What Is Decentralised Finance? Top 5 Trends Worth Watching in DeFi | by LBank Exchange | Feb, 2023

From the LBank blog.

What Is Decentralised Finance? Top 5 Trends Worth Watching in DeFi

Decentralised finance (DeFi) is a fast-growing sector of the financial industry that is changing the way people interact with their money. To understand DeFi, we need to first understand what it means and how it has performed on the market over the past few years.

What Is DeFi?

Decentralised finance refers to a financial system that operates on a blockchain network, such as Ethereum, and is thus not controlled by any single entity or organisation.

DeFi aims to provide financial services and products that are transparent, accessible, and secure, without the need for traditional intermediaries such as banks and financial institutions.

DeFi services include decentralised exchanges (DEXs), yield farming, lending and borrowing platforms, insurance, and stablecoins, among others.

By leveraging blockchain technology, DeFi enables users to have full control over their assets, reduce the risk of centralization and access a wider range of financial services.

Overview of the DeFi market

In 2020, the growth of DeFi took the world by storm, as Total Value Locked (TVL) — a measure of DeFi transaction value — grew by an astonishing 14 times its original size. This explosive growth was driven by a number of factors, including increased interest in cryptocurrencies and blockchain technology.

As DeFi continued to gain traction in 2021, the TVL more than quadrupled, reaching a peak value of $112.07 billion.

However, by June 2022, the decentralised finance market size was less than 80 billion dollars. This staggering decline was due to the crash of cryptocurrency Terra (LUNA) and its ecosystem stablecoin TerraUSD (UST) in May 2022.

Despite the market downturn, DeFi continued to thrive, with a number of new protocols and platforms entering the space. One of the most notable developments was the rise of decentralised autonomous organisations (DAOs), which are run by code rather than by a central authority. This innovation allowed for more transparent, community-driven decision-making, and further contributed to the growth of DeFi.

In addition to these developments, 2022 saw a number of high-profile partnerships and investments in DeFi, including investments from traditional financial institutions and partnerships with well-known technology companies. This growing recognition of the potential of DeFi helped to solidify its place in the financial landscape and demonstrate its viability as a long-term solution.

According to DeFiLlama, the TVL is currently sitting at $47.39 billion.

5 DeFi Trends to Watch Out For

The decentralised finance (DeFi) sector has rapidly evolved since its inception, and has already disrupted traditional finance in a big way. DeFi is a rapidly growing market with a lot of innovation happening at breakneck pace. As the DeFi sector continues to grow, here are the top 5 trends worth watching in DeFi:

DeFi is a rapidly evolving sector that is changing the way we think about and interact with our finances. Whether you are a seasoned investor or just starting to explore the world of finance, it is important to stay informed about the latest trends in DeFi. The trends mentioned above are just a few of the many exciting developments happening in the DeFi space, and are definitely worth watching.

Final Thoughts

Despite its impressive growth, DeFi still faces a number of challenges, including regulatory headwinds, security risks, and the need for greater user education. However, as DeFi continues to evolve and mature, it is clear that it’s poised to play an increasingly important role in the financial world.

The growth of DeFi in 2020, 2021, and 2022 has been nothing short of phenomenal. With its potential for increased accessibility, transparency, and security, DeFi is transforming the financial landscape and showing that the decentralised approach is a viable alternative to traditional financial services.

Whether you are a seasoned investor or just starting to explore the world of finance, DeFi is a sector that is well worth paying attention to.

Disclaimer: The opinions expressed in this blog are solely those of the writer and not of this platform.

This article came directly from the LBank blog, found on https://lbank-exchange.medium.com/what-is-decentralised-finance-top-5-trends-worth-watching-in-defi-fedddccbbfa?source=rss-87c24ae35186——2

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