DeFi: What to look out for in 2022

Staying on top of the latest trends in Decentralized Finance is extremely difficult – A lot is happening at the moment. If you don’t work full-time in crypto, you may not have the chance to stay on top of everything that’s going on. To you help you, we have compiled a list that contains the most recent crypto trends, and explains if there is a way to anticipate them.

The Cosmos Ecosystem is exploding #

Currently, most DeFi’s are based on Ethereum. Ethereum has by far the largest ecosystem and has the greatest network effect. This is likely to change very soon, though.

Several other blockchains are rapidly catching up. On the rise are Solana, Binance Smart Chain, Polkadot, and Cosmos.

There is a demand for different blockchains with varying parameters, which is demonstrated by the growing Cosmos ecosystem. By using Cosmos, developers can easily create a brand new blockchain – with adjustable parameters. Cosmos has developed a framework for standardizing this process: The Cosmos SDK.

Custom blockchains can be built by developers and connected to the rest of the Cosmos ecosystem. We mean by “connecting” that all blockchains can exchange information with each other. The Cosmos IBC – one of the most advanced interoperability solutions – makes this possible.

For things like the Poly Network hack to not occur again, token bridges must be standardized. Communication between heterogeneous blockchains is standardized by the Cosmos IBC; It is very easy to integrate, and developers no longer have to build untested token bridges.

The Cosmos ecosystem is growing at an amazing pace right now. Check out Gravity Dex, which is the first DEX on Cosmos, which let’s you trade tokens with a UX similar to Uniswap.

Cosmos even has its own Metamask version, which is called Keplr Wallet. Fans of Cosmos are also eagerly awaiting the launch of Emeris, a centralized portal for all DeFi apps on Cosmos.

Take a look at the Cosmos ecosystem; Currently, Cosmos has its own network effect, which strongly resembles the early stages of Ethereum’s DeFi adoption. There were very few DeFi apps in January 2020, but a few months later, we saw DeFi Summer 2020, and everything exploded. So, watch out for Cosmos!

New Asset Class: NFT #

NFTs has been the subject of discussion a lot lately. Why? Due to their incredible growth.

Recent examples include Axie Infinity, which became the first NFT game to reach $1 billion in sales. Approximately 15 percent of sales occurred in August. That shows how quickly the NFT market is growing.

A NFT is more than just an in-game item. It’s a new class of assets we’ve never seen before. Please read this article if you have no idea what they are.

Crypto enthusiasts should keep an eye out for NFTs, especially if you’re into DeFi. Soon, we will be able to use them inside the DeFi ecosystem by fractionalizing NFTs. In the past, NFTs and DeFi were two separate ecosystems that didn’t have much in common. Soon, that will change.

Mergers such as DeFi and NFT are but a small part of the thriving NFT ecosystem. There’s a lot to discover, so go and explore it.

Merging with Beacon Chain #

The merger of the Ethereum node and the Beacon node is another big event we are all looking forward to. It is the moment when Ethereum’s PoW becomes obsolete; this will be a landmark because it proves that highly decentralized blockchains do not rely on high energy consumption.

However, when is it going to happen? The merger could happen as early as 2022 if everything goes according to plan. Nevertheless, this could be overly optimistic. Technology generally takes much longer than expected. We expect that the merger will not be completed before Q1 2022.

Whenever it takes place, it will be a major milestone for the Ethereum ecosystem. There was a lot of attention focused on EIP-1559 just a few weeks ago. After the successful hard fork, everyone is looking forward to the merger.

Yield Farming #

A trend that hasn’t been in the spotlight for quite some time is yield farming. Yield farming has been around since DeFi’s early days. The summer of 2021 was all about yield farming. This began with the release of Compound’s liquidity mining program.

Things went crazy after that… and you all know how that turned out. People started to lose their interest in yield farming quickly after DeFi summer.

However, it could return with a vengeance. Sidechains and second-layer solutions could bring yield farming back into the crypto mainstream. Why? Because high gas fees stopped DeFi summer. When people start transacting natively on L2 solutions and realize that yield farming is affordable, its popularity can increase again.

Conclusion #

DeFi an emerging system and it’s always moving forward. We can try to guess where things are headed in the near future, but it’s almost impossible to predict what will happen in the long run. Trends like those we discussed today are very clear to me. There are countless new developments on their way.

Regardless of what happens, it’s always rewarding to watch different ecosystems grow – builders who are passionate about the future of their niche. Crypto’s spirit is unquestionably unique, and very few industries have as hardworking and cheerful people as crypto does. DeFi is still far from being a finished product.

References:

Staff, C. (2021, September 3). NFTs as an Asset Class. CoinDesk. https://www.coindesk.com/sponsored-content/nfts-as-an-asset-class/

Browne, R. (2021, August 24). Hacker behind $600 million crypto heist returns final slice of stolen funds. CNBC. https://www.cnbc.com/2021/08/23/poly-network-hacker-returns-remaining-cryptocurrency.html

Martin, S. (2021, October 27). SCRT, OSMO and ATOM Rally as Cosmos Ecosystem Claims Center Stage: Markets Wrap. Blockworks. https://blockworks.co/scrt-osmo-and-atom-rally-as-cosmos-ecosystem-claims-center-stage-markets-wrap/