“The DeFi ecosystem is an exciting and fast-moving sector, with financial services innovation happening fast, as it is attracting large amounts of capital to projects” — Paul Ebeling
Y 2021 was a big yr for decentralized finance would be a notable understatement. As the total value locked (TVL) in DeFi applications topped $107-B by the end of November. This is remarkable, but even more so with context as the current TVL represents a 400% increase from November 2020’s TVL ($22.09-B) and a 1200% rise from Y 2019 at $8.5-B.
DeFi can no longer be dismissed by doubters as a fad. Consumers have made it clear that they want the financial freedom and flexibility that DeFi applications provide and the overly restrictive digital solutions provided by central banks no longer apply.
Blockchain writer Adelyn Zhou noted earlier this year: “The outrage we’re seeing these days with fintech and banking experiences are the result of a growing realization that people do not have the control they thought they had over their financial lives. As trust issues continue to occur in the traditional financial world and opportunities for yield stagnate, the exodus into DeFi will only continue.”
In other words, the runaway growth we have seen this year is just the beginning. DeFi proponents have every reason to expect a ‘DeFi summer’ an unparalleled frame of market growth to happen in Y 2022, as DeFi innovators finally succeed in bringing mainstream consumers into the DeFi ecosystem.
In the past DeFi adoption was curtailed by complexity. For all that consumers might want to reap its benefits, simply understanding DeFi solutions can often be difficult for those without specialized knowledge using it might be out of the question altogether. But now, faced with skyrocketing consumer interest, industry innovators have begun to make their solutions more accessible and usable for ordinary consumers.
Given this, it is likely that in the Summer of 2022, will see a DeFi boom the likes of which we have not seen.
The Big Q: How should current and prospective investors prepare for it?
The Big A: Due Diligence is Key.
The DeFi market offers near inexhaustible opportunities for innovative exploration and gain but like any financial sector, it is not without its risks. Investors should make due diligence a priority and avoid basing decisions solely on article headlines or social media excitement. A good 1st step is to review a solution’s whitepaper to learn more about its value-add and technical viability.
Have a prosperous day, Keep the Faith!