Original title: "2022 DeFi Year In Review"

Author: DefiLlama

Compiled by: Qianwen, Biscuit, ChainCatcher

 

(ChainCatcher was appropriately deleted during compilation)

 

Cryptocurrency was the first use case when Satoshi Nakamoto showed the world blockchain in 2009. Bitcoin proved that blockchain can be used to prove true ownership of digital currency. More than a decade after Bitcoin was launched, DeFi is proving that blockchain has many other use cases.

DeFi has taken a hit this year as the global economy has declined, but DeFi has come a long way. From an innovative product on Ethereum (MakerDAO created the first stablecoin), it has now grown into a multi-billion dollar global industry that has affected hundreds of thousands of consumers.

This report aims to provide a comprehensive, data-driven view of DeFi for those who want to gain a deeper understanding of the industry.

 

1. DeFi historical timeline

2009: Bitcoin

Bitcoin demonstrated that people can have true ownership of digital financial assets and make instant international payments without the use of a trusted third party.

 

2015: Ethereum

In July 2015, the Ethereum blockchain was launched, introducing smart contracts to cryptocurrencies and enabling developers to start building applications and realizing blockchain use cases beyond currency and payments.

 

2016: EtherDelta

EtherDelta is the first decentralized exchange launched on Ethereum. The protocol allows users to trade tokens on-chain without permission. It uses an order book model to connect buyers and sellers. In 2017, EtherDelta users lost $1.4 million in a phishing attack, and its founder was accused by the U.S. Securities and Exchange Commission of operating an unregulated securities exchange. At the same time, due to other factors, the protocol was eventually suspended.

 

2017: Maker

Three years after the project was founded, Maker was deployed on Ethereum as the first DeFi stablecoin protocol. Maker allows users to provide collateral and mint stablecoins. A stablecoin is a token that pegs its value to another asset. Maker’s stablecoin DAI tracks the price of the US dollar.

 

2018: Uniswap

Uniswap, launched in 2018, was one of the first decentralized exchanges to use automated market makers instead of order books.

 

2019: Synthetix Liquidity Incentives

Synthetix is ​​a derivatives trading protocol that launched a project in July 2019 where users who provide collateral to the protocol can earn both trading fees and the protocol's native token SNX. This technology of using tokens to incentivize users to add liquidity to the protocol will become a key driver of the DeFi boom in 2020.

 

2020: Black Thursday

On March 12, 2020, the price of ETH fell by more than 30% in one day. This sudden drop had a huge impact on the DeFi ecosystem. The Maker protocol failed to quickly liquidate the declining positions and lost millions of dollars. The protocol had to create and auction a large amount of its native token MKR to make up for the losses.

 

2020: The Summer of Defi

In June 2020, the Compound protocol launched a liquidity mining program that awarded COMP tokens to users who borrowed and lent on the protocol, which led to a surge in activity on Compound. Other protocols quickly adopted liquidity mining, and a large number of incentives led to exponential growth in DeFi activity. Of course, this state of affairs is not sustainable. The value of DeFi tokens fell sharply at the end of the year, causing the value of the incentive program yield to fall.

 

2021 to Present: The Odyssey

Since the DeFi summer, the industry has seen a flurry of innovation and new challenges. We are still in the early stages of this movement. It will only get crazier from now on.

 

2. Market conditions in 2022

 

The total value of locked assets (TVL) refers to the sum of the value of all assets stored in DeFi products. Since the beginning of this year, the total DeFi TVL has been on a downward trend, but the new floor price is much higher than the level before the most recent bull run.

 

How DeFi yield drives DeFi TVL

DeFi TVL is related to DeFi yields, where investors provide capital to DeFi protocols to earn returns. DeFi yields come from a variety of sources. For example, some protocols lend funds to borrowers, collect interest, and pay these interests to liquidity providers.

When yields are high, investors rush to deposit capital into DeFi protocols to earn lucrative returns. When yields are low, investors move funds to other opportunities that can earn better returns. As we can see in the figure below, the median DeFi yield plummeted in early 2022, followed by a sharp drop in DeFi TVL.

