The crypto industry wants to upend the giants of finance. And they have a word for their revolution: DeFi trends.
Technological advancements have given a push to digital currency trading. Numerous DeFi trends have emerged from the fray. No doubt, new DeFi trends, and developments have entered the market and resulted in tremendous DeFi growth.
The decentralized finance market size is following hot on the heels of cryptocurrency as a trending term in this fintech world. Major platforms including Compound, Uniswap, Maker, and Aave have seen a major boost from less than $1 billion in 2019 to more than $90 billion in 2021. It’s continuing to develop new innovative ways to earn yields on digital assets.
But what exactly is it? You might be searching the web trying to figure out the latest DeFi trends. Well, in this article, we will cover the main decentralized finance trends holding up the DeFi market size, including some examples to help illustrate our points.
What is DeFi?
DeFi refers to a new phenomenon in the world of crypto which involves functions like borrowing or lending money without any middlemen like banks or brokers. The concept focussed on making financial products and services accessible to everyone through a decentralized network i.e. blockchain.
In simple terms, decentralized finance or DeFi is a category of crypto applications that provides traditional financial services on Blockchain technology in a decentralized manner. DeFi is considered a decentralized version of the conventional finance sector. The applications or dApps built on top of the decentralized finance market size are permissionless with several functions automated by smart contracts.
As a result, numerous blockchains form the underlying technology for decentralized finance applications. In addition, these popular trends in DeFi in the form of dApps have been disrupting the traditional finance ecosystem where the stakeholders are finally sitting up to take notice.
How have the advantages helped DeFi Trends?
The world of decentralized finance seems more volatile than ever before. No doubt, the several advantages of DeFi trends have made the fintech fans engage themselves to invest in upcoming projects. The trends in DeFi come with better transparency, control, and efficiency for financial assets. Hence, it appeals to investors with an irresistible alternative to the traditional finance sector.
People who wanted to step outside the traditional system’s drawbacks were quite attracted to the new decentralized computer approach. Therefore, more and more banks and financial institutions realized their exponential growth just by adopting the DeFi trends in their principles.
After a series of crises and scandals in traditional finance, legions of computer programmers decided to throw their hats into the ring. Hence, developing a new infrastructure that took banks and other institutions out of the equation. Anyone with a computer and an internet connection could launch their own software for virtual lending, trading, and insurance.
It was very difficult for involved users as the third-party agencies provided an extensive amount of complications for every major or minor transaction. Hence, to overcome such challenges multiple trends in DeFi trends were introduced to the fintech world. To understand the DeFi growth let’s talk about the benefits offered by the decentralized finance market size:
A. Your financial assets and products are stored on a decentralized crypto
Unlike the traditional method, where the money and assets were held by the custodians, the products are stored on decentralized crypto. These crypto wallets incorporate different digital currencies like Bitcoin, Ethereum, Blockchain, and other chains.
B. High-cost deduction
DeFi trends removed the need of paying a hefty price to the middlemen. It’s not like DeFi products are absolutely free, but it offers a much cheaper and more secure alternative to complete transactions.
C. Decentralized finance trends removed the transaction delays
Trends in DeFi offer a quicker way as compared to the traditional method. Completing a transaction using the DeFi method takes less time than ever before. Meanwhile, a simple money transfer might take days to process in the traditional method.
D. Decentralized finance trends allow anyone to access quickly
The trends in DeFi market size do not require a long time-consuming process for verification. In fact, it’s a simple and quick method where you don’t have to provide personal documents.
As we all know, DeFi trends have maintained a continuous DeFi market size since its inception, attracting countless investors. The beginning of the DeFi market size in the crypto market has scaled up the DeFi growth rate. Many DeFi stats have highlighted the rising investment in the decentralized finance trends. Let’s have a look at some of these DeFi statistics below.
Amazing DeFi Stats indicating Decentralized Finance Market Size
The exploded interest in DeFi growth over the last 3 years has resulted in some fastest-growing DeFi trends in the decentralized finance market size. Before diving deep into the top trends in DeFi, it’s imperative to access some important DeFi statistics that will back up all the data that we are about to present to you. So here are some amazing DeFi stats that will indicate the growing popularity of DeFi trends.
