The DeFi market has been in the spotlight for years, with another bumper year in 2022.
DeFi, or decentralized finance, refers to financial products such as collateralized loans and derivatives that are offered using decentralized blockchain technology rather than the traditional centralized systems of banks and exchanges.
However, at the same time, some industry experts still doubt whether projects from this investment segment are worthy of attention and interest from investors and crypto enthusiasts.
Have you been following the DeFi craze? From yield farms to decentralized exchanges and staking, there are plenty of projects out there. But now that we’re a few years into this wild ride, let’s take some time and reflect on what trends are driving the growth of DeFi in 2022-2024. A lot has changed since 2021–from new players entering the scene to innovative projects revolutionizing how blockchain technology is used–and understanding these trends can help Bitcoin holders, traders, and investors create smart investment strategies moving forward. So come along to review the top DeFi trends for 2022-2024, the future of DeFi, and much more!
Does DeFi Have a Future?
The development of the decentralized finance sector is controversial among crypto experts. Some are sure that soon DeFi will become a hostage of its own growth. However, others think the bubble threat is overblown, and DeFi will definitely reshape the future of finance.
The role of DeFi is becoming more evident, and, likely, DeFi will only grow in the future. As we can see, the range of services provided by DeFi applications is already impressive. It includes lending, loans, insurance, stablecoins, decentralized exchanges, online gaming, etc.
Investment volume from institutional investors in the crypto sector has been growing for several years. But if earlier prominent players invested primarily in Bitcoin and Ethereum, now they have begun to invest in altcoins and DeFi protocols. In 2022, this trend is likely to be one of the growth drivers for the entire crypto market.
The growth of institutional investment in altcoins and DeFi shows that the attitude of large players towards the crypto sector has changed dramatically in a positive direction. When choosing digital assets, they seek high returns, especially against the backdrop of volatility in the stock market and minimal returns on conservative instruments, as well as protection from ever-accelerating inflation.
Top Reasons Why DeFi Will Grow
Crypto enthusiasts want to believe that DeFi will always be on the rise. But what might drive its growth? Some count on non-fungible tokens (NFTs), while others believe the Metaverse will take the lead. Let’s check out more of these reasons.
This area lacked regulatory clarity from the beginning but is finally starting to improve. Some jurisdictions are starting to offer regulatory certainty that allows DeFi protocols and tokenized assets to continue operating within their borders. In addition, many countries have begun to open up their markets and create a “safe space” for decentralized finance. Experts believe this regulatory trend will continue throughout 2022 and bring DeFi projects closer to mainstream adoption.
Blockchain adoption reaches new heights
DeFi will very likely continue to grow as blockchain adoption continues to gain momentum around the world. More and more exciting next-gen blockchain projects are emerging, adding value to platforms like Ethereum. As a result, DeFi projects will be able to attract new users as well as provide decentralized financial solutions to existing ones. This cannot but lead to an increase in the popularity of these protocols.
New players are entering the DeFi market
More and more new players enter the DeFi market daily, increasing competition. This includes both existing institutions and potentially successful new start-ups.
Existing institutions are expanding their services by relying on decentralized finance protocols. By launching various applications focused on decentralized finance (DeFi), these protocols not only increase their legitimacy but also become more attractive to existing and new users.
What to Wait From DeFi in the Future
Learn about the most exciting and influential trends in the DeFi space and what we could expect from DeFi in the future. Check them out!
- Traditional financial products are starting to enter the decentralized finance (DeFi) market. As the DeFi industry continues to skyrocket, we can expect financial products such as insurance, derivatives, and tranche or secured lending to become increasingly important.
- DeFi is on its way to monetizing blockchain-based games. With more and more people worldwide dedicating their time to online and video gaming, players and creators want to further monetize this industry.
- Cross-chain technologies hope to solve scalability issues. One of the most serious problems associated with rapid DeFi ecosystem growth is the increasing transaction costs. Many crypto projects are starting to offer cross-chain features to solve these issues. It is hoped that this interoperability will allow DeFi platforms to scale much more easily than on the Ethereum network alone.
- Decentralized exchanges and automated market makers fuel DeFi growth. Another problem facing the DeFi space is balancing decentralization with efficiency. Centralized crypto exchanges allow for efficient transactions. However, many of them are lacking when it comes to decentralization. Here is where DEXs and AAMs come into play.
- DeFi platforms’ own tokens have become more important. Known as governance tokens, they differ from ordinary cryptos. They aim to provide the holders voting rights regarding an underlying DeFi protocol. These governance tokens have become increasingly popular in 2022, and traditional financial institutions are also starting to notice the value of owning governance tokens.
Top 5 #DeFi Trends for 2022-2024
DeFi technology is on the rise, and DeFi trends for the next few years are poised to take the blockchain and crypto industry by storm. Traditional financial products are set to enter DeFi in 2023, meaning DeFi could finally be ready for mass adoption. DeFi technologies also hope to monetize blockchain gaming experiences and provide decentralized exchanges (DEXs) and automated market makers (AMMs). But these DeFi trends won’t stop there – cross-chain technology is being developed in an attempt to end scalability issues, while governance tokens will become increasingly vital for DeFi stakeholders. Soon DeFi will become a household term, and all eyes should be watching out for its incredible potential!
How to use DeFi to grow your crypto portfolio
If you’re interested in DeFi and want to use it to create passive income, there are several ways to double your tokens. You can try:
- Staking — the process of depositing crypto assets into a smart contract;
- Yield Farming — the practice of utilizing the tokens you have earned as a liquidity provider on a yield farm to make a profit;
- Investing in DeFi projects — you will need to prepare a crypto wallet, purchase coins, get started with protocols, and track your DeFi investments. However, before investing in this or that DeFi project, you have to Do Your Own Research (DYOR).Please find out more in our BullPerks DYOR guide, and learn how to analyze IDO projects.
Regardless of the rise in Bitcoin price, DeFi can somewhat beat the classic cryptocurrency market. Of course, the decentralized finance segment can face risks and difficulties, but all the shortcomings compensate for the opportunities it opens up.
In the future, DeFi will likely gain a foothold in the traditional financial market. But, at the same time, the decentralized finance market already has several noteworthy projects that will definitely make it into history of the digital economy.
Would you like to start investing in the most impactful projects with BullPerks? Learn how in this comprehensive tutorial!
Disclaimer. This material should not be construed as a basis for making investment decisions or as a recommendation to participate in investment transactions. Trading digital assets may involve significant risks and can result in the loss of invested capital. Therefore, you must ensure that you fully understand the risk involved, consider your level of experience, investment objectives, and seek independent financial advice if necessary.