 

How does U.S. monetary expansion drive this cycle?

The fluctuations in DeFi yields and the resulting boom and bust of TVL in the 2020-2022 cryptocurrency market cycle are caused by several interrelated factors. One of the biggest contributors to the cycle is rising inflation caused by the US government’s aggressive monetary expansion policy.

Americans are one of the largest cryptocurrency holders in the world, and their purchasing power is relatively high. Therefore, Americans have a huge influence on the cryptocurrency market.

In 2020, the U.S. government printed money with stimulus measures to respond to the economic recession caused by the COVID-19 pandemic. During the year, the supply of dollars increased by 26%. Consumers had more money to spend, and their demand pushed up the prices of goods and services. This led to a sharp rise in inflation in 2021.

As inflation rises, sophisticated investors buy risky assets, such as growth stocks and cryptocurrencies, to offset the effects of inflation. The popular saying at the time was, "My cash is losing value due to inflation. I need to buy assets that appreciate faster than the inflation rate." Retail investors also spent more on risky assets as they had more disposable income due to stimulus measures.

As a result, demand for cryptocurrencies surges, causing crypto token prices to surge. Rising crypto asset prices mean that the tokens that investors earn in DeFi protocols are more valuable. Therefore, the returns are higher. Monetary expansion drives inflation, driving up crypto token prices and returns.

Capital flows into DeFi protocols to earn more yield. In the process, the bull market goes into full swing. As we can see in the chart below, the boom in DeFi TVL follows a surge in the supply of U.S. dollars and inflation in the United States.

But happy times are always short-lived. Inflation has risen to too high a level, forcing the Federal Reserve to raise interest rates in 2022. When interest rates are high, borrowing costs more, so investors and consumers have to spend less. High interest rates also cause Treasury yields to rise, so investors move money from other assets into Treasury bonds.

The Fed achieved its goal of reducing spending and fighting inflation. But this pushed token prices down, which in turn pushed DeFi yields and TVL down.

We can analyze historical data to find the exact point in time when the yield of traditional markets is higher than that of DeFi. Let's look at the trade-off between DeFi returns and US Treasury bonds. The figure below shows that in April 2022, the median DeFi yield was lower than the yield of the US one-year Treasury bond.

At this point, sophisticated investors who (1) are reaping the yield in DeFi and (2) have exposure to U.S. Treasuries will need to make a decision to reallocate capital or miss out on potential gains. Why take the risk in DeFi when you can make more money in relatively risk-free Treasuries?

 

Next chapter

This story doesn't end here. Alternating between bear and bull markets is the norm in the cryptocurrency market. During speculative bubbles, greedy capital poured into cryptocurrencies and DeFi products to take advantage of rising asset prices and returns. During bear markets, economic activity declined and unsustainable systems collapsed, but some of the new capital, talent, and user base that poured in during bull markets were retained. In the end, the industry will be more resilient and stronger than before the crypto boom.

 

3. Popular DeFi Categories

 

Breaking down DeFi TVL into categories, we can see that in early 2020, before the most recent bull run, the majority of TVL was in collateralized debt position (CDP) protocols. Using collateralized loans, these CDP protocols mint stablecoins (tokens whose value is pegged to an external asset).

1. CDP

At the beginning of 2020, Maker accounted for the majority of CDP TVL because, at the time, obtaining DAI as a loan against crypto collateral was the best DeFi option for borrowing crypto. Another factor contributing to Maker’s dominance was the Dai Savings Rate, which Maker launched in November 2019. This product allowed users to deposit DAI and earn part of the interest on Maker loans, becoming the most popular interest-bearing account option in DeFi.

When the DeFi summer began in mid-2020, other categories began to take more of the TVL market share of CDPs as many different protocols launched liquidity mining programs. They used token rewards to encourage users to deposit funds. But in terms of TVL, Maker is still the largest DeFi protocol by December 2022, holding 15% of all TVL in DeFi.

