Delphi Digital Reveals Key Trends That Will Shape the Future of DeFi in 2024
In Brief
Delphi Digital released its “The Year Ahead for DeFi 2024” report, highlighting anticipated trends in the DeFi sector for the upcoming year.
Blockchain and cryptocurrency consulting firm Delphi Digital released a report titled “The Year Ahead for DeFi 2024,” highlighting anticipated trends in the decentralized finance (DeFi) sector for the upcoming year.
This year was characterized as a relatively uneventful year for DeFi with the global macro environment experiencing chaos, while the wave of insolvencies among centralized entities in mid-2022 resulted in a depletion of capital from on-chain finance.
However, the current year has witnessed a positive performance within the sector, with several tokens experiencing significant rallies, surpassing the 100% mark, while only a few tokens recorded losses for the year.
Among the prospects of DeFi in 2024 there are five tendencies worth following:
Liquid Staking
The current staking rate of Ethereum (ETH) stands at 23.7% relative to the total supply of 120.2 million ETH. The quantity of staked ETH is approaching the target of 33.5 million ETH, constituting 27% of the total Ethereum supply, a level deemed optimal for ensuring robust network security.
The adoption of LSDs also saw significant growth, with approximately 44% of all staked ETH now distributed across various protocols, including Lido, Coinbase, Rocketpool, Biinance, Frax Finance, Mantle, among others.
Throughout 2023, Frax Finance demonstrated consistent growth, with staked ETH increasing from 38,000 to 233,000. Frax Finance also stands out due to its innovative sfrxETH design and integration within its ecosystem, particularly in Fraxlend.
Meanwhile, Mantle leveraged its protocol-owned ETH to launch its mETH offering, aimed at generating yield for Mantle and enhancing liquidity on decentralized exchanges (DEXs).
Decentralized Exchanges
Decentralized Exchanges (DEXes) differ from traditional centralized exchanges by operating on blockchain networks, enabling peer-to-peer trading without intermediaries.
The major project expected to drive 2024 include Uniswap v4, Uniswap X, and other intent-based DEXs. Notable DEXes to keep following the developments of in 2024 include RageeTrade, IntentX, Orderbook Protocol, Uniswap, Cow DAO, 1inch Network and SYMMIO.
As for perpetual DEXs, 2023 marked a year of developments but didn’t witness increased market share. DYDX v4 migrated to the Cosmos app chain, Aevo pioneered the OP stack, Vertex protocol elevated DEX UX, and RabbitX emerged as Starkware’s booster.
App-specific rollups
Application-Specific Rollups (ASRs) represent a notable advancement in the blockchain space, offering a tailored solution to scalability challenges. By processing and bundling transactions off-chain before submitting them to the main Ethereum network, ASRs aim to enhance efficiency, reduce congestion and mitigate gas fees.
Aevo paved the way for rollapps forked Optimism and deployed DEX with the aim of expanding its capacity to accommodate increased usage. In 2024, the majority of DEXs, particularly those dealing with derivatives, are expected to gain advantages by establishing their own execution environments.
Promising projects to watch for in 2024 include Aevo, known for its less centralized matching process; Vertex Lyrafinance; Caldera and other tools designed to simplify rollup deployment. Additionally, Astira and Espresso systems present noteworthy prospects in this context.
Real-World Assets
The real-world assets (RWAs) sector emerged as one of the most successful segments in the cryptocurrency space during 2023. With crypto-asset prices experiencing a decline and global interest rates on the rise, investor attention has redirected towards traditionally off-chain yields, such as US Treasurys, moving away from crypto-native opportunities like yield farming. Simultaneously, the narrative surrounding tokenization garnered increased interest from both established players in the cryptocurrency sector and external market participants, including institutional money managers and regulators.
In 2024, tokenization projects such as Backed and Superstate are anticipated to gain strong momentum.
Decentralized stablecoins
In 2023, the global stablecoin market witnessed a year of unprecedented developments, shaping the future of digital currencies. The year marked a significant shift, not only in technological adoption and innovation but also in the regulatory landscape that governs these digital assets.
Decentralized stablecoins are tethered to a particular asset class, utilizing protocols and mathematical algorithms to uphold their peg and reduce price volatility, distinguishing them from centralized stablecoins. Despite their unique features, decentralized stablecoins constitute only a small fraction of the total stablecoin market capitalization.
The derivatives market is evolving as a significant sector with untapped potential, and decentralized stablecoins like synthetic USD, introduced by Synthetix, are anticipated to be noteworthy considerations in 2024.
As the crypto landscape evolves, 2024 promises a dynamic journey for DeFi. The prospects for 2024 indicate a continued evolution, driven by technological advancements, market dynamics, and the ongoing pursuit of innovation in the decentralized finance space.
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Alisa is a reporter for the Metaverse Post. She focuses on investments, AI, metaverse, and everything related to Web3. Alisa has a degree in Business of Art and expertise in Art & Tech. She has developed her passion for journalism through writing for VCs, notable crypto projects, and scientific writing. You can contact her at alisa@mpost.io
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Alisa is a reporter for the Metaverse Post. She focuses on investments, AI, metaverse, and everything related to Web3. Alisa has a degree in Business of Art and expertise in Art & Tech. She has developed her passion for journalism through writing for VCs, notable crypto projects, and scientific writing. You can contact her at alisa@mpost.io
