Messari co-founder Ryan Selkis predicts five major trends in DeFi

Editor's Note: This article comes fromChain reference (ID: lianneican), Author: Internal Reference Jun, reprinted by Odaily with authorization.

Editor's Note: This article comes from

Chain reference (ID: lianneican)

Chain reference (ID: lianneican)

, Author: Internal Reference Jun, reprinted by Odaily with authorization.

Ryan Selkis, co-founder and CEO of Messari, a New York-based encrypted asset research and data company, summarized the five major trends of DeFi in 2020 at the 2020 Hangzhou Blockchain Conference last week, and there are many highlights.

He said that for beginners, I want to tell him that DeFi (decentralized finance) is actually applicable to the entire encryption field. Bitcoin is the first, and the foundation, part of the decentralization effort, starting with money and a superior digital store of value, and a transparent ledger for reconciliation of payments and other transactions.

Ethereum is actually a cryptocurrency that has evolved to encapsulate most of what we think of as modern financial services. That would be decentralized exchanges, lending, new synthetic asset offerings, ICOs and token sales, things like that. We also see digital goods and non-fungible tokens, as well as on-chain instruments such as derivatives, loans, and insurance products.

Currently, DeFi has accelerated in recent quarters. Since the beginning of the year, transaction volume on decentralized exchanges has increased fivefold. The lending market, which was largely non-existent in early 2018, is today a multi-billion dollar market run by some of the biggest exchanges. As a result, the combined market capitalization of these lending agreements is now over $3 billion.

But really, what we're doing is an ongoing trial of a new set of protocols that will eventually be used. Maybe in 15 to 20 years, the world we see will be driven by protocols. It doesn't have to be Bitcoin that wins. It won't necessarily be Ethereum, but there will be a network of interoperable protocols that will provide long-term momentum for decentralized financial services.

Messari’s first prediction for the DeFi market in 2020 is that Maker and Maker Foundation are no longer everything.

MakerDAO has had incredible success in introducing the programmatic stablecoin movement as well as pioneering the concept of collateralized debt positions that can run entirely on-chain using one or more cryptoassets as collateral. In fact, we saw MakerDAO take the lead in terms of total value last year, with the amount locked in DeFi doubling from $250 million in the first half of last year to $500 million by the middle of the year.

Then other protocols like Synthetix and Compound started hitting the market. Of course, some of the main components of the DeFi ecosystem now, especially the tokens it launches are precursors to the concept of DeFi farming and yield farming. For these protocols, the most important thing is the network function. It builds a healthy ecosystem of connected apps and gives people confidence. This is where liquidity finally gathers.

The second prediction is about the Synthetix protocol, synthetic assets. Its volume grew from less than $1 million in August to more than $10 million in December. It is currently the second largest DeFi protocol in terms of assets locked and total value locked. It continues to grow rapidly, in large part because it really opens the door for all types of synthetic on-chain instruments, not just stablecoins, but any type of digital commodity.

Ultimately, we believe, this will pave the way for all sorts of synthetic securities and mirror vehicles...and the growth is phenomenal for obvious reasons because the traditional stock market is several times larger than the current crypto market. There is a huge demand for real-world equities, international exposure and portfolio diversification. This may be especially important as we see a rise in nationalism, as we see some of the less globalization caused by the coronavirus. With access points closing between countries and investors starting to be forced to work within their own countries and economies in order to invest, synthetic assets may be one of the few ways to actually get the right exposure.

The third prediction is that “decentralized finance” is a bit of a misnomer these days. Because many current leading protocols are still very centralized. In five years, we will see healthy decentralized finance protocols being truly governed by multi-party ecosystems, perhaps through distributed autonomous organizations or other types of stakeholder voting mechanisms.

Today, though, most teams remain centralized, for the most part. Most of the key development takes place within the original token creators. Because everything has to start centered. The same thing happened with Bitcoin. In the early days, developer Satoshi and some of his early colleagues were the only people working on the protocol for the first few years. Ethereum is also going through this process.

The same thing will happen to DeFi in the long run. But even better, in the early days of these teams and these projects, to have a treasury of tokens that will eventually be actively managed and distributed and eventually sold to a wider ecosystem of potential stakeholders.

The fourth prediction is related to systemic risk. "Hyper liquid collateral" is a term used to describe the layering of different on-chain derivatives, along with the fact and reality that some collateral scattered across financial applications can be used simultaneously as collateral in multiple applications. collateral. It's going to be very, very difficult to actually track down.

For example, if individual investors can use the same ETH, then the potential liquidation risk and liquidation reputation risk that the DeFi protocol will eventually face.