2. Borrowing

Compound is a popular lending protocol that kicked off liquidity mining with a very successful token incentive program in June 2020. The success of Compound caused the TVL market share of lending to surge from 16% to 43% in a week.

Aave, the most popular lending protocol, subsequently launched its own liquidity mining program, establishing itself as a market leader.

The chart below shows that these events caused a step-change in lending TVL in 2020. In 2021, the category saw rapid growth as token prices and lending yields exploded.

I show the TVL of lending in both ETH and USD because token prices have risen so quickly in 2021 that it’s difficult to see the key peaks in 2020 on a USD-denominated chart.

 

 

3. DEX

Decentralized exchanges (DEX) are the next category to see a surge in TVL in 2020. SushiSwap launched a large token incentive program in September 2020, attracting many liquidity providers (LPs).

LPs deposit funds in DEX liquidity pools, which help facilitate transactions. In exchange, LPs can earn transaction fees.

Sushiswap’s plan attracted a large number of LPs originally from UniSwap, which was the most popular DEX at the time. In order to combat this “vampire attack”, Uniswap launched their own incentives. The launch of these plans ultimately led to the TVL market share of DEX rising from 18% to a peak of 47% in two months.

The chart below shows that in September 2020, while DEX TVL skyrocketed, DEX took away a large amount of trading volume market share from centralized exchanges.

 

4. Liquidity Staking

In 2021 and 2022, liquidity staking attracted a considerable market share, with the main driving force behind it being the Lido protocol.

On blockchains that use Proof-of-Stake (PoS) consensus, validators stake the blockchain’s native tokens for the right to process transaction blocks and win block rewards.

Liquid staking protocols allow users to stake the blockchain’s native assets in exchange for staking rewards and tradable tokens of their staking positions.

In December 2020, Ethereum's beacon chain was launched. Before the Ethereum main chain was converted to PoS, the beacon chain was where Ethereum's new PoS consensus logic was tested for reliability. In September 2022, the beacon chain merged with the original Ethereum Proof of Work (PoW) chain, making the Ethereum mainnet a PoS chain.

Launched in December 2020, Lido allows users to easily earn Ethereum staking returns without running a validator node. Ethereum users will no longer have to choose between DeFi returns and staking returns after using Lido. They can stake on Lido, earn both returns, and then use the stETH they earned in DeFi.

 

5. Benefits

Yield protocols have also seen huge growth in TVL over the past two years. These protocols reward users for staking or providing liquidity on their platform rather than directly on the target protocol. The growth in TVL for this category of protocols has been driven primarily by a series of events known as the “Curve wars.”

Curve is a very popular DEX specifically designed for stablecoin-to-stablecoin trading and pegged asset trading, such as ETH and stETH. Curve implemented a "voting custody" token system in August 2020. This system allows users to lock their Curve tokens (CRV) in a smart contract to earn veCRV. veCRV grants holders the right to vote on the parameters of Curve liquidity pools, and most importantly, decide which pools receive the most CRV incentive rewards to LPs.

Different protocols and groups began competing to accumulate the most veCRV tokens and voting rights. Convex, the largest yield-yielding protocol, ultimately won the fight and became the largest holder of veCRV. Convex users who deposited CRV were rewarded with crvCVX tokens (these tokens have the same voting rights as veCRV, but unlike veCRV are tradable), as well as more CRV tokens to trade with Curve transaction fees.

A big driver of Convex's success is their bribery system. Convex token (CVX) holders can vote on Curve token rewards for every veCRV locked in the protocol. So projects bribe CVX holders to get incentive rewards for their desired trading pools. Convex TVL grew quickly because people wanted cash flow from bribes. The total TVL of the income category was siphoned off as a result.

At its peak in January 2022, Convex held $20 billion of the $32 billion in yield agreements.

