real world.

However, this growth and evolution could come with its own set of challenges; ethical concerns about autonomous decision-making, accountability, and privacy will need to be addressed as the boundary between human oversight and AI control becomes more blurred. In the future, we may need to define not just the rules of code, but also the principles that govern how these systems grow, evolve, and interact with one another.

The potential for on-chain AI to reshape industries; whether in finance, healthcare, or even governance, brings with it the promise of a more efficient and self-sustaining world. As smart contracts transition from seeds into fully autonomous, evolving entities, we will witness a new kind of evolution: one that is driven not by nature’s randomness, but by a collaborative intelligence that transcends the individual and builds a thriving ecosystem within the blockchain. The evolution of these systems marks the dawn of a new era, where decentralized and autonomous technologies redefine how we interact with the digital world. The future, it seems, is not just smart; it’s alive.

Disclaimer: This article is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence. 

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