5 Developments in DeFi You Should Know About
The world has been revolutionized by various technological advancements, and 2020 till date has seen the progress that would have taken many years to achieve. The global pandemic remains one of the most powerful driving forces behind some of the most innovative technologies and ideas of the previous two to three years. One of these innovative technologies that took the world by the neck is DeFi.
There is no doubt that the financial industry has been revolutionized by the emergence of DeFi as we have all seen. Decentralized finance was the theme of the year 2020, and since then, it has witnessed a huge exponential growth in market size and adoption, leading to the birth of new DeFi projects and marketplaces. According to Defi Llama, the total value locked (TVL) — the total value of assets deposited in DeFi protocols is $200bn.
Top Important Trends in the DeFi Space
The advent of 5G will make a significant impact and boost to DeFi. With DeFi, traders have the ability to lend, borrow, and receive higher-interest rewards as compared to traditional financial organizations. As a result of this, DeFi will employ 5G to assure high-speed connectivity, reducing the need for servers to be situated near Bitcoin exchanges.
Ethereum and Cross-Chain Technology
When decentralized financing and the latest DeFi trends are discussed, it will be difficult and unjust not to include Ethereum in the discussion. Ethereum was part and parcel of DeFi in 2021, and this support and move are expected to continue.
To enable the smooth movement of information between different blockchain networks and encourage user interoperability, cross-chain technology has emerged as one of the most recent manifestations of the 2021 DeFi trend.
Matic blockchain, also known as “Ethereum’s Internet Blockchain,” an excellent example of cross-chain technology, is a critical endeavor to spread the DeFi sector’s load across numerous blockchains. It addresses some of Ethereum’s existing issues, such as high transaction costs, low scalability, and low transaction counts per second (TPS).
If you take a closer look and observe, you will notice DeFi platforms now have their own tokens. These tokens are known as governance tokens, and they are primarily used as incentives and to offer token holders voting power of the DeFi system.
Governance tokens are generally believed to become more important in 2022 as the adoption of governance tokens becomes more widely polarized among DeFi projects.
Monetization of Gaming Industry
Globally, there are more than 2 billion gamers. With an increasing number of individuals devoting hours to this form of entertainment, both gamers and developers are looking for new ways to make a profit from it. The science behind the blockchain game revolves around the idea of a player executing some specified tasks in order to be rewarded with a token.
The blockchain gaming sector will experience great growth in DeFi as developers and individuals or gamers spend their time on this sort of entertainment. DeFi generates new and appealing trends for gamers by monetizing the game business.
Continual Adoption of Liquidity Mining
Liquidity mining, also known as yield farming, was a trend in the DeFi sector last year. It refers to the process of engaging in a decentralized network by supplying liquidity to the protocol’s liquidity pool, and in turn, liquidity providers are incentivized and earn rewards.
With so many new developments and use cases springing up on blockchain technology, the year 2022 will undoubtedly be memorable. DeFi will solidify its position by expanding and extending its community across numerous industries.
About Linear Finance
Linear Finance is a cross-chain compatible, decentralized delta-one asset protocol that allows users to get synthetic exposure to various assets, including cryptocurrency, commodities, and market indices. Users can utilize our cross-chain swap functionality to instantly swap assets across leading blockchain environments and DeFi protocols with unlimited liquidity and zero slippage.