 

4. Public Chain and L2

 

One of the biggest trends in the recent cryptocurrency market cycle has been the adoption of new smart contract chains that offer faster and cheaper alternatives to Ethereum (alt-L1). Splitting historical TVL data by chain, we see that at the beginning of 2021, the majority of DeFi TVL was concentrated on Ethereum, after which Ethereum's dominance began to waver.

1. Ethereum

We can see in the chart above that a key driver of market share changes was the sudden increase in Ethereum transaction fees during the bull run, which made the chain inaccessible to most users. This transaction fee is the fee that users pay to conduct transactions on the blockchain.

At the height of Ethereum’s high fees, the cost of making an ETH transfer could be as high as $20. As shown in the figure below, during the DeFi summer of 2020, there were multiple peaks in fee prices.

Alt-L1s are orders of magnitude cheaper to use and faster than Ethereum because they innovate in their design or trade decentralization for performance. These Alt-L1s have successfully taken away Ethereum’s TVL market share, which has fallen from 87% at the beginning of 2021 to 57% in December 2022.

Of course, there are many factors other than fees that contribute to why a particular alt-L1 gains traction at different times. We’ll explore these catalysts in the following sections.

 

2. Binance Smart Chain

In 2021, Binance Smart Chain has seen widespread adoption by retail investors who want to trade STC tokens (tokens with no value other than speculation) on a cheaper and faster chain.

Profits can be made by entering early in the token launch and quickly hyping it up. Some projects offer huge returns to liquidity holders of their tokens on DEX, and many people are attracted by this, but this impermanent loss is usually not a good strategy.

These drivers have led to PancakeSwap, the most popular exchange on BSC, and Venus, the most popular lending platform on BSC.

In May 2021, BSC's TVL market share reached a record high of 18.6%.

BNB is the native token of BSC; it is used to pay transaction fees when using the chain. As users rushed to use the network and trade tokens, the price of BNB exploded. This surge popularized the saying that "investing in hot alt-L1s is a good way to make money," which in turn drove the subsequent surge in alt-L1s.

In 2022, BSC's TVL was hit as token prices collapsed and yields fell. At the end of 2022, its TVL market share was 10%, down 46% from its all-time high. Despite the decline, BSC is still the second largest public chain by TVL.

 

3. Polygon

Ethereum sidechain Polygon is the next popular blockchain. The catalyst is that the Polygon Foundation began to cooperate with popular DeFi protocols, allowing them to deploy their products on Polygon and launch joint liquidity mining programs with these protocols.

The first of these joint liquidity mining programs includes Aave deployed on Polygon. In April 2021, Polygon offered $40 million worth of its native token MATIC to lenders and borrowers on Polygon Aave. Users rushed to transfer funds to Polygon and use Aave to receive these rewards. As a result, Polygon Aave's TVL grew rapidly.

The Polygon Foundation repeated this strategy in many popular protocols such as Curve and Sushiswap. The price of the MATIC token soared as the chain gained adoption.

In June 2021, TVL's market share reached an all-time high of 10.3%.

As the market turned bearish, Polygon's TVL fell. At the end of 2022, Polygon's market share was 2.4% (down 77% from its historical high), and it was the fifth largest public chain by TVL.

 

4. Solana

The alt-L1 was later taken over by Solana. The chain saw a massive increase in TVL in August 2021. Liquidity mining programs, high Ethereum fees, and slow Ethereum transaction speeds exacerbated Solana's rise. The chain's TVL market share hit an all-time high of 6% in September 2021.

One unique factor driving Solana's early success is the support of FTX and Alameda. Before its bankruptcy in November 2022, FTX was the second largest cryptocurrency exchange in the world, and Alameda was one of the most famous cryptocurrency hedge funds. FTX and Alameda directly affect Solana TVL by building, investing in, and providing liquidity for applications such as Serum DEX. Indirectly, their promotion helps attract capital and talent to Solana.

