A recent report just came out with new information about the rapidly growing world of decentralized finance (DeFi). The report showed that the DeFi sector has already surpassed the $100 billion mark in 2021, gaining around 225% since the start of the year. This growth, as well as the interest from the public, have skyrocketed, putting decentralized finance in the attention of seasoned and new investors and developers alike.
As we predicted in late 2020, DeFi’s increased prevalence in 2021 has proven to be the case; with a total capital locked in DeFi protocols now sitting at around $100bn +. This has totally changed the landscape for the adoption of decentralized finance, creating new opportunities and heralding a new era of financial services.
This massive uptake in interest for DeFi is driven not only by the promise of yield farming and transaction fees, but also by a wider set of practical use cases. DeFi protocols enable people to borrow, save, and invest in a range of different assets. They also provide insurance options and automated trading strategies through open source smart contracts. DeFi also enables people to enter the financial ecosystem with lower entry costs, as protocols are open to anyone with access to a computer or a smartphone.
What’s even more exciting is that DeFi is just the tip of the iceberg. While the sector is rapidly expanding and the user base growing, the industry is still in its infancy. We are now seeing developers creating more innovative projects such as decentralized investing, open source shared applications, and even tokenized traditional asset classes in partnership with regulated financial institutions.
The implications for DeFi are far-reaching. If a new financial ecosystem emerges that runs on open protocols, it will benefit everyone by reducing the cost of access, promoting open-source collaboration, and reducing risk by allowing people to build trust.
The industry is maturing and these exciting developments have the potential to revolutionize the way finance works. As we move ahead, the task for regulators and enforcement authorities is to provide answers to the pertinent questions in order to ensure consumer protection and effective oversight.
In leaving off, it’s safe to say that 2021 has been a defining year for Decentralized Finance and the growth of DeFi protocols. With the key players in the market now providing a wide range of investment options, this sector continues to expand, as evidenced by the levels of investment and growth we have been seeing. It’s clear that the industry is still in its early stages and continues to have a huge potential for growth and innovation. Keep following us to stay ahead of all the news and opportunities that arise from the DeFi sector.