Normal smart contracts are like vending machines in which you can enter commands and they can give you an output. On the other hand, predictive smart contracts are like vending machines with a small AI brain that can look at data and change behaviour.
Smart contracts cannot see the real world like humans so they use oracles. Oracles like Chainlink help them to stream prices, weather, on chain stats and AI model outputs. Those feeds on oracles often include AI generated signals including price forecasts, risk scores and fraud flags. Several offchain AI Machine Learning models run off chain which is cheaper, they then compute predictions and push only the results on chain. The smart contracts can then use the computed results to change terms in real time. For example they can adjust lending rates or rebalance liquidity pools.