When Solana started to rise, Ian and Dylan Macalinao hatched a double-counting scheme. They launched 11 protocols under 11 pseudonyms and encouraged users to deposit collateral from one protocol to another. This meant that the same collateral was double-counted many times, making it seem like there was more TVL in the Solana ecosystem than there actually was, making $1 look like $6.

In September 2021, the Macalinao project accounted for more than half of Solana’s TVL. This event prompted the DefiLlama team to filter out double counting when viewing TVL on the website. The following figure shows Solana’s TVL and the combined TVL of some Macalinao-controlled protocols (Saber, Sunny, Cashio, Quarry, Arrow, and aSol) (without filtering out double counting).

During the bear market, Solana's TVL market share fell more than Polygon and BSC. At the end of 2022, its TVL market share was 0.53%, down 91% from its peak, ranking 11th by TVL.

In addition to poor market conditions, Solana was negatively impacted by the FTX-Alameda incident. In November 2022, it was discovered that $10 billion of FTX customers’ funds had been fraudulently siphoned to Alameda and used for bad investments. That year, Solana was also hit by three network outages that rendered the blockchain unusable for days.

 

5、Avalanche

In the same way as Polygon, Avalanche runs joint liquidity mining with mainstream protocols to increase user adoption. The Avalanche Rush plan invests $180 million worth of AVAX to incentivize protocols such as Aave, Curve, Benqi, and TraderJoe. In four months, Avalanche TVL market share rose to a peak of 6.8%.

By December 2022, Avalanche’s TVL market share had fallen to 1.9%, a 72% drop from its peak, and the chain currently ranks 6th in TVL.

6、 Earth

Terra has attracted a lot of attention from crypto users from late 2021 to early 2022. Terra’s most popular product is a stablecoin called UST, which is backed by the chain’s native token LUNA.

The reason for this growth is a massive incentive program deployed by Terraform Labs with the Anchor Protocol. Users can deposit their UST into Anchor to earn a fixed 20% annual yield. The yield is heavily subsidized by the Anchor Reserve Fund. A small portion of the yield comes from interest paid by borrowers on the Anchor lending market, and returns on staking borrowers’ collateral. The incentive program has attracted a massive influx of users and capital who want this incredible fixed savings rate.

Backing stablecoins with unstable endogenous assets (assets from the same system) has proven to be unsustainable. This model has failed many times before, such as Iron Finance, Empty Set Dollar, Basis Cash (later the protocol was confirmed to be founded by Terra founder Do Kown). This model is doomed to fail again.

In early May 2022, UST lost its peg and was heavily sold off over the weekend, after which UST was unable to recover its $1 peg. UST holders could redeem less than $1 worth of UST for $1 worth of LUNA. As more and more users redeemed, the supply of LUNA increased and its value fell. Over the next week, UST and LUNA holders competed to reduce their positions. As the price of UST fell, more Luna was minted. At the same time, the falling price of Luna reduced people's confidence in UST. The resulting death spiral drove the value of both tokens to close to 0.

The collapse of the Terra ecosystem wiped out $20 billion in TVL from DeFi. At its peak before the crash, Terra had 15% of the market share.

The Terra debacle rippled through other crypto projects throughout the rest of the year, bankrupting multiple centralized crypto projects like Celcius and Voyager that had mismanaged their businesses and failed to prepare for the downturn.

 

7、Optimism and Determination

Arbitrum and Optimism are Rollups networks built on Ethereum, also known as L2. These networks help blockchains scale and support faster and cheaper transactions by moving some computations off-chain while keeping some data about each transaction on-chain. Arbitrum and Optimism have risen in TVL market share in 2022.

 

Decision

When Arbitrum was launched in September 2021, its TVL rose sharply in a short period of time and peaked at $2.6 billion within two months. Initially, capital poured into Arbitrum to participate in altcoin mining projects like ArbiNyan, whose TVL soared to $1.5 billion the day before the crash. An ArbiNyan fork project Carbon also briefly peaked at $300 million TVL. However, this capital subsequently moved to popular DeFi protocols such as Curve and Abracadabra.

