While 2020 will be one of the most challenging the world has faced collectively in many years, the success of the decentralized financial sector is an important milestone for the cryptocurrency community.
In the midst of the ongoing COVID-19 pandemic, economies have shattered and governments and financial institutions have been forced to impose drastic monetary policies and stimulus packages to revitalize the global market. As a result of uncertainty and monetary policy, alternative asset classes like cryptocurrency have become an attractive target for investors, companies and institutions.
2020 in particular has been a big year for Bitcoin (BTC), as cryptocurrencies have reached levels not seen since the infamous rally erupted at the end of 2017. Perhaps most exciting is the fact that Bitcoin has broken a new record for total market cap.
This period of success was accompanied by the DeFi boom that drew some similarities with the supply of original coins, which was set when Bitcoin first in history approached the $ 20,000 mark three years ago.
However, DeFi is a beast in itself and has lost impressive numbers in 2020. Its popularity has grown due to the growth in activity and value that is moving into the Ethereum ecosystem and into the larger blockchain and cryptocurrency region. At the same time, there are concerns that the DeFi room may lead to the fact that a large number of users will lose their money on projects that are not working for one reason or another. This could later hinder any further development and public image the sector is trying to create.
DeFi Room marked several milestones in 2020 as users gathered together to reap the benefits that cross-platform and protocol spying brings. August 2020 was a milestone for DeFi as the market value crossed the $ 7 billion market associated with the platforms that make up the ecosystem and is currently more than $ 14 billion.
The rise in DeFi apps has also driven the price of Ether (ETH) up in recent months as investors have plunged into proliferation. At that time, decentralized apps running on the Ethereum blockchain accounted for less than 50% of the total value of the Ethereum ecosystem.
As this data shows, the use and value of DeFi platforms is clearly demonstrated in the sheer volume of value being funneled across the various platforms. This interest raises an urgent question: What will drive the adoption and wider use of DeFi’s projects and products in the future?
Alexei Kuluskov, CEO and co-founder of DeFi Orion Protocol liquidity provider, told Cointelegraph that the main mechanism for DeFi going forward would be integration with central exchanges and platforms. Koloskov believes that DeFi projects and decentralized exchanges originated specifically to give traders access to liquidity while maintaining ownership of their assets, but that they often lack the liquidity, trading pairs, user experience, and features that traders are looking for:
“Crucial to the sustainability of the industry is to provide access to benefits and opportunities throughout the market, but in a completely decentralized manner: the most valuable opportunities come from hybrid solutions that connect the centralized and decentralized world of cryptocurrencies.”
Ish Goel, co-founder of Deot PlotX forecast market, told Cointelegraph that while expansion continues to be a slowly evolving problem, two major barriers to increasing usage and improving DeFi’s offerings to users and transaction expansion projects must be removed. He added, “Projects need to further simplify the application’s user experience to facilitate normal user interaction with non-storage community protocols that did not exist before. The average user will not use MetaMask.”
Dealing with harsh opinions
While the use of DeFi platforms is evidenced by the immense value that will flow into space, this is also an area for criticism of the ecosystem. Farming is becoming a hot topic as cryptocurrency users with large assets of various tokens can make big profits by setting up their holdings for profit.
While this has brought some users a good return on their investment, many others have been stolen due to unfinished projects and outright scams looking to make money with the syringe. This is DeFi’s infamous dark side, and our industry representatives haven’t overlooked it. Even when it appears that DeFI’s projects are coming from well-known developers or gaining traction on social media, investors can still cry over the lost money.
Joel gave a more optimistic impression of the cropping phenomenon and suggested that the positives outweigh projects that finished poorly for some users: “Most of DeFi’s projects are still very small, and at this point they are not.