Year-end round-up: Top 5 DeFi Trends This Year

DeFi is slowly getting the recognition it deserves due to the benefits it brings. Statistics say that nearly $42 billion is locked in DeFi total volume, and investment in decentralized finance products has increased sharply!

Let’s look at the top trends that spurred DeFi growth this year and promise to bring more innovation in the future.

1. New Financial Products Like Tranche Lending, and Insurance

Blockchain-based insurance products are similar to traditional coverage. You can buy DeFi insurance from companies such as Nexus Mutual, InsurAce, Bride Mutual, and more to protect your crypto assets.

DeFi insurance reduces the risks of monetary losses from events such as smart contract exploits, hacks, and attacks on protocols. It is a safety net for crypto users.

Tranche lending is another financial innovation that is fast gaining popularity. Platforms like Tranche Finance offer tranche lending to manage risk and maximize return. 

2. The Rise of Governance Tokens

Governance tokens are quite important in the DeFi world. Governance token owners play an active role in managing DeFi protocols. MakerDAO stablecoin Dai is a governance token that gives one vote per token.

3. Synthetic Securities

Smart-contract technology allows developers to create synthetic securities that trade directly on the blockchain instead of traditional exchanges. They are simply tokenized derivatives that will track the value of a specific security. The main benefit of synthetic securities is that they have 24/7 liquidity. 

Synthetix.io is one of the biggest names in synthetic securities. 

4. Monetized Blockchain Gaming

The gaming industry is bigger than Hollywood in terms of revenue. Now that more people are joining the blockchain, creators and gamers are looking to monetize and earn money from gaming. 

Players can earn crypto or NFTs with the play-to-earn model and can even stake their in-game items to earn more money. 

5. Cross-Chain Tech to Solve Scalability

Scalability is one of the biggest issues in the blockchain ecosystem. Cross-chain technology streamlines interoperability and data sharing across different networks. Chainlink is one of the biggest examples of cross-chain platforms that solve scalability issues by efficiently exchanging value and information between different networks.

Final Take

DeFi will grow significantly in the coming years. It is accessible, easy to use, and yields attractive gains. It is a bottom-up innovation that is giving traditional finance tough competition. Moreover, it is still in its nascent stage and is constantly evolving. We will soon see even more efficient DeFi solutions emerge.