- DeFi market size total locked value has exploded over the past years. The TVL has reached over around 43 billion on DeFi platforms. (DeFilama)
- DeFi protocols surpassed the cumulative revenue of $4.5 billion in March 2022. (The Block).
- Presently, over 86.8 million users have a crypto wallet from all over the world. (Statista)
- The average daily trading volume on all DeFi bridges is $153.42m, whereas the monthly trading volume is $5.26 billion. (DeFiLama)
- The estimated number of DeFi users is estimated at 4.87 million in 2022 worldwide. (Dune)
- The highest staked value of blockchain in the decentralized finance market size is Ethereum with over 58% of the total value. (Statista)
DeFi Market Size
Evidently, the COVID-19 pandemic has resulted in clear domination of DeFi trends over traditional financial institutions. Hence, the year 2021 has been a wonderful year for decentralized finance growth.
According to a report, the decentralized finance market size is estimated to grow by $125.1 billion by the year 2028 at a CAGR rate of 42.8% globally. As the regulations work on smart contracts, the algorithm focuses on the consistent practice of transactions directly between two parties. Furthermore, extending the development in security in the decentralized finance trends has surely made the DeFi market size grow bigger this year.
Trends in DeFi saw exponential growth in the year 2020 when the TVO grew by 14x. To be precise, the momentum continued in the year 2021 as well. To a point where TVL quadrupled to a total value of 112.07 billion dollars. Since DeFi is unregulated primarily and billions are poured into this market saying that it’s dangerous and precarious won’t be a wrong statement due to lack of consumer safeguards fraud and money laundered over this market as per Elliptic more than 10 billion dollars was lost to DeFi scams just in 2022. Despite being highly risky, DeFi is on a substantial rise.
In spite of witnessing such a boost in the decentralized finance market size, the practice is still in its early stages and yet remains with a huge possibility of innovations. So now you might be wondering about the latest DeFi trends that will be worth keeping an eye on in 2023. Don’t worry we have explored some of the most popular DeFi trends that will rule the market in the upcoming years. Let’s have a look at the following segment.
DeFi Trends for 2023
The expansion of Decentralized finance growth has led to the creation of an enormous amount of DeFi trends that are going viral at a rapid rate in the digital space. What’s in store for us in the upcoming time? Let’s have some insights into some of the top trends in DeFi.
A. Traditional financial products
The first trend DeFi that will transform the DeFi marketplace includes Traditional financial products. Traditional financial products enter the DeFi landscape with various benefits and scopes. Currently, Maker and Uniswap are the major players in the market of decentralized finance trends. DeFi trends in products and protocols based on major public chains occupy many tracks, especially in the traditional finance industry.
Maker, for instance, makes up over 20% of the entire DeFi derivatives market, while Uniswap ranks second on the table. The digital crypto space has also utilized the Wrapped Bitcoin (WBTC) to perform deviations and enhance regulation. WBTC offers a method of creating a derivative of bitcoin based on Ethereum.
This version of bitcoin can be used to execute numerous tasks like staking, lending, or yielding farms on the Ethereum blockchain. Above all, WBTC’s supply saw a massive jump from 600 BTC to 124,000 BTC in the year 2020. By the end of the year, it made up to 1% of the entire bitcoin supply.
B. Monetizing Blockchain Gaming
The second trend DeFi that will transform the DeFi marketplace includes monetizing blockchain gaming. DeFi trends seek to monetize blockchain gaming in many ways. More than 1 billion active users are involved in the gaming spectrum of the DeFi trend. Many DeFi stats have revealed that more than 2 billion people all over the globe spend about $159 billion annually on games. Additionally, players may ‘mine’ tokens by completing specific game tasks.
In-game flexibility will require well-known DeFi protocols. The DeFi convention acts very beneficially for the fintech world. In addition, many games’ cryptocurrency owners will presumably want to see a return on investment. According to a Toptal poll, around 82% of developers and 62% of gamers expressed interest in generating and purchasing virtual goods that may be traded between games. Since then, the crypto economy has evolved to achieve its goals.
