Decentralized financing has exploded over the past twelve months. Barter, storage and agricultural crops have been successful. DeFi’s market cap has reached $ 45 billion, and there is more than $ 28 billion total value locked in DeFi today. That’s up from $ 600 million in January 2020 – an increase of 4,300%.
As with all emerging technologies, it attracts new money flowing into the talent sector, innovation and the best entrepreneurs. Like it or not, standard cryptocurrency rates will also attract the attention of major Wall Street media. This combination of factors, along with DeFi’s glamor and glamor, is the result of a true silent hero letting a tsunami of capital flow around him. Without this, DeFi wouldn’t be possible – I’m of course talking about the infrastructure that supports the decentralized internet, or Web 3.0.
At the time of writing, DeFi’s outstanding loans have increased 22 times from $ 150 million last year to nearly $ 4.5 billion today. The monthly decentralized exchange amounts to 30 billion dollars. There are now over 230 decentralized apps, with innovative new projects announced on a daily basis. The largest projects in the DeFi space boast impressive stats: The MakerDAO project has released more than $ 1.5 billion in Dai; The complex currently has $ 5.8 billion in assets reaping interest across nine markets; Uniswap has handled a lifetime volume of $ 51.7 billion.
Related: Was 2020 the “Year of DeFi,” and what is the sector expected to do in 2021? The experts answer
The numbers are staggering and keep growing. DeFi is about to enter the mainstream as we see more institutional investors participating in this area. This will only continue to happen as we see more and more central funding shifting to blockchains.
For example, Uniswap and Curve are quickly competing with volume for the top exchanges. Automated market makers empower individuals by allowing them to trade without incurring the overheads of central exchanges and by allowing them to participate in liquidity pools. Users can now become market makers, cutting out middlemen and giving centralized exchanges a run for their money. DeFi eats their lunch, and is a prime example of what cryptography is designed to do, cut the middleman, and conditions ripe for innovation.
Decentralized Infrastructure and DeFi
DeFi wasn’t possible with the internet as we knew it. Zooming in on the ancient internet, we see that Web 2.0’s centralization, monitoring, and intrusiveness give power to a small minority. We’re seeing that play at fintech, as trading apps come under scrutiny due to the GameStop trading story. DeFi adoption signals a shift away from traditional institutions as large communities flock to build on something different: the decentralized infrastructure for Web 3.0.
Related: The GameStop saga reveals that old finance is fake, and DeFi is the answer
We are witnessing not only the formation of a new financial center but also the formation of a new economy, new professions and new institutions. That being said, there is still a long way to go. We have yet to see the emergence of Bloomberg or Robinhood of crypto. I’m excited to see more and more Web 2.0 developers flocking to Web 3.0 from companies that previously worked on centralized systems, selling data or pushing ads to their users. The web 3.0 infrastructure that Ethereum, IPFS, and others bring to you, gives you an opportunity to build on a decentralized infrastructure that they know will always be there, with an emphasis on the user experience and user interface of their apps.
Web 3.0 is the future
I believe blockchain is an integral part of the future of the internet. It is the basis on which these new ideas will be built. We scraped the surface only with what was possible. Business models that could only exist on blockchains will appear, giving opportunities to people who might not have had the opportunity to live well otherwise. In this decentralized, blockchain-powered future, there won’t be a single point of failure.
It is clear that Ethereum has been one of the major enabling factors for DeFi that has been at the forefront of Web 3.0’s evolution. The Electric Capital report claims that “Ethereum has 4 times more developers than any other crypto ecosystem,” and nearly half of all the decentralized applications operating in the market are dependent on the Ethereum network. I believe Ethereum will remain the largest ecosystem by expansion solutions as well as other binary layers. Portability will continue to live on Ethereum, making it difficult for others to compete, and ERC-20 tokens will likely remain the standard within the ecosystem.
Related: The second layers will save the day in 2021, boosting Ethereum and DeFi
However, we will live in a multi-blockchain future. No single chain would rule them all; Blockchain interoperability will be key to supporting the next web. This multi-blockchain future will inspire the next generation of applications. There will be more encapsulated assets, non-perishable icons, gaming and privacy apps not tied to a single series.
Related: Time to get off the dukes and work together for the future of the blockchain
The increase in DeFi has proven that blockchains are a great price discovery tool. This is where cross-blockchain compatibility matters. Without the layers connecting the blockchain, the real price discovery would not be possible, and there would be an arbitrage problem that was insurmountable.
Related: The future of cryptocurrency trading will be a comprehensive chain
The basic infrastructure implemented in 2020 is essential for blockchain interoperability. Moving applications towards verifiable decentralized data and away from private application programming interfaces (APIs) as a primary vector for interoperability reduces platform risks for applications looking to integrate with one another.
The decentralized network turns the idea of the Fortune 500 company on its head. The protocols will allow people to work for ideas, not just companies. Foundational layers are building for a new network and how humans interact online. This new web will reward creativity and inspire entrepreneurs. Decentralization gives everyone a chance to make a difference in the world. We’ll see an era of innovation we’ve never seen before, and it all goes back to a white paper published in 2008 by an unknown author.
We didn’t fully realize the amount of space available to grow with Web 3.0. Web 2.0 developers now have a decentralized infrastructure to build on and create new business models – models that put the user first, respect privacy, and foster entrepreneurship.
DeFi is just the beginning, and the DeFi snowball will turn into an avalanche on Web 3.0.
Opinions, ideas and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Kline crowns He is the entrepreneur at The Graph, an indexing and querying protocol that organizes the world’s open blockchain data and makes open data a public good. Tegan is the former Director of International Business Development and OXT Relationship Leader for Orchid, a blockchain powered by A16z and Sequoia. Tijan began her career in traditional finance before discovering the blockchain.