DeFi refers to a group of financial products and services that are available to anyone who uses Ethereum and has access to the internet. There are no centralized authorities that can ban payments or refuse you access to anything with DeFi because the marketplaces are open. Services that were once slow and vulnerable to human errors are now automated and safer, thanks to code that anybody can read and evaluate.
With a growing market for blockchain technology and cryptocurrencies, there have been multiple developments in the DeFi space. In this blog we will be covering some major trends to look out for in DeFi in 2022.
- Monetization Of Blockchain-based Games
Since the launch of the internet, the gaming industry has been witnessing rapid growth. With the introduction of blockchain-based gaming, it is expected to grow even further, gaining a larger user base. However, for gaming to be monetized, adoption of DeFi protocols is essential so that gamers can make payments over the blockchain. Minting of NFTs, trade between players are some examples of monetized gaming. With the advent of many blockchain-based games, there will definitely be a surge in the use of payment portals for which application of DeFi platform is a necessity and can emerge as the new trend.
- Cross-Functional DeFi Platforms
As the blockchain market is growing, several blockchains other than Ethereum such as PolkaDot and Equilibrium have been introduced. Moreover, increasing transaction cost in Ethereum has been prompting users to adopt a cross functional platform. Cross-chain technology allows transactions and smart contracts to cross over from one chain to another. Hence, to make stable transactions across different blockchains, there is a need to have a DeFi platform which can surf on multiple platforms.
This crossfuncionality feature might solve many problems faced by users and will emerge as a new trend in the blockchain and cryptocurrency industry.
- Governance Tokens
It refers to tokens that provide holders with governance rights within a particular protocol, game, dApp, or DeFi (decentralized finance) solution. These tokens are not the same as traditional cryptocurrencies. The goal of these tokens is to give token holders voting rights over an underlying DeFi technology. Token holders vote on initiatives, and the value of their tokens improves as the DeFi protocol grows in popularity and its total value locked (TVL) increases. Hence, this voting right gives additional powers to the users, which will make DeFi more popular in nature and therefore, holding governance tokens might be seen as something normal in the future.
- Popularity Of NFTs
With the introduction of several new platforms such as OpenSea, Foundation and Cryptopunk, the demand for NFTs have doubled over the past few months. This subsequently puts pressure on DeFi protocols so as to assist the buying and selling of NFTs. Moreover, new sectors of NFTs such as music NFTs have seen massive growth which establishes the requirement of a DeFi protocol there too. Therefore, in the next 2-3 years, DeFi developments in the NFT space will be huge.
- Increased Regulation
The concern with DeFi is that most investors aren’t intelligent or tech-savvy enough to know whether promised returns are realistic or not. Many DeFi protocols aren’t as decentralized as one might think, leaving them vulnerable to theft and cyber attacks. Therefore governments are looking at increased regulations to make it more fair and efficient, with less manipulation and fraud.
Some governments have started taxing cryptocurrencies and other blockchain-based transactions. . In fact, taxation will become the next upcoming trend in DeFi, with more and more governments introducing it and showing increased regulation towards cryptocurrencies.
In the next five to ten years, the blockchain industry is expected to see massive changes. These new updates are an outcome of increased awareness among people and their curiosity in cryptocurrencies and NFTs. Additionally, different areas have been emerging in blockchain like music NFTs and gaming. With newer consumer segments entering the market, there has been a demand for having a secure payments portal in several platforms for which DeFi’s importance is vital. , In line with all these developments, the role of DeFi will expand to include all the latest inclusions..