Technological progress has taken over the planet, and so the year 2023 will witness advances that might otherwise have taken years to develop. The pandemic may have affected our daily lives, but it has certainly spurred technology and innovation. Just as the pandemic has driven technological progress, digital currency trading is no exception.
Today’s generation is receptive to digital currencies such as Bitcoin, Ripple’s XRP, Ethereum, Stable Coin, etc. Therefore, 2023 is often referred to as the year of decentralized finance (DeFi), especially for the blockchain sector. DeFi applications and DeFi platforms have jettisoned the normal financial systems and paved the way for a whole new method of trading digital currencies.
While the rest of the world was gripped by pandemic terror, Blockchain got a DeFi bug. Cryptocurrency enthusiasts were furious with FOMO-ing for mining industry liquidity, constant borrowing, and protocol funding. In short, DeFi trends dominated the discourse for much of the year, and a notable development was observed in non-traditional financial institutions during COVID -19.
In February 2022, the total blocked volume (TVL) exceeded $1 billion. This is often the dollar value for assets entered into DeFi agreements, ending over $13 billion in fiscal years.
Despite the rapid DeFi growth, emerging DeFi projects are still a very young industry with plenty of room for innovation.
If this is often true, what DeFi Google trends are worth keeping an eye on in 2022?
Let us explore a number of the easiest DeFi projects to watch in 2022
However, before we continue exploring the top DeFi trends, let us address the most basic question about DeFi:
What is DeFi?
Decentralized finance, in its simplest form, is the provision of financial goods to anyone through a decentralized public blockchain network rather than through intermediaries such as banks or brokers. Unlike a bank or an account, DeFi does not require a ID, issued by the government, a social security number, or proof of address. Instead, DeFi primarily refers to a system that allows buyers, sellers, lenders, and borrowers to interact with peers or an intermediary backed by rigorous software rather than a company that facilitates transactions or an agency that develops fintech apps.
Is the defi growing?
Decentralised finance is still in the early stages of its growth. As of March 2022, DeFi contracts had a total value of over $41 billion. While the total amount of DeFi may seem substantial, it should be noted that many DeFi coins do not provide enough liquidity or volume for cryptocurrency trading. In addition, there are infrastructure malfunctions and hacks within DeFi platforms. The rapidly changing DeFi applications are also teeming with scams. For this type of legislation, DeFi’s transaction range is limitless. For example, who is guilty of a cross-border financial crime, from protocols and DeFi applications?
For example, what if a system crashes due to an incorrect input? Or if a compiler (who is responsible for creating and executing the code) makes a mistake. Who is then liable for these changes? These and many other questions need to be addressed before DeFi becomes a mass system.
Now that we know what DeFi is and why it is so popular, let us take a look at some of the latest trends in the DeFi world:
Trends of DeFi
Trend 1 – Liquidity generation
The biggest fad that quickly emerged was liquid mining, also known as yield farming. This incentive drives crypto asset investors to secure a decentralised network for their currencies. Unfortunately, this provides the stated liquidity and unintentionally boots the protocol. Liquid mining may be a DeFi trend that will never go away.
A recent example of liquidity mining is Compound Finance Protocol, a DeFi application that allows any user to withdraw assets or offer liquidity in one of their liquidity pools as long as they have an Ethereum wallet. Users earn rewards that align with Compound’s core principles. Last year, Compound launched its governance token called COMP and since then, liquidity mining has become an unbeatable DeFi trend.
Anyone who buys or borrows tokens with the COMP will be rewarded according to the new protocol. This year with the event of higher DeFi platforms automated production farmers like to yearn. finance liquid mining was further revolutionized.
Trend 2 – Ethereum are often a next big thing.
Ethereum is typically always talked about when it comes to decentralised finance and thus the latest DeFi trends 2023. Ethereum best supported the DeFi in 2023 is anticipated to follow an identical path. the thought that DeFi is for everyone’s loyalty when it simply circulates prices from $5 to quite $30.
Cross-chain technology has become one of the latest types of DeFi trends in 2023, as it enables the transfer of data between different blockchain networks, making interoperability easier for users. Matic, an Indian blockchain scalability platform also referred to as ” Ethereum’s Internet of Blockchain,” can be an important attempt to evenly distribute the load of the DeFi sector across multiple blockchains. It is an ideal example of cross-chain technology, and thus a solution to a number of Ethereum’s current problems – including high fees, poor user experience, and fewer transactions per second (TPS). MATIC seeks to create an Ethereum-compatible decentralised blockchain multi-chain ecosystem and help traders trade better.
Trend 3 – Stablecoins are the highest DeFi trend.
The stablecoin business is another industry where DeFi is trending high. Stablecoin have grown to twenty billion dollars in one year, and stablecoin stocks have grown to over 26 billion dollars. With about 79 percent of the market dominance, Tether USDT is that the most important participant. The U.S. dollar continues to dominate the stablecoin market, with Circle USDC being one of the main counterparts. However, it is predicted that fat-packed stablecoins may begin to eat into market share as the industry matures and government stimulus programmes come to fruition.
Trend 4 – Monetization of the games industry
More than 2 billion people worldwide engage with games and spend around $159 billion annually. As more and more people dedicate hours to this type of entertainment, the blockchain gaming industry will see tremendous DeFi growth.
Blockchain gaming is based on the simple concept that players perform certain tasks to mine the tokens. If the industry is to be monetized, DeFi protocols are needed to ensure in-game portability. Last year, the crypto gaming platform created the opportunity for crypto owners to sponsor gaming tournaments. Such tournaments and more gaming platforms are expected to increase this year as well, becoming one of the easiest DeFi projects for 2023. With the monetization of the gaming industry, DeFi will definitely set a new and interesting trend for traders.
With the advances in blockchain security, 2023 will undoubtedly be the most exemplary year of decentralised finance. By expanding the blockchain community, DeFi is securing its presence. Given the trends described above for the fledgling industry, 2023 could prove to be an even more significant year.
There are several reasons why DeFi fans and crypto enthusiasts keep looking at the top DeFi trends in 2023 and want to invest in the upcoming DeFi projects.
Are you ready for such a change? If you think you’re able to incorporate the changes in your business ideas and use blockchain app development technology to interact with customers, then ask Brugu, a trusted and reliable fintech app development company. A financial services consultancy that could help you expand your decentralised journey.