Gradually, then Suddenly – Can DeFi become Viable Alternative to Traditional Finance?
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DeFi is evolving to leverage blockchain’s properties like decentralization and transparency to provide financial services to any individual with an internet connection and a mobile device. They have proven to be a useful tool for crypto enthusiasts as they found new ways to earn income by lending their crypto assets on DeFi platforms. Beyond financial services, several industries including e-commerce, gaming, real estate, and sports have discovered various use cases of DeFi.
Traditional finance is riddled with issues that arise due to its requirement of middlemen carrying out financial transactions. An increasingly connected world has highlighted such drawbacks, where intermediaries like banks charge high fees to become entry barriers for accessing various financial instruments. Hence, there has been a growing need for an alternative financial system with lower transaction fees and improved accessibility.
Since September 2020, DeFi witnessed a whopping 816% growth to register $78.8 billion in its TVL by the end of September 2021, which could be primarily attributed to the growing pace in transition to more attractive financial products like yield farming. DeFi market cap reached $115 billion by the end of September 2021, a growth of 420.0% from January 2021. By the end of Q3 2021, 3.35 million unique addresses used at least one DeFi protocol, a growth of 90% since the end of Q1 2021. DeFi claims several properties native to blockchain technology, enhanced by flexible blockchain platforms like Ethereum that are programmable and act as marketplaces for many applications to transform traditional finance.
DeFi stepped into the limelight as a new investment tool to utilize crypto assets. Its mentions are on the rise across print media, social media, and company filings of banks and other enterprises to offer DeFi services. It holds a promise to provide financial services, even for the unbanked, from any location, 24/7 and at lower costs, higher speed mainly due to the elimination of intermediaries.
This report highlights how startups and enterprises are leveraging DeFi to change the way we embrace financial services using cryptos. It also draws attention to how business leaders and major industries like automotive, energy, and healthcare can be benefitted in the future with the adoption of DeFi.
What are the market dynamics in DeFi?
DeFi allows any individual to buy, sell, lend, and borrow to interact peer-to-peer (P2P) by removing intermediaries. It serves as an alternative to banks for the underserved and unbanked populations by giving access to financial instruments like loans. DeFi is built on decentralized blockchain networks so that the information is spread across multiple nodes on thousands of computers via a P2P network. It enables censorship resistance; every user has self-custody of their assets regardless of credit history or social standing.
DeFi promises to transform traditional finance into transparent protocols without middlemen via blockchain powered smart contracts. It aims to tackle dissatisfaction in the financial ecosystem by influencing the speed and cost of transactions. While startups push the envelope for innovative DeFi applications beyond financial services to industries such as e commerce, the focus of enterprises is on merging DeFi offerings with their existing portfolio.
What are the emerging concepts in the DeFi development?
Digital IDs: Digital IDs can help in onboarding and reverification during transactions. In the future, digital IDs could be tied to biometric recognition. Bloom, a US-based startup is trying to bridge the gap between DeFi and digital IDs.
DeFi intelligence: Integrating DeFi with AI technologies to unlock advanced capabilities like AI-mitigated risk management, intelligent lending, and insurance to incorporate liquidation history and transaction patterns can be the next big step in DeFi evolution.
DeFi NFTs: The Interest-bearing NFTs created by depositing ERC tokens into NFT can unlock new revenue streams for industry influencers, bloggers, artists, musicians, videographers, and social media content creators.
DeCloud: Decentralized Cloud or DeCloud has the potential to accelerate deployment, scaling, and price performance of high-growth domains like AI. The future of cloud computing would be permissionless and open.
DeFi, key concepts
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Who are few of the startups that dominates NFT development across major applications?
ParaFi Capital, DeFi Alliance, and CMS Holdings are the top three investors to promote DeFi startups. Other key companies that promote startups are AU21 Capital, Polychain Capital LLC, NGC Ventures, Genblock Capital, Defiance Capital LLC, Moonwhale, Ventures Pte Ltd, and X21 Digital.
Market report scope
Market Capitalization (Year- Sep 2021) | $115 billion |
Period | October 2021 |
Emerging concepts | Digital IDs, DeFi Intelligence, DeCloud, and Defi NFTs |
Companies Covered | ParaFi Capital, DeFi Alliance, CMS Holdings, Trustworks, GoldFinx, Definer, Pumapay, Fireblocks, Trustworks, GoldFinx, Definer, Pumapay, Fireblocks and others |
Scope
- Technology Decoding: presents the technology overview, growing interests in the technology, major milestones, DeFi vs TradFi, Ethereum vs Binance, ecosystem players, major applications, and a market map with potential use cases and popular players (startups as well as enterprises).
- Media & Trend Analysis: highlights the technology presentation from the media perspective – major news, initiatives from banks and financial institutions, the social media buzz promoting the technology, and job hirings for the technology. Also, includes mentions of the technology from company annual and other filings.
- Investment Radar: outlines the venture capital funding trends with some of the popular deals, country-wise funding, recently funded select startups, and notable investors and accelerators pumping millions into the technology growth.
- Innovation Explorer: introduces game-changing company innovations with a spotlight on startups. Select company partnerships inclined at future technology adoption are also mentioned.
- IP Landscaping: provides a broad-level analysis of the trends in patent filings and grants, priority countries, and key patent filers in the technology. Also, highlights unique patents by enterprises.
- The Road Ahead: summarizes the drivers and challenges, use cases that can become successful with business leaders, potential applications in new horizons, and the outlook of the technology.
Key Highlights
DeFi overview and its key applications across industries, ecosystem and major stakeholders in each industry, buzz created in the media, VC investment trends, innovations across industries and examples related to implementation of DeFi, trends in patent filings and grants, and the future potential of DeFi.
