The DeFi Revolution Coming in 2023
The crypto markets rallied to start the new year. It appears we have survived the worst of the crypto winter. That said, it might be too early to declare the bear market over but there’s certainly been a breath of optimism into the sector for the first time in months. With this rediscovered sense of optimism, it’s worth asking what’s going to be the driving force of crypto in 2023 and beyond. If you ask us, we think that will be DeFi.
A $75 Billion Opportunity w/ More Growth to Come
According to dAppRadar, the total value locked in DeFi protocols is over $75 billion which — even with the recent downturn- represents truly parabolic growth from May of 2020. That value is derived from all deposits locked in the form of cryptocurrencies for lending, staking, liquidity pool, etc. The chart is impressive and in many ways speaks for itself but it’s important to remember that the true opportunity is magnitudes larger.
Our current financial system is ripe for innovation as it hasn’t really systematically changed since the industrial revolution. Many of the innovations we have seen over the last few decades are merely superficial retrofits. The “innovation” in Fintech was coming from the UI/UX or data aggregation, but the core legacy banking systems stayed the same for decades. DeFi is a true reconfiguring of the systems and structures of the financial system at its deepest levels.
As DeFi continues to grow it will have the opportunity to disrupt so many sectors- consumer banking ($2.3T), insurance ($6T), traditional capital markets ($100T), and many more. That’s a huge opportunity and one that you should keep on your radar as DeFi continues to grow & mature.
DeFi Lowdown
Decentralized finance, or DeFi, refers to an emerging class of decentralized applications (think like apps on your phone but created through smart contracts) that aim to recreate traditional financial instruments using a web3 tech stack (i.e., built on top of blockchain). It’s essentially peer 2 peer finance — free of middlemen, gatekeepers, or controlling governments and governed by clear programmed rules (smart contracts). No funny business allowed! With DeFi it will be possible to take out loans, exchange value, earn yield, borrow assets, join liquidity pools, and mint stablecoins and even more uses will emerge as innovation continues.
Core Tenants:
- Permissionless (openly accessible to anyone)
- Programmable (fully automated by smart contracts)
- Transparent (traceable and trackable to a public ledger)
- Immutable (unchangeable)
- Non-custodial (no one can freeze or seize your assets)
Real Life (D’)Applications
There are over 12,000 DApps- a number that is growing too. It’s still early but you get how this story is going- as time goes on adoption will increase and these sorts of applications will become more and more mainstream. DApps are innovating not just in finance but also in gaming, property, security, marketplaces, and media.
You can see from the chart above, the DeFi sector holds 377,000 dUAW, as of January 2023. There’s a massive potential for growth here as more and more useful dApps are built. For users, DeFi applications are similar to regular web or mobile applications, but they are built with smart contracts. For example, with DeFi lending, users can borrow cryptocurrency, like with a fiat currency at a bank, or lend it to earn additional interest. That’s right you now have that power, it is not solely reserved to banks or the ultra-wealthy.
Interest fluctuates depending on the supply and demand at the time, and borrowers must provide collateral (w/ other crypto-assets) but the process is permissionless, programmable, transparent, immutable, and non-custodial so it’ll be easier and less expensive than going through a more traditional channel.
Future of Crypto Asset Management
Multi-Chain Future Becoming Reality
With Velvet.Capital and our Cross-chain DeFi Asset Management Operating System, users can create all kinds of thematic, crypto portfolios, indexes & other financial products with additional yields — across assets and ecosystems. All in just a few simple clicks.
You can make your own or copy one of your favorite crypto gigabrains! The possibilities are endless. We utilize modern portfolio theory and yield farming to improve your risk-reward profile & amplify your returns. We build with the future in mind so you’ll be able to benefit however the market evolves.
The multi-chain future (Binance, Ethereum, Polygon, Avalanche, Tron, etc.) is coming as users search for more cost-efficient ecosystems with cross-chain features. The days of Ethereum totally dominating are over. This can be illustrated in the chart above that shows the TVL growth of competing chains in the last 12 months. You’ll be able to best take advantage of wherever the trends go with Velvet.Capital.
You don’t need to spend time researching different cryptocurrencies, making trades, and staying on top of a constantly evolving crypto market — we got you covered. Velvet.Capital provides a secure and intuitive platform for anyone — individuals, professional asset managers, and treasury managers alike to benefit from the crypto sector.
DeFi Use Cases Will Only Grow from Here
The use cases for DeFi are going to expand and grow as the technology matures but some worth mentioning use cases are: for compliance & KYT purposes (know your transaction purposes) — meant to prevent money laundering/ other illicit activity, improved data analytics- making better decisions from a more transparent and wide pool of data, and insurance- protecting your assets with smart contract centric insurance solutions.
Frictionless
Aside from some of the more obvious benefits of DeFi- that come with the immutability, transparency, and trackability, the permissionless nature, the programmability, and the control you have over your assets- it’s completely frictionless. When you remove the layers of gatekeepers & intermediaries, the red tape and bureaucracy; you create a streamlined and seamless experience that keeps people much closer to their desired outcomes- meaning you maintain a high level of control. Your future is back in your own hands.
The horrible fees, paperwork, lag times in processing requests, the incompetence- gone! Imagine all the synergies that come from savings on fees, administrative costs, regulatory hurdles, time, energy, and worry! You no longer have to rely on banks, governments, regulatory agencies, etc. to get stuff done. Just you, your desired outcome, and a smart contract. All from your phone or computer. Voila!
This is just the beginning for DeFi and Velvet.Capital. It’s time to take back control of your assets and financial future.
Create Custom DeFi Portfolios Easier Than Ever Before
Don’t forget to take a look at what the future of DeFi has to offer: Velvet.Capital.
Follow us on Twitter, LinkedIn and join us on Discord & Telegram for more updates! We want to hear from you, don’t be shy.
Until next time,
Cheers!
Originally published at https://velvet.capital.
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