Summary: The State of DeFi in 2023 document explores the current condition and future potential of DeFi, analyzing its challenges, and showcasing the protocols still in operation.
DeFi Winter in Numbers:
- Total valued locked in DeFi has dropped 75% since 2022.
- DEX volume has also been affected by DeFi winter.
- Despite challenging conditions, there are reasons for optimism, such as reduced Ethereum fees and promising trends in the DeFi to ETH market cap ratio.
The State of DeFi Now:
- Major DeFi protocols still in operation include Uniswap, Curve, Aave, Synthetix, and dYdX/GMX.
- Uniswap remains the biggest DEX due to its liquidity provision and working capital requirements.
- Aave is working on decentralized stablecoin GHO and Lens Protocol to stay relevant in the market.
Problems Plaguing DeFi:
- Current DeFi systems are complex for newcomers to grasp, which makes it difficult for mainstream adoption.
- Solutions must be developed to make DeFi not only more accessible but also more secure and useful for users.
The Future of DeFi:
- Real-world Assets: Tying DeFi to real-world assets enables new borrowing and lending opportunities for physical assets.
- DEXes: Integration of DEXes into existing centralized platforms and communication between different blockchain networks may result in increased adoption.
- Appchains: By creating dedicated blockchains for each application, scalability and efficiency can be improved within the DeFi ecosystem.
- Undercollateralized Lending: Exploring methods of credit assessment and risk assessment can help promote DeFi adoption among those with fewer collateral options.
- UX Improvements: Streamlining user interfaces and providing easy access to key features can help to further extend the reach of DeFi to traditional finance users.