It is noticeable that even though many centralised companies have fallen or lost their positions in the past years, the DeFi ecosystem stood still and remained intact. However, it would not be right to say that multiple insolvencies in the centralised space left DeFi players unscathed. It does affect the condition of the bear market for a long time and damages consumer trust in crypto assets; however, there has been a silver lining.
Though the market struggled, there were huge developments in decentralized ledger technology. In the year 2020, the growth of DeFi stunned everyone as it took the financial world by storm. However, these frauds, bankruptcies, and irresponsible lending and trading created an urge to make better regulations for the crypto market. Let’s now delve into the details to know about the DeFi and upcoming growing DeFi trends in 2023.
What Is Decentralized Finance (DeFi)?
Decentralized Finance, popularly known as DeFi, is an emerging financial technology that is based on a secured distributed ledger. It is similar to those used by cryptocurrencies. The best thing about DeFi is that it eliminates the fees that banks and several other financial organisations charge for using its service. With DiFi, individuals can hold money in a digital wallet and easily transfer the funds, and any individual with an internet connection can easily use DeFi.
What are the Top 5 DeFi Trends in 2023?
After the lows and highs, DeFi is aiming to climb out of the bear market. Let’s have a look at some of the major DeFi trends in 2023 below:
1. Inclining towards real-world assets
Real-world assets (RWA) have helped to unlock large amounts of liquidity and utility by moving on-chain. Large DeFi lending players like MakerDAO have shown interest in investing in US Treasury and corporate bonds and have partnered with banks in order to provide loans with RWAs as collateral. It looks like these moves are going to be common in 2023 as several industries look at RWA as the top opportunity to get together with traditional institutions with DeFi liquidity.
2. Greater Stablecoin Adoption
Despite bear market conditions, stablecoins like Circle’s USDC and Maker’s DAI continued to be stable at the top of the cryptocurrencies by market capitalization. They are among the most widely accepted cryptocurrencies with strong user cases. There is a higher possibility that there would be a speedier adoption of stablecoin and reduced time and costs on international remittances in the following year.
3. Focus on layer-2 scaling and ZK technology
Ethereum Merge has become the talk of the town, but the gas fees and transaction speed were the problem with mainstream adoption. Its next evolution into one of the largest networks is called “Surge”, Zero-knowledge (ZK) technology and layer-2s will continue to be a focus area for DeFi in the coming years.
4. Security and Compliance
Speaking of security, it will be a huge focus in the near future. As billions of dollars have been stolen from the DiFi platform, ZK proofs will make on-chain interaction much more secure and also improve transaction speed and cost.
5. DeFi seeks to monetize blockchain gaming
Over the years, gaming has immensely dominated the world. There are more than 3 billion gamers worldwide, and they spend over $159 billion per year. Further, this is going to rise to roughly $256 billion. Through blockchain, gaming is the only way that developers trying to monetize and further the popular DeFi protocol will need to allow for in-game transferability.
Conclusion
This year is likely to bring great potential for change in the crypto world. With the rising interest in decentralized technology and its financial products, the DeFi projects align more with traditional finance. One important thing that combines these different trends is a focus on increased efficiency. We have listed the top DeFi trends to watch in 2023. For more information, stay connected with us.