Today I spoke with FLUID's President & CEO, Ahmed Wael Ismail. In our conversation, we talked about the importance of artificial intelligence (AI) in the crypto industry and how it can help in building a resilient financial system.
Hello Ahmed, it's great to have you with us. Can you please introduce yourself and share your journey with our readers?
Hello, I'm Ahmed Ismail, founder, president, and CEO of FLUID, an AI-quant-based liquidity aggregator. I'm also the co-founder and a board member of HAYVN, the first and largest fully regulated institutional digital assets trading and custody platform in the Middle East. I graduated from Imperial College London with an MEng (Hons) and a specialization in Chemical Engineering. My first stint in banking was at Credit Suisse as an investment banking analyst in 2005. After that, I worked at Merrill Lynch for 7 years and at Jefferies LLC for over 3 years.
Having worked with some of the top financial institutions on Wall Street, I was beginning to see opportunities the digital assets industry was presenting. After four successful years at HAYVN, I wanted to build something that would resolve one of the main challenges in the crypto industry - fragmented liquidity. This motivated me to create FLUID in July 2021.
At FLUID, we are leveraging artificial intelligence (AI) technology to build a deep-liquidity infrastructure for institutions, traders, and retailers.
What role does AI play in building a robust and efficient crypto market?
Despite the nascency of AI and blockchain technology, they have enormous potential to complement each other and reshape finance. A JPMorgan survey revealed that institutional traders consider AI as 2023's top trend followed by blockchain in the third position.
Distributed ledger technology offers immutable data storage capabilities with enhanced transparency and traceability. AI can process enormous amounts of blockchain data to provide intelligent insights and accurate prediction models. Thus blockchain-AI combination creates diverse utilities for everyone.
As AI can comprehensively read thousands of terabytes of secure data at record speed, it enhances scalability and automation. This reduces the chances of human error while increasing speed and efficiency. Therefore, decision-making becomes easier as all market participants make informed decisions to maintain healthy market metrics.
In fact, there are numerous ways and use cases where AI is helping to build a stronger crypto market.
Tell us about a few real-world examples where AI is contributing towards the crypto industry's evolution.
Developers are using AI for Sentiment Analysis where Natural Language Processing (NLP) algorithms are analyzing texts to attribute meanings. This helps in quickly assigning a positive or negative sentiment to a digital asset and assists in price prediction frameworks. Sentiment Analysis can collect data from diverse sources to detect orchestrated bots and cognitive distortions about an asset class.
AI uses deep learning and machine learning techniques to identify market dynamics and price fluctuations in a volatile scenario. Leveraging reinforcement learning, AI can predict price slippages and the real-time impact of asset trading without any human assistance. Researchers are also exploring strategies for creating innovative AI-enabled automated market makers (AMMs) to strengthen decentralized trading infrastructure.
Finally, AI is playing a critical role in identifying dubious on-chain activities and flagging them with its wide neural networks. AI can analyze vast amounts of data to provide risk signals and predictive risk exposure alerts about crypto assets.
We are using predictive AI-based models with FLUID to make trading easier and become a low-latency digital asset liquidity aggregator.
How is FLUID using AI to impact the crypto sector?
FLUID is using its proprietary AI model to predict digital asset order book prices in real-time and provide deep liquidity for all trading pairs. We use a Smart Order Router and Matching Engine to connect to major centralized and decentralized exchanges and enhance liquidity reserves.
Additionally, FLUID uses customized algorithms like Volume Weighted Average Price (VWAP), Time Weighted Average Price (TWAP), Arrival Price and Volume Participation. This helps in minimizing adverse market impacts and prevents information leakage during large orders.
We also use a Risk Engine that offers counterparty risk mitigation policies and processes to reduce risks for all stakeholders. It optimizes overall costs and offers better collateral management.
What makes FLUID's AI different from other crypto AI platforms? Can you elaborate on some of the AI methodologies that make FLUID unique?
Dr. Lawrence Henesey, a professor at Blekinge Institute of Technology, Karlskrona, Sweden is currently leading FLUID's AI application. His team has built a sophisticated hybrid cryptocurrency prediction model that harvests real-time data to predict high-precision asset prices.
FLUID's model relies on Machine Learning and Deep Learning to automate price extraction by processing large datasets. Instead of relying on outdated statistical quant models that restrict predictive capacities, our AI processes micro and macro variables for better precision.
We leverage Artificial Neural Networks (ANNs) and Support Vector Machines (SVMs) to autonomously predict prices using linear and non-linear models. FLUID runs on a cloud-based event-driven architecture for processing events with tools like Centralized Limit Order Book (CLOB).
Our researchers are developing an analytical toolkit that can process complex data to help traders in spot, margin, and derivatives trading.
From FTX to Silicon Valley Bank, financial institutions across the spectrum are collapsing and filing for Chapter 11 bankruptcy protection. What do you think needs to be done to build a better financial system that can prevent such incidents and protect investor interests?
I recently shared an article on Twitter where the credit rating agency Moody's downgraded the US banking system outlook from 'stable' to 'negative'. Consequently, people have started talking about adopting alternative currencies like bitcoin to mitigate the risks of centralized, traditional banking. In my Twitter poll, 87.5% of people voted that BTC is becoming a hedge against risk amidst banking insolvencies.
I firmly believe that blockchain-cryptocurrency technology has the potential to offer a secure and efficient financial system. But malicious and greedy actors are still at large to misuse crypto for making personal, short-term gains. To this end, AI will play a crucial role in making the blockchain-crypto space safer for everyone.
With advanced computing power, AI can process large datasets and monitor on-chain activities to offer round-the-clock protection to investors. I think blockchain-AI is a formidable technological combo that can finally offer us a better financial future.
