Top 5 Decentralized Finance Trends to Expect in 2024

As industry interest in decentralized finance (DeFi) grows and the market shifts to incentive-driven growth that prioritizes technology advancements and genuine benefit, the area is emerging from bear winter into bull summer. Or, at least, that’s what DeFi industry experts claim.

According to a recent Exponential research, there has been a notable increase in interest in DeFi yields, and the “latest indicators signal not just growth but a transformative shift” inside the DeFi industry.

The paper states that from $26.5 billion in the third quarter of 2023 to $59.7 billion in the first quarter of 2024, the total value locked (TVL) in yield-generating DeFi protocols has climbed rapidly.

Top 5 Decentralized Finance Trends to Expect in 2024

1. Conventional Integration of Finance : Possibly the most significant development in the DeFi scene at the moment is the entry of the traditional finance market.

Traditional financial institutions are anticipated to work more closely with the DeFi space, leveraging features like smart contracts, tokenization, and decentralized lending to improve their products and services. Lian observed that the integration of traditional markets into the DeFi space could become a “significant step towards a more inclusive and efficient financial ecosystem.”

Telyatnikov went on to say that there may be a lot of research into new use cases in the DeFi domain in conjunction with more established universities as legislative clarity increases. “DeFi and centralized finance boundaries will also become more hazy, resulting in hybrid solutions that combine the best features of both worlds.”

2. Scaling Solutions for Layer-2 : According to Telyatnikov of AlphaPoint, Layer-2 scaling solutions are a well-known tech DeFi example that will likely be very important in the second half of 2024. These solutions will preserve the security of the underlying blockchain while enabling faster and less expensive transactions.

Lian went on to say that another essential component for the development of DeFi technology is L2 solutions’ capacity to improve the efficiency and scalability of blockchain networks.

3. Bridges for cryptocurrency : However, according to Lian, other new trends that have emerged in the past year for major DeFi platforms include the creation of crypto bridges and Know Your Customer (KYC’d) DeFi. He declared:

“By enabling asset transfers to quicker layer 2 networks like Polygon and Arbitrum, the rise of crypto bridges has improved ERC-20 token trading while preserving exposure to Ethereum.”

4. Regulation : Telyatnikov of AlphaPoint continued, “One of the biggest shifts in the DeFi environment in the last year has been the increased regulatory scrutiny.”

One instance is the recent enforcement efforts against Uniswap Labs by the U.S. Securities and Exchange Commission (SEC), which indicated that the commission intended to suggest legal action against the business.

5. KYC’d DeFi : There may also be an increase in KYC’d DeFi since these court cases directly dispute the legality of DeFi products, tokens, and use cases. Know Your Customer policies are known to comply with legal requirements and lessen illicit activity, which may put several DeFi platforms in the spotlight.

For instance, Singularity, a startup creating a protocol to grant institutions exclusive access to DeFi, raised $2.2 million to create a platform for institutions that complies with KYC.

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