On 6 February 2020, the total value locked into Ethereum’s decentralized finance apps crossed $1 billion for the first time. This marked a major milestone for Ethereum, as the blockchain is still shy of 5 years old. So, the billion dollar milestone has been hit for Ethereum’s DeFi – what’s next?
Ethereum is evolving
The fact that Ethereum now supports more than $1 billion worth of DeFi (decentralised finance) activity shows that the blockchain, although young, is evolving and producing truly innovative products. Things have come a seriously long way for the blockchain, and the process is still ongoing. Let’s look into the future of DeFi and Ethereum, to see what the next few years have in store.
- Maker Dominance Rate
The Maker Dominance Rate refers to the proportion of value that’s locked in MakerDAO smart contracts, compared to how much is locked in other DeFi dApps – at the moment, it’s around 62%. The Maker project is currently sitting at the #1 position on the DeFi charts – but will it maintain its lead? Likely.
According to DeFi Pulse, a tracker site, the Maker lending dApp is in first place with more than $600 million worth of value in its smart contracts.
Contrastingly, Synthetix and Compound finance, its nearest contenders, are sitting at $140 million and $125 million in their contracts at the moment. Will they be able to close the gap in the near future? It doesn’t seem all that likely.
- $10 billion
Breaking the $1 billion mark is a huge deal, but stakeholders already have their eyes on the next milestone – $10 billion. Hitting $10 billion in DeFi will push the community forward, bringing dApps that people need, want, and can leverage with ease. User experience has also vastly improved in the last few years, which is a trend that will likely continue.
If more UX strides are made, then it’s possible that DeFi could reach $10 billion within the next two years.
Just got a @Zer0Collateral loan with….zero collateral.
Took out a year loan at 12%.
— evan.ethereum.eth (@evan_van_ness) February 7, 2020
- ETH will see price gains
So, the billion dollar milestone has been hit for Ethereum’s DeFi – what’s next? Will the growth of DeFi make Ethereum’s cryptocurrency, Ether, see price gains? It’s quite likely. The value of stablecoin transactions taking place over Ethereum, outperformed the value of ETH transactions for the first time ever. Much of the stablecoin activity is centered around DeFi, and the demand for ETH grows as the demand for the gas that powers the transactions increases.
“They’re one of the biggest reasons to be bullish on ETH,” Bankless writer Ryan Sean Adams remarked. Adams continued, “ETH is economic bandwidth for DeFi.”
How will Ethereum 2.0 affect the growth of the DeFi network? It’s fairly likely that we’ll see the introduction of Serenity within the next year or so, and with it we’ll see a major improvement in scalability. Improved scalability will bring advancements in the dApp world, and DeFi by default.
DeFi is bringing prosperity to Ethereum
The billion dollar milestone has been hit for Ethereum’s DeFi – what’s next? It’s very likely that we’ll see continued growth of DeFi dApps over the next few years. In fact, some analysts are already suggesting that we could see DeFi reach $10 billion by 2022. With Ethereum 2.0 heading our way soon, we’ll see even more DeFi dApps hitting the market – and they’ll be bigger and better than ever. For now, DeFi is pulling Ethereum forward, and it’s pretty exciting for the blockchain.