State of DeFi
A quick run through of the state of DeFi over the years
Last updated
Was this helpful?
A quick run through of the state of DeFi over the years
Last updated
Was this helpful?
Decentralized Finance(DeFi), is an umbrella term for various financial applications and projects in the public blockchain space, that operate solely on the Internet. As with crypto generally, DeFi is borderless, thus global, and somewhat peer-to-peer with no centralized human-led intermediaries, pseudonymous, and open to all.
DeFi has seen tremendous growth since 2020.
The ecosystem saw growth of the Total Value Locked (TVL) in DeFi by at least 15,000% in 2 years, peaking at 200B USD total value locked, as of Jan 25, 2021, in numerous protocols, offering users different kinds of decentralized financial services. It currently sits at 50B USD with far more room to grow (as of April 10th, 2023).
Source:
But there's more.
Stablecoins -- a digital asset that is pegged to fiat currency -- is considered one of the most innovative pillars in DeFi. Stablecoins provide an avenue where you can park your money, hedge against volatility, or wait out uncertain market conditions.
There are two major types of stablecoins. Fiat-backed and crypto-collateralized stablecoins. Fiat-backed, such as USDC and USDT, are not decentralized meaning they can be censored, frozen, or even blacklist a user from using it. While crypto-collateralized stablecoins such as DAI give the user much more flexibility and liberty. Crypto-backed stablecoins also create an avenue for their user to access and spend the value of their crypto, without having to sell it, as it's used as the collateral backing the stablecoin. This gives the user the peace of mind of being able to keep their crypto’s upsides, with also the assurance that the stablecoin is not exposed to volatility.
The non-fungible tokens(NFTs) space has equally seen explosive growth since the beginning of 2020, with total sales volume exceeding more than 50 billion USD, the majority happening in the last year.
Source:
Individually, each space is experiencing massive exponential growth, but as of yet, no project has emerged that fuses the blazing potential of both into one platform.