Arbitrum’s TVL over time is largely driven by GMX, a decentralized spot and contract exchange. Arbitrum does not yet have a token, so a large influx of funds into the network is likely due to the ability to earn tokens for future airdrops by participating in the ecosystem.

At the end of 2022, Arbitrum's TVL market share was 2.6%, ranking 4th in TVL.

 

Optimism

When it launched in July, Optimism had a much slower TVL growth rate. The Optimism Foundation intentionally limited the early growth rate so that they could test the network in a controlled way. Until December 2021, developers must be whitelisted to deploy applications on Optimism.

Early on, Optimism’s introduction of the Synthetix protocol played a major role in TVL growth. Synthetix was the first large DeFi protocol deployed on L2, and they built a bridge that allowed users to easily migrate their SNX tokens to Optimism.

Similar to Arbitrum, Optimism’s TVL is also influenced by users’ expectations of its token airdrop. Optimism airdropped OP tokens to users in May 2022. Since then, the Optimism Collective community has begun running joint liquidity mining programs for different protocols to stimulate adoption growth.

At the end of 2022, Optimism's TVL market share was 1.3%, ranking 7th in TVL.

 

8. Looking to the future

Now that the crypto market has entered a bear market, the narrative of mainstream public chains seems to have cooled, and the indicators of many outstanding public chains in the previous round have plummeted from their historical highs. New public chains have tried to take advantage of the same narrative, such as Aptos, but the crazy market like the previous public chains has not happened.

Despite the apparent loss of market share, Ethereum remains the market leader in DeFi by a large margin, and its L2 is rapidly climbing the rankings. It looks like the Ethereum ecosystem will remain the primary habitat for DeFi for the foreseeable future.

 

V. Review of Important Events

 

1. Hacker Attacks

2022 was the worst year for cryptocurrency hacking. $3.2 billion was stolen in hacker attacks. The most popular hacker attack was the cross-chain bridge, which accounted for 59% of the stolen funds in 2022.

Security is one of the biggest obstacles to the development and adoption of DeFi. Users can only enjoy the benefits of DeFi if there are no exploitable security vulnerabilities in smart contracts.

2. Stablecoins

In 2022, the total market capitalization of stablecoins hit an all-time high of $187.5 billion.

During the bear market, stablecoin market cap has fallen much more slowly than other DeFi protocols, even including the full loss of UST. The market cap of stablecoins has fallen to $148 billion, 21% below its all-time high.

Stablecoins stand as the most popular use case for transitioning real-world assets to blockchain assets.

USDT is currently the market leader, accounting for 47% of the stablecoin market capitalization.

 

3、The Merge

After five years of research and development, on September 15, the Ethereum blockchain transitioned from Proof of Work (PoW) to Proof of Stake (PoS).

In the old consensus system, PoW, Ethereum miners compete to solve mathematical puzzles. The winning miner in each block is rewarded with ETH.

In the new consensus system PoS, Ethereum validators stake ETH and randomly select a node to process new blocks each time slot. The selected node receives a block reward. If a node behaves maliciously, its stake is slashed. Such a system is more energy-efficient and supports a large number of future innovations listed in the Ethereum roadmap. It is estimated that the Ethereum merger has reduced the world's total energy consumption by 0.2%.

The chart below shows that Ethereum’s energy consumption is expected to drop by 99.99% after the merger.

Now, the vast majority of DeFi is on-chain activity secured by PoS. This shift is a big step forward in terms of DeFi’s carbon footprint and security.

 

6. Prediction of emerging trends

 

Here are some of the growing trends that DefiLlama team members are watching in the new year:

DeFi protocols will increase leverage on their core functionality, allowing participants to choose more risk costs to improve capital efficiency. Two examples are Uniswapv3 and Aave v3, which have high LTV on related assets.

1、Oxngmi：Boss llama

Leverage ZK proofs and privacy technologies. The killer app should be a smooth Web3 entry that integrates smooth DeFi protocols and prioritizes mobile support.