Reasons to Buy
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98Labs Inc.
9th Gear Technologies
Aave
Abaxx Technologies
Abra
Adobe
Advanced New Technologies Co.
Alchemix
Algorand
Alibaba
Alkemi Network
All It Top Co. Ltd.
Amazon
Amazon Web Services
American Express
Amex Ventures
Ant Group
APY.Finance
APY.vision
Argent
Asia Reserve Currency Coin
Assetblock
AT&T
Atari
Atari Chain
AU21 Capital
Augur
Axie Infinity
Bancor
Bank of America
Barclays
Beijing Aimo Ruice Technology
Berkshire Hathaway
BiLira
Binance
Binance DEX
Binance Smart Chain
Bisq
Bizmodeline Company
Blockchain Development Company
Blockpass
Blocksquare
Bloom
BMW
Boson Protocol
BrickEX
BrightID
Brugu
BT Group
Bunicorn
bZx
Capital One Services
Carnomaly
Chainbeat
Circle
Cisco
Citigroup
Civic
CMS Holdings LLC
Coinbase
CoinGecko
CoinLinked
CoinLoan
CoinMarketCap
Coinplug Inc.
Compound Labs
Consensys
Contour
Coral Protocol
Curate
dCUN Corp
DeepDAO
DeFi 11
DeFi Alliance
DeFi Land
DeFi Pulse
Defiance Capital LLC
DeFiDollar
DeFiLlama
DeFiner
Defito
Denso
Deutsche Telekom
Dharma Labs
DigiliraPay
Directly Inc.
Dtravel
Dydx
Eaton
eBay
Ekart Inu
Enedex
Energy Web
Engie
Engie Energy Access
E-Shop
ESP Coin
Ethereum
Etherisc
Fairmint
Fantom
Fetch.ai
Fidelity Investments Inc.
Fidessa Group
Fireblocks
FirstBlood Technologies
FIS
Flare Network
Ford
Framework Labs
Fujitsu
Galaxy Digital
Galileo Financial Technologies
GameStop
GamyFi
Genblock Capital
General Electric
Gnosis
GoldFinX
Goldman Sachs
Grayblock Power
Gro
Harbor
Hewlett-Packard
Hifi Finance
HSBC
HTC
Huobi Global
IBM
Icetea Labs
IDEX
ING Group
Instadapp
Intel
IPwe Inc.
J.P.Morgan
Jabil Inc.
Jointer
JPMorgan Chase Bank
King Arthur DeFi
KingSwap
KoKoSwap
LandOrc
Landshare
Lbxc Co. Ltd.
Lenovo
Lexit
Lition
Lofty AI
Long Hash
Lottery Now Inc.
Ltd.
LunaPBC Inc.
Lyra
Mainframe
MakerDAO
Maps.me
Mastercard
MathWallet
MedicalVEDA
Meld
Meng Jianghua
Meridio
Metamask
Microsoft
Middle Chart LLC
Milestone Entertainment
Mogul Productions
Monerium
Moody’s
Moonwhale Ventures Pte Ltd
Mox-SpeedChain LLC
Mt Pelerin
My DeFi Pet
MyCrypto
MyEtherWallet
Mythical Inc.
NAX
nChain Group
Nexon
Nexus Mutual
NGC Ventures
Nuro
OpenDAO
Openfinance
Opium Finance
Opyn
Orbs
Ox
OxTracker
ParaFi Capital LLC
Paxos
PayPal
Pfizer
Poleecy Insutech S R L S
Polkadot
Polychain Capital LLC
Polygon
Polymath
Propy
PumaPay
PwC
R3
RadwareLtd.
Rage Fan
Rakuten
Rarible
RealT
Reef Finance
Resillience Financing
Robinhood
Royal Bank of Canada
Salesforce
Salt Lending
Samsung
SBI Holdings
SCB 10X
Scientia Potentia
Securrency Inc
SelfKey
ShapeShift
Sheesha Finance
Shopify
Siam Commercial Bank
Siemens
SingularityDAO
Sinochain Technology Co. Ltd.
Skybridge Capital
Smart Realty
Solana
Solve.Care
Sony Interactive Entertainment
SpaceX
Splyt Core
Sportscash One
SportsD3
SportsIcon
SportsMEDIA Technology Coporation
SportyCo
Spring Labs
Square
Square Enix
State Farm Insurance
Stellar Vdc Commerical
Strong Force Intellectual Capital
Superfluid
SwapXI
Swisscom
Synthetix
Tangem
Terra
Terra Virtua
Terraform Labs
Tesla
Tether
TradeStars
TransUnion
Trust Wallet
TrustWorks
Ubisoft
UBS
Unifimoney
Uniswap
Universal Market Access
Uphold
uPort
USD Coin
Vauld
Virgin Group
Visa
Volatility Managers LLC
Walmart
Warner Bros
WebMD
Wells Fargo Bank
Winklevoss IP
Wintermute Trading
WOO Network
X World Games
X21 Capital
Y Combinator
Zerion
Table of Contents
Frequently asked questions
-
What is market capitalization of DeFi as of September 2021?
The market capitalization of DeFi as of September 2021 is $115 billion.
-
What are the emerging concepts in DeFi development?
Key emerging concepts in DeFi development are Digital IDs, DeFi Intelligence, DeCloud, and Defi NFTs,
-
Who are the top investors promoting DeFi startups?
Some of the top VC investors seeking potential DeFi startups for financing are ParaFi Capital LLC, DeFi Alliance, CMS Holdings LLC, AU21 Capital, Polychain Capital LLC, NGC Ventures, Genblock Capital, Defiance Capital LLC, Moonwhale Ventures Pte Ltd, and X21 Digital.
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