Decentralized finance (DeFi) still demonstrates greater potential than the traditional financial industry, despite recent setbacks, a new report good found it.
The report, prepared by crypto-focused investment firm Hashkey Capital, states that the scalability of DeFi solutions is already several times that of traditional financial services.
“Given the decentralized and autonomous nature of DeFi applications, their business model is highly scalable. We have seen cases where a single smart contract developed by a single developer processes transactions worth billions of dollars. DeFi has the potential to be many times more scalable than traditional financial industry and more scalable than traditional [software-as-a-service (SaaS)] model,” the report said.
The report also emphasizes how flexible DeFi protocols are, which is due to them being “mostly autonomous.”
“For most DeFi applications, almost all members work in product development, marketing, etc., and if any one of them fails, the application will not be affected, and it will be able to continue processing millions of dollars. DeFi protocols do not need to rely on labor to run,” the Hashkey Capital report said, in stark contrast to how the traditional financial industry operates.
The report pointed out that as a result of how autonomous DeFi protocols are, the net income they generate per employee is also on a completely different level than traditional services.
Tough year for DeFi
DeFi protocols have had a rough year in 2022, despite their superiority over traditional financial services. For example, the sector has faced pessimism and low prices in the crypto market. ETH Down about 68% year-over-year.
ETH is the native token of Ethereum, the blockchain most DeFi protocols are built upon.
Black swans highlight the power of DeFi
Black swan events like the Terra Luna collapse have served to highlight the power of the DeFi market, reports Hashkey Capital.
This is true because the collapse of Terra Luna mainly affected centralized finance (CeFi) companies including crypto lenders. Celsius and crypto hedge funds three arrows capital,
Meanwhile, decentralized protocols made it through the collapse “without a scratch,” with the report stating that these protocols have shown “great resilience in times of market volatility.”
Heavy fall in TVL in 2022
The news that DeFi is now outperforming traditional finance is breaking news report good Nansen Research also confirms that the total value locked (TVL) in DeFi protocols has declined significantly over the course of the year.
TVL in DeFi protocols now stands at $41bn, from a high of nearly $180bn late last year, the Nansen report said, while the price of many DeFi tokens has fallen.
However, bright spots do exist in the market, and there are reasons for optimism as we enter 2023, the Nansen report said. it cameCome on) and uniswap (university) as the protocol for monitoring.
“The roadmap for these protocols has a number of exciting features,” the Nansen analysts wrote.
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