Looking at DeFi's Untapped Potential. Decentralized finance | Crypto Fight
Looking at DeFi's Untapped Potential.
Decentralized finance (DeFi) is the largest and most innovative crypto vertical in the last two years. DeFi has used smart contract platforms as a base to develop a network of interconnected layers for decentralized financial services.
DeFi TVL (total value locked) across chains reached $256 billion in December 2021. The last few months have been difficult for the cryptocurrency market, falling to $73 billion. Market disadvantages can create new opportunities. Innovation involves repeated failures until breakthrough structures are built. DeFi protocols for the next generation have many options. Let's find these opportunities.
CeDeFi
Assets are the foundation of any economic system, including DeFi. Stablecoins are driving decentralized finance by overcoming the cryptocurrency market's high volatility. Its invention made non-volatile account units important for lending, borrowing, and forecasting interest payments.
DeFi protocols should use stablecoins as an asset because they offer high trust and reduce volatility, making them ideal for decentralized financial products.
A need to capture more opportunities in Synthetic and Real-World Assets (RWAs)
Blockchains have innovative protocols for building synthetics and RWAs, but some blockchains lack synthetics and RWA protocols for the DeFi ecosystem.
Investors can profit from synthetic assets without owning the underlying asset. They let investors invest in crypto commodity classes that are out of reach due to product structure and characteristics. DeFi protocols can use synthetic assets thanks to blockchain composability. Synthetics in crypto assets improve DeFi's efficiency by offering investors access and liquidity.
Most DeFi protocols overcollateralized crypto due to volatility. Real-world assets (RWA) lack this trait. RWA is a non-volatile DeFi-TradFi bridge. RWA's protocols would attract retail and institutional blockchain investors.