2. Strobie: Delayed liquidation

The trend I am watching is privacy-oriented DeFi (e.g. Aztec). I also think that the use of stablecoins will continue to expand, as currently they are mainly used by residents of Europe and the United States. Aggregators could be a killer app.

3. Vrotend: Yield Adapter PRs and Meta DEX Aggregator

DeFi needs real returns. It will be easier for people to understand where their returns come from. The killer app will become the Bloomberg of cryptocurrencies

4、Bump：DEX

I am watching the volume on DEXs, they continue to grow, it will be interesting to analyze which dApps grow in that category. A good DEX is key to growth and competition for any public chain. The killer app could be a P2E game that is consistently profitable.

5. realShaman: Blockchain Verification

I am interested in using blockchain for verification. A few years ago, there was a lot of interest in supply chain cryptocurrencies, but this exploration did not progress. I think verification applications are where blockchains can be really useful. The killer app would be a swish wallet where users can send transactions directly from the dApp without the need for a browser extension like Metamask.

6. wavnebruce: NFT and Oracle API

Protocols that provide delta-neutral yield strategies will become a major trend. The killer applications will be privacy-focused wallets, more convenient access channels, mobile payments, and so on.

7. Slasher: Revenue Dashboard

Privacy will be a big trend. I'm excited about Aztec, even if it's not out yet. Maybe Ethereum L2 adoption will increase. Also, I'm looking forward to a cross-chain dex/aggregator faucet.

8. ulvsses: TVL changes

After the collapse of CeFi lending platforms, it will be interesting to develop a product to meet users' demand for "safe" returns. Crypto social media has a lot of untapped potential. If it only relies on applications like "TikTok Earn Money", it means that the industry is not moving forward.

9. Cocoahmology: Stablecoins and cross-chain bridges

Uncollateralized lending is interesting and I’m interested to see how different projects approach the uncollateralized challenge. The killer app will be lending against user assets.

10、nemus:Call, Callend 和 Waifus

There will be an uptick in minimal governance and “code and law” protocols that are better positioned to withstand the coming regulatory pressure. The killer app will be a capital-efficient insurance protocol.

11. Intern: Changes in TVL

The trend I’m most interested in is the adoption rate of prediction markets. The killer apps will be atomic swap protocols and aggregated cross-chain protocols.

12. mintdart: general purpose front end

I think there is still a lot of interesting things to see in crypto games. The killer app will be an all-in-one multi-chain dApp integrating DEX, yield farming, privacy cross-chain bridges, subscriptions and streaming payments.

13. Oxtawa: Dex trading volume, revenue, and fees

The killer app will be a system that allows users to easily get mortgages without KYC.

14、Oxgnek：TVL adapters

I’m excited to see improvements in DeFi security. Currently, security is seen as an event-based practice (testing -> peer review -> auditing), but good crypto teams will see it as a continuous process: static analysis and fuzz testing for every addition to the codebase, using automated threat response monitoring systems, and hiring security professionals.

15. Kofi: Hackers and Trending Contracts

 

Summarize

 

DeFi has made great progress, but the asset class is still small relative to the traditional financial services industry. The total value locked in DeFi ($54 billion) is only a small fraction of the total assets managed by the banking system.

I believe that in the next decade, DeFi will occupy an important position in the financial world. In 2023, we will continue to move towards this goal:

  • More DeFi teams will build products that are accessible to ordinary users. This will attract more mainstream assets to the category and further normalize DeFi's position as a global financial player.

  • Centralized cryptocurrency exchanges (Coinbase, Binance, Kraken, etc.) will recognize the importance of proving their on-chain reserves and making DeFi services accessible to users in a transparent manner. The bridges they build will make it easier for people outside the crypto ecosystem to interact with DeFi for the first time.

  • DeFi activities will flourish on Ethereum L2, bringing cheap, fast and secure DeFi experience to more people.

The DeFi industry in 2022 is full of innovations, challenges, and breakthroughs.

2023 will be even more exciting.