Ubisoft developed the first blockchain video, HashCraft, in 2019. Furthermore, the BitSport gaming network has announced that bitcoin owners will soon begin to sponsor professional players. Not only players, but it will also help them participate in tournaments. BitSpot stablecoin owners may stake their assets on new competitions to generate interest.
C. Cross-chain technology Or Crypto Bridges
The third trend DeFi that will transform the DeFi marketplace includes Crypto bridges. Cross-Chain technology hopes to solve scalability issues to a major extent. The rising transaction costs in the DeFi market size are one of the issues brought on by its fast expansion. The technology has the potential to facilitate blockchain interoperability as revealed by various DeFi stats.
The fast-rising Ethereum gas charges are only a single demonstration of this. In essence, Ethereum gas is the fee needed to complete an operation on the Ethereum blockchain. The cost depends on the supply and desire for the computing resources required to handle network transactions. Since 2020, the average sale expense has rapidly increased and went above 69 dollars in May 2021.
The biggest issues with blockchain development include the limited potential of tokens to be used on some other platform. Therefore, to overcome such silos, crypto bridges became another one of the popular DeFi trends that enabled users to access different chains smoothly. A crypto bridge between blockchains allows the transfer of tokens or other data from the ecosystem of a particular blockchain to another.
Interestingly, each chain can have different protocols, governance rules, and functionalities. With a crypto bridge, you’re able to move your assets to different blockchains and enjoy the benefits that may have been native to a certain ecosystem. Conclusively, these involve the essential building blocks of a crypto-enabled global economy that comes with various useful use cases.
D. Dex’s and AMM’s
The fourth trend DeFi that will transform the DeFi marketplace includes DEX’s and AMM’s. DEX’s and AMM’s fuel DeFi growth. Finding a balance between decentralization and efficiency includes one of the most challenging issues facing the decentralized finance sector. The utilization of centralized bitcoin exchanges like Coinbase makes commerce efficient. The market cap has increased by 36.8% in 2022 as mentioned by various DeFi stats. At this point, DEXs are the largest segment at 44.5% of the decentralized finance market share.
The comprehensive DEX trading in the first month of 2021 exceeded $60 billion, a milestone. DEX trading volume rapidly grew higher in the initial two months of the year 2021 than in all previous months together. DEX had to figure out how to improve the efficiency of their decentralized exchanges as volume increased. They have majorly attained this by using automated market makers.
E. Governance tokens
The fifth trend DeFi that will transform the DeFi marketplace includes Governance tokens. Government tokens have become more important. You might have observed that each of these expanding DeFi sites also has its tokens. The governance market cap includes around $11.9 billion by the end of this year. According to various DeFi statistics, top government tokens include Uniswap, Internet Computer, Aave, PancakeSwap, Maker, and many more.
These governmental tokens vary from conventional cryptocurrencies in several ways. The main objective is to grant token owners voting power over a base DeFi technology. For instance, a DeFi project like Compound may let people lend and produce farms using tokens native to a different protocol.
Take the balancer as an illustration. It’s a decentralized exchange for digital assets. Balancer also developed its government token known as BAL, Users can help govern the platform using the (BAL) token. Coin owners can trade their tokens with other users and vote on the platform proposals. The token value increases combined with the computing platform as a whole.
In addition, another DEX, Curve finance, also launched its own governance token in 2020. Instead of administering any IPO, Curve provided CRV to the system’s present liquidity contributors.
F. Liquidity Mining
The sixth trend DeFi that will transform the DeFi marketplace includes liquidity mining. Liquidity mining or yield farming includes one of the latest decentralized finance trends in the atmosphere. It quickly gained a lot of popularity after the DeFi growth in 2020. DeFi stats revealed that around $5 billion has flooded into the DeFi platforms with a high correlation to the introduction of liquidity mining in 2020.
Liquidity mining allows holders of crypto to easily help add functionality to the crypto community while also earning passive income off of their crypto assets. In addition, its benefits encouraged more and more investors to secure decentralized finance trends for their cryptocurrencies. Not only did the decentralized finance market size take the decentralized ethos of crypto to a new level, but in doing so it spurred other innovations.
While replacing the order book system of a centralized exchange was first seen as an issue, the solution of allowing users to add to a pool in order to earn rewards generated by fees has proved useful in multiple areas.
