Are You on Top of These DeFi Trends?
The world of decentralized finance (DeFi) is evolving at a breakneck pace — growing from a $500 million to a $44 billion industry in a single year.
In this time, decentralized exchanges (DEXs), prediction markets, synthetic assets, liquidity mining, open lending platforms, and much more have risen to prominence, with more than a million users now having interacted with a DeFi protocol at least once.
But the industry is still very much in a period of explosive development, with newer, even more powerful solutions and use-cases emerging each day. Here, we take a look at three of the latest trends just beginning to emerge in the DeFi space.
High-Speed Yield Pools
If you’ve been involved in the DeFi space for more than a short period, then you’ve almost certainly noticed that yield pools are exploding in popularity — with both the number and variability of yield pools skyrocketing in the last year.
The reasons behind this are simple. Yield pools represent a simple, generally safe way to earn a yield on otherwise idle cryptocurrencies, without forcing users to rely on centralized intermediaries or fork over control of their assets for the privilege — unlike many custodial yield-bearing platforms.
But as yield pools have iterated thick and fast, an entirely new trend is beginning to emerge; high-speed yield pools.
As their name suggests, these are yield pools that work over dramatically shorter timeframes, allowing users to claim their deposit and withdraw their profits far quicker than they’re usually accustomed to.
Image: Prophecy
Right now, Prophecy’s Prophet Pools stand out as the most prominent example of a high-speed yield pool. Unlike your typical yield pools that take potentially weeks or even months to generate a substantial yield, Prophecy Pools use a unique fractional winner system to allow the majority of participants to turn a substantial return on their deposit in as little as minutes, while the rest get carried into a second pool for another go.
Beyond this, other projects are beginning to experiment with ways to grow the yields possible from their cryptocurrencies by allowing users to continue using their assets even while they’re locked and earning interest. Such as KIRA with its liquid staking solution, which could be used to farm yields while earning staking rewards at the same time.
Functional NFTs
For the longest time, NFTs have been a relatively obscure piece of technology — even as far as cryptocurrencies go.
In general, they’ve mostly been used to represent digital works of art, collectibles, and unique tradeable items — one of which recently sold for a cool $69 million.
But this is slowly changing, as projects begin to take NFTs and wrap in additional utility and functionality. Arguably the first project to do this was Decentraland, which uses unique NFT tokens known as LAND parcels to represent ownership of a fixed plot within the Decentraland game work (known as the Metaverse).
Image: My Neighbor Alice
Now, the idea has been expanded even further in My Neighbor Alice, a blockchain-powered game that also uses NFT tokens to represent pieces of land in the game’s various islands as well as animals and other in-game items. But more than this, holders of some My Neighbor Alice NFTs were also entitled to play the game for free — demonstrating one of the first times an NFT has been used for real-world benefits.
But that’s just the beginning. A number of new platforms are looking to use NFTs to represent real-world assets, including both Convergence and LABS Protocol — both of which are set to allow users to trade NFTs representing the ownership of real-world assets, such as property and land.
Governance Coins
What if you could own, or have your say in how your favorite DApp works? Or the features that should be added next in its development pipeline?
Well, with the advent of governance coins, you now can — sort of.
As their name suggests, governance coins are used for participating in the governance of an underlying platform or protocol. Typically, governance token holders are able to vote on governance proposals, and potentially even table their own proposals, which will help shape the platform moving forward.
Now, many of the most popular decentralized platforms incorporate a governance coin — including Uniswap, 1inch, Compound, and more.
Image: SushiSwap
Beyond this, governance coins are increasingly becoming used for speculative purposes, since many governance coins have demonstrated a meteoric uptrend in the last year, while some entitle holders to dividends or a share of any fees generated by the network; such as Sushi, the native governance token for SushiSwap.
With the DeFi industry consistently evolving along a line that empowers users, it appears likely that governance coins will become an increasingly common feature in the future.
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