The decentralized finance (DeFi) sector has seen a massive amount of progress throughout 2020. Once basically unknown and disregarded sector that only featured a handful of projects now consists of several hundred DeFi apps and protocols, across multiple networks.
Naturally, DeFi is still at its strongest on Ethereum's platform, which is where it was born, and where it started its growth. But, since mid-2020, when the DeFi craze really began, DeFi has reached other Ethereum-like platforms that focus on dApps and smart contracts, such as Tron and EOS.
The Advancement of DeFi in 2020
As mentioned, DeFi has been around for a while, with Maker being the most popular projects. In 2020, however, DeFi started seeing numerous new projects emerge, including Wrapped Bitcoin, Compound, Aave, Uniswap, Curve Finance, Synthetix, yearn.finance, and many others.
The sector started measuring its success by the amount of money that got deposited in smart contracts, known as TVL (Total Value Locked). At the time of writing (December 15th, 2020), DeFi TVL sits at $14.9 billion, which is the highest it has ever been.
Cryptocurrency expert Andrey Sergeenkov added that "DeFi had its ups and downs, typically reacting alongside the rest of the crypto industry, and at one point — in early November — it even suffered a bit of a crash, when TVL dropped from its ATH at $12.47 billion to $11.07 billion. But, it soon resumed its surge, and it currently sits at a completely new ATH, as mentioned earlier."
What Is Going on With DeFi These Days?
As a relatively new sector — at least when the amount of attention it is receiving is concerned — DeFi is filled with significant events. Every new partnership, every new project launch, and every major update that projects receive, are making headlines.
BTC PEERS cryptocurrency news platform states that "The situation with DeFi now is not unlike what the crypto industry used to look back when the ICO craze was at its peak, when everyone rushed to invest in the next big thing."
The biggest project right now is still Maker, although the one that is making headlines the most is yearn.finance.
The company has teamed up with numerous companies recently, and especially in the last two weeks. Yearn teamed up with Akropolis, Cover, Cream, Pickle, and others.
It is also worth noting that Pickle Finance, one of the firms that yearn.finance recently acquired, lost about $19.7 million in DAI during a recent hacking incident. This is not that surprising, since it was only a matter of time before hackers started targeting DeFi as much as the rest of the crypto industry.
One major DeFi project, Uniswap, became the largest decentralized exchange (DEX) in recent months, especially after its rival project, SushiSwap, got accused of being an exit scam.
Meanwhile, users are also constantly looking for new, emerging DeFi projects, as the so-called 'second wave' of the DeFi craze is expected to bring these projects to fame.
In truth, new projects are always sought out in crypto and DeFi alike, as some of them do come with new, innovative ideas that allow them to climb out of the sea of lesser projects.
One example is OnigiriSwap — which is not exactly brand new, but it did recently decide to restructure its entire underpinning of the protocol, and make $ONIGIRI more like $CORE. As a result, the project decided to upgrade to what it called $ONIGIRIv2, which was expected to bring numerous improvements to its tokenomics.
With OnigiriSwap V2, the project is bringing rewards for farmers from the fee imposed on any trades concerning the token. The project will also get a fixed supply, as well as locked liquidity, for faster transaction processing. Lastly, governance will let the community decide on things like developer and approver contract fees, new pool implementation, rebalancing, and potential removal.
Lastly, there is one more thing that could have great implications for the DeFi sector, and that is the fact that Ethereum has started its upgrade to Ethereum 2.0. Throughout this year — as well as the last few years — Ethereum has been seeing a significant surge in activity.
However, with the project being unable to scale, that often pushed gas prices up, while the network became over clogged with transactions. It happened when dApps went big, and it happened again this year, with DeFi.
But, with Ethereum 2.0, Ethereum's network will become faster, safer, more competent, and significantly more capable, which might have beneficial effect on Ethereum's part of the DeFi sector.