For instance, a recent case of liquidity mining of the DeFi application includes Compound finance protocol. The application allows every user to withdraw products or provide liquidity as long as they possess an Ethereum wallet. Recently, the application launched its own token named COMP. After that, the users went crazy over trading using their tokens and gained rewards as per the new protocols.
G. NFT-related Platforms
The seventh trend DeFi that will transform the DeFi marketplace includes NFT platforms. No doubt, Non-fungible tokens have a big contribution towards DeFi growth. Numerous DeFi stats and trends have proved the buzzing future of NFTs in the market. Various DeFi stats have highlighted the extensive use of NFTs in multiple marketplaces such as Opensea and Mintable.
Furthermore, the rising gaming spectrum DeFi trends have also resulted in the rise of NFT platforms. To clarify, the gaming models usually come with in-game assets that we can trade in the form of NFTs. In the end, we can surely say that the future of DeFi trends is said to be orchestrated by NFT-related platforms.
H. Development of Blockchain
The eighth trend DeFi that will transform the DeFi marketplace includes blockchain. The development of blockchain platforms provides a backbone for DeFi growth and upcoming decentralized finance trends. A long list of DeFi statistics has indicated that over a half percent of the total population is somehow utilizing blockchain technology.
The ultimate goal of the DeFi trends includes developing a sense of loyalty among digital users while providing top-notch services. Hence, to provide stability between different platforms, we use blockchain technology. To give an example, one of the most popular blockchain networks includes Ethereum. It has been supporting the sector for a very long time now.
The ninth trend DeFi that will transform the DeFi marketplace includes stablecoins. In simple terms, stablecoins are cryptocurrency tokens that are pegged to a real-world asset, like the US dollar. According to numerous DeFi statistics, the top stablecoins of the market are Tether, USD Coin, Binance USD, and many more. Furthermore, many DeFi stats have also highlighted the skyrocketed DeFi growth of stablecoins by $20 billion to over $26 billion over a year.
They utilize a few methods that constantly adjust their process so they stay pegged to that asset over time. The cryptocurrency market is highly volatile and stablecoins help to manage the volatility in the decentralized finance market size.
Stablecoins are supposed to be everything tokens like Bitcoin and Ether aren’t. Whereas Bitcoin’s price fluctuates sharply, stablecoins are designed to be worth the same as something else. In the decentralized finance market size, many stablecoins are also issued directly by companies, whereas bitcoin operates independently of any central authority.
J. Synthetic Securities
Lastly, another strong use case in the decentralized finance trends includes synthetic assets. Essentially, these were introduced to overcome the gap between the traditional commodity market and the crypto market. Consequently, these decentralized finance trends incorporated products are gaining more popularity than traditional securities because of their 24/7 active market.
In addition, it enables users to trade all over the world seamlessly. To give an example, with the utilization of smart contracts, the stock of your organization can be easily transformed into synthetic assets. Similarly, the DeFi trends enable users to trade assets easily on crypto exchanges.
Decentralized finance Market Size: Ending Thoughts!
No wonder the year proved to be a marvelous year for numerous trends in DeFi. We can call it a generation of NFTs, cryptocurrencies, blockchains, and even Metaverse that are helping to reach DeFi growth to the next heights. Many are calling the DeFi trends the “wild west of finance”.
This fast-growing industry aims to provide automated banking services for cryptocurrencies to everyone, with no middlemen. However, the DeFi market size is still in its early stages, which means there are risks. However, dealing with these concerns before will help these trends in DeFi become a mainstream mass system. Blockchain developers are still working on its improvements to make it a more reliable and robust solution for users.
The time has witnessed the latest DeFi trends that no one could have imagined. Now we don’t know what’s more has been kept in the bag of DeFi market size. However, we have explored the top DeFi trends that will continue to engage traders in the upcoming years. Moreover, we have also stated various DeFi stats that show the arrival of it to transform the world forever.
Conclusively, in this article, we have tried to cover all the DeFi trends and important DeFi statistics that you need to learn before investing in the decentralized finance trends. However, if you have any doubts related to the topic feel free to contact our team.