Best DeFi Trends To Look Out For In 2024

Defi Trends to Look Out For In 2022
All About Blockchain

Best DeFi Trends To Look Out For In 2024

Last Updated on December 2, 2023

Technological progress has conquered the world, and 2021 has seen the progress that would otherwise have taken years to progress. The Pandemic might have influenced our daily lives, but it is also one of the strongest driving forces behind some of the finest technologies and innovations in the last two years.

Just as the Pandemic has driven technological advances — digital currency trading is no exception. 

2021 can be described as the year of decentralized finance (DeFi), especially in the financial blockchain sector. The current generation is susceptible to digital currencies such as Bitcoin, Ripple’s XRP, Ethereum, and Stablecoin.

DeFi applications and DeFi platforms have abandoned the traditional financial system and paved a whole new way to trade digital currencies. 

The blockchain got a DeFi bug while fear of a pandemic seized control of the rest of the globe. Cryptocurrency enthusiasts have been angry with FOMO for mining liquidity, stable borrowing, and protocol financing. In short, DeFi trends dominated the debate for most of the year, and non-traditional financial institutions saw remarkable moves during COVID 19. 

In February 2021, the total amount locked out (TVL) exceeded $ 1 billion. This is the dollar value of assets signed under DeFi contracts – more than $ 13 billion in the fiscal year. 

Despite this rapid growth of DeFi, future DeFi trends and projects remain a very young industry with plenty of room for innovation.

If that’s true, which DeFi Trends should you be aware of in 2022?

But first, let’s clear out the basics.

What is DeFi?

In its simplest form, decentralized finance allows anyone on a decentralized public blockchain network to use financial products without intermediaries such as banks or brokers.

Unlike banks or any brokerage account, DeFi does not require government-issued identification, social security numbers, or proof of address. 

Instead, DeFi essentially refers to a system that allows buyers, sellers, lenders, and borrowers to interact with trusted software supported by partners or intermediaries rather than transaction facilitators or financial technology app development agencies. 


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    How Well Is De-Fi Growing?

    Decentralized finance is still in its infancy. As of March 2021, the total value of DeFi contracts is over $41 billion according to Defi Pulse .

    While DeFi’s cap may seem substantial, it’s important to note that many DeFi coins do not provide sufficient liquidity or volume to trade on cryptocurrency exchanges.

    DeFi platforms also have infrastructure failures and hacks. Even the fast-changing DeFi apps are rampant. In this type of law, DeFi trading volume is infinite. For example, who has committed cross-border financial crimes involving DeFi protocols and applications?

    The DeFi Regulation focuses on smart contracts. Beyond Bitcoin’s success, DeFi is the best example of the idea that “code is law.”

    A law here can be a set of rules written and enforced by immutable code. A smart contract algorithm consists of a building and conditions of use required to conduct a transaction between two parties. However, several circumstances can cause the Defi platform to fail. 

    What if, for example, the system crashes due to incorrect input? Or if the compiler (the person responsible for building and running the code) is wrong. Who is responsible for these modifications? These and many other issues must be addressed before DeFi becomes a mainstream system.

    DeFi Trends

    DeFi Trends To Look Out For In 2022

    • Mining Of Liquidity

    The biggest epidemic that emerged rapidly was liquid mining, also known as harvesting agriculture. This incentive encourages crypto investors to secure a decentralized network for their currencies.

    Unfortunately, this provides the required liquidity and accidentally launches the protocol. Liquid mining is a DeFi trends and never goes away. 

    A current example of liquidity mining is a complex financial protocol. This is a DeFi application that allows users to withdraw assets or provide liquidity in one of the liquidity pools as long as they have an Ethereum wallet.

    Users earn rewards according to the basic principles of the Compound. Last year, Compound announced a governance token called COMP, and since then, liquidity mining has become an unbeatable DeFi trend. Everyone who buys or rents COMP tokens will be rewarded according to the new protocol. 

    This year, with the development of a better DeFi platform, farmers’ automated production, such as liquid mining from long.Finance has further revolutionized. 

    • Ethereum To Be The Next Big Thing

    Ethereum is usually part of the conversation when decentralized financing and the latest DeFi trends of 2022 are discussed. Ethereum has been the best support for DeFi in 2021 and is expected to follow a similar path. The idea is that DeFi is meant to increase loyalty for everyone by simply circulating prices from $ 5 to over $ 30. 

    Cross-chain technology has become one of the latest forms of the 2021 DeFi trends to enable the transfer of information between different blockchain networks and promote user interoperability.

    Matic, India’s blockchain scalability platform, also known as “Ethereum’s Internet Blockchain,” is a key effort to distribute the load of the DeFi sector across multiple blockchains.

    This is a perfect example of cross-chain technology and is a solution to some of Ethereum’s current problems, such as high prices, poor user experience, and low transaction counts per second (TPS).

    MATIC strives to build an Ethereum-compatible decentralized blockchain multi-chain ecosystem to help traders improve their trading.

    • Governance Tokens To Become More Important

    You may have noticed that all of these growing DeFi platforms also offer their own tokens. 

    These are known as Governance Tokens. 

    These tokens are different from regular cryptocurrencies. Their general purpose is to give token holders voting rights in relation to the underlying DeFi protocol. 

    For example, a DeFi project like Compound allows users to use native tokens for different farm or rent income protocols. However, the Compound also has its token (COMP). And this token regulates the progress of the Compound DeFi protocol. 

    Token holders vote for the initiative, and as the DeFi protocol gains more users or increases TVL, the token’s value generally increases. And if the price is a clue, governance tokens were very popular in 2021. The prices of governance tokens have risen significantly since early 2021 on TV’s three major DeFi platforms. 

    The largest MakerDAO has increased its tokens (MKR) by about five times since the beginning of the year. COMP has also increased 1.5 times since January 1st.

    And Aave, the third-largest DeFi lending platform, has quadrupled the value of Governance Tokens (AAVE) since early 2021. 

    • Stablecoins Are The New Buzzwords In The De-Fi Industry

    The Stablecoin business is another industry where DeFi is emerging at a strong pace. Stablecoin has grown by $ 20 billion over the year, and stablecoin offerings have skyrocketed to over $ 26 billion. About 79% of the market is dominant, and TetherUSDT is the most important participant.

    The US dollar still dominates the stablecoin market, and CircleUSDC is one of the other most prominent numbers. However, as the industry matures and government stimulus measures are implemented, fat stablecoin is projected to run out of market share. 

    • Monetizing The Gaming Industry

    More than 2 billion people around the world are involved in games, spending about US $ 159 billion annually. As more and more people spend their time on this form of entertainment, the blockchain gaming industry will see tremendous growth in DeFi.

    The blockchain game is based on the simple concept of a player performing a specific task to mine a token. If your industry is monetized, you will need the DeFi protocol to ensure game portability.

    Last year, crypto game platform BitSport created a way for crypto owners to sponsor game tournaments. Such tournaments and other gaming platforms are expected to grow again this year and become one of the best DeFi projects in 2021.

    Monetizing the gaming industry ensures that DeFi sets new and compelling trends for retailers.

    • Cross Chain Technologies To Make De-Fi Stabler

    One of the problems associated with this rapid growth of the DeFi ecosystem is rising transaction costs. 

    An example of this is the rapidly increasing Ethereum gas tariff. 

    Ethereum Gas is basically the price you have to pay to successfully execute a transaction on the Ethereum blockchain. Pricing is based on the supply and demand of computing power needed to process transactions on the network. Average transaction fees have risen sharply since the end of 2020, surpassing the US $ 69 per transaction in May 2021. 

    High gas charges were cited as a possible reason for the record DeFi liquidation on February 22nd and 23rd, 2021. In addition to higher transaction costs, the number of new users using DeFi applications on the Ethereum blockchain is slowing down the overall network. To address this issue, many crypto room projects offer cross-chain capabilities. 

    Basically, cross-chain technology wants to move transactions and smart contracts from one chain to the next. We hope that this interoperability will make it much easier to scale the DeFi platform than it would be with the Ethereum network alone. 

    The most successful innovator in this area was Polkadot. The Polkadot network basically enables cross-blockchain transfers of tokens, data, and other assets. Users can also create custom blockchains.

    It also makes transactions more efficient by distributing them across multiple parallel blockchains.  

    The price of the Polkadot Governance Coin (DOT) has risen from less than $ 10 in August to over $ 50. This brings the DOT’s market capitalization to over $ 50 billion, about the size of Ethereum a year ago. I already had some DeFi applications built on the Polkadot network. 

    Equilibrium is probably the most popular. In 2020, we moved to the Polkadot network. Equilibrium is committed to creating an interoperable DeFi environment where users can rent, invest, trade, and create smart contracts across different blockchains. 

    And in February 2021, equilibrium was one step closer to this goal. Curve Finance, the largest crypto market maker (AMM), has announced that it will establish an exchange on the Polkadot network.

    Avalanche, another network of multiple blockchains, launched the Avalanche Ethereum Bridge platform in February 2021. 

    The platform basically provides a new DeFi network with more efficient and cheaper transactions. The project hopes to attract its own decentralized applications (Dapps), such as the decentralized exchange Pangolin. The poly network has had some success in cross-chain interoperability. 

    They have partnered with Binance, the world’s largest crypto exchange, to make Dapp developed on either Binance Smart Chain or Poly Network available on both platforms.

    The poly network was also used in the Blockchain Services Network (BSC) to achieve cross-chain interoperability. The BSC is operated by the Chinese government and is used to create the “blockchain internet.”

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