DeFi 2021 and Beyond: What to Look Out For
What will the next few months look like and how can you use this to your advantage?
Hey DEFI TIMES community,
It’s super hard to stay on top of the latest trends in Decentralized Finance. A lot is happening right now.
If you’re not full-time in crypto, you might not have the chance to catch up with all the important things that are going on!
So today, I put together a list for you! What are the latest crypto trends? How can you front-run them?
Let’s find out!
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DeFi 2021 and Beyond: What to Look Out For
Cosmos Ecosystem Exploding
As of today, most DeFi’s is on Ethereum. Ethereum has by far the biggest ecosystem and the largest network effects. However, this is likely to change very soon.
Other blockchains are catching up very quickly. Solana, Binance Smart Chain, Polkadot, and Cosmos are on the rise. For me, it has always been very clear that we will see a multi-chain future. A future, where multiple chains apart from Bitcoin and Ethereum exist.
The growing Cosmos ecosystem proves that there is demand for different blockchains with different parameters. Cosmos basically allows developers to easily build a whole new blockchain from scratch - with adjustable parameters. Cosmos has developed a framework to standardize this process: The Cosmos SDK!
Developers can freely build custom blockchains, and connect them to the rest of the Cosmos ecosystem. With “connecting,” I mean that each blockchain can exchange information with all other chains. This is made possible by the Cosmos IBC - one of the most advanced interoperability solutions.
Last Friday, we talked about the need to standardize token bridges to avoid things like the Poly Network hack. The Cosmos IBC standardizes communication between heterogeneous blockchains. Developers can integrate it very easily and the need to build untested token bridges falls away.
It’s super interesting to watch the Cosmos ecosystem grow right now. If you haven’t, take a look at Gravity Dex, which is the first DEX on Cosmos! It’s live today, and you can trade tokens with a UX similar to Uniswap! Pretty cool!
Cosmos even has its own Metamask, which is called Keplr Wallet!
Cosmos enthusiasts are also looking forward to the launch of Emeris, which is a one-stop portal for all DeFi apps on Cosmos!
All in all, keep an eye on the Cosmos ecosystem! In my opinion, Cosmos is currently developing its own network effect. It heavily reminds me of the early stages of Ethereum DeFi. In January 2020, very few DeFi apps existed but a few months later, we saw DeFi Summer 2020, and everything exploded! Cosmos could be something worth watching!
NFT As A New Asset Class
A recent example is Axie Infinity, which just became the first NFT game to hit $1 billion in all-time sales. ⅕ of all sales took place in the first week of August. That shows very well how fast NFTs are taking off right now.
But NFTs are more than just items in some random games. They are a completely new asset class we have never seen before.
If you have no idea about NFTs whatsoever, then I highly encourage you to take an hour or two and learn about NFTs.
Especially if you are into DeFi, NFTs are the next big thing to look out for. By fractionalizing NFTs, we will use them inside the DeFi ecosystem soon. NFTs and DeFi have previously been two separate ecosystems that didn’t have too much to do. Soon, that will change!
The DeFi <> NFT merger is just one little niche inside the flourishing NFT ecosystem. There’s some much to discover - so you better go and explore it!
Merging With the Beacon Chain
Another big event we are all waiting for is the merger between the PoW Ethereum chain and the Beacon chain. It’s the moment when Ethereum’s PoW will be a thing of the past; This will be a historical milestone because it proves that highly decentralized blockchains don’t rely on heavy energy usage.
But when will it happen? If everything goes well, we could see the merger already in 2021. However, this might be a little too optimistic. In tech, things typically tend to take much more time than initially thought. Personally, I don’t think the merger will happen before Q1 2022.
Whenever it happens, it’s the next big milestone in the Ethereum ecosystem. Just a few weeks ago, all eyes were on EIP-1559. But after the successful hard fork, the merger is the next big event everyone is waiting for.
So, keep an eye on the merger! In my opinion, one of the best ways to stay on top of general Ethereum updates is The Daily Gwei!
Another big trend that hasn’t been in the spotlight for quite some time is yield farming. Yield farming has been around since the beginning of DeFi. Yield farming was a hot topic in DeFi summer 2021. It all really started with Compound releasing its liquidity mining program.
After that things went crazy… and you all know how it ended!
After DeFi summer, people didn’t pay too much attention to yield farming anymore!
But it could come back in a big way. With all the sidechains and second-layer solutions, yield farming could get into the crypto mainstream again. Why? Just think about how DeFi summer stopped: high gas fees! What happens when people start natively transacting on L2 solutions and realize that yield farming is affordable?
We could see a similar hype to DeFi Summer 2020. But this time… it’s DeFi Summer 2021!
DeFi an emerging system and it’s always moving forward!
While it’s almost impossible to predict what happens in the long run, we can try and guess where things are heading in the near future.
For me, some trends are very clear - like the ones we discussed today! But there are countless other developments!
Whatever happens, it’s always super rewarding to watch different ecosystems growing - Builders, who are excited about the future of their specific niche!
The crypto spirit is unquestionably unique, and I truly believe that there are very few industries out there where people are as hard-working and cheerful as in crypto!
So, lean back and enjoy the show!
The DeFi ecosystem is far from a finished product!
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DISCLAIMER: All information presented above is meant for informational purposes only and should not be treated as financial, legal, or tax advice. This article's content solely reflects the opinion of the writer, who is not a financial advisor.
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