DeFi is evolving to take advantage of blockchain properties such as decentralization and transparency in order to provide financial services to anyone with an internet connection and a mobile device. They have proven to be an invaluable resource for cryptocurrency enthusiasts, who have discovered new ways to earn money by lending their crypto assets on DeFi platforms. Aside from finance, several industries, including e-commerce, gaming, real estate, and sports, have discovered various applications for DeFi.

Traditional finance is riddled with problems caused by the need for middlemen to carry out financial transactions. A more connected world has highlighted such drawbacks, where intermediaries such as banks charge high fees, creating entry barriers to various financial instruments. As a result, there is a growing demand for an alternative financial system with lower transaction fees and greater accessibility.

Since September 2020, DeFi has grown by 816% to $78.8 billion in TVL by the end of September 2021, which can be attributed primarily to the increasing pace of transition to more appealing financial products such as yield farming. By the end of September 2021, the DeFi market cap had grown by 420.0% since January 2021. 3.35 million unique addresses used at least one DeFi protocol by the end of Q3 2021, a 90% increase from the end of Q1 2021. DeFi claims several blockchain-native properties, enhanced by programmable blockchain platforms like Ethereum that act as marketplaces for many applications to transform traditional finance.

DeFi emerged as a new investment tool that makes use of crypto assets. Its mentions in print media, social media, and company filings of banks and other enterprises offering DeFi services are increasing. It promises to provide financial services, including those to the unbanked, from any location, 24/7, and at lower costs and faster speeds, owing to the elimination of intermediaries.

What Are the DeFi Market Dynamics?

By eliminating intermediaries, DeFi enables anyone to buy, sell, lend, and borrow peer-to-peer (P2P). It provides access to financial instruments such as loans to underserved and unbanked populations as an alternative to banks. DeFi is based on decentralized blockchain networks, so information is distributed across multiple nodes on thousands of computers via a peer-to-peer network. It enables censorship resistance; every user, regardless of credit history or social standing, has self-custody of their assets.

DeFi’s blockchain-powered smart contracts promise to transform traditional finance into transparent protocols with no middlemen. It aims to alleviate dissatisfaction in the financial ecosystem by influencing transaction speed and cost. While startups push the boundaries of innovative DeFi applications beyond financial services into industries such as e-commerce, enterprises are focused on integrating DeFi offerings into their existing portfolio.

What Are the New Concepts Emerging in DeFi Development?

Digital IDs: Digital IDs can aid in transaction onboarding and verification. Digital IDs may be linked to biometric recognition in the future. Bloom, a startup based in the United States, is attempting to bridge the gap between DeFi and digital IDs.

Integrating DeFi with AI technologies: unlocking advanced capabilities such as AI-assisted risk management, intelligent lending, and insurance to incorporate liquidation history and transaction patterns could be the next big step in DeFi evolution.

Interest-bearing NFTs: created by depositing ERC tokens into NFTs can open up new revenue streams for industry influencers, bloggers, artists, musicians, videographers, and social media content creators.

Decentralized Cloud (DeCloud): Decentralized Cloud (DeCloud) has the potential to accelerate the deployment, scaling, and pricing performance of high-growth domains such as AI. The cloud computing of the future would be permissionless and open.

Who Are Some of the Leading Startups in NFT Development Across Major Applications?

The top three investors in DeFi startups are ParaFi Capital, DeFi Alliance, and CMS Holdings. AU21 Capital, Polychain Capital LLC, NGC Ventures, Genblock Capital, Defiance Capital LLC, Moonwhale Ventures Pte Ltd, and X21 Digital are some other key companies that support startups.

Scope

Technology Decoding: provides an overview of the technology, increasing interest in the technology, major milestones, DeFi vs TradFi, Ethereum vs Binance, ecosystem players, major applications, and a market map with potential use cases and popular players (startups as well as enterprises).

Media and Trend Analysis: highlights the technology presentation from a media standpoint, including major news, initiatives from banks and financial institutions, social media buzz promoting the technology, and job hirings for the technology. Also includes references to the technology in the company’s annual and other filings.

Investment Radar: outlines venture capital funding trends, including some of the most popular deals, country-by-country funding, recently funded select startups, and notable investors and accelerators pumping millions into technology growth.

The Innovation Explorer: series introduces game-changing corporate innovations, with a focus on startups. Select business partnerships geared toward future technology adoption are also mentioned.

IP Landscaping: a high-level analysis of patent filing and grant trends, priority countries, and key patent filers in the technology. Additionally, it highlights unique patents held by businesses.

The Road Ahead: summarizes the drivers and challenges, successful use cases with business leaders, potential applications in new horizons, and the technology’s outlook.