The fiscal decentralized move was a ticking time bomb waiting to explode when it finally exploded in 2020. From automated market makers to the industry’s current obsession with liquidity operations, DeFi has grown enormously over the past year.
Most of the decentralized financial applications are distributed on the Ethereum blockchain, which brings billions of dollars into the network and drives them to the extreme to operate. While the capabilities of the underlying network may seem like the only thing holding back DeFi, Ethereum is not weakened either.
With Ethereum 2.0 entering a transition period, much can be expected in 2021. DeFi and Ether (ETH) have performed exceptionally well, with the Ethereum token recently reaching a full-time high and peaking at $ 2000. …
While some members of the audio community believe that this pump is the result of a bubble similar to the original coin offering in 2017, there are many reasons to believe that this is not the case.
DeFi has taken a new breath into the cryptocurrency area and has produced countless new tokens that have revolutionized decentralized lending and lending services. Short-term Yam Finance, which aims to simplify returns and transform blockchain management into a business model, has quickly become one of the fastest growing platforms in the DeFi space.
Even projects like Uniswap have revived the concept of decentralized exchanges using an automated market maker model. This system makes it possible to value trades without relying on cash from the counterparty. Instead of using order books, AMM courses use assets, and use the token ratio in the liquidity pool to determine supply and demand.
The expansion of Uniswap has been driving the DeFi engine for some time, with daily trading volumes rising from around $ 1 million to $ 1 billion between July 2020 and September 2020. Without being bound by order entries, Uniswap can fulfill orders in the chain. This means that transactions are made and settled directly on the network, and this has become one of Ethereum’s most prominent features.
This has resulted in a sharp increase in the number of smart contract calls in Ethereum, reaching new heights in full-time work, and creating an ever-increasing economy. While the robust DeFi ecosystem provides higher levels of efficiency and more automation, it is still more sophisticated than traditional offerings.
This is an important issue that DeFi must address before it can achieve broader interoperability. Buying and selling cryptocurrency should really work from a consumer perspective, but in the current state, DeFi still does not take this figure into account. Groups like Yearn.finance have sent Algorithm Management Portfolios to DeFi, but there is still a lot of work to be done.
“Agriculture is not sustainable, but it helps to run the industry in the short term and attract developers,” Ron Christensen, veteran founder of DeFi MakerDAO, told Cointelegraph:
“Once the markets have calmed down, the next step for DeFi will be to integrate with conventional mortgage financing and coding so that it can be used in DeFi’s network protocols.”
He also mentioned that DeFi is currently completely dependent on the Ethereum platform, especially as it can be used for interoperability between existing DeFi and ETH applications as a primary source of security and stability. However, there may be other issues with Divi’s growth trajectory.
This feeling is shared by many in society. According to Ilya Polosukhin, CEO of Near Protocol, a blockchain that allows the creation of decentralized and interoperable applications with Ethereum, DeFi can only continue to evolve on Ethereum.
“Most of the applications are designed to work with and exceed current limits, and will only work moderately in other chains,” he said. “It’s not just about the apps themselves, but the whole ecosystem of users, resources, apps and other integrations.” However, there may be other issues with Divi’s growth trajectory.
These issues include the launch of Eth2 and its potential impact on decentralized financing. MakerDAO founder said this is likely to have less impact than expected with fewer new DeFi applications. “It is likely that Level 2 scalability solutions with high-security bridges will allow DeFi to focus on retail,” he said.
Presenting more complexity is a cumbersome end user, especially with raw UI / UX systems that appear to be spread across the room. However, this will allow DeFi-smart contracts to interact and trade automatically without human intervention on multiple platforms.