Top 2023 DeFi Trends
DeFi burst onto the global scene in 2020. Within a mere 11 months, the combined TVL across all DeFi platforms soared to $19 billion. By the close of 2022, that figure had escalated to $112.07 billion.
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2023 saw the TVL dip by half. Yet, there are budding trends poised to elevate the decentralized finance sector back to its zenith.
Cross-Chain Bridges
Facilitating interactions across diverse blockchains has perennially posed challenges in the DeFi domain. The advent of cross-chain bridges has dissolved barriers in transferring diverse token standards across platforms. Their evolution and incorporation will gain momentum in the coming years, as several blockchains remain unlinked. Given that leveraging L2 networks curtails transactional fees, this is bound to boost liquidity. Intriguingly, by 2024, we might even see ETH transactions within the Dash network.
Blockchain Gaming Monetization
Blockchain-based games are now as popular as traditional shooters or MMORPGs, with non-fungible tokens (NFTs) becoming key elements in the gameplay. Over the next few years, DeFi is poised to play a crucial role in the monetization of these gaming platforms. The “Play-to-Earn” approach, where gamers can earn project-specific tokens, is on track to challenge centralized gaming projects that don't allow users to have full ownership of their in-game assets. GameFi protocols might serve as the backbone for a decentralized in-game economy, offering enhanced opportunities for players and investors alike.
DeFi and Traditional Finance
The fusion of traditional finance with the DeFi sector is a growing trend. More banks and payment systems are exploring the potentials of decentralized assets. This intersection could lead to a surge in DeFi services, further bridging the divide between traditional and decentralized financial sectors. Expect to see new DeFi lending and insurance platforms partnering with TradFi structures. Moreover, the advent of concepts like “tokenized ownership rights” might fundamentally shift investment norms in the conventional real estate market.
Automated Market Makers (AMMs)
The progress made in the realm of decentralized exchanges (DEXs) has already set the crypto market abuzz, providing unrestricted access to an extensive range of assets. The evolution of AMMs seems to be the next logical step. With improved user interfaces, reduced slippage, enhanced liquidity management, and the ability for seamless arbitrage, decentralized trading is set to become even more enticing, giving centralized methods a run for their money.
Governance Tokens
The surging interest in governance tokens, foundational for any DEX platform, DApp, or DAO, shows no sign of waning. These tokens lie at the heart of decentralized finance, empowering users to have a say in the decision-making processes linked to the protocol.
Going forward, it's anticipated that DeFi will further entrench the idea of community-driven control over projects. Decentralized platforms and systems guided by the token holders will flourish, giving users a voice in overseeing updates and project funding decisions.
As DeFi continues its march forward, these five key trends could be instrumental in charting its trajectory in the upcoming years.
Other potential front-runners in the trend space include decentralized stablecoins and social platforms. However, they are still in the nascent stages of capturing widespread attention.
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