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23 April 2021

ReDeFining growth: Innovative trends impact evolution of blockchain tech

ReDeFining growth: Innovative trends impact evolution of blockchain tech


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Over the last year, the decentralized finance space has been making waves in the financial sector, building on blockchain technology to decentralize a multitude of banking services.

The advent of programmable smart contracts catalyzed the formation of our modern decentralized finance ecosystem, making financial services accessible to anyone with an internet connection.

With more development resources allocated to DeFi systems than ever before, blockchain is the next frontier for any financial services company worldwide.

Smart contract platforms allow people to interact with several decentralized applications using a single financial identity.

In fact, even some centralized banks have started offering cryptocurrency custodial services, allowing users to store their cryptocurrencies in a secure manner with a party that can be held responsible for its security.

Furthermore, as pointed out by Anton Bukov, co-founder of the 1inch decentralized exchange aggregator, as banks start to provide huge amounts of stablecoin liquidity to DeFi platforms, APY for lending and borrowing will decrease in the future.

With decentralized exchanges like Uniswap occasionally reporting volumes higher than Coinbase Pro, there’s talk of whether centralized exchanges are sustainable in the long run.

“Centralized exchanges will always have a leg up in terms of user experience, creativity and trust with their user base,” said Kerr, noting how centralized exchanges offer services that are essential to the space, such as fiat on-ramps, regulatory compliance and better mobile app user experiences.

From initial exchange offerings and staking to lending and borrowing services, exchanges could begin to defend their positions by increasing margins from other lines of business and face competition from their decentralized counterparts.

“Just as banks don’t earn on deposits, they earn on the back-end services and cross-selling of other financial products — so too will centralized exchanges as the industry advances,” Kerr said.

This will give developers the freedom to choose different platforms to best suit their individual decentralized applications.

“In the future with interoperability, these platforms will remain useful for prototyping, but developers will select the most specialized and optimized services for their app and use cases.”.

DeFi outstanding debt is over $9 billion, but decentralized finance is still a toddler against the broader financial services industry.

With fresh innovation constantly around the corner, there’s good reason to believe accessibility and variability among DeFi applications will improve with time.

Today’s applications are usually designed for traders familiar with DeFi systems in mind and offer services that aren’t always useful to the average consumer, such as auditing tools and on-chain data oracles.

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