DeFi Outlook in 2022

Written by EmergentX Insights team

February 16, 2022 | 1 Min

  • The landscape of DeFi is set to become more diverse as concepts from traditional
    finance are reinvented in DeFi.
  • Given the disruptive nature of DeFi, partial regulation is a likely outcome in 2022,
    which will lead to a middle ground between DeFi and CeFi.
  • DeFi innovations such as DeFi 2.0, DeFi 3.0 with NFT integration, GameFi, will help
    onboard more users.

Core thesis

Decentralized Finance (DeFi) replicate a broad spectrum of existing financial services
without centralized intermediaries. DeFi is developing rapidly at the intersection of
Blockchain technology, digital assets, and financial services as an alternative to the legacy
financial infrastructure.

Significance and Disruptive Impacts

DeFi has the potential to make financial services and tools accessible to large segments of
the population at lower cost and with higher efficiency. Given its disruptive potential,
regulators have been eying DeFi, which may result in a parallel DeFi industry that ‘live’
within the regulatory framework of traditional finance, which satisfies KYC and AML
requirements. Innovations in DeFi that aim to improve the original DeFi protocols include
DeFi 2.0, better UX via integrations with GameFi, and DeFi 3.0 with NFT integration.

Expectation for 2022

  • DeFi is becoming more diverse and sophisticated
    DeFi innovations, including centralized and decentralized stablecoins, DeFi 2.0, will
    empower the unbanked.
  • Regulated DeFi?
    Regulators are eying the DeFi sector in the name of investor protection against
    counterparty and cybersecurity risks..
  • Finding a middle ground for DeFi and CeFi to co-exist
    The urge to find a middle ground for DeFi and CeFi may result in a blended open
    financial ecosystem. The appeal of the scale and size of the institutional market will
    likely drive specific DeFi platforms to adopt institutional-friendly processes.
  • Next-gen DeFi protocols to boost adoption
    Next-gen DeFi protocols with better integration and UX will boost adoption.
    For example, DeFi 3.0 with NFT integration: staking, lending and more
    comprehensive financial applications expanding into NFT-based assets.

EmergentX Digital Asset 2022 Outlook

Year of Consilience

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