The decentralized economy is one of the most promising and fastest growing ecosystems in the field of cryptography and blockchain. DeFi’s total book value – a measure of the total value of assets transferred to the DeFi ecosystem – approached $ 40 billion this month, representing a nearly 200-fold increase in value since February 2019. It just started in 2021, promising some important changes to the DeFi Room Features.
On the subject: Was 2020 “the year of DeFi” and what is expected from this sector in 2021? Experts answer
DeFi has brought many changes to our world. Some argue that the transition to true decentralization has begun; From the rise of the Web 3.0 movement to decentralized governance, others see it as an answer to the broken legacy of finance and the future of banking.
Despite all the benefits that DeFi has to offer, there are some issues and challenges that need to be addressed. The future success of the ecosystem depends on accurate, secure and tamper-proof data and is therefore less vulnerable to exploitation, which requires the implementation of quality control mechanisms. Improving transaction speed and peer-to-peer aspect remain among the key issues for wider industry adoption and sustainability.
Meanwhile, the biggest obstacle to the development of DeFi is the ever-increasing gas price on Ethereum, which surpassed $ 1,000 this month. While Ethereum 2.0’s long-awaited transition to address this issue will “save the day,” some argue that DeFi users shouldn’t wait for Eth2 to prove what they can do.
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Undoubtedly, Ethereum has overtaken Bitcoin (BTC) as the infrastructure and flagship network for the DeFi protocol. However, some experts say it is “difficult to imagine a future in which BTC will not be used in DeFi products,” while others argue that Bitcoin will ultimately have to “overcome the 21 million cap to remain sustainable and relevant” as DeFi continues to grow and thrive. Cointelegraph has reached out to the experts in the DeFi room for their views on the following questions: Will DeFi remain almost exclusive to Ethereum, or will it make a big difference to other teams, or will new enterprises add smart contracts to Bitcoin that will steal thunder?
Amadeo Brands, CTO, DeFi Capital:
“I interact with and experience DeFi on a daily basis, and follow closely with all developments. We are still in the early stages, but so far the benefits and infrastructure built on the Ethereum ETH ecosystem gives you a head start. We see a future in which we see a world of multi-chain DeFi infrastructure that requires the same. Reduced data security and transactions can be synchronized and consistent, but remember that the focus is not on performance, but on trust in DeFi. Some complex financial transactions are now possible in DeFi, they will cost much higher fees and provide less confidence and more bureaucracy compared to working in CeFi systems. ”
André Crony, Independent DeFi Developer and Founder of Yearn.finance:
“But is there no answer to the question? DeFi is already present on other chains. It doesn’t seem hypothetical. ”
Anthony Hamsi, founder of Golden Algorithm:
“While Ethereum has been a pioneer in smart contracts, its huge infrastructure size makes it slow to move in terms of the necessary changes needed to adapt to the needs of users in the current market. Gas taxes have risen steadily since the DeFi boom, and as the amount of taxes spent on the Ethereum network peaked, it has helped others get involved in the pie. Let’s not forget that for many small retail investors, the current gas fees on the Ethereum network can be higher than the percentage of annual return they would have earned if they were set up for a full year.
Of course, we have projects like Stacks 2.0 that hope to make Bitcoin programmable, but I think Bitcoin’s most important features will remain the same as a long-term value-added store. This feature is most in demand because Bitcoin is the largest dominant cryptocurrency on the market today.
I think the winners in the DeFi room will move quickly with powerful technologies like Project Serum built on the Solana blockchain at lightning speed, with much cheaper transaction fees backed by massive liquidity and compatible with Ethereum and Bitcoin. As long as the dominant cryptocurrency exchanges support the direct divestiture of these asset groups, they will flourish.
Corbin Page, Product Manager, ConsenSys Codefi:
“DeFi started with an open and unlicensed spirit that fosters competition and ultimately improves financial products for more people.