Binance says the decentralized finance (DeFi) movement is growing, but has yet to make a dent in the mainstream.
In a comprehensive report, Binance Research tracks how DeFi – which is an umbrella name for a broad push to automate and remove middlemen from traditional financial services like borrowing and lending, derivatives, margin trading, and insurance – is gaining steam among the crypto savvy.
Binance highlights early success stories like the crypto lending company Compound, which has built a decentralized system for people to earn interest by lending their cryptocurrency to fellow users.
Compound now has a user base of 21,424 customers. The US dollar value of collateral in its ecosystem expanded from $13.4 million at the start of 2019 to $86.3 million by the end of the year, a jump of 541%.
The researchers anticipate more growth.
“In our views, we expect DeFi to further garner interest from industry participants. However, use-cases have, so far, remained mostly confined within the existing crypto-community…
Once some technical and legal challenges are solved, we expect a meteoric growth in the decentralized financial industry, likely to attract individuals and capital beyond the scope of the existing crypto-industry.”
Binance points to Ethereum as the undisputed king of the DeFi movement, but says it expects other blockchain platforms to grow in the year ahead.
As for Bitcoin, Binance says a growing number of decentralized financial solutions built around BTC are also expected to emerge.
“Bitcoin (BTC) is likely to play a more significant part of DeFi, both on Ethereum and as a stand-alone solution… [It could also] be added as collateral in MakerDAO (e.g., tBTC, WBTC), and further garner adoption in established Ethereum-based DeFi applications.”
Binance also singles out EOS, Binance Chain, NEO, Cosmos, Tezos, Algorand, TomoChain, Tron, Waves and Ontology as potential blockchain platforms that could play a significant role in the growth of DeFi over the long run.
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