Decentralized technologies’ insiders shared their views on DeFi and the role, achievements and challenges
Decentralized technologies’ insiders shared their views on DeFi and the role, achievements and challenges the space faced in 2021.
Tristan Frizza of Zeta Markets:
Tristan is the core contributor to Zeta Markets, an under-collateralized DeFi derivatives platform, providing liquid derivatives trading to individuals and institutions alike.
“We’ve seen a Cambrian explosion in the DeFi ecosystem in 2021, with peak TVL approaching $300 billion vs the 2020 peak of $21 billion. This sounds like the growth surely has to slow. Yet, DeFi still represents just a fraction of CeFi trading volumes.
At Zeta, we see a clear opportunity for more and more CeFi infrastructure to be built on-chain in a permissionless manner. This will unlock innovative products that have previously been impossible to implement. The following has already started to happen:
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Composability trumps the siloed products of CeFi, which has created really powerful network effects and will continue to do so.
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DeFi UX continues to improve, DApps on Solana, in particular, are now improving with the looks and feels of CEX products (i.e., Robinhood).
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On-chain derivatives are still in their infancy but are already showing promise (dYdX surpassing Coinbase in trading volume).
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On-chain primitives like oracles and order books are now a reality.
DeFi growth sustaining itself and achieving its potential blockchain speed and transaction costs will be critical. CeFi markets rely on speed and deep liquidity. This dependency is already showing some truth, with DeFi expanding outside of the Ethereum ecosystem. We suspect this is a trend that is likely to continue in 2022 and expand the DeFi pie as a whole — cross-chain bridging will be a big theme for DeFi in the years ahead as we move toward a multi-chain world.”
These quotes have been edited and condensed.
The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Simon Lapscher of Liquality
Simon is a co-founder of Liquality, a multichain browser extension wallet.
“I think we can all agree that DeFi protocols remain at an early stage relative to the wider crypto industry. According to DeFi Llama, the total value of crypto assets in DeFi surged from roughly $5 billion to nearly $160 billion over the past year, but this is largely because of crypto traders and investors, not due to wider mass adoption. As Ethereum layer twos and alternative layer ones like Terra, Solana, Avalanche and others mature, more and more user-facing applications no longer need to deal with prohibitive gas fees, which will significantly drive adoption. This, combined with incredibly easy-to-use and incentivized DApp integrations at the wallet level, will be what drives DeFi and other areas further into mass adoption territory. If you can be anywhere in the world, download a mobile app, and go from fiat to over 20% yield in Anchor (Terra) in just a few clicks without having to understand complicated blockchain concepts, it’s a game-changer.”
Rodrigo Vicuna of Prime Trust
Rodrigo is the chief financial officer of Prime Trust, a blockchain-driven trust company that provides API-driven open banking solutions.
“DeFi has grown significantly over the last year, from around $700 million in 2020 to an estimated $60 billion to $80 billion in TVL in 2021. Some are estimating this to grow even more in 2022. Mass adoption of DeFi sits somewhere between the early adopter stage and mass growth. Institutional investors are increasingly adding Bitcoin, Ethereum and other cryptocurrencies to their portfolios, and worldwide adoption of crypto has jumped by over 880%. This shows that the digital asset and crypto industry has further expanded into the mainstream.
For 2022, we anticipate a convergence of institutional and individual users in addition to typical integrators. One of the challenges that DeFi still faces is the costly entry point for new users. Crypto is still unknown for many users, and the volatility and varied regulations from governing bodies are adding to this unknown; however, new and nascent market segments will continue to emerge. Over the past year, we’ve seen a 200% increase in alternative trading systems for digital assets, a 120% increase in registered investment advisor wealth-tech platforms, a 54% increase in infrastructure businesses like trading firms and blockchain development platforms, a 47% increase in retail crypto on-ramps and neobanks, and a 22% increase in crypto exchanges using our platform. We only expect this growth and adoption to continue throughout 2022.”
Paolo Ardoino of Bitfinex
Paolo is the chief technology officer of Bitfinex, a digital asset trading platform offering state-of-the-art services for digital currency traders and global liquidity providers.
“DeFi continued to grow this year. As far as 2022 goes, I would encourage people to look at the…
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