DeFi ushered in a big explosion this summer, such as lending agreements, liquidity mining, insurance agreements, non-custodial transactions, and NFT tokens have seen different applications this year. As Bitcoin enters the mainstream, DeFi popularity has declined, and many people feel that the DeFi boom is dead. But the fact is that mortgage assets in DeFi once again hit a new high.
From the rise of concept to the rapid progress, DeFi has become the most attractive narrative in the crypto circle in just over two years. COMP, YFI, YAM, CRV, etc., with hundreds of times and a thousand times of income, make DeFi a veritable carrier of the current crypto market. Even the public chain, which is silent on both the market and the technology, is smashed as soon as it is stained with the concept of DeFi.
At the same time, DeFi has also fallen into a speculative circle. The liquidation risks and systemic risks behind the explosion of liquid mining have put its development in an embarrassing situation. In addition, inferior products dressed in DeFi's coat make DeFi into a mire of trust and it is difficult to break free.
However, for DeFi, which upholds innovative concepts and has a great vision, only being active in the digital asset track will eventually make it insufficient for development.
Has the DeFi fever gone? Especially after the boom in liquid mining has passed, this should be a question for many users. However, recently Peel, head of digital asset market at Morgan Stanley, said that DeFi may continue to maintain its momentum next year and develop rapidly.
Peel said that DeFi will not disappear in the coming year. Although the live broadcast mainly discusses how cryptocurrency or blockchain will be used for traditional finance in the future, Peel did not predict PayPal or Square's Bitcoin payment at the end of the forecast. Instead, he believes that DeFi will be required in 2021. Pay attention to the trend.
He described DeFi as a "fascinating field" and believed that DeFi's "programmable contracts" should be part of the foundation of digital finance :
The growth momentum in this field will continue, and traditional finance will continue to pay attention to this field. I have observed the explosive growth of DeFi, and the field of DeFi is quite fascinating. Since the launch of the Ethereum smart contract in 2017, we have seen many revolutionary applications.
I think DeFi, like ICO, will be used by traditional finance in a compliant manner between 2021 and 2022.
◢▏DeFi TVL hits a new high
Recently, Bitcoin has hit new highs one after another, coupled with many Wall Street institutions continue to announce that they will buy Bitcoin, DeFi seems to have lost its previous popularity.
However, even though most DeFi coins are falling, the assets locked in DeFi are increasing. According to DeFi Pulse data, the current TVL of DeFi has reached 16.2 billion USD, which is much higher than the 11 billion USD in September.
But for DeFi, which focuses on open finance, it really faces many difficulties and challenges if it wants to truly fly into the homes of ordinary people and attract traditional funds. On the other hand, because DeFi projects have the characteristics of high compatibility, composability, programmability, etc., they are very convenient for the innovation and iteration of financial products, but they are also vulnerable to threats brought by combination risks, especially when they are combined with When atomic transactions and flash loans are combined, this risk will be magnified several times.
But at the same time, the high compatibility and composability of DeFi projects will greatly accelerate the innovation of synthetic assets and derivatives. Because the technology itself is open, programmable, and flexible, it can be combined in different ways to break regional and national boundaries, allow anyone to participate, and transactions are completely open, transparent, and verifiable on the chain. These are places that the traditional financial industry under strong supervision cannot match.
For traditional finance, the DeFi field belongs to the "great wilderness period." Especially in the coming year, after countries begin to issue digital legal currency, DeFi applications will inevitably link them to the DeFi field. This year’s DeFi also proves that putting the concept of traditional financial products in DeFi applications can even be compared to traditional financial Moderately efficient.
Although Peel did not clearly point out which areas of DeFi should be paid attention to, it is clear that DeFi will not disappear, but will only grow faster. The only difference lies in the form.