The number of active DeFi users on the Ethereum network is experiencing phenomenal growth. A recent report shows that number has doubled to 60,000 in just five months.
And expectations that it will form the foundation for the new financial economy have never been higher, which signals tremendous trust in Ethereum.
DeFi intends to mirror and recreate, not move
In 2019, DeFi emerged as the next major use case for Ethereum. Expressed in a simple way; it refers to digital assets, smart contracts, protocols and DApps based on the Ethereum network.
While this is nothing new, it is the modular aspect of integrating them. And this enables traditional financial instruments to be replicated. But all in a decentralized environment, free from corporate and government influence.
Additionally, this functionality has spawned multiple uses including loan logs, security tokens, derivatives, decentralized exchanges, and much more.
But the real beauty is that DeFi has no intention of usurping the old, as is often the dream of crypto purists, and one who brings a mountain of trouble with it, no. DeFi aims to mirror and integrate existing traditional financial systems.
Mason Nystrom from the blockchain studio ConcenSys put it this way:
“[it] The point is not to create a new system from scratch, but to democratize the existing system and make it fairer through open protocols and transparent data. “
In fact, the scope for development is really overwhelming. And as crypto assets continue to evolve with the addition of newer categories like staking and insurance, 2020 seems critical to Ethereum’s success.
The wheels are falling from traditional finance
With that in mind, the DeFi trend could continue to accelerate with the decay of the old. Less than a month ago, the Federal Reserve had pumped a massive $ 235 billion into the repo market. This corresponds to the total market capitalization of cryptocurrencies.
And the interbank liquidity issue shows no sign of an additional $ 60.7 billion added to repo markets on Monday.
While the Fed had planned to gradually reduce repo interventions, some experts believe that they will last well into early summer.
Therefore, the warning signs are visible to everyone. And that can only be good for Ethereum and DeFi as consumers turn to alternative instruments for their financial needs.
Although 2019 was a mediocre year for Ethereum, DeFi was its only salvation. And with the surge in active users and growing interest from traditional companies, DeFi is poised to turn the financial world upside down.
In fact, the amount of ether included in DeFi, a consumption metric, has recently hit an all-time high. According to defipulse.com, that was the equivalent of $ 783 million. That is 45% more than in October 2019.
The total value of the Ethereum DeFi apps exceeds $ 700 million (Source: defipulse.com)
And according to CoinGecko, 2020 seems to be a continuation of this form. Their latest report predicts the space will continue to grow and Ether Locked in DeFi will exceed $ 1 billion.
With this in mind, there is mounting evidence that Ethereum will experience a resurgence in the coming year.
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