Crypto Review

Crypto Review – DeFi

The emergence of the DeFi ecosystem is one of the stand-out trends of 2020.

A number of high-profile hacks and attacks early in 2020 cast a dark cloud over the emerging space. However this didn’t stop total market cap ending 2020 around $25bn. Multiple DeFi projects passed $1bn in total value locked.The popularity of DeFi staking protocols like UniswapSushiCompound and Aava has boomed in 2020.

Emergence and Boom in DeFi in 2020


These included SushiSwap launching in August as a fork of the decentralised exchange UniSwap. Also that month, Wrapped Bitcoin (WBTC) supply passed $1bn. In mid September Uniswap launched its own governance token. This was in part aimed to take liquidity away from UniSwap.

It’s true the area remains highly speculative. The risk of large moves, uncertainties and failures is present. We only have to think of Harvest Finance. But DeFi and the idea of finding new ways to put assets to work offers exciting possibilities.

Significant regulatory uncertainty still surrounds DeFi. Governments and financial institutions remain resistant to embracing the concept of decentralizing other financial instruments.

However don’t forget that 5 years ago this was also true of cryptocurrencies. Except for an extremely small number of forward-thinking jurisdictions like Gibraltar, which introduced bespoke DLT legislation on 1/1/2018.

But another hot trend of 2020 has been institutional recognition and acceptance of cryptocurrency. We’ll discuss increased moves towards government regulation and financial institutional adoption in our continuing look back at 2020!

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Written By:
Penny Sommerfeld