Undoubtedly, in the field of cryptocurrencies in 2021, NFTs will receive the most attention.
While some people had long foreseen that NFTs would become popular, no one expected that both the traditional world and the crypto world would embrace it and rapidly gain popularity. The hype surrounding cypherpunks, monkeys, and stone NFTs overshadowed even the thriving DeFi space.
Even so, I still expect DeFi to be in the spotlight again in 2022, with a second “Summer of DeFi” like 2020.
There are two main reasons: yield opportunities are more sought after , especially in sideways or bear markets; and there will be a regulated version of DeFi, which I will call “RdeFi” .
Attractive Earnings Opportunity
Since the “Summer of DeFi” in 2020, many new and innovative projects have emerged, while established projects have further developed their products. We have seen a trend last year, especially in the first half of the year, there are many different types of DeFi products, from 3-5% conservative products to 30-40% active products, catering to users with different risk appetites.
During the bull market some time ago, many new entrants started to explore DeFi.
In the past, the path to enter the currency circle was Bitcoin-Ethereum-DeFi.
Now it is different, the path of new entrants becomes, from NFT to Ethereum, and then to DeFi.
Whether one starts with Bitcoin or NFTs, the result is the same: more and more people are using DeFi, and this may lead to “DeFi Summer 2.0”.
Escape from high gas fees
Even if the ETH 2.0 upgrade is scheduled to roll out this year, I believe Ethereum will still be dealing with high gas fees for most of this year.
This will not stop DeFi adoption, but will push investors to use more Layer 2 scaling solutions like Arbitrum, Polygon or Optimism, as well as other smart contract platforms like Polkadot, Solana, Avalanche or Terra.
I’m very excited about Polkadot’s DeFi platform, Acala, which recently became one of the first projects to get a parachain spot on Polkadot. Also, it would be interesting to see Solana getting a lot of NFT shares from Ethereum due to lower network fees. Its high TPS and scalability allow building a large number of DeFi applications, which is impossible in Ethereum.
The emergence of “RDeFi”
I believe that in 2022 we will see the emergence of “RdeFi”, or “Regulated DeFi”.
This may be an oxymoron to some, but it will be the next evolution of DeFi. I expect that in addition to the DeFi we all know and love, there will be a parallel DeFi section: a regulated DeFi section that meets the regulatory requirements of traditional finance. RDeFi can only be obtained through traditional investment procedures with KYC and must meet the same anti-money laundering standards.
In fact, we have already seen early examples of RDeFi projects in 2021, with lending protocols Aave and Compound both offering regulatory-compliant platform versions, Aave Arc and Compound Treasury, respectively.
This trend is likely to continue, and other types of DeFi projects, such as decentralized exchanges, are expected to offer regulated versions as well. I wouldn’t be surprised if Uniswap Pro comes out next year.
I would also like to see more projects complying with regulatory requirements from the start, such as Swarm Markets receiving regulatory approval from German regulator BaFin earlier this year as the first regulated DEX project.
Additionally, I expect large exchanges, like Coinbase or Kraken, to offer their investors access to DApps through a regulated gateway. Since the use of centralized exchanges avoids the burden of self-custody and private key management, they can provide a DeFi platform without downloading a web wallet, interacting directly with DApps. These products will further promote the space and bring liquidity to it.
While some cryptocurrency proponents will argue that DeFi applications with KYC requirements go against the spirit of decentralized finance, I prefer to define DeFi as an “owner-operator” economic model rather than a for-profit Services provided by the entity. The conditions of access to services do not change the economic model. “Rdefi” opens up a new customer base for these platforms, namely regulated financial institutions, who otherwise would not be able to interact with these platforms.
Additionally, regulation can increase customer protection and hold platforms accountable, which may be preferred by those who are not opposed to regulated services. In fact, this is the only way for regulated institutions to enter the DeFi space, “RdeFi” will play a role in increasing the liquidity of DeFi platforms, which will help the mature development of this field.
While NFTs will continue to attract interest, especially in combination with the metaverse and on-chain games, I believe that the DeFi segment will regain some traction.
DeFi has matured in the past year, but it is still an area that is very worthy of innovation. High yields will continue to attract investors, while RDeFi will take Defi to another level, increasing adoption and liquidity.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/will-the-defi-boom-return-in-2022/
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