Not all implemented DeFi projects were successful
Experts differ on the future of decentralized finance
Many startups fell short of expectations
International consortium of news organizations developing transparency standards.
Members of the crypto community have different attitudes towards the decentralized finance market (DeFi) Decentralized finance (DeFi) is a financial service built on blockchain technology that offers users access to an open, efficient and … More). Some follow his success with enthusiasm, others use DeFi tools to make money throughout the entirety, while others prefer to quietly giggle at the direction investors.
Either way, DeFi has become one of the main themes of 2020. BeInCrypto decided to find out what the future holds for the decentralized finance market and whether it can survive in 2021. To do this, the editorial staff of the magazine learned the opinions of experts on the prospects for DeFi..
Decentralized finance – to be
Tatiana Maksimenko, official representative of the Garantex cryptocurrency exchange believes that decentralized finance will occupy a certain niche in the financial market.
“This is an approach to lending and tokenization of assets, which was demanded by market participants, but was impossible for a long time due to insufficient technology development. Now there is an emergence – not even the formation of this sphere, so it will either grow, then collapse, then revive in a modified form, but DeFi will not go anywhere, ”the expert explained her point of view.
The amount of funds blocked for DeFi projects. Data: DeFi Pulse
Tatyana Maksimenko noted that, as at the dawn of the emergence of cryptocurrencies, the top of the largest DeFi protocols in terms of the amount of frozen funds can radically change every year..
“If we look at the top 10 cryptocurrencies according to CoinMarketCap for 2014 and 2017, we will see how the composition of the leaders has changed. Only bitcoin remained unchanged. So it is with the DeFi sphere: in a year, some of the DeFi protocols may be deflated, but others will appear that will take their place, ”the expert summed up her thought.
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Of a similar vision adheres to the president of the blockchain company PointPay Andrey Svyatov. He believes that the decentralized finance system will definitely continue to develop..
“In 2020, the main focus of blockchain engineers was on mechanisms for placing and withdrawing liquidity in Ethereum and ETH-like tokens from the protocols functioning on its blockchain. At the same time, in 2021, a possible growth point could be the creation of bridges, which, within the framework of one smart contract, would open access to the services of trading, lending and profitable farming using several popular blockchains, and not just one Ethereum, ”explained his point of view President of PointPay.
This concept of decentralized liquidity management using multiple blockchains, as noted by the expert, is often referred to as atomic swaps. Perhaps it is she, according to Andrey Svyatov, who will become the next driver of the cryptocurrency market development.
Full speed ahead
Chief Editor of Cryptonization Irina Dzhigilo, in turn, I am confident that there will be no decline of DeFi in 2021.
“You need to understand that now the technology and the idea is at an early stage of development and is facing a number of difficulties. The main one is the complexity of use. But the possibility of transfers, loans, insurance, deposits, etc. in an impersonal format is viable and will develop in the future, ”the expert explained her point of view.
An indirect sign of the viability of DeFi, in her opinion, is the emergence of more and more projects that are supported by large players (such as Binance).
“I expect DeFi to continue to grow in 2021 as well. We will most likely see new platforms and technologies that will make using DeFi more convenient. Perhaps next year we will witness the use of DeFi in the real sector, “summed up Irina Dzhigilo.
Top 10 DeFi Projects with the Most Funds Locked, as of December 16, 2020 Data: DeFi Pulse
Two reasons for DeFi to survive
Tokenomica CEO Artem Tolkachev also sees the prospects for the development of the decentralized finance market. He noted that despite the rise in the bitcoin rate, the fastest growing industry in the cryptocurrency market is DeFi protocols..
“Firstly, unlike a simple crypto purchase, DeFi is practically the only way to receive a regular fixed income in cryptocurrencies,” the expert noted..
He explained his point of view by the fact that the annual percentage yield (APY) in the top 5 DeFi protocols varies from 15 to 166% per annum.
“Secondly, DeFi protocols are a new round in the development of the entire cryptocurrency market. If Bitcoin makes it possible to extremely simplify the storage and transfer of funds, then DeFi-protocols provide a real opportunity to change the loan market due to much simpler conditions for their issuance, “Artem Tolkachev summed up his thought..
Top 10 DeFi Tokens by Market Cap, as of December 16, 2020. Data: CoinMarketCap
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DeFi under the shadow of an ICO bubble
Ambassador of the innovative blockchain ecosystem UMI Andrey Amris, in turn, noted that today decentralized finance is experiencing a real boom. At the same time, he drew attention to the fact that all market participants remember 2017 and the ICO – the bubble burst quickly, and few of the ICO projects survived and did not mourn.
The expert is confident that after a rapid rise, the sphere of decentralized finance may face a serious recession and prolonged stagnation. However, he does not believe that this sphere will completely disappear..
“I think that it [the sphere of decentralized finance] will recover during stagnation and will continue to develop, which is already less hysterical than now,” said Andrey Amris.
The very approach in decentralized finance seems to the expert to be very interesting.
“It [the approach to implementing projects on the decentralized finance market] is not innovative, but only now there is an opportunity to implement it,” the UMI ambassador explained..
Lending, insurance, tokenization The term “tokenization” has been around for quite some time. In the broadest sense, a “token” is a certain unit designed to represent a certain value within … More assets, in his opinion, are the most demanded areas of application for decentralized technologies. And the expert noted that their implementation was discussed not only among some crypto geeks, but also financial organizations themselves were thinking about how to improve the customer experience and shorten the path between the borrower and the lender..
Top 10 DeFi projects according to capitalization, as of December 16, 2020. Source: Defimarketcap
“In general, this has all been discussed for a long time, but now it has begun to come true,” Andrey Amris summed up the thought.
The expert noted that he would like to separately highlight decentralized stablecoins. He noted his interest by the fact that at first they saw cryptocurrencies as a tool to counter excessive censorship in relation to financial transactions. Andrey Amris drew attention to the fact that we are not talking about any illegal transactions such as the purchase of weapons or drug trafficking, but about completely legal operations.
“Those who have tried to work with cross-border operations and those who have subcontractors (or those who are subcontractors themselves) abroad know how many obstacles arise when paying for services under the contract. Operations are blocked, then the money has to be freed from captivity for months, and obligations to partners abroad do not disappear, ”the expert pointed out the problem.
At first, Andrey Amris noted, they tried to use cryptocurrencies to solve this problem, but it turned out that this tool is not convenient for everyone because of the high volatility. Then, according to him, they began to use stablecoins, but now every year it becomes more obvious that they will face the same fate as ordinary fiat transfers – accounts and transactions are easily blocked by the central management of these projects..
And here, Andrey Amris drew attention, there is a demand for a truly uncensored instrument. Such, in his opinion, can be decentralized stablecoins, which arose in the environment of DeFi-protocols..
“I believe that in the future, decentralized stablecoins will become even more popular than they are now,” summed up the UMI Ambassador.
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More expert opinions on what awaits the decentralized assets market in the future – in our material.
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