Fun

Defi More Scalable Than Traditional Finance, New Study Says

News Feed - 2022-12-22 04:12:31

Defi More Scalable Than Traditional Finance, New Study Says


Despite the market conditions that prevailed in much of 2022, decentralized finance (defi) still demonstrated its greater scaling potential than that of the traditional financial industry, a new report has said. Even though the total value locked dropped from the peak of $180 billion in Dec. 2021, to just over $50 billion by end of Oct. 2022, certain sectors of the defi market still “show a very optimistic trend.” Decline in Total Value Locked


According to Hashkey Capital’s end-of-year report, decentralized finance (defi) has the “potential to be many times more scalable than the traditional financial industry.” In addition to the scaling potential, defi protocols are resilient and are likely to emerge from black swan events such as the Terra luna/UST collapse unscathed, the report suggested.



However, in the report titled Defi Ecosystem Landscape Report, Hashkey Capital — an end-to-end digital asset financial services group — acknowledged that unfavorable market conditions that largely prevailed in 2022 had contributed to the decline in the value of total assets under management.


“The decline of the TVL – Total Value Locked (a proxy for total assets under management in Defi) – was also motivated by the general market conditions. Lower crypto prices (due to generally unfavourable macro) mean that the value of the collaterals provided in Defi lending is also lower, reducing the motivation to get a loan against those collaterals. DEX [decentralized exchange] activity and crypto trading volumes are also lower,” the report said.


As shown by the report’s data, the TVL, which peaked at $180 billion in Dec. 2021, dropped from just under the $150 billion seen around May 2022, to just over $50 billion in late October. Despite this TVL decline, according to the report, certain sectors of the defi market still “show a very optimistic trend.”


Defi Growth Slowdown


Concerning the extent of adoption, the report acknowledges that there has been a slowdown in the growth rate in 2022 (31%) when compared to 2021 (545%). Remarking on this outcome, as well as the rise in number of wallets to over 5 million, the report said: 2022 can be seen as a year of consolidation where most projects are busy building and improving their products rather than spending their resources on marketing activities. 2022 is also the year when the UI and user experience of Defi protocols improved significantly, to a level that we can finally say that it’s easier to use some Defi protocols than using a home banking app.


According to the report, a large chunk of support for Defi protocols came from venture capital (VC) firms which poured “$14 billion into 725 crypto projects (many of those are Defi)” in the first half of 2022.



On the likely trigger of the next defi summer, the report points to the derivatives and options sector where key platforms like GMX saw a “substantial growth in the number of users and TVL.” From the TVL of $108 million at the start of 2022, GMX saw this value grow to $480 million by the end of October. Another platform, Dydx, which saw the price of its token drop by 90% in one year, “earned over $50 million in revenue and continues to have over 1000 weekly active users.” Tags in this story banking app, crypto projects, Decentralized finance (Defi), Defi protocols, DEX, Digital Assets, Hashkey Capital, TVL


What are your thoughts on this story? Let us know what you think in the comments section below. Terence Zimwara


Terence Zimwara is a Zimbabwe award-winning journalist, author and writer. He has written extensively about the economic troubles of some African countries as well as how digital currencies can provide Africans with an escape route. TVL in Defi Slides Under $40 Billion, Tapping a Low Not Seen Since February 2021 DEFI | 5 days ago Decentralized Finance Protocols Flounder as Value Locked in Defi Shed More Than 25% Since FTX Collapsed DEFI | Dec 12, 2022


Image Credits: Shutterstock, Pixabay, Wiki Commons Previous articleUS Lawmaker: Crypto Self-Custody Is Antidote to FTX Fraud — ‘Keep Your Coins Act’ Will Protect Self-Hosted Wallets Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Read disclaimerShow comments More Popular NewsIn Case You Missed ItOman to Incorporate Real Estate Tokenization in Virtual Assets Regulatory Framework


Real estate tokenization is set to be incorporated into Oman Capital Markets Authority (OCMA)"s virtual asset regulatory framework. According to an advisor with the authority, the tokenizing of real estate will open investment opportunities for local and foreign investors. Real ... read more.Fidelity Investments Launches Crypto, Metaverse ETFs — Says "We Continue to See Demand" Goldman Predicts US Recession Odds at 35% in 2 Years, John Mauldin Wouldn"t Be Surprised if Stocks Fell 40% Privacy-Centric Monero Plans for July Hard Fork, Plans Include Ring Signature, Bulletproof Upgrade FBI Issues Alert Concerning Malicious State-Sponsored North Korean Hackers Targeting Crypto Firms

News Feed

About 90% of Bitcoin Investors Worried About Fate of Their Assets After Death: Study
About 90% of Bitcoin Investors Worried About Fate of Their Assets After Death: StudyNearly 90% of cryptocurrency investors worry about what will happen to their assets after they di
Derek Andersen3 hours agoSouth Korean regulator outlines steps to enhance digital asset legislationThe Virtual Asset Users Protection Act was passed in June without a sufficient regulatory framework, the head of South Ko
DOJ Launches Network of Over 150 Federal Prosecutors to Combat Criminal Uses of Crypto
DOJ Launches Network of Over 150 Federal Prosecutors to Combat Criminal Uses of Crypto The U.S. Department of Justice (DOJ) has established the nationwide Digital Asset Coordinator
Colombia Issues Guide for Implementing Blockchain for Public Projects in the Country
Colombia Issues Guide for Implementing Blockchain for Public Projects in the Country The Ministry of Information Technologies and Communications of Colombia, Mintic, has issued a g
Crypto is ‘top of mind for voters’ in US swing states — Harris Poll
Turner Wright7 hours agoCrypto is ‘top of mind for voters’ in US swing states — Harris PollA majority of respondents with crypto-positive views said they intended to vote in 2024, where tight elections in certain s
Grayscale Investments Scooped Up Over 17,000 BTC in the Last Seven Days
Grayscale Investments Scooped Up Over 17,000 BTC in the Last Seven DaysDuring the last seven days, Grayscale Investments purchased 17,100 BTC or $182 million worth of bitcoin using
Ripple CTO Says One Important Lesson From FTX Meltdown ‘Will Not Be Learned’
Ripple CTO Says One Important Lesson From FTX Meltdown "Will Not Be Learned" A Ripple executive says there is one important lesson from the meltdown of crypto exchange FTX that he
UK closes ‘trust me bro’ crypto firm that gave horrible advice to clients
Brayden Lindrea8 hours agoUK closes ‘trust me bro’ crypto firm that gave horrible advice to clientsIt comes just two weeks after the Insolvency Service secured a winding-up order against Amey’s firm in the United K
Mark Cuban Tells Stock Traders That BTC Hodlers ‘Are a Great Example to Follow’
Mark Cuban Tells Stock Traders That BTC Hodlers "Are a Great Example to Follow" Billionaire and crypto-asset supporter, Mark Cuban has identified bitcoin hodlers
US Court Sentences ICO Fraudster to 6 Months in Jail: Orders the Accused to Pay Over $4 Million in Restitution
US Court Sentences ICO Fraudster to 6 Months in Jail: Orders the Accused to Pay Over $4 Million in Restitution A U.S. court has sentenced Jerry Ji Guo, a residen
Martin Young3 hours agoNic Carter, other pro-Bitcoiners fight climate impact narrative in new paperA newly published working paper on Bitcoin mining has worked to counter claims from anti-crypto politicians that Bitcoin
Tristan Greene6 hours agoOxford quantum computing spinout announces $100M funding round led by Japan’s SBIOQC is also launching what it calls “the world’s first enterprise ready quantum computing platform.”806 To