Technology has changed the world, and by 2021, there have been changes that would have taken years to make. The pandemic may have had an effect on our daily lives, but there is no doubt that it has led to technological progress and new ideas. The pandemic has sped up technological progress, and trading digital currency is no different.
Digital currencies like bitcoin, XRP from ripple, ethereum, stablecoin, etc. are appealing to the current generation. So, 2021 can be thought of as the year of decentralised finance (DeFi), especially in the blockchain industry. Traditional financial systems have been left behind by DeFi applications and platforms, making way for a new way to trade digital currencies.
But before we talk about the top DeFi trends, let’s start with the most basic DeFi question:
What does DeFi mean?
In its simplest form, decentralised finance makes financial goods available to everyone through a public, decentralised blockchain network instead of through middlemen like banks or brokers. Unlike a bank or brokerage account, you don’t need a government-issued ID, a social security number, or proof of address to open a DeFi account. Instead of a company that helps with transactions or makes fintech apps, DeFi is most often used to describe a system that lets buyers, sellers, lenders, and borrowers interact with each other or a middleman through rigorous software.
Is Defi getting bigger?
Finance that is run without a central bank is still in its early stages. As of March 2021, DeFi contracts were worth more than $41 billion. Even though the total amount of DeFi may seem big, it’s important to note that many DeFi coins don’t have enough volume or liquidity to be traded on cryptocurrency exchanges. Also, there are bugs and hacks in the infrastructure of the DeFi platforms. Scams are common in the DeFi apps, which are always changing. For this kind of law, DeFi’s transactions can happen anywhere. For example, who is in charge of financial crimes that cross borders, protocols, and DeFi applications?
DeFi Trends
Trend 1: Searching for cash
Liquid mining, also called “yield farming,” is the most recent trend. This makes investors in crypto assets look for a network for their currencies that is not controlled by a single group. Unfortunately, this gives the necessary liquidity, but it also boots the protocol by accident. The trend of liquid mining in DeFi is not likely to go away.
The Compound Finance Protocol is a recent example of liquidity mining. It is a DeFi application that lets anyone with an Ethereum wallet withdraw assets or offer liquidity in one of their liquidity pools. The users get rewards based on how tp Compound works.
The second trend is that Ethereum could be the next big thing.
Ethereum comes up a lot when people talk about decentralised funding and the newest DeFi trends for 2022. In 2021, Ethereum is likely to follow the same path as the DeFi. The idea that DeFi is loyal to everyone when it just passes around prices from $5 to $30 or more.
Trend 3: The most popular DeFi trend is stablecoins.
The stablecoin market is another area where DeFi is making progress. Stablecoin has grown to 20 billion dollars in a year, and there are now more than 26 billion dollars worth of it. The most important participant is Tether USDT, which controls about 79 percent of the market. Circle USDC is one of the other major players in the stable-coin market, but the US dollar continues to be the market leader. But as the industry grows and government programmes to boost the economy have an effect, fat-packed stablecoins are likely to take market share.
Trend 4: Making money from games is the fourth trend.
Over 2 billion people around the world play video games, and they spend about $159 billion each year. As more people spend hours on this form of entertainment, the blockchain gaming industry will grow by a huge amount.
To summarise
With blockchain security getting better, 2022 will be the best year ever for decentralised finance. DeFi makes sure that it will be around by growing its blockchain community. Based on the above trends in the young industry, 2023 may turn out to be a more important year.
Are you ready for that kind of change? If you think you are ready to change your business ideas, you should hire a good defi development company. A consulting firm for financial services that can help you grow your decentralised journey.
