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The decentralized finance sector witnessed various changes throughout the past twelve months. Meanwhile, Ethereum’s (ETH) Shapella upgrade dominated the industry, seemingly revolutionizing the DeFi market forever.
Ethereum’s Shapella upgrade
The Ether mainnet unveiled the Shanghai hardfork in April 2023. It introduced the option to cash out Ethereum tokens that validators staked. Market players expected the event to affect the altcoin negatively. However, investor appetite remained steady despite massive withdrawals after the event.
Surprisingly, staked Ethereum increased steadily after the hardfork as money flowed into staking protocols. Investors delved into massive ETH staking, as the option to cash out their Ether at any time boosted investor confidence. The entire DeFi industry reflected this development.
Liquid Staking protocols recorded surges since March, outpacing the decentralized exchange category by June end. The former’s total value locked jumped 334% since early 2023, whereas DEXs increased by 176% in the last twelve months.
Liquid Staking dominated the DeFi market with a TVL of more than $32 billion. Decentralized exchanges had their total value locked at around $21 billion during this publication.
Such developments saw Lido DAO surpassing other leading DeFi Apps, including AAVE. AAVE is a top Dapp in the lending category. Lido’s TVL stands at around $22.3B, while AAVE’s stands at $10.9 billion.
The future of DeFi markets
The decentralized finance market will likely continue flourishing in the future, and analysts forecast that investors will opt to keep their money in safer bets, which could be joining Ethereum as a validator. That will propel Liquid Staking protocol’s TVL, further outshining Dapps. Moreover, the DeFi world awaits crucial developments in 2024.
The much-anticipated DeFi 2.0 promises inclusivity and accessibility in the financial segment. That will likely introduce new opportunities for market participants and redefine the traditional finance sector.
Decentralized Finance (DeFi) is preparing for a watershed moment in 2024. DeFi 2.0 is set to reshape financial markets by providing more accessible and inclusive financial services, opening up new opportunities for investors and reshaping the landscape of traditional finance.
— lori_wenninger (@lori_wenninger) December 24, 2023
DeFi 2.0 will be business-to-business (B2B) oriented. The earlier DeFi applications prioritized user-